EXHIBIT 13.1

OPTIMUMBANK HOLDINGS, INC.

Audited Consolidated Financial Statements

December 31, 2008 and 2007 and for the Years
Then Ended

(Together with Report of Independent
Registered Public Accounting Firm)

Index to Financial Statements

|                                                                                                |  |    
|----------------------------------------------------------------------------------------------- |  | ---
|Independent Auditors Report                                                                    |  | F-2
|                                                                                                |  |    
|Consolidated Balance Sheets, December 31,
 2008 and 2007                                        |  | F-3
|                                                                                                |  |    
|Consolidated Statements of Earnings for the
 Years Ended December 31, 2008 and 2007             |  | F-4
|                                                                                                |  |    
|Consolidated Statements of Stockholders
 Equity for the Years Ended December 31, 2008 and 2007 |  | F-5
|                                                                                                |  |    
|Consolidated Statements of Cash Flows for
 the Years Ended December 31, 2008 and 2007           |  | F-6
|                                                                                                |  |    
|Notes to Financial Statements, December 31,
 2008 and 2007 and for the Years Then Ended         |  | F-8

F-1

---



Report of Independent Registered Public
Accounting Firm

OptimumBank
Holdings, Inc.
Fort Lauderdale, Florida:

We have
audited the accompanying consolidated balance sheets of OptimumBank Holdings,
Inc. and Subsidiary (the Company) as of December 31, 2008 and 2007, and the related
consolidated statements of earnings, stockholders equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company at
December 31, 2008 and 2007, and the results of its operations and its cash
flows for the years then ended, in conformity with U.S. generally accepted
accounting principles.

HACKER,
JOHNSON & SMITH PA
Fort Lauderdale, Florida 
March 13, 2009

F-2

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Balance Sheets(Dollars in thousands, except share amounts)

|                                                                                                                  |  |              |         |      |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | ------- | -
|                                                                                                                  |  | December 31, |        
|                                                                                                                  |  | 2008         |         | 2007 |  
|Assets                                                                                                            |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Cash and due from banks                                                                                           |  | $            | 980     |      | $ | 368     |  
|Interest-bearing deposits with banks                                                                              |  |              | 97      |      |   | 107     |  
|Federal funds sold                                                                                                |  |              | 2,143   |      |   | 226     |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total cash and cash equivalents                                                                                   |  |              | 3,220   |      |   | 701     |  
|                                                                                                                  |  |              |         |      |   |         |  
|Securities held to maturity (fair value of
 $78,756 and $58,117)                                                  |  |              | 82,208  |      |   | 58,471  |  
|Security available for sale                                                                                       |  |              | 244     |      |   | 244     |  
|Loans, net of allowance for loan losses of
 $1,906 and $692                                                       |  |              | 160,699 |      |   | 173,323 |  
|Federal Home Loan Bank stock                                                                                      |  |              | 3,526   |      |   | 2,965   |  
|Premises and equipment, net                                                                                       |  |              | 3,094   |      |   | 3,249   |  
|Foreclosed assets                                                                                                 |  |              | 95      |      |   | 79      |  
|Accrued interest receivable                                                                                       |  |              | 1,277   |      |   | 1,448   |  
|Deferred tax asset                                                                                                |  |              | 570     |      |   | -       |  
|Other assets                                                                                                      |  |              | 807     |      |   | 1,067   |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total assets                                                                                                      |  | $            | 255,740 |      | $ | 241,547 |  
|                                                                                                                  |  |              |         |      |   |         |  
|Liabilities and Stockholders
Equity                                                                              |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Liabilities:                                                                                                      |  |              |         |      |   |         |  
|Noninterest-bearing demand deposits                                                                               |  | $            | 90      |      | $ | 1,304   |  
|Savings, NOW and money-market deposits                                                                            |  |              | 30,668  |      |   | 28,202  |  
|Time deposits                                                                                                     |  |              | 84,167  |      |   | 95,528  |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total deposits                                                                                                    |  |              | 114,925 |      |   | 125,034 |  
|                                                                                                                  |  |              |         |      |   |         |  
|Federal Home Loan Bank advances                                                                                   |  |              | 68,700  |      |   | 56,850  |  
|Other borrowings                                                                                                  |  |              | 41,800  |      |   | 28,900  |  
|Junior subordinated debenture                                                                                     |  |              | 5,155   |      |   | 5,155   |  
|Advanced payment by borrowers for taxes and
 insurance                                                            |  |              | 935     |      |   | 1,692   |  
|Official checks                                                                                                   |  |              | 553     |      |   | 559     |  
|Other liabilities                                                                                                 |  |              | 907     |      |   | 1,076   |  
|Deferred tax liability                                                                                            |  |              | -       |      |   | 34      |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total liabilities                                                                                                 |  |              | 232,975 |      |   | 219,300 |  
|                                                                                                                  |  |              |         |      |   |         |  
|Commitments and contingencies (Notes 4, 8
 and 15)                                                                |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Stockholders equity:                                                                                             |  |              |         |      |   |         |  
|Common stock, $.01 par value; 6,000,000
 shares authorized, 3,120,992 and 2,972,507 shares issued and outstanding |  |              | 31      |      |   | 30      |  
|Additional paid-in capital                                                                                        |  |              | 18,494  |      |   | 17,308  |  
|Retained earnings                                                                                                 |  |              | 4,244   |      |   | 4,913   |  
|Accumulated other comprehensive loss                                                                              |  |              | (4      | )    |   | (4      | )
|                                                                                                                  |  |              |         |      |   |         |  
|Total stockholders equity                                                                                        |  |              | 22,765  |      |   | 22,247  |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total liabilities and stockholders
equity                                                                        |  | $            | 255,740 |      | $ | 241,547 |  

See
Accompanying Notes to Consolidated Financial Statements.

F-3

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Earnings (In thousands, except share amounts)

|                                                     |  |                         |        |      |   |        | 
|---------------------------------------------------- |  | ----------------------- | ------ | ---- | - | ------ | 
|                                                     |  | Year Ended December 31, |       
|                                                     |  | 2008                    |        | 2007 |  
|Interest income:                                     |  |                         |        |      |   |        | 
|Loans                                                |  | $                       | 11,236 |      | $ | 13,086 | 
|Securities                                           |  |                         | 4,183  |      |   | 2,803  | 
|Other                                                |  |                         | 151    |      |   | 248    | 
|                                                     |  |                         |        |      |   |        | 
|Total interest income                                |  |                         | 15,570 |      |   | 16,137 | 
|                                                     |  |                         |        |      |   |        | 
|Interest expense:                                    |  |                         |        |      |   |        | 
|Deposits                                             |  |                         | 4,521  |      |   | 5,836  | 
|Borrowings                                           |  |                         | 4,690  |      |   | 3,864  | 
|                                                     |  |                         |        |      |   |        | 
|Total interest expense                               |  |                         | 9,211  |      |   | 9,700  | 
|                                                     |  |                         |        |      |   |        | 
|Net interest income                                  |  |                         | 6,359  |      |   | 6,437  | 
|                                                     |  |                         |        |      |   |        | 
|Provision for loan losses                            |  |                         | 1,374  |      |   | 476    | 
|                                                     |  |                         |        |      |   |        | 
|Net interest income after provision for
 loan losses |  |                         | 4,985  |      |   | 5,961  | 
|                                                     |  |                         |        |      |   |        | 
|Noninterest income:                                  |  |                         |        |      |   |        | 
|Service charges and fees                             |  |                         | 141    |      |   | 79     | 
|Loan prepayment fees                                 |  |                         | 154    |      |   | 294    | 
|Litigation settlement                                |  |                         | -      |      |   | 155    | 
|Other                                                |  |                         | 98     |      |   | 5      | 
|                                                     |  |                         |        |      |   |        | 
|Total noninterest income                             |  |                         | 393    |      |   | 533    | 
|                                                     |  |                         |        |      |   |        | 
|Noninterest expenses:                                |  |                         |        |      |   |        | 
|Salaries and employee benefits                       |  |                         | 2,175  |      |   | 2,061  | 
|Occupancy and equipment                              |  |                         | 696    |      |   | 662    | 
|Data processing                                      |  |                         | 167    |      |   | 171    | 
|Professional fees                                    |  |                         | 376    |      |   | 280    | 
|Insurance                                            |  |                         | 81     |      |   | 59     | 
|Stationary and supplies                              |  |                         | 35     |      |   | 39     | 
|Loss on sale of foreclosed assets                    |  |                         | 443    |      |   | -      | 
|Provision for losses on foreclosed assets            |  |                         | 74     |      |   | -      | 
|Other                                                |  |                         | 498    |      |   | 477    | 
|                                                     |  |                         |        |      |   |        | 
|Total noninterest expenses                           |  |                         | 4,545  |      |   | 3,749  | 
|                                                     |  |                         |        |      |   |        | 
|Earnings before income taxes                         |  |                         | 833    |      |   | 2,745  | 
|                                                     |  |                         |        |      |   |        | 
|Income taxes                                         |  |                         | 313    |      |   | 1,003  | 
|                                                     |  |                         |        |      |   |        | 
|Net earnings                                         |  | $                       | 520    |      | $ | 1,742  | 
|                                                     |  |                         |        |      |   |        | 
|Net earnings per share:                              |  |                         |        |      |   |        | 
|Basic                                                |  | $                       | .17    |      | $ | .56    | 
|                                                     |  |                         |        |      |   |        | 
|Diluted                                              |  | $                       | .16    |      | $ | .55    | 

See
Accompanying Notes to Consolidated Financial Statements.

F-4

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders
Equity

Years Ended December 31, 2008 and 2007(Dollars in thousands)

|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|------------------------------------------------------------------------- |  | ------------ | --------- | ------ | - | ---------------------------- |  | ------------------ | ------ | -------------------------------------- | -------------------------- | ------ | - | - | -- | - | - | ------ | -
|                                                                          |  |              |           |        |   |                              |  |                    |        | Accumulated
 Other
 Compre-hensiveLoss |                            |        |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        | Total
 StockholdersEquity |       
|                                                                          |  |              |           |        |   | Additional
 Paid-In
 Capital |  | Retained
 Earnings |        |                                        |                           
|                                                                          |  | Common Stock |           |        |   |                              | 
|                                                                          |  | Shares       |           | Amount |   |                              |  |                    |       
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Balance at December 31,
 2006                                             |  |              | 2,820,280 |        | $ | 28                           |  | $                  | 15,930 |                                        | $                          | 4,474  |   | $ | (9 | ) | $ | 20,423 |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Proceeds from sale of
 common stock                                       |  |              | 4,172     |        |   | -                            |  |                    | 37     |                                        |                            | -      |   |   | -  |   |   | 37     |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Proceeds from exercise of common stock options                            |  |              | 7,166     |        |   | -                            |  |                    | 41     |                                        |                            | -      |   |   | -  |   |   | 41     |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|5% stock dividend (fractional shares paid in cash)                        |  |              | 140,889   |        |   | 2                            |  |                    | 1,300  |                                        |                            | (1,303 | ) |   | -  |   |   | (1     | )
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Comprehensive income:                                                     |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Net earnings                                                              |  |              | -         |        |   | -                            |  |                    | -      |                                        |                            | 1,742  |   |   | -  |   |   | 1,742  |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Net change in unrealized loss on security available
for sale, net of
 tax |  |              | -         |        |   | -                            |  |                    | -      |                                        |                            | -      |   |   | 5  |   |   | 5      |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Comprehensive income                                                      |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   | 1,747  |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Balance at December 31, 2007                                              |  |              | 2,972,507 |        | $ | 30                           |  | $                  | 17,308 |                                        | $                          | 4,913  |   | $ | (4 | ) | $ | 22,247 |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|5% stock dividend (fractional shares paid in cash)                        |  |              | 148,485   |        |   | 1                            |  |                    | 1,186  |                                        |                            | (1,189 | ) |   | -  |   |   | (2     | )
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Comprehensive income-Net earnings                                         |  |              | -         |        |   | -                            |  |                    | -      |                                        |                            | 520    |   |   | -  |   |   | 520    |  
|                                                                          |  |              |           |        |   |                              |  |                    |        |                                        |                            |        |   |   |    |   |   |        |  
|Balance at December 31, 2008                                              |  |              | 3,120,992 |        | $ | 31                           |  | $                  | 18,494 |                                        | $                          | 4,244  |   | $ | (4 | ) | $ | 22,765 |  

See Accompanying Notes to
Consolidated Financial Statements.

F-5

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows
(In thousands)

|                                                                                     |  |                         |         |      |   |         |  
|------------------------------------------------------------------------------------ |  | ----------------------- | ------- | ---- | - | ------- | -
|                                                                                     |  | Year Ended December 31, |        
|                                                                                     |  | 2008                    |         | 2007 |  
|Cash flows from operating activities:                                                |  |                         |         |      |   |         |  
|Net earnings                                                                         |  | $                       | 520     |      | $ | 1,742   |  
|Adjustments to reconcile net earnings to
 net cash provided by operating activities: |  |                         |         |      |   |         |  
|Depreciation and amortization                                                        |  |                         | 201     |      |   | 225     |  
|Provision for loan losses                                                            |  |                         | 1,374   |      |   | 476     |  
|Deferred income tax benefit                                                          |  |                         | (604    | )    |   | (13     | )
|Net amortization of fees, premiums and
 discounts                                    |  |                         | 866     |      |   | 372     |  
|Decrease (increase) in accrued interest
 receivable                                  |  |                         | 171     |      |   | (194    | )
|Decrease (increase) in other assets                                                  |  |                         | 260     |      |   | (686    | )
|Loss on sale of foreclosed assets                                                    |  |                         | 443     |      |   | -       |  
|Provision for losses on foreclosed assets                                            |  |                         | 74      |      |   | -       |  
|Decrease in official checks and other
 liabilities                                   |  |                         | (175    | )    |   | (16     | )
|                                                                                     |  |                         |         |      |   |         |  
|Net cash provided by operating activities                                            |  |                         | 3,130   |      |   | 1,906   |  
|                                                                                     |  |                         |         |      |   |         |  
|Cash flows from investing activities:                                                |  |                         |         |      |   |         |  
|Purchases of securities held to maturity                                             |  |                         | (35,580 | )    |   | (34,206 | )
|Principal repayments and calls of
 securities held to maturity                       |  |                         | 11,399  |      |   | 9,193   |  
|Net decrease in loans                                                                |  |                         | 10,038  |      |   | 7,569   |  
|(Purchase) sale of premises and equipment,
 net                                      |  |                         | (46     | )    |   | 516     |  
|Proceeds from sale of foreclosed assets,
 net                                        |  |                         | 257     |      |   | -       |  
|Purchase of Federal Home Loan Bank stock                                             |  |                         | (561    | )    |   | (9      | )
|                                                                                     |  |                         |         |      |   |         |  
|Net cash used in investing activities                                                |  |                         | (14,493 | )    |   | (16,937 | )
|                                                                                     |  |                         |         |      |   |         |  
|Cash flows from financing activities:                                                |  |                         |         |      |   |         |  
|Net decrease in deposits                                                             |  |                         | (10,109 | )    |   | (4,468  | )
|Net increase in other borrowings                                                     |  |                         | 12,900  |      |   | 17,950  |  
|Proceeds from Federal Home Loan Bank
 advances                                       |  |                         | 22,500  |      |   | 11,300  |  
|Net (decrease) increase in advanced payment
 by borrowers for taxes and insurance    |  |                         | (757    | )    |   | 269     |  
|Repayments of Federal Home Loan Bank
 advances                                       |  |                         | (10,650 | )    |   | (11,000 | )
|Proceeds from sale of common stock                                                   |  |                         | -       |      |   | 37      |  
|Proceeds from exercise of common stock
 options                                      |  |                         | -       |      |   | 41      |  
|Fractional shares of stock dividend paid in
 cash                                    |  |                         | (2      | )    |   | (1      | )
|                                                                                     |  |                         |         |      |   |         |  
|Net cash provided by financing activities                                            |  |                         | 13,882  |      |   | 14,128  |  
|                                                                                     |  |                         |         |      |   |         |  
|Net increase (decrease) in cash and cash
 equivalents                                |  |                         | 2,519   |      |   | (903    | )
|                                                                                     |  |                         |         |      |   |         |  
|Cash and cash equivalents at beginning of
 the year                                  |  |                         | 701     |      |   | 1,604   |  
|                                                                                     |  |                         |         |      |   |         |  
|Cash and cash equivalents at end of the
 year                                        |  | $                       | 3,220   |      | $ | 701     |  

(continued)

F-6

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows,
Continued
(In thousands)

|                                                                                                                           |  |                         |       |      |   |       | 
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----- | ---- | - | ----- | 
|                                                                                                                           |  | Year Ended December 31, |      
|                                                                                                                           |  | 2008                    |       | 2007 |  
|Supplemental
 disclosure of cash flow information:                                                                         |  |                         |       |      |   |       | 
|Cash paid during the year for:                                                                                             |  |                         |       |      |   |       | 
|Interest                                                                                                                   |  | $                       | 9,232 |      | $ | 9,697 | 
|                                                                                                                           |  |                         |       |      |   |       | 
|Income taxes                                                                                                               |  | $                       | 928   |      | $ | 1,014 | 
|                                                                                                                           |  |                         |       |      |   |       | 
|Noncash transactions:                                                                                                      |  |                         |       |      |   |       | 
|Change in accumulated other comprehensive
 loss, net change in unrealized loss on security available for sale, net of
 tax |  | $                       | -     |      | $ | 5     | 
|                                                                                                                           |  |                         |       |      |   |       | 
|Common stock dividend                                                                                                      |  | $                       | 1,187 |      | $ | 1,302 | 
|                                                                                                                           |  |                         |       |      |   |       | 
|Loan reclassified to foreclosed assets                                                                                     |  | $                       | 2,390 |      | $ | 79    | 
|                                                                                                                           |  |                         |       |      |   |       | 
|Loans made in connection with sale of
 foreclosed assets                                                                   |  | $                       | 1,600 |      | $ | -     | 

See
Accompanying Notes to Consolidated Financial Statements.

F-7

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December 31, 2008 and 2007 and the Years Then
Ended

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Organization.
 OptimumBank Holdings, Inc. (the Holding Company) is a one-bank holding
 company and owns 100% of OptimumBank (the Bank), a state
 (Florida)-chartered commercial bank (collectively, the Company). The
 Holding Companys only business is the operation of the Bank. The Banks
 deposits are insured by the Federal Deposit Insurance Corporation. The Bank
 offers a variety of community banking services to individual and corporate
 customers through its three banking offices located in Broward County,
 Florida.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Basis of
 Presentation. The accompanying consolidated
 financial statements include the accounts of the Holding Company and the
 Bank. All significant intercompany accounts and transactions have been
 eliminated in consolidation. The accounting and reporting practices of the
 Company conform to U.S. generally accepted accounting principles and to
 general practices within the banking industry. The following summarizes the
 more significant of these policies and practices:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Use of Estimates.
 In preparing consolidated financial statements in conformity with U.S.
 generally accepted accounting principles, management is required to make
 estimates and assumptions that affect the reported amounts of assets and
 liabilities as of the date of the consolidated balance sheet and reported
 amounts of revenues and expenses during the reporting period. Actual results
 could differ from those estimates. A material estimate that is particularly
 susceptible to significant change in the near term relates to the
 determination of the allowance for loan losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Cash and Cash
 Equivalents. For purposes of the consolidated
 statements of cash flows, cash and cash equivalents include cash and balances
 due from banks, interest-bearing deposits and federal funds sold, all of
 which mature within ninety days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company is required by law or regulation to maintain cash
 reserves in the form of vault cash or in accounts with other banks. There
 were no reserve balances required at December 31, 2008 and 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Securities.
 Securities may be classified as either trading, held to maturity or available
 for sale. Trading securities are held principally for resale and recorded at
 their fair values. Unrealized gains and losses on trading securities are
 included immediately in earnings. Held to maturity securities are those which
 management has the positive intent and ability to hold to maturity and are
 reported at amortized cost. Available for sale securities consist of securities
 not classified as trading securities nor as held to maturity securities.
 Unrealized holding gains and losses, net of tax on available for sale
 securities are reported as a net amount in accumulated other comprehensive
 loss in stockholders equity until realized. Gains and losses on the sale of
 available for sale securities are determined using the
 specific-identification method. Premiums and discounts on securities
 available for sale and held to maturity are recognized in interest income
 using the interest method over the period to maturity.

(continued)

F-8

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Loans.
 Loans that management has the intent and ability to hold for the foreseeable
 future or until maturity or pay-off are reported at their outstanding
 principal adjusted for any charge-offs, the allowance for loan losses, and
 any deferred fees or costs.                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Commitment fees, and loan origination fees are deferred and certain
 direct origination costs are capitalized. Both are recognized as an
 adjustment of the yield of the related loan.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The accrual of interest on loans is discontinued at the time the loan
 is ninety days delinquent unless the loan is well collateralized and in
 process of collection. In all cases, loans are placed on nonaccrual or
 charged-off at an earlier date if collection of principal or interest is
 considered doubtful.                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | All interest accrued but not collected for loans that are placed on
 nonaccrual or charged-off is reversed against interest income. The interest
 on these loans is accounted for on the cash-basis or cost-recovery method,
 until qualifying for return to accrual. Loans are returned to accrual status
 when all the principal and interest amounts contractually due are brought
 current and future payments are reasonably assured.                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Allowance for Loan
 Losses. The allowance for loan losses is
 established as losses are estimated to have occurred through a provision for
 loan losses charged to earnings. Loan losses are charged against the
 allowance when management believes the uncollectibility of a loan balance is
 confirmed. Subsequent recoveries, if any, are credited to the allowance.                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The allowance for loan losses is evaluated on a regular basis by
 management and is based upon managements periodic review of the
 collectibility of the loans in light of historical experience, the nature and
 volume of the loan portfolio, adverse situations that may affect the borrowers
 ability to repay, estimated value of any underlying collateral and prevailing
 economic conditions. This evaluation is inherently subjective as it requires
 estimates that are susceptible to significant revision as more information
 becomes available.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The allowance consists of specific and general components. The
 specific component relates to loans that are classified as impaired. For such
 loans, an allowance is established when the discounted cash flows (or
 collateral value or observable market price) of the impaired loans are lower
 than the carrying value of those loans. The general component covers all
 other loans and is based on historical loss experience adjusted for
 qualitative factors.                                                                                        

(continued)

F-9

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Allowance for Loan
 Losses, Continued. A loan is considered impaired
 when, based on current information and events, it is probable that the
 Company will be unable to collect the scheduled payments of principal or
 interest when due. Factors considered by management in determining impairment
 include payment status, collateral value, and the probability of collecting
 scheduled principal and interest payments when due. Loans that experience
 insignificant payment delays and payment shortfalls generally are not
 classified as impaired. Management determines the significance of payment
 delays and payment shortfalls on a case-by-case basis, taking into
 consideration all of the circumstances surrounding the loan and the borrower,
 including the length of the delay, the reasons for the delay, the borrowers
 prior payment record, and the amount of the shortfall in relation to the
 principal and interest owed. Impairment is measured on a loan by loan basis
 for commercial real estate, land and construction and multi-family real
 estate loans by either the present value of expected future cash flows
 discounted at the loans effective interest rate, the loans obtainable
 market price, or the fair value of the collateral if the loan is
 collateral-dependent.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Large groups of smaller balance homogeneous loans are collectively
 evaluated for impairment. Accordingly, the Company does not separately
 identify individual consumer and residential loans for impairment
 disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Foreclosed Assets.
 Assets repossessed or acquired by foreclosure or deed in lieu of foreclosure
 are carried at the lower of estimated fair value or the balance of the loan
 on the assets at date of acquisition. Costs relating to the development and
 improvement of assets are capitalized, whereas those relating to holding the
 assets are charged to expense. Valuations are periodically performed by
 management and losses are charged to earnings if the carrying value of the
 assets exceeds its estimated fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Premises and
 Equipment. Land is stated at cost. Buildings and
 improvements, furniture, fixtures, equipment, and leasehold improvements are
 stated at cost, less accumulated depreciation and amortization. Depreciation
 and amortization expense are computed using the straight-line method over the
 estimated useful life of each type of asset or lease term, if shorter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

(continued)

F-10

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Preferred
 Securities of Unconsolidated Subsidiary Trust. On
 September 30, 2004, the Company acquired the common stock of OptimumBank
 Holdings Capital Trust I (Issuer Trust), an unconsolidated subsidiary
 trust. The Issuer Trust used the proceeds from the issuance of $5,000,000 of
 its preferred securities to third-party investors and common stock to acquire
 a $5,155,000 debenture issued by the Company. This debenture and certain
 capitalized costs associated with the issuance of the preferred stock
 comprise the Issuer Trusts only assets and the interest payments from the
 debentures finance the distributions paid on the preferred securities. The
 Company recorded the debenture in Junior Subordinated Debenture and its
 equity interest in the business trust in Other Assets on the consolidated
 balance sheets.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company has entered into agreements which, taken collectively,
 fully and unconditionally guarantee the preferred securities of the Issuer
 Trust subject to the terms of the guarantee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The debenture held by the Issuer Trust currently qualifies as Tier I
 capital for the Company under Federal Reserve Board guidelines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Transfer of
 Financial Assets. Transfers of financial assets
 are accounted for as sales, when control over the assets has been
 surrendered. Control over transferred assets is deemed to be surrendered when
 (1) the assets have been isolated from the Company, (2) the transferee obtains
 the right (free of conditions that constrain it from taking advantage of that
 right) to pledge or exchange the transferred assets, and (3) the Company does
 not maintain effective control over the transferred assets through an
 agreement to repurchase them before their maturity.                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Income Taxes.
 Deferred income tax assets and liabilities are recorded to reflect the tax
 consequences on future years of temporary differences between revenues and
 expenses reported for financial statement and those reported for income tax
 purposes. Deferred tax assets and liabilities are measured using the enacted
 tax rates expected to apply to taxable income in the years in which those
 temporary differences are expected to be realized or settled. Valuation
 allowances are provided against assets which are not likely to be realized.                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Holding Company and the Bank file a consolidated income tax
 return. Income taxes are allocated proportionately to the Holding Company and
 subsidiary as though separate income tax returns were filed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Advertising.
 The Company expenses all media advertising as incurred. Media advertising
 expense included in other in the accompanying consolidated statements of
 earnings was approximately $17,000 and $40,000 during the years ended
 December 31, 2008 and 2007, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

(continued)

F-11

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Stock
 Compensation Plans. The Company follows the fair value recognition provisions
 of Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment(SFAS
123(R)), using the
 modified-prospective-transition method. Under that transition method,
 compensation cost recognized includes: (a) compensation cost for all
 share-based payments granted prior to, but not yet vested as of January 1,
 2006, based on the grant date fair value calculated in accordance with the
 original provisions of SFAS 123, Accounting
 for Stock-Based Compensation (as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition
 and Disclosure) (collectively SFAS 123) and (b) compensation cost
 for all share-based payments granted subsequent to December 31, 2005, based
 on the grant-date fair value estimated in accordance with the provisions of
 SFAS 123(R). At December 31, 2005, all outstanding options had vested.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Earnings
 Per Share. Basic earnings per share is computed
 on the basis of the weighted-average number of common shares outstanding.
 Diluted earnings per share is computed based on the weighted-average number
 of shares outstanding plus the effect of outstanding stock options, computed
 using the treasury stock method. All amounts reflect the 5% stock dividends
 declared in May 2008 and 2007. Earnings per common share have been computed based
 on the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                                                                                                          |  |                         |           |      |  |           | 
|--------------------------------------------------------------------------------------------------------- |  | ----------------------- | --------- | ---- |  | --------- | 
|                                                                                                          |  | Year Ended December 31, |          
|                                                                                                          |  | 2008                    |           | 2007 | 
|Weighted-average number of common shares
 outstanding used to calculate basic earnings per common share   |  |                         | 3,120,992 |      |  | 3,112,227 | 
|                                                                                                          |  |                         |           |      |  |           | 
|Effect of dilutive stock options                                                                          |  |                         | 43,227    |      |  | 72,517    | 
|                                                                                                          |  |                         |           |      |  |           | 
|Weighted-average number of common shares
 outstanding used to calculate diluted earnings per common share |  |                         | 3,164,219 |      |  | 3,184,744 | 

| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | The following options were excluded from
 the calculation of EPS due to the exercise price being above the average
 market price:

|                                       |  |                     |         |                 |   |            |  |  |           | 
|-------------------------------------- |  | ------------------- | ------- | --------------- | - | ---------- |  |  | --------- | 
|                                       |  | Number
 Outstanding |         | Exercise
 Price |   | Expire     | 
|For the year ended December 31,
 2008- |  |                     |         |                 |   |            |  |  |           | 
|Options                                |  |                     | 278,987 |                 | $ | 7.81-11.90 |  |  | 2014-2015 | 
|                                       |  |                     |         |                 |   |            |  |  |           | 
|For the year ended December 31,
 2007- |  |                     |         |                 |   |            |  |  |           | 
|Options                                |  |                     | 267,412 |                 | $ | 9.52-11.90 |  |  | 2014-2015 | 

| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Off-Balance-Sheet
 Financial Instruments. In the ordinary course of
 business the Company has entered into off-balance-sheet financial instruments
 consisting of commitments to extend credit. Such financial instruments are
 recorded in the consolidated financial statements when they are funded.

(continued)

F-12

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of
Significant Accounting Policies, Continued                                                                                                                                                                                                                
|    | Fair
 Value Measurements. Effective January 1, 2008,
 the Company adopted SFAS No. 157, Fair
 Value Measurements(SFAS 157). SFAS 157 defines fair value,
 establishes a framework for measuring fair value and enhances disclosures
 about fair value measurements.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SFAS 157 defines fair value as the exchange price that would be
 received for an asset or paid to transfer a liability (an exit price) in the
 principal or most advantageous market for the asset or liability in an
 orderly transaction between market participants on the measurement date. SFAS
 157 also establishes a fair value hierarchy which requires an entity to
 maximize the use of observable inputs and minimize the use of unobservable
 inputs when measuring fair value. The standard describes three levels of
 inputs that may be used to measure fair value:
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Level 1: Observable inputs such as quoted prices (unadjusted) in
 active markets for identical assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Level 2: Inputs other than quoted prices that are observable for the
 asset or liability, either directly or indirectly. These include quoted
 prices for similar assets or liabilities in active markets; quoted prices for
 identical or similar assets or liabilities that are not active; and
 model-driven valuations whose inputs are observable or whose significant
 value drivers are observable. Valuations may be obtained from, or
 corroborated by, third-party pricing services.                                                                                     
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Level 3: Unobservable inputs to measure fair value of assets and
 liabilities for which there is little, if any market activity at the
 measurement date, using reasonable inputs and assumptions based upon the best
 information at the time, to the extent that inputs are available without
 undue cost and effort.                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | In October 2008, the Financial Accounting Standards Board (FASB)
 issued FASB Staff Position No. 157-3, Determining
 the Fair Value of a Financial Asset When the Market for That Asset Is Not
 Active. This FASB Staff Position clarifies the application of SFAS
 157 in determining the fair value of a financial asset when the market for
 that financial asset is not active. This FASB Staff Position was effective
 upon issuance.                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | In February 2008, the FASB issued FASB Staff Position (FSP) No.
FAS
 157-2, Effective Date of FASB Statement
 No. 157. This FSP delays the effective date of FAS 157 for all
 non-financial assets and non-financial liabilities, except those that are
 recognized or disclosed at fair value on a recurring basis (at least
 annually) to fiscal years beginning after November 15, 2008. The impact of
 adoption had no effect on the Company.                                                                                                                                

(continued)

F-13

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Fair
 Value Measurements, Continued. The following
 describes valuation methodologies used for assets and liabilities measured at
 fair value:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Securities Available for Sale.
 Where quoted prices are available in an active market, securities are
 classified within level 1 of the valuation hierarchy. Level 1 securities
 include highly liquid government bonds, certain mortgage products and
 exchange-traded equities. If quoted market prices are not available, then
 fair values are estimated by using pricing models, quoted prices of
 securities with similar characteristics, or discounted cash flows. Examples
 of such instruments, which would generally be classified within level 2 of
 the valuation hierarchy, include certain collateralized mortgage and debt
 obligations and certain high-yield debt securities. In certain cases where
 there is limited activity or less transparency around inputs to the
 valuation, securities are classified within level 3 of the valuation
 hierarchy. Securities classified within level 3 include certain residual
 interests in securitizations and other less liquid securities.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Impaired Loans.
 All of the Companys loans are evaluated individually for impairment.
 Estimates of fair value is determined based on a variety of information,
 including the use of available appraisals, estimates of market value by
 licensed appraisers or local real estate brokers and the knowledge and
 experience of the Companys management related to values of properties in the
 Companys market areas. Management takes into consideration the type,
 location and occupancy of the property as well as current economic conditions
 in the area the property is located in assessing estimates of fair value.
 Accordingly, fair value estimates for impaired loans is classified as Level
 3.                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Fair
 Values of Financial Instruments. The following
 methods and assumptions were used by the Company in estimating fair values of
 financial instruments disclosed herein:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash and Cash
 Equivalents. The carrying amounts of cash and
 cash equivalents approximate their fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Securities.
 Fair values for securities are based on the framework for measuring fair
 value established by SFAS 157.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Federal Home Loan
 Bank Stock. Fair
 value of the Companys investment in Federal Home Loan Bank stock is based on
 its redemption value, which is its cost of $100 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Loans.
 For variable-rate loans that reprice frequently and have no significant
 change in credit risk, fair values are based on carrying values. Fair values
 for certain fixed-rate mortgage (e.g. one-to-four family residential),
 commercial real estate and commercial loans are estimated using discounted
 cash flow analyses, using interest rates currently being offered for loans
 with similar terms to borrowers of similar credit quality.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

(continued)

F-14

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Fair Values of Financial Instruments,
 Continued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Deposit Liabilities.
 The fair values disclosed for demand, NOW, money-market and savings deposits
 are, by definition, equal to the amount payable on demand at the reporting
 date (that is, their carrying amounts). Fair values for fixed-rate time
 deposits are estimated using a discounted cash flow calculation that applies
 interest rates currently being offered on time deposits to a schedule of
 aggregated expected monthly maturities of time deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Accrued Interest
 Receivable. The
 carrying amounts of accrued interest approximate their fair values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Federal Home Loan
 Bank Advances, Junior Subordinated Debenture and Other Borrowings. Fair values of Federal Home Loan Bank
 advances, junior subordinated debenture and other borrowings which consist of
 securities sold under an agreement to repurchase are estimated using
 discounted cash flow analysis based on the Companys current incremental
 borrowings rates for similar types of borrowings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Off-Balance-Sheet
 Financial Instruments. Fair values for
 off-balance-sheet lending commitments are based on fees currently charged to
 enter into similar agreements, taking into account the remaining terms of the
 agreements and the counterparties credit standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Comprehensive
 Income. Accounting principles generally require that
 recognized revenue, expenses, gains and losses be included in net earnings.
 Although certain changes in assets and liabilities, such as unrealized gains
 and losses on available for sale securities, are reported as a separate
 component of the equity section of the consolidated balance sheets, such
 items along with net earnings, are components of comprehensive income. The
 only component of other comprehensive income is the net change in unrealized
 loss on securities available for sale for the year ended December 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Recent
 Accounting Pronouncements. In December 2007, the FASB issued SFAS
 No. 141(R), Business Combinations
 (SFAS 141(R)). SFAS 141(R) is effective for the Companys financial
 statements for the year and interim periods within the year beginning January
 1, 2009. SFAS 141(R) requires the acquiring entity in a business combination
 to recognize all (and only) the assets acquired and liabilities assumed in
 the transaction; establishes the acquisition date fair value as the
 measurement objective for all assets acquired and liabilities assumed; and
 requires the acquirer to disclose to investors and other users all of the
 information they need to evaluate and understand the nature and financial
 effect of the business combination. Acquisition related costs including
 finders fees, advisory, legal, accounting valuation and other professional
 and consulting fees are required to be expensed as incurred. The adoption of
 SFAS 141(R) had no current effect on the Companys financial condition or results
 of operations.

(continued)

F-15

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Recent
 Accounting Pronouncements, Continued. In December 2007, the FASB issued SFAS
 No.160, Non-controlling Interests in
 Consolidated Financial Statements (SFAS 160). SFAS 160 requires
 the Company to establish accounting and reporting standards for the
 non-controlling interest in a subsidiary and for the deconsolidation of a
 subsidiary. SFAS 160 is effective for the Companys financial statements for
 the year and interim periods within the year beginning January 1, 2009. The
 adoption of SFAS 160 had no effect on the Company.                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and
 Hedging Activities (SFAS 161). This standard requires enhanced
 disclosures regarding derivative instruments and hedging activities so as to
 enable investors to better understand their effects on an entitys financial
 position, financial performance, and cash flows. SFAS 161 is effective for
 the Companys financial statements for the year and interim periods within
 the year beginning January 1, 2009. The Company does not engage in trading or
 hedging activities, nor does it invest in interest rate derivatives or enter
 into interest rate swaps. Accordingly, the adoption of SFAS 161 had no effect
 on its financial statements
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles
 (SFAS 162). This statement identifies the sources of accounting principles
 and the framework for selecting the principles to be used in the preparation
 of financial statements of non-governmental entities that are presented in
 conformity with generally accepted accounting principles (GAAP) in the
 United States. This Statement was effective in December 2008. The adoption of
 SFAS 162 had no effect on the Company.                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In September 2008, the FASB issued FSP No. 133-1 and FIN 45-4,
Disclosures about Credit Derivatives and Certain
 Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation
 No. 45; and Clarification of the Effective Date of FASB Statement No. 161
 (FSP 133-1). FSP 133-1 requires expanded disclosures about credit
 derivatives and guarantees. The expanded disclosure requirements for FSP
 133-1 were effective for the Companys financial statements for the year
 ending December 31, 2008. The adoption of FSP 133-1 had no effect on the
 Company.                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether
Instruments Granted in
 Share-Based Payment Transactions Are Participating Securities
 (FSP 03-6-1). FSP 03-6-1 defines unvested share-based payment awards that
 contain non-forfeitable rights to dividends as participating securities that
 should be included in computing earnings per share (EPS) using the two-class
 method under SFAS No. 128, Earnings per
 Share. FSP 03-6-1 is effective for the Companys financial
 statements for the year and interim periods within the year beginning January
 1, 2009. Additionally, all prior-period EPS data shall be adjusted
 retrospectively. The adoption of FSP 03-6-1 had no effect on the Company.                    

(continued)

F-16

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Recent Accounting
 Pronouncements, Continued. In February 2008, the FASB issued FSP
 No. FAS 140-3, Accounting for Transfers of
 Financial Assets and Repurchase Financing Transactions (FSP
 140-3). FSP 140-3 requires that an initial transfer of a financial asset and
 a repurchase financing that was entered into contemporaneously with, or in
 contemplation of, the initial transfer be evaluated together as a linked
 transaction under SFAS 140, unless certain criteria are met. FSP 140-3 is
 effective for the Companys financial statements for the year and interim
 periods within the year beginning January 1, 2009. The adoption of FSP 140-3
 had no effect on the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Reclassifications. Certain amounts in the 2007
 consolidated financial statements have been reclassified to conform to the
 2008 presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Securities have been classified according to managements intent. The
 carrying amount of securities and approximate fair values are as follows (in
 thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                             |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|---------------------------- |  | --------------- | ------ | ------------------------ | - | ------------------------- |  | ----------- | ------ | - | - | ------ | 
|                             |  | Amortized
 Cost |        | Gross
 Unrealized
 Gains |   | Gross
 Unrealized
 Losses |  | Fair
 Value |       
|At December 31, 2008:        |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Securities Held to Maturity: |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Mortgage-backed securities   |  | $               | 82,108 |                          | $ | 886                       |  | $           | (4,338 | ) | $ | 78,656 | 
|State of Israel bond         |  |                 | 100    |                          |   | -                         |  |             | -      |   |   | 100    | 
|                             |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|                             |  | $               | 82,208 |                          | $ | 886                       |  | $           | (4,338 | ) | $ | 78,756 | 
|                             |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Security Available for Sale- |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Mutual fund                  |  | $               | 250    |                          | $ | -                         |  | $           | (6     | ) | $ | 244    | 
|                             |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|At December 31, 2007:        |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Securities Held to Maturity: |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Mortgage-backed securities   |  | $               | 58,371 |                          | $ | 229                       |  | $           | (583   | ) | $ | 58,017 | 
|State of Israel bond         |  |                 | 100    |                          |   | -                         |  |             | -      |   |   | 100    | 
|                             |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|                             |  | $               | 58,471 |                          | $ | 229                       |  | $           | (583   | ) | $ | 58,117 | 
|                             |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Security Available for Sale- |  |                 |        |                          |   |                           |  |             |        |   |   |        | 
|Mutual fund                  |  | $               | 250    |                          | $ | -                         |  | $           | (6     | ) | $ | 244    | 

(continued)

F-17

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes
to Consolidated Financial Statements, Continued

|    |                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|(2) | Securities, Continued                                                                                                               
|    | Available for sale securities at December 31, 2008 measured at fair
 value on a recurring basis are summarized below (in thousands):

|                               |  |                                 |     |                                                              |                               |                                            |  |                                        |   |  |  |   | 
|------------------------------ |  | ------------------------------- | --- | ------------------------------------------------------------ | ----------------------------- | ------------------------------------------ |  | -------------------------------------- | - |  |  | - | 
|                               |  |                                 |     |                                                              | Fair Value Measurements Using |                                           
|                               |  | FairValueAs ofDecember
 31,2008 |     | Quoted PricesIn
 ActiveMarkets
 forIdenticalAssets(Level
 1) |                               | SignificantOtherObservableInputs(Level
 2) |  | SignificantUnobservableInputs(Level 3) |  
|Available for sale
 securities |  | $                               | 244 |                                                              |                               | 244                                        |  |                                        | - |  |  | - | 

| |                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | There were
 no securities sold during the years ended December 31, 2008 or 2007.                                                                                                                                       
| |                                                                                                                                                                                                                        
| | Securities with gross unrealized losses at December 31, 2008,
 aggregated by investment category and length of time that individual
 securities have been in a continuous loss position, is as follows (in
 thousands):

|                             |  |                           |        |                    |   |                         |  |           |        |   |   |        | 
|---------------------------- |  | ------------------------- | ------ | ------------------ | - | ----------------------- |  | --------- | ------ | - | - | ------ | 
|                             |  | Less Than Twelve Months   |        | Over Twelve Months |  
|                             |  | Gross
 Unrealized
 Losses |        | Fair
 Value        |   | GrossUnrealized
 Losses |  | FairValue |       
|Securities Held to Maturity- |  |                           |        |                    |   |                         |  |           |        |   |   |        | 
|Mortgage-backed securities   |  | $                         | (1,647 | )                  | $ | 21,119                  |  | $         | (2,691 | ) | $ | 26,814 | 
|                            
|Security Available for Sale- |  |                           |        |                    |   |                         |  |           |        |   |   |        | 
|Mutual fund                  |  | $                         | -      |                    | $ | -                       |  | $         | (6     | ) | $ | 244    | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Management evaluates securities for other-than-temporary impairment
 at least on a quarterly basis, and more frequently when economic or market
 concerns warrant such evaluation. Consideration is given to (1) the length of
 time and the extent to which the fair value has been less than cost, (2) the
 financial condition and near-term prospects of the issuer, and (3) the intent
 and ability of the Company to retain its investment in the issuer for a
 period of time sufficient to allow for any anticipated recovery in fair
 value.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | The unrealized losses on twenty investment securities were caused by
 market conditions. It is expected that the securities would not be settled at
 a price less than the par value of the investments. Because the decline in
 fair value is attributable to market conditions and not credit quality, and
 because the Company has the ability and intent to hold these investments
 until a market price recovery or maturity, these investments are not
 considered other-than-temporarily impaired.                                            

(continued)

F-18

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes
to Consolidated Financial Statements, Continued

|    |                                                        
|--- | -------------------------------------------------------
|(3) | Loans                                                  
|    | The
 components of loans are as follows (in thousands):

|                                           |  |                 |         |      |   |         |  
|------------------------------------------ |  | --------------- | ------- | ---- | - | ------- | -
|                                           |  | At December 31, |        
|                                           |  | 2008            |         | 2007 |  
|                                           |  |                 |         |      |   |         |  
|Residential
 real estate                   |  | $               | 58,693  |      | $ | 65,908  |  
|Multi-family
 real estate                  |  |                 | 9,588   |      |   | 10,275  |  
|Commercial
 real estate                    |  |                 | 73,541  |      |   | 75,777  |  
|Land and
 construction                     |  |                 | 19,223  |      |   | 21,093  |  
|Consumer                                   |  |                 | 878     |      |   | 15      |  
|                                           |  |                 |         |      |   |         |  
|Total loans                                |  |                 | 161,923 |      |   | 173,068 |  
|                                           | 
|Add
 (deduct):                             |  |                 |         |      |   |         |  
|Net deferred loan fees, costs and premiums |  |                 | 689     |      |   | 970     |  
|Loan discounts                             |  |                 | (7      | )    |   | (23     | )
|Allowance for loan losses                  |  |                 | (1,906  | )    |   | (692    | )
|                                           | 
|Loans, net                                 |  | $               | 160,699 |      | $ | 173,323 |  

| |                                                                                    
| | -----------------------------------------------------------------------------------
| | An analysis
 of the change in the allowance for loan losses follows (in thousands):

|                           |  |                         |       |      |   |      |  
|-------------------------- |  | ----------------------- | ----- | ---- | - | ---- | -
|                           |  | Year Ended December 31, |      
|                           |  | 2008                    |       | 2007 |  
|                           |  |                         |       |      |  
|Beginning
 balance         |  | $                       | 692   |      | $ | 974  |  
|Charge-offs                |  |                         | (160  | )    |   | (758 | )
|Provision
 for loan losses |  |                         | 1,374 |      |   | 476  |  
|                           | 
|Ending balance             |  | $                       | 1,906 |      | $ | 692  |  

| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Information about impaired loans, all of which are collateral
 dependent, is as follows (in thousands):

|                                                            |  |                 |        |      |   |   | 
|----------------------------------------------------------- |  | --------------- | ------ | ---- | - | - | 
|                                                            |  | At December 31, |       
|                                                            |  | 2008            |        | 2007 |  
|Loans
 identified as impaired:                              |  |                 |        |      |   |   | 
|Gross loans with no related allowance for
 losses           |  | $               | 4,001  |      | $ | - | 
|Gross loans with related allowance for loan losses
recorded |  |                 | 6,937  |      |   | - | 
|Less: Allowance on these loans                              |  |                 | (1,120 | )    |   | - | 
|                                                            | 
|Net investment in impaired loans                            |  | $               | 9,818  |      | $ | - | 

(continued)

F-19

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes
to Consolidated Financial Statements, Continued

|    |                 
|--- | ----------------
|(3) | Loans, Continued

| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | The average net investment in impaired loans and interest income
 recognized and received on impaired loans is as follows (in thousands):

|                                              |  |                         |       |      |   |       | 
|--------------------------------------------- |  | ----------------------- | ----- | ---- | - | ----- | 
|                                              |  | Year Ended December 31, |      
|                                              |  | 2008                    |       | 2007 |  
|                                              |  |                         |       |      |   |       | 
|Average
 investment in impaired loans         |  | $                       | 3,240 |      | $ | 1,581 | 
|Interest
 income recognized on impaired loans |  | $                       | -     |      | $ | 39    | 
|Interest
 income received on impaired loans   |  | $                       | -     |      | $ | 39    | 

| |                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Impaired collateral-dependent loans are carried at the lower of cost
 or fair value. At December 31, 2008, those impaired collateral-dependent
 loans which are measured at fair value or a nonrecurring basis are as follows
 (in thousands):

|               |  |               |       |         |  |         |  |         |   |             |  |                                      |  |  |        |   |  |        |  
|-------------- |  | ------------- | ----- | ------- |  | ------- |  | ------- | - | ----------- |  | ------------------------------------ |  |  | ------ | - |  | ------ | -
|               |  | FairValue (1) |       | Level 1 |  | Level 2 |  | Level 3 |   | TotalLosses |  | LossesRecorded
 inEarningsDuring2008 | 
|               |  |               |       |         |  |         |  |         |   |             |  |                                      |  |  |        |   |  |        |  
|Impaired loans |  | $             | 5,817 |         |  | -       |  |         | - |             |  | 5,817                                |  |  | (1,120 | ) |  | (1,120 | )

| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) In addition, loans with a carrying
 value of $4.0 million were measured for impairment using Level 3 inputs and
 had a fair value in excess of carrying value.
| |                                                                                                                                                                   
| | Nonaccrual
 and past due loans were as follows (in thousands):                                                                                                    

|                                                           |  |                 |       |      |   |     | 
|---------------------------------------------------------- |  | --------------- | ----- | ---- | - | --- | 
|                                                           |  | At December 31, |      
|                                                           |  | 2008            |       | 2007 |  
|                                                           |  |                 |       |      |   |     | 
|Nonaccrual
 loans                                          |  | $               | 5,086 |      | $ | 245 | 
|Past due
 ninety days or more, but still accruing interest |  | $               | -     |      | $ | -   | 

(continued)

F-20

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes
to Consolidated Financial Statements, Continued

|    |                                                             
|--- | ------------------------------------------------------------
|(4) | Premises and Equipment                                      
|    | A summary of
 premises and equipment follows (in thousands):

|                                                |  |                 |        |      |   |       |  
|----------------------------------------------- |  | --------------- | ------ | ---- | - | ----- | -
|                                                |  | At December 31, |       
|                                                |  | 2008            |        | 2007 |  
|                                                |  |                 |        |      |   |       |  
|Land                                            |  | $               | 1,171  |      | $ | 1,171 |  
|Buildings
 and improvements                     |  |                 | 1,959  |      |   | 1,940 |  
|Furniture,
 fixtures and equipment              |  |                 | 997    |      |   | 987   |  
|Leasehold
 improvements                         |  |                 | 119    |      |   | 114   |  
|                                               
|Total, at cost                                  |  |                 | 4,246  |      |   | 4,212 |  
|                                               
|Less accumulated depreciation and
 amortization |  |                 | (1,152 | )    |   | (963  | )
|                                               
|Premises and equipment, net                     |  | $               | 3,094  |      | $ | 3,249 |  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On February 1, 2007, the Company entered into a sale/leaseback
 transaction for its Galt Ocean Mile branch facility. No gain or loss was
 recognized on this transaction.                                                                                                                                                                                                                                                                                                                                                      
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | The Company currently leases two branch facilities under operating
 leases. One lease contains renewal options and requires the Company to pay an
 allowable share of common area maintenance and real estate taxes. The other
 lease only requires the Company to pay real estate taxes. Rent expense under
 operating leases during the years ended December 31, 2008 and 2007 was
 $128,000 and $119,000 respectively. At December 31, 2008, the future minimum
 lease payments are approximately as follows (in thousands):

|            |  |   |        |  | 
|----------- |  | - | ------ |  | 
|Year Ending |  |   | Amount | 
|           
|2009        |  | $ | 133    | 
|2010        |  |   | 133    | 
|2011        |  |   | 133    | 
|2012        |  |   | 84     | 
|2013        |  |   | 75     | 
|            |  | $ | 558    | 

(continued)

F-21

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Deposits                                                                                                                                                                       
|    | The aggregate amount of time deposits with
 a minimum denomination of $100,000, was approximately $36.9 million and $38.9
 million at December 31, 2008 and 2007, respectively.
|    |                                                                                                                                                                                
|    | A schedule of maturities of time deposits
 at December 31, 2008 follows (in thousands):                                                                                        

|                          |  |  |        |        | 
|------------------------- |  |  | ------ | ------ | 
|Year Ending
 December 31, |  |  | Amount |       
|                          |  |  |        |        | 
|2009                      |  |  | $      | 72,989 | 
|2010                      |  |  |        | 7,918  | 
|2011                      |  |  |        | 1,207  | 
|2012                      |  |  |        | 352    | 
|2013                      |  |  |        | 1,701  | 
|                          |  |  |        |        | 
|                          |  |  | $      | 84,167 | 

|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(6) | Federal Home Loan Bank Advances and Junior Subordinated Debenture                                                         
|    | The maturities and interest rates on the Federal Home Loan Bank
 (FHLB) advances were as follows (dollars in thousands):

|                                    |       |            |  |                |  |                 |      |  |   |        |  |   |        | 
|----------------------------------- | ----- | ---------- |  | -------------- |  | --------------- | ---- |  | - | ------ |  | - | ------ | 
|Maturity
 Year Ending
 December 31, |       | Call
 Date |  | Interest
 Rate |  | At December 31, |     
|                                    |       |            | 
|                                    |       |            |  | 2008           |  |                 | 2007 | 
|                                   
|                                    | Daily |            |  | -              |  | 4.40            | %    |  | $ | -      |  | $ | 700    | 
|                                    | 2009  |            |  | -              |  | 4.92            |      |  |   | 1,000  |  |   | 1,000  | 
|                                    | 2009  |            |  | -              |  | 4.99            |      |  |   | 5,000  |  |   | 5,000  | 
|                                    | 2009  |            |  | -              |  | 4.95            |      |  |   | 5,000  |  |   | 5,000  | 
|                                    | 2010  |            |  | -              |  | 3.16            |      |  |   | 5,000  |  |   | -      | 
|                                    | 2010  |            |  | -              |  | 3.12            |      |  |   | 5,000  |  |   | -      | 
|                                    | 2012  |            |  | 2009           |  | 4.75            |      |  |   | 4,000  |  |   | 4,000  | 
|                                    | 2013  |            |  | 2008           |  | 3.42            |      |  |   | -      |  |   | 2,000  | 
|                                    | 2013  |            |  | 2008           |  | 3.09            |      |  |   | -      |  |   | 3,000  | 
|                                    | 2013  |            |  | 2008           |  | 2.80            |      |  |   | -      |  |   | 1,950  | 
|                                    | 2013  |            |  | 2008           |  | 2.56            |      |  |   | -      |  |   | 3,000  | 
|                                    | 2013  |            |  | -              |  | 3.44            |      |  |   | 3,000  |  |   | 3,000  | 
|                                    | 2013  |            |  | 2011           |  | 3.00            |      |  |   | 5,000  |  |   | -      | 
|                                    | 2013  |            |  | 2011           |  | 3.64            |      |  |   | 7,500  |  |   | -      | 
|                                    | 2014  |            |  | 2009           |  | 3.64            |      |  |   | 8,000  |  |   | 8,000  | 
|                                    | 2016  |            |  | 2009           |  | 4.51            |      |  |   | 5,000  |  |   | 5,000  | 
|                                    | 2016  |            |  | 2009           |  | 4.65            |      |  |   | 8,000  |  |   | 8,000  | 
|                                    | 2016  |            |  | 2009           |  | 4.44            |      |  |   | 5,600  |  |   | 5,600  | 
|                                    | 2017  |            |  | 2009           |  | 4.38            |      |  |   | 1,600  |  |   | 1,600  | 
|                                    |       |            |  |                |  |                 |      |  |   |        |  |   |        | 
|                                    |       |            |  |                |  |                 |      |  | $ | 68,700 |  | $ | 56,850 | 

(continued)

F-22

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6) | Federal Home Loan Bank Advances and Junior Subordinated Debenture,
 Continued                                                                                                                                                                                                                                                                                                                                                              
|    | Certain of the above advances are callable by the FHLB in the year
 indicated.                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | At December 31, 2008 and 2007, the FHLB advances were collateralized
 by a blanket lien on qualifying residential one-to-four family mortgage loans,
 commercial and multi-family real estate loans, second mortgage loans and all
 of the Companys Federal Home Loan Bank stock.                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On September 30, 2004, the Company issued a $5,155,000 junior
 subordinated debenture to an unconsolidated subsidiary. The debenture has a
 term of thirty years. The interest rate is fixed at 6.4% for the first five
 years, and thereafter, the coupon rate will float quarterly at the
 three-month LIBOR rate plus 2.45%. The junior subordinated debenture, due in
 2034, is redeemable in certain circumstances after October 2009.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(7) | Other Borrowings                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Other borrowings consist of securities sold under an agreement to
 repurchase. The securities sold under the agreement to repurchase were
 delivered to the broker-dealer who arranged the transactions. Information
 concerning the securities sold under an agreement to repurchase is summarized
 as follows (dollars in thousands):                                                                                                    

|                                                   |  |                          |        |      |   |        |  
|-------------------------------------------------- |  | ------------------------ | ------ | ---- | - | ------ | -
|                                                   |  | Year Ended December
 31, |       
|                                                   |  | 2008                     |        | 2007 |  
|                                                   |  |                          |        |      |   |        |  
|Balance at
 year end                               |  | $                        | 41,800 |      | $ | 28,900 |  
|Average
 balance during the year                   |  | $                        | 39,051 |      | $ | 26,971 |  
|Average
 interest rate during the year             |  |                          | 4.35   | %    |   | 4.72   | %
|Maximum
 month-end balance during the year         |  | $                        | 41,800 |      | $ | 31,900 |  
|Securities
 held to maturity pledged as collateral |  | $                        | 55,636 |      | $ | 33,675 |  

| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | The maturities and interest rates on securities sold under an
 agreement to repurchase are as follows (dollars in thousands):

|                                 |                |      |                 |      |   |        |  |   |        | 
|-------------------------------- | -------------- | ---- | --------------- | ---- | - | ------ |  | - | ------ | 
|MaturingYear Ended
 December 31, |                |      |                 |      |  
|                                 | Interest
 Rate |      | At December 31, |     
|                                 |                | 2008 |                 | 2007 |  
|                                
|2012                             |                |      | 4.60%           |      | $ | 6,000  |  | $ | 6,000  | 
|2012                             |                |      | 4.63%           |      |   | 4,500  |  |   | 4,500  | 
|2012                             |                |      | 4.69%           |      |   | 8,000  |  |   | 8,000  | 
|2012                             |                |      | 4.71%           |      |   | 4,600  |  |   | 4,600  | 
|2012                             |                |      | 4.64%           |      |   | 5,800  |  |   | 5,800  | 
|2013                             |                |      | 3.19%           |      |   | 6,500  |  |   | -      | 
|2013                             |                |      | 3.20%           |      |   | 6,400  |  |   | -      | 
|                                
|                                 |                |      |                 |      | $ | 41,800 |  | $ | 28,900 | 

(continued)

F-23

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | Other Borrowings, Continued                                                                                                                                                                                            
|    | At December 31, 2008, the Company also had $6 million available under
 a line of credit with its correspondent bank. There were no amounts
 outstanding in connection with this agreement at December 31, 2008 or 2007.
|    |                                                                                                                                                                                                                        
|(8) | Financial Instruments                                                                                                                                                                                                  
|    | The estimated fair values of the Companys financial instruments
were
 as follows (in thousands):                                                                                                                      

|                                        |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|--------------------------------------- |  | -------------------- | ------- | -------------------- | - | ---------------- |  | ----------- | ------- |  | - | ------- | 
|                                        |  | At December 31, 2008 |         | At December 31, 2007 |  
|                                        |  | Carrying
 Amount     |         | Fair
 Value          |   | Carrying
 Amount |  | Fair
 Value |        
|                                        |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|Financial
 assets:                      |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|Cash and cash equivalents               |  | $                    | 3,220   |                      | $ | 3,220            |  | $           | 701     |  | $ | 701     | 
|Securities held to maturity             |  |                      | 82,208  |                      |   | 78,756           |  |             | 58,471  |  |   | 58,117  | 
|Security available for sale             |  |                      | 244     |                      |   | 244              |  |             | 244     |  |   | 244     | 
|Loans                                   |  |                      | 160,699 |                      |   | 160,684          |  |             | 173,323 |  |   | 172,860 | 
|Federal Home Loan Bank stock            |  |                      | 3,526   |                      |   | 3,526            |  |             | 2,965   |  |   | 2,965   | 
|Accrued interest receivable             |  |                      | 1,277   |                      |   | 1,277            |  |             | 1,448   |  |   | 1,448   | 
|                                        |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|Financial
 liabilities:                 |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|Deposit liabilities                     |  |                      | 114,925 |                      |   | 115,807          |  |             | 125,034 |  |   | 125,134 | 
|Federal Home Loan Bank advances         |  |                      | 68,700  |                      |   | 71,058           |  |             | 56,850  |  |   | 56,346  | 
|Other borrowings                        |  |                      | 41,800  |                      |   | 43,714           |  |             | 28,900  |  |   | 29,317  | 
|Junior subordinated debenture           |  |                      | 5,155   |                      |   | 4,871            |  |             | 5,155   |  |   | 5,083   | 
|Off-balance sheet financial instruments |  |                      | -       |                      |   | -                |  |             | -       |  |   | -       | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company is party to financial instruments with off-balance-sheet
 risk in the normal course of business to meet the financing needs of its
 customers. These financial instruments are commitments to extend credit and
 may involve, to varying degrees, elements of credit and interest-rate risk in
 excess of the amount recognized in the consolidated balance sheet. The
 contract amounts of these instruments reflect the extent of involvement the
 Company has in these financial instruments.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The Companys exposure to credit loss in the event of nonperformance
 by the other party to the financial instrument for commitments to extend
 credit is represented by the contractual amount of those instruments. The
 Company uses the same credit policies in making commitments as it does for
 on-balance-sheet instruments.                                                                                                                                                                        

(continued)

F-24

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Financial Instruments, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Commitments to extend credit are agreements to lend to a customer as
 long as there is no violation of any condition established in the contract.
 Commitments generally have fixed expiration dates or other termination clauses
 and may require payment of a fee. Because some of the commitments are
 expected to expire without being drawn upon, the total commitment amounts do
 not necessarily represent future cash requirements. The Company evaluates
 each customers credit worthiness on a case-by-case basis. The amount of
 collateral obtained, if deemed necessary by the Company, upon extension of
 credit, is based on managements credit evaluation of the counterparty.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Commitments to extend credit typically result in loans with a market
 interest rate when funded. A summary of the amounts of the Companys
 financial instruments with off-balance-sheet risk at December 31, 2008
 follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                              |  |                  |       | 
|----------------------------- |  | ---------------- | ----- | 
|                              |  | Contract
 Amount |      
|                             
|Commitments
 to extend credit |  | $                | 2,000 | 

|     |                                                                                                                                                                                                                                                                                                                                                                     
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9)  | Credit Risk                                                                                                                                                                                                                                                                                                                                                         
|     | The Company grants the majority of its loans to borrowers throughout
 Broward and portions of Palm Beach and Miami-Dade Counties, Florida. Although
 the Company has a diversified loan portfolio, a significant portion of its
 borrowers ability to honor their contracts is dependent upon the economy in
 Broward, Palm Beach and Miami-Dade Counties, Florida.
|     |                                                                                                                                                                                                                                                                                                                                                                     
|(10) | Income Taxes                                                                                                                                                                                                                                                                                                                                                        
|     | Income taxes consisted of the following (in thousands):                                                                                                                                                                                                                                                                                                             

|               |  |                         |      |      |   |       |  
|-------------- |  | ----------------------- | ---- | ---- | - | ----- | -
|               |  | Year Ended December 31, |     
|               |  | 2008                    |      | 2007 |  
|               |  |                         |      |      |   |       |  
|Current:       |  |                         |      |      |   |       |  
|Federal        |  | $                       | 784  |      | $ | 866   |  
|State          |  |                         | 133  |      |   | 150   |  
|               |  |                         |      |      |   |       |  
|Total current  |  |                         | 917  |      |   | 1,016 |  
|              
|Deferred:      |  |                         |      |      |   |       |  
|Federal        |  |                         | (516 | )    |   | (10   | )
|State          |  |                         | (88  | )    |   | (3    | )
|               |  |                         |      |      |   |       |  
|Total deferred |  |                         | (604 | )    |   | (13   | )
|               |  |                         |      |      |   |       |  
|Total          |  | $                       | 313  |      | $ | 1,003 |  

(continued)

F-25

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Income Taxes, Continued                                                                                                                                     
|     | The reasons for the differences between the
 statutory Federal income tax rate and the effective tax rate are summarized
 as follows (dollars in thousands):

|                                        |  |                         |     |                        |  |        |   |                        |       |   |  |      |  
|--------------------------------------- |  | ----------------------- | --- | ---------------------- |  | ------ | - | ---------------------- | ----- | - |  | ---- | -
|                                        |  | Year Ended December 31, |    
|                                        |  | 2008                    |     | 2007                   | 
|                                        |  | Amount                  |     | % of
 Pretax
 Earnings |  | Amount |   | % of
 Pretax
 Earnings |      
|                                        |  |                         |     |                        |  |        |   |                        |       |   |  |      |  
|Income taxes
 at statutory rate         |  | $                       | 283 |                        |  | 34.0   | % | $                      | 933   |   |  | 34.0 | %
|Increase
 (decrease) resulting from:    |  |                         |     |                        |  |        |   |                        |       |   |  |      |  
|State taxes, net of Federal tax benefit |  |                         | 30  |                        |  | 3.6    |   |                        | 97    |   |  | 3.5  |  
|Other                                   |  |                         | -   |                        |  | -      |   |                        | (27   | ) |  | (1.0 | )
|                                        |  |                         |     |                        |  |        |   |                        |       |   |  |      |  
|                                        |  | $                       | 313 |                        |  | 37.6   | % | $                      | 1,003 |   |  | 36.5 | %

| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The tax effects of temporary differences
 that give rise to significant portions of the deferred tax assets and
 deferred tax liabilities are presented below (in thousands).

|                                                |  |                 |     |      |   |      |  
|----------------------------------------------- |  | --------------- | --- | ---- | - | ---- | -
|                                                |  | At December 31, |    
|                                                |  | 2008            |     | 2007 |  
|                                                |  |                 |     |      |   |      |  
|Deferred tax assets:                            |  |                 |     |      |   |      |  
|Allowance for loan losses                       |  | $               | 638 |      | $ | 186  |  
|Premises and equipment                          |  |                 | 22  |      |   | -    |  
|Unrealized loss on security available for
 sale |  |                 | 2   |      |   | 2    |  
|                                                |  |                 |     |      |   |      |  
|Deferred tax assets                             |  |                 | 662 |      |   | 188  |  
|                                                |  |                 |     |      |   |      |  
|Deferred tax liabilities:                       |  |                 |     |      |   |      |  
|Loan costs                                      |  |                 | (31 | )    |   | (39  | )
|Accrual to cash adjustment                      |  |                 | -   |      |   | (62  | )
|Premises and equipment                          |  |                 | -   |      |   | (104 | )
|Other                                           |  |                 | (61 | )    |   | (17  | )
|                                                |  |                 |     |      |   |      |  
|Deferred tax liabilities                        |  |                 | (92 | )    |   | (222 | )
|                                                |  |                 |     |      |   |      |  
|Net deferred tax asset (liability)              |  | $               | 570 |      | $ | (34  | )

|     |                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                  
|     | The Company has entered into transactions
 with its executive officers, directors and their affiliates in the ordinary
 course of business. There were loans to related parties at December 31, 2008
 and 2007 of approximately $8,292,000 and $3,810,000, respectively. At
 December 31, 2008 and 2007, these same related parties had approximately
 $1,488,000 and $1,436,000, respectively, on deposit with the Company.

(continued)

F-26

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(12) | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     | The Company established an Incentive Stock
 Option Plan (the Plan) for officers, directors and employees of the Company
 and reserved 600,686 (amended) shares of common stock for the plan. Both
 incentive stock options and nonqualified stock options may be granted under
 the plan. The exercise price of the stock options is determined by the board
 of directors at the time of grant, but cannot be less than the fair market value
 of the common stock on the date of grant. The options vest over three and
 five years. However, the Companys board of directors authorized the
 immediate vesting of all stock options outstanding as of December 29, 2005 in
 order to reduce noncash compensation expense that would have been recorded in
 its consolidated statements of earnings in future years upon adoption of SFAS
 123(R) in January 2006. The options must be exercised within ten years from
 the date of grant. At December 31, 2008, 14,239 options were available for
 grant.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     | A summary of the activity in the Companys
 stock option plan is as follows. All option amounts reflect the 5% stock
 dividends declared in May 2008 and 2007 (dollars in thousands, except share
 amounts):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                          |  |                    |         |                                     |   |                                                  |  |                             |  |   |    |  | 
|----------------------------------------- |  | ------------------ | ------- | ----------------------------------- | - | ------------------------------------------------ |  | --------------------------- |  | - | -- |  | 
|                                          |  | Number of
 Options |         | Weighted-
 Average
 Exercise
 Price |   | Weighted-
 Average
 Remaining
 Contractual
 Term |  | Aggregate
 Intrinsic
 Value | 
|                                          |  |                    |         |                                     |   |                                                  |  |                             |  |   |    |  | 
|Outstanding at December 31, 2006          |  |                    | 514,805 |                                     | $ | 7.66                                             |  |                             |  |   |    |  | 
|Exercised                                 |  |                    | (7,166  | )                                   |   | 5.67                                             |  |                             |  |   |    |  | 
|Forfeited                                 |  |                    | (4,052  | )                                   |   | 10.00                                            |  |                             |  |   |    |  | 
|                                          |  |                    |         |                                     |   |                                                  |  |                             |  |   |    |  | 
|Outstanding at December 31, 2007 and 2008 |  |                    | 503,587 |                                     | $ | 7.68                                             |  |                             |  |   |    |  | 
|                                          |  |                    |         |                                     |   |                                                  |  |                             |  |   |    |  | 
|Exercisable at December 31, 2008          |  |                    | 503,587 |                                     | $ | 7.68                                             |  | 4.7 years                   |  | $ | 35 | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The total intrinsic value of options
 exercised during the year ended December 31, 2007 was $16,675. There was no
 tax benefit recognized in 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Effective January 1, 2002, the Board of
 Directors adopted a nonemployee director compensation and stock purchase plan
 under which each outside director was required to purchase Company stock with
 compensation for board meetings at a price no less than fair market value. A
 total of 15,941 shares (as adjusted to reflect the 5% stock dividend declared
 in May 2007) were authorized for issuance to outside directors under this
 plan. A total of 4,172 shares of common stock were issued to outside
 directors under this plan during the year ended December 31, 2007. This plan
 was terminated effective January 1, 2008.

(continued)

F-27

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(13) | Regulatory Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | The Bank is subject to various regulatory
 capital requirements administered by the regulatory banking agencies. Failure
 to meet minimum capital requirements can initiate certain mandatory and
 possibly additional discretionary actions by regulators that, if undertaken,
 could have a direct material effect on the Companys and Banks financial
 statements. Under capital adequacy guidelines and the regulatory framework
 for prompt corrective action, the Bank must meet specific capital guidelines
 that involve quantitative measures of their assets, liabilities, and certain
 off-balance-sheet items as calculated under regulatory accounting practices.
 The capital amounts and classification are also subject to qualitative
 judgments by the regulators about components, risk weightings, and other
 factors.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | Quantitative measures established by
 regulation to ensure capital adequacy require the Bank to maintain minimum
 amounts and percentages (set forth in the following table) of total and Tier
 1 capital (as defined in the regulations) to risk-weighted assets (as
 defined) and of Tier 1 capital (as defined) to average assets (as defined).
 Management believes, as of December 31, 2008, the Bank met all capital
 adequacy requirements to which they are subject.                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | As of December 31, 2008, the most recent
 notification from the regulatory authorities categorized the Bank as well
 capitalized under the regulatory framework for prompt corrective action. To
 be categorized as well capitalized, an institution must maintain minimum
 total risk-based, Tier I risk-based, and Tier I leverage percentages as set
 forth in the following tables. There are no conditions or events since that
 notification that management believes have changed the Banks category. The
 Banks actual capital amounts and percentages are also presented in the table
 (dollars in thousands).                                                                                                                                                                                                                   

|                                       |  |        |        |                                |  |                                                                              |   |   |        |        |  |      |   |   |        |  |  |       |  
|-------------------------------------- |  | ------ | ------ | ------------------------------ |  | ---------------------------------------------------------------------------- | - | - | ------ | ------ |  | ---- | - | - | ------ |  |  | ----- | -
|                                       |  | Actual |        | For Capital Adequacy
 Purposes |  | Minimum
 To Be Well
 Capitalized Under
 Prompt Corrective
 Action Provisions |  
|                                       |  | Amount |        | %                              |  | Amount                                                                       |   | % |        | Amount |  | %    |  
|As of December 31, 2008:               |  |        |        |                                |  |                                                                              |   |   |        |        |  |      |   |   |        |  |  |       |  
|Total Capital to Risk-Weighted Assets  |  | $      | 29,357 |                                |  | 18.91                                                                        | % | $ | 12,419 |        |  | 8.00 | % | $ | 15,524 |  |  | 10.00 | %
|Tier I Capital to Risk-Weighted Assets |  |        | 27,451 |                                |  | 17.68                                                                        |   |   | 6,210  |        |  | 4.00 |   |   | 9,314  |  |  | 6.00  |  
|Tier I Capital to Total Assets         |  |        | 27,451 |                                |  | 10.71                                                                        |   |   | 10,254 |        |  | 4.00 |   |   | 12,818 |  |  | 5.00  |  
|                                       |  |        |        |                                |  |                                                                              |   |   |        |        |  |      |   |   |        |  |  |       |  
|As of December 31, 2007:               |  |        |        |                                |  |                                                                              |   |   |        |        |  |      |   |   |        |  |  |       |  
|Total Capital to Risk-Weighted Assets  |  |        | 27,966 |                                |  | 17.95                                                                        |   |   | 12,465 |        |  | 8.00 |   |   | 15,581 |  |  | 10.00 |  
|Tier I Capital to Risk-Weighted Assets |  |        | 27,274 |                                |  | 17.50                                                                        |   |   | 6,232  |        |  | 4.00 |   |   | 9,349  |  |  | 6.00  |  
|Tier I Capital to Total Assets         |  |        | 27,274 |                                |  | 11.15                                                                        |   |   | 9,787  |        |  | 4.00 |   |   | 12,234 |  |  | 5.00  |  

(continued)

F-28

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(14) | Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | The Company is limited in the amount of
 cash dividends that may be paid. Banking regulations place certain restrictions
 on dividends and loans or advances made by the Bank to the Holding Company.
 The amount of cash dividends that may be paid by the Bank to the Holding
 Company is based on the Banks net earnings of the current year combined with
 the Banks retained earnings of the preceding two years, as defined by state
 banking regulations. However, for any dividend declaration, the Company must
 consider additional factors such as the amount of current period net
 earnings, liquidity, asset quality, capital adequacy and economic conditions.
 It is likely that these factors would further limit the amount of dividend
 which the Company could declare. In addition, bank regulators have the
 authority to prohibit banks from paying dividends if they deem such payment
 to be an unsafe or unsound practice.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(15) | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     | Various claims also arise from time to time
 in the normal course of business. In the opinion of management, none have
 occurred that will have a material effect on the Companys consolidated
 financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(16) | Simple IRA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     | The Company has a Simple IRA Plan whereby
 substantially all employees participate in the Plan. Employees may contribute
 up to 15 percent of their compensation subject to certain limits based on
 federal tax laws. The Company makes matching contributions equal to the first
 3% of an employees compensation contributed to the Plan. Matching
 contributions vest to the employee immediately. For the years ended December
 31, 2008 and 2007, expense attributable to the Plan amounted to $45,525 and
 $42,333, respectively.                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(17) | Stock Purchase Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | On September 25, 2008, the Company adopted
 a stock purchase plan (the Plan). The Plan allows the Company to purchase
 up to 5% of the common stock outstanding (approximately 156,050 shares). As
 of December 31, 2008, no shares had been purchased.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

(continued)

F-29

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(18) | Holding
Company Financial Information                                                                                                             
|     | The Holding Companys unconsolidated financial information as of
 December 31, 2008 and 2007 and for the years then ended follows (in
 thousands):

Condensed Balance Sheets

|                                           |  |                 |        |      |   |        | 
|------------------------------------------ |  | --------------- | ------ | ---- | - | ------ | 
|                                           |  | At December 31, |       
|                                           |  | 2008            |        | 2007 |  
|Assets                                     |  |                 |        |      |   |        | 
|                                           |  |                 |        |      |   |        | 
|Cash                                       |  | $               | 362    |      | $ | 13     | 
|Investment
 in subsidiary                  |  |                 | 27,447 |      |   | 27,270 | 
|Other assets                               |  |                 | 256    |      |   | 218    | 
|                                           |  |                 |        |      |   |        | 
|Total assets                               |  | $               | 28,065 |      | $ | 27,501 | 
|                                           |  |                 |        |      |   |        | 
|Liabilities and Stockholders Equity       |  |                 |        |      |   |        | 
|                                           |  |                 |        |      |   |        | 
|Other
 liabilities                         |  | $               | 145    |      | $ | 99     | 
|Junior
 subordinated debenture             |  |                 | 5,155  |      |   | 5,155  | 
|Stockholders
 equity                      |  |                 | 22,765 |      |   | 22,247 | 
|                                           |  |                 |        |      |   |        | 
|Total liabilities and stockholders equity |  | $               | 28,065 |      | $ | 27,501 | 

Condensed Statements of Earnings

|                                    |  |                         |      |      |   |       |  
|----------------------------------- |  | ----------------------- | ---- | ---- | - | ----- | -
|                                    |  | Year Ended December 31, |     
|                                    |  | 2008                    |      | 2007 |  
|                                    |  |                         |      |      |   |       |  
|Earnings of
 subsidiary             |  | $                       | 852  |      | $ | 2,011 |  
|Interest
 expense                   |  |                         | (320 | )    |   | (320  | )
|Other
 expense                      |  |                         | (213 | )    |   | (111  | )
|                                    |  |                         |      |      |   |       |  
|Earnings
 before income tax benefit |  |                         | 319  |      |   | 1,580 |  
|                                    |  |                         |      |      |   |       |  
|Income tax
 benefit                 |  |                         | (201 | )    |   | (162  | )
|                                    |  |                         |      |      |   |       |  
|Net earnings                        |  | $                       | 520  |      | $ | 1,742 |  

(continued)

F-30

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                 
|---- | ------------------------------------------------
|(18) | Holding Company Financial Information, Continued

Condensed Statements of Cash Flows

|                                                                                                                                         |  |                         |       |      |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----- | ---- | - | ------ | -
|                                                                                                                                         |  | Year Ended December 31, |      
|                                                                                                                                         |  | 2008                    |       | 2007 |  
|Cash flows from operating activities:                                                                                                    |  |                         |       |      |   |        |  
|Net earnings                                                                                                                             |  | $                       | 520   |      | $ | 1,742  |  
|Adjustments to reconcile net earnings to
 net cash used in operating activities:                                                         |  |                         |       |      |   |        |  
|Equity in undistributed earnings of
 subsidiary                                                                                          |  |                         | (852  | )    |   | (2,011 | )
|(Increase) decrease in other assets                                                                                                      |  |                         | (38   | )    |   | 37     |  
|Increase (decrease) in accrued other
 liabilities                                                                                        |  |                         | 46    |      |   | (4     | )
|                                                                                                                                         |  |                         |       |      |   |        |  
|Net cash used in operating activities                                                                                                    |  |                         | (324  | )    |   | (236   | )
|                                                                                                                                         |  |                         |       |      |   |        |  
|Cash flow from investing activities:                                                                                                     |  |                         |       |      |   |        |  
|Dividend from subsidiary                                                                                                                 |  |                         | 675   |      |   | 175    |  
|Investment in subsidiary                                                                                                                 |  |                         | -     |      |   | (78    | )
|                                                                                                                                         |  |                         |       |      |   |        |  
|Net cash provided by investing activities                                                                                                |  |                         | 675   |      |   | 97     |  
|                                                                                                                                         |  |                         |       |      |   |        |  
|Cash flows from financing activities:                                                                                                    |  |                         |       |      |   |        |  
|Proceeds from sale of common stock                                                                                                       |  |                         | -     |      |   | 37     |  
|Proceeds from exercise of common stock
 options                                                                                          |  |                         | -     |      |   | 41     |  
|Fractional shares of stock dividend paid in
 cash                                                                                        |  |                         | (2    | )    |   | (1     | )
|                                                                                                                                         |  |                         |       |      |   |        |  
|Net cash provided by financing activities                                                                                                |  |                         | (2    | )    |   | 77     |  
|                                                                                                                                         |  |                         |       |      |   |        |  
|Net increase (decrease) in cash                                                                                                          |  |                         | 349   |      |   | (62    | )
|                                                                                                                                         |  |                         |       |      |   |        |  
|Cash at beginning of the year                                                                                                            |  |                         | 13    |      |   | 75     |  
|                                                                                                                                         |  |                         |       |      |   |        |  
|Cash at end of year                                                                                                                      |  | $                       | 362   |      | $ | 13     |  
|                                                                                                                                         |  |                         |       |      |   |        |  
|Noncash transactions:                                                                                                                    |  |                         |       |      |   |        |  
|Change in accumulated other comprehensive
 loss of subsidiary, net change in unrealized loss on security available for
 sale, net of tax |  | $                       | -     |      | $ | 5      |  
|                                                                                                                                         |  |                         |       |      |   |        |  
|Common stock dividend                                                                                                                    |  | $                       | 1,187 |      | $ | 1,302  |  

F-31

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