(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~[X]~~ ☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ~~[X]~~ ☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the ~~definition~~definitions of “large accelerated filer,” “accelerated filer” ~~and~~, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange ~~Act (check one):~~Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~[ ]~~Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ~~[ ]~~ ☐ No ~~[X]~~ ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~1,103,447~~ 4,372,309 shares of ~~Common Stock,~~common stock, $.01 par value, issued and outstanding as of ~~November 13, 2017.~~July 31, 2021.

Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In thousands)

~~Condensed Consolidated Statements of Operations (Unaudited)~~
~~(in thousands, except per share amounts)~~

Condensed Consolidated Statements of ~~Comprehensive Loss~~Cash Flows (Unaudited)

(1) General. OptimumBank Holdings, Inc. (the “Company”) is a one-bank holding company and owns 100% of OptimumBank (the “Bank”), a Florida-chartered commercial bank. The Company’s only business is the operation of the Bank. The Bank’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”). The Bank offers a variety of community banking services to individual and corporate customers through its two banking offices located in Broward County, Florida.

Basis of Presentation. In the opinion of management, the accompanying condensed consolidated financial statements of the Company contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at June 30, 2021, and the results of operations and cash flows for the three and six month periods ended June 30, 2021 and 2020. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2021, are not necessarily indicative of the results to be expected for the full year.

Subsequent Events. The Company has evaluated subsequent events through August 11, 2021, which is the date the condensed consolidated financial statements were issued. On July 16, 2021, the Company closed its banking office located in Plantation, Florida. The Company acquired the remaining Trust Preferred Securities with a balance of $1,228,000 at June 30, 2021 in exchange for 407,195 shares of common stock during July 2021. The Company determined no additional events required disclosure.

Coronavirus Global Pandemic(“COVID-19”). The Company is subject to risks related to the public health crisis associated with COVID-19. COVID-19 has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption in financial markets. The extent to which COVID-19 impacts the Company’s business, results of operations, and financial condition, as well as loan quality, regulatory capital and liquidity ratios, will depend on future developments, the duration of the pandemic, and actions taken by governmental authorities to slow the spread of the disease or to mitigate its effects.

Junior Subordinated Debenture. In 2004, the Company formed OptimumBank Capital Trust I (the “Trust’’) for the purpose of raising capital through the sale of trust preferred securities. At that time, the Trust raised $5,155,000 through the sale of 5,000 trust preferred securities (the “Trust Preferred Securities”) to a third-party investor and the issuance of 155 common trust securities to the Company.

The Trust utilized the proceeds of $5,155,000 to purchase a junior subordinated debenture from the Company (the “Junior Subordinated Debenture”). Under the Junior Subordinated Debenture, the Company was required to make interest payments on a periodic basis and to pay the outstanding principal amount plus accrued interest on October 7, 2034.

In May 2018, Preferred Shares, LLC (the “Purchaser”) acquired all 5,000 of the Trust Preferred Securities from a third party. The Purchaser is an affiliate of a director of the Company. The Purchaser has subsequently sold and/or transferred 3,087 of the Trust Preferred Securities to unaffiliated third parties.

During 2018, the Company issued 301,778 shares of common stock in exchange for 694 Trust Preferred Securities. For accounting purposes, the Trust Preferred Securities acquired by the Company were deemed to be cancelled. As a result, the Company cancelled $694,000 in principal amount of the Trust Preferred Securities, together with accrued interest of $211,000, and increased its stockholders’ equity by the same amount.

During 2019, the Company issued 924,395 shares of common stock in exchange for 1,881 Trust Preferred Securities. For accounting purposes, the Trust Preferred Securities acquired by the Company were deemed to be cancelled. As a result, the Company cancelled $1,881,000 in principal amount of the Trust Preferred Securities, together with accrued interest of $763,000, and increased its stockholders’ equity by the same amount.

The Company had been in default under the Junior Subordinated Debenture due to the failure to pay interest since 2015. In September 2020, the Company paid approximately $1.1 million to the holders of the outstanding Trust Preferred Securities, which represented all accrued interest through September 2020 under the Junior Subordinated Debenture attributable to the Trust Preferred Securities that had not been cancelled. The coupon interest rate floats quarterly at the six-month LIBOR rate plus 2.45% (2.65% at June 30, 2021).

During December 2020, the Company issued 171,500 shares of common stock in exchange for 512 Trust Preferred Securities. For accounting purposes, the Trust Preferred Securities acquired by the Company were deemed to be cancelled. As a result, the Company cancelled $512,000 in principal amount of the Trust Preferred Securities, together with accrued interest of $2,000, and increased its stockholders’ equity by the same amount.

During the first quarter of 2021, the Company issued 11,042 shares of common stock to pay approximately $41,000 of accrued interest associated with the outstanding Trust Preferred Securities.

During the second quarter of 2021, the Company issued 282,377 shares of common stock in exchange for 840 Trust Preferred Securities. For accounting purposes, the Trust Preferred Securities acquired by the Company were deemed to be cancelled. As a result, the Company cancelled $840,000 in principal amount of the Trust Preferred Securities, together with accrued interest of $7,000, and increased its stockholders’ equity by the same amount.

~~(continued)~~Comprehensive Income (Loss). GAAP generally requires that recognized revenue, expenses, gains and losses be included in net earnings (loss). Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale debt securities, are reported as a separate component of the equity section of the condensed consolidated balance sheets, such items along with net loss, are components of comprehensive loss.

Income Taxes. The Company assessed its earnings history and trends and estimates of future earnings, and determined that the deferred tax asset could not be realized as of June 30, 2021. Accordingly, a valuation allowance was recorded against the net deferred tax asset.

Reclassifications. Certain amounts have been reclassified to allow for consistent presentation for the periods presented.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13 Financial Instruments-Credit Losses (Topic 326). The ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by the Company. The ASU requires the Company to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The Company will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the condensed consolidated financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU will take effect for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements.

(2)Debt Securities. Debt Securities have been classified according to management’s intent. The carrying amount of debt securities and approximate fair values are as follows (in thousands):

There were 0 sales of debt securities during the three and six months ended June 30, 2021 and 2020.

Debt Securities available for sale with gross unrealized losses, aggregated by investment category and length of time that individual debt securities have been in a continuous loss position, is as follows (in thousands):

Schedule of Debt Securities with Gross Unrealized Losses, by Investment Category

(3)Loans, Continued. The Company has divided the loan portfolio into six portfolio segments, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten based upon standards set forth in the policies approved by the Company’s Board of Directors (the “Board”). The Company identifies the portfolio segments as follows:

Residential Real Estate, Multi-Family Real Estate, Commercial Real Estate, Land and Construction. Residential real estate loans are underwritten based on repayment capacity and source, value of the underlying property, credit history and stability. The Company offers first and second one-to-four family mortgage loans; the collateral for these loans is generally the clients’ owner-occupied residences. Although these types of loans present lower levels of risk than commercial real estate loans, risks do still exist because of possible fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrowers’ financial condition. Multi-family and commercial real estate loans are secured by the subject property and are underwritten based upon standards set forth in the policies approved by the Board. Such standards include, among other factors, loan to value limits, cash flow coverage and general creditworthiness of the obligors. Construction loans to borrowers finance the construction of owner occupied and leased properties. These loans are categorized as construction loans during the construction period, later converting to commercial or residential real estate loans after the construction is complete and amortization of the loan begins. Real estate development and construction loans are approved based on an analysis of the borrower and guarantor, the viability of the project and on an acceptable percentage of the appraised value of the property securing the loan. Real estate development and construction loan funds are disbursed periodically based on the percentage of construction completed. The Company carefully monitors these loans with on-site inspections and requires the receipt of lien waivers on funds advanced. Development and construction loans are typically secured by the properties under development or construction, and personal guarantees are typically obtained. Further, to assure that reliance is not placed solely on the value of the underlying property, the Company considers the market conditions and feasibility of proposed projects, the financial condition and reputation of the borrower and guarantors, the amount of the borrower’s equity in the project, independent appraisals, cost estimates and pre-construction sales information. The Company also makes loans on occasion for the purchase of land for future development by the borrower. Land loans are extended for future development for either commercial or residential use by the borrower. The Company carefully analyzes the intended use of the property and the viability thereof.

Commercial. Commercial business loans and lines of credit consist of loans to small- and medium-sized companies in the Company’s market area. Commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Primarily all of the Company’s commercial loans are secured loans, along with a small amount of unsecured loans. The Company’s underwriting analysis consists of a review of the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower. These loans are generally secured by accounts receivable, inventory and equipment. Commercial loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, which makes them of higher risk than residential loans and the collateral securing loans may be difficult to appraise and may fluctuate in value based on the success of the business. The Company seeks to minimize these risks through its underwriting standards. The Company took action to prepare its employees, support its clients, and help its communities. The Company has supported small business owners by making loans through the Small Business Administration Paycheck Protection Program (“PPP”). As of June 30, 2021, the Bank had originated 502 PPP loans for a total dollar amount of $37.4 million. These loans are 100% guaranteed by the Small Business Administration (the “SBA”). At June 30, 2021 outstanding PPP loans total approximately $32 million.

Consumer. Consumer loans are extended for various purposes, including purchases of automobiles, recreational vehicles, and boats. Also offered are home improvement loans, lines of credit, personal loans, and deposit account collateralized loans. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Loans to consumers are extended after a credit evaluation, including the creditworthiness of the borrower(s), the purpose of the credit, and the secondary source of repayment. Consumer loans are made at fixed and variable interest rates. Risk is mitigated by the fact that the loans are of smaller individual amounts.

(3)Loans, Continued. The following summarizes the loan credit quality (in thousands):

(3)Loans, Continued. Age analysis of past-due loans is as follows (in thousands):

There were no impaired loans at June 30, 2021. The following summarizes the amount of impaired loans at December 31, 2020 (in thousands):

(3)Loans, Continued. The average recorded investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands):

(4) Earnings (Loss) Per Share. Basic earnings (loss) per share have been computed on the basis of the weighted-average number of shares of common stock outstanding during the period. During the three and six month periods ended June 30, 2021, basic and diluted earnings per share is the same as there were no outstanding potentially dilutive securities. During the three and six month periods ended June 30, 2020, basic and diluted loss per share is the same due to the net loss incurred by the Company. Earnings (loss) per common share have been computed based on the following:

At September 30, 2017, the Bank is well-capitalized. As a result of the Consent Order discussed in Note 9, the Bank cannot be categorized higher than “adequately capitalized” until the Consent Order is lifted, even if its ratios were to exceed those required to be a “well capitalized” bank.

~~(continued)~~

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~(5)~~

(~~Loss) Earnings per Share.~~ Basic (loss) earnings per share has been computed on the basis of the weighted-average number of shares of common stock outstanding during the periods. (Loss) earnings per common share have been computed based on the following (weighted-average number of common shares outstanding have been adjusted for the reverse stock split discussed in note 11):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Weighted-average number of common shares outstanding used to calculate basic and diluted (loss) earnings per common share 1,103,447 1,097,644 1,103,447 1,024,704

~~(continued)~~(5)Stock-Based Compensation

~~OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY~~The Company is authorized to grant stock options, stock grants and other forms of equity-based compensation under its 2018 Equity Incentive Plan (the “2018 Plan”). The plan has been approved by the shareholders. The Company is authorized to issue up to 550,000 shares of common stock under the 2018 Plan, of which 250,096 shares remain available for grant.

~~Notes~~During the first quarter of 2021, the Company agreed to ~~Condensed Consolidated Financial Statements (Unaudited)~~issue 62,112 shares to a director for services performed and recorded compensation expense of $200,000. The director has not yet taken delivery of the shares. As such, at June 30, 2021, the $200,000 is presented on the accompanying condensed consolidated balance sheets under the caption of “other liabilities”.

~~(6)~~	*~~Stock-Based Compensation.~~* On December 27, 2011, the Company’s stockholders approved the 2011 Equity Incentive Plan (“2011 Plan”). In May 2016, the Company increased the total number of shares available to be awarded from 105,000 shares (adjusted for the one-for-ten reverse stock split) to 210,000 shares. Options, restricted stock, performance share awards and bonus share awards in lieu of obligations may be issued under the 2011 Plan. Both incentive stock options and nonqualified stock options can be granted under the 2011 Plan. The exercise price of the stock options cannot be less than the fair market value of the common stock on the date of grant. Options must be exercised within ten years of the date of grant.

	As of September 30, 2017, only common stock has been issued as compensation to directors for services rendered under this plan. There were no shares of common stock issued during the period ended September 30, 2017. A total of 7,559 shares of common stock (adjusted for one-for-ten reverse stock split) were issued during the period ended September 30, 2016. A total of $32,000 of compensation was recorded during the period ended September 30, 2016. Subsequently, $200,000 (46,296 shares) was reclassified to other liabilities (see Note 13). At September 30, 2017, a total of 145,861 (adjusted for one-for-ten reverse stock split) shares remain available for grant.

~~(7)~~

~~Fair Value Measurements.~~~~Assets measured at fair value on a nonrecurring basis are as follows (in thousands):~~

~~Impaired Collateral Dependent Loans:~~(6)Fair Value Measurements. There were 0 impaired collateral dependent loans measured at fair value on a nonrecurring basis at June 30, 2021 and December 31, 2020.

Fair
Value Level 1 Level 2 Level 3 Total
Losses Losses
Recorded in
Operations
At September 30, 2017-
Residential real estate $ 1,018 $ — $ — $ 1,018 $ 461 $ —

Fair
Value Level 1 Level 2 Level 3 Total Losses Losses
Recorded in
Operations
At December 31, 2016-
Residential real estate $ 375 $ — $ — $ 375 $ 126 $ —

~~Available-for-sale~~Debt securities available for sale measured at fair value on a recurring basis are summarized below (in thousands):

Schedule of Debt Securities Available-for-sale Measured at Fair Value on Recurring Basis

	Fair Value Measurements Using										Fair Value Measurements Using
	Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

At September 30, 2017:
At June 30, 2021 :
SBA Pool Securities									$	1,191	$	—	$	1,191		—
Collateralized mortgage obligations	$	8,882		—	$	8,882		—		313		—		313		—
SBA Pool Securities		7,317		—		7,317		—

	$	16,199		—	$	16,199		—
At December 31, 2016:
Collateralized mortgage obligations	$	9,752	$	—	$	9,752	$	—
SBA Pool Securities		10,470		—		10,470		—

	$	20,222	$	—	$	20,222	$	—
Taxable municipal securities										9,982		—		9,982		—
Mortgage-backed securities										10,493		—		10,493		—
Total									$	21,979		—	$	21,979		—

			Fair Value Measurements Using
	Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

At December 31, 2020 :
SBA Pool Securities	$	1,297	$	—	$	1,297		—
Collateralized mortgage obligations		485		—		485		—
Taxable municipal securities		5,085		—		5,085		—
Mortgage-backed securities		12,026		—		12,026		—
Total	$	18,893		—	$	18,893		—

~~During~~(7)Fair Value of Financial Instruments. The estimated fair values and fair value measurement method with respect to the ~~three and nine month periods ended September 30, 2017 and 2016, no securities~~Company’s financial instruments were ~~transferred in or out~~as follows (in thousands):

Schedule of ~~Level 1, Level 2 or Level 3.~~

~~(continued)~~

~~OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY~~

~~Notes to Condensed Consolidated~~Estimated Fair Value of Financial ~~Statements (Unaudited)~~Instruments

	At June 30, 2021							At December 31, 2020
	Carrying Amount		Fair Value			Level		Carrying Amount		Fair Value			Level
Financial assets:
Cash and cash equivalents	$	74,147	$	74,147			1	$	54,629	$	54,629			1
Debt securities available for sale		21,979		21,979			2		18,893		18,893			2
Debt securities held-to-maturity		1,743		1,811			2		3,399		3,549			2
Loans		190,805		190,762			3		152,469		153,276			3
Federal Home Loan Bank stock		793		793			3		1,092		1,092			3
Accrued interest receivable		1,091		1,091			3		1,336		1,336			3

Financial liabilities:
Deposit liabilities		244,005		244,101			3		190,759		191,011			3
Federal Home Loan Bank advances		18,000		18,055			3		23,000		23,254			3
Junior subordinated debenture		1,228		N/A	(1)		3		2,068		N/A	(1)		3
Off-balance sheet financial instruments		—		—			3		—		—			3

~~(8)~~

~~Fair Value of Financial Instruments.~~~~The estimated fair values and fair value measurement method with respect to the Company’s financial instruments were as follows (in thousands):~~

At September 30, 2017 At December 31, 2016
Carrying
Amount Fair
Value Level Carrying
Amount Fair
Value Level
Financial assets:
Cash and cash equivalents $ 18,514 $ 18,514 1 $ 17,640 $ 17,640 1
Securities available for sale 16,199 16,199 2 20,222 20,222 2
Loans 69,194 69,095 3 76,999 76,829 3
Federal Home Loan Bank stock 979 979 3 1,113 1,113 3
Accrued interest receivable 366 366 3 380 380 3

Financial liabilities:
Deposit liabilities 77,374 77,935 3 86,009 86,364 3
Federal Home Loan Bank advances 20,500 20,458 3 23,500 23,500 3
Junior subordinated debenture 5,155 NA ⁽¹⁾ 3 5,155 N/A ⁽¹⁾ 3
Off-balance sheet financial instruments — — — — — —

(1)	The Company is unable to determine ~~the fair~~ value based on significant unobservable inputs required in the ~~calculation refer to Note 10 for further information.~~

	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 condensed consolidated balance sheets. 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.

	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.

	~~As of September 30, 2017, commitments to extend credit totaled $4.3 million.~~calculation.

~~(9)~~	*~~Regulatory Matters.~~* The Bank is subject to various regulatory capital requirements administered by the bank regulatory 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 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 its 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.

	Effective January 1, 2015, the Bank, became subject to the new Basel III capital level threshold requirements under the Prompt Corrective Action regulations with full compliance with all of the final rule’s requirements phased in over a multi-year schedule. These new regulations were designed to ensure that banks maintain strong capital positions even in the event of severe economic downturns or unforeseen losses.

	Changes that could affect the Bank going forward include additional constraints on the inclusion of deferred tax assets in capital and increased risk weightings for nonperforming loans and acquisition/development loans in regulatory capital. Beginning on January 1, 2016, the Bank became subject to the capital conservation buffer rules which places limitations on distributions, including dividend payments, and certain discretionary bonus payments to executive officers. In order to avoid these limitations, an institution must hold a capital conservation buffer above its minimum risk-based capital requirements. As of September 30, 2017 and December 31, 2016, the Bank’s capital conversation buffer exceeds the minimum requirements of 0.625%. The required buffer is to be phased in over three years. Under the new regulations in the first quarter of 2015, the Bank elected an irreversible one-time opt-out to exclude accumulated other comprehensive loss from regulatory capital.

(continued)

2216

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(8)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, unused lines of credit, and standby letters of credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the condensed 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 non-performance 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.

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.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit to customers is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments. Standby letters of credit generally have expiration dates within one year.

Commitments to extend credit, unused lines of credit, and standby letters of credit typically result in loans with a market interest rate when funded. A summary of the contractual amounts of the Company’s financial instruments with off-balance-sheet risk at June 30, 2021 follows (in thousands):

Schedule of Off-Balance Sheet Risks of Financial Instruments


Commitments to extend credit	$	13,388

Unused lines of credit	$	9,338

Standby letters of credit	$	4,550

(9)Regulatory Matters. The Bank is subject to various regulatory capital requirements administered by the bank regulatory 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 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 its 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.

In 2019, the federal banking agencies jointly issued a final rule that provides for an optional, simplified measure of capital adequacy, the community bank leverage ratio framework (CBLR framework), for qualifying community banking organizations. The final rule became effective on January 1, 2020 and was elected by the Bank. In April 2020, the federal banking agencies issued an interim final rule that makes temporary changes to the CBLR framework, pursuant to section 4012 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and a second interim final rule that provides a graduated increase in the community bank leverage ratio requirement after the expiration of the temporary changes implemented pursuant to section 4012 of the CARES Act.

The community bank leverage ratio removes the requirement for qualifying banking organizations to calculate and report risk-based capital but rather only requires a Tier 1 to average assets (leverage) ratio. Qualifying community banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than required minimums will be considered to have satisfied the generally applicable risk based and leverage capital requirements in the agencies’ capital rules (generally applicable rule) and, if applicable, will be considered to have met the well capitalized ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act. Under the interim final rules, the community bank leverage ratio minimum requirement is 8% as of December 31, 2020, 8.5% for calendar year 2021, and 9% for calendar year 2022 and beyond. The interim rule allows for a two-quarter grace period to correct a ratio that falls below the required amount, provided that the Bank maintains a leverage ratio of 7% as of December 31, 2020, 7.5% for calendar year 2021, and 8% for calendar year 2022 and beyond. Under the final rule, an eligible community banking organization can opt out of the CBLR framework and revert back to the risk-weighting framework without restriction.

(continued)

~~(9)~~

~~Regulatory Matters, Continued.~~As of September 30, 2017 and December 31, 2016, the Bank is subject to a Consent Order issued by the Federal Deposit Insurance Corporation and the State of Florida Office of Financial Regulation (“OFR”), and accordingly is deemed to be “adequately capitalized” even if its capital ratios were to exceed those generally required to be a “well capitalized” bank. An institution must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the following tables. The Bank’s actual capital amounts and percentages are also presented in the table (dollars in thousands):

~~The following table shows the Bank’s capital amounts and ratios and regulatory thresholds at September 30, 2017 and December 31, 2016 (dollars in thousands):~~17

Actual For Capital
Adequacy Purposes Minimum
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions Requirements of
Consent Order
Amount % Amount % Amount % Amount %
As of September 30, 2017:
Total Capital to Risk-Weighted Assets $ 10,472 14.42 % $ 5,809 8.0 % $ 7,262 10.0 % $ 8,714 12.00 %
Tier I Capital to Risk-Weighted Assets 9,527 13.12 % 4,357 6.0 % 5,809 8.0 % NA NA
Common equity Tier I capital to Risk-Weighted Assets 9,527 13.12 % 3,268 4.5 % 4,720 6.5 % NA NA
Tier I Capital to Total Assets 9,527 8.54 % 4,463 4.0 % 5,579 5.0 % 8,926 8.00 %

As of December 31, 2016:
Total Capital to Risk-Weighted Assets $ 10,662 12.79 % $ 6,609 8.0 % $ 8,261 10.0 % $ 9,913 12.0 %
Tier I Capital to Risk-Weighted Assets 9,498 11.50 % 4,957 6.0 % 6,609 8.0 % N/A N/A
Common equity Tier I capital to Risk-Weighted Assets 9,498 11.50 % 3,718 4.5 % 5,370 6.5 % N/A N/A
Tier I Capital to Total Assets 9,498 8.06 % 4,714 4.0 % 5,893 5.0 % 9,428 8.0 %

	~~Regulatory Enforcement Actions~~

	~~Bank Consent Order~~. On November 7, 2016, the Bank agreed to the issuance of a Consent Order by the FDIC and the OFR (the “Consent Order”), which requires the Bank to take certain measures to improve its safety and soundness. The Consent Order supersedes the prior consent order that became effective in 2010. Pursuant to the Consent Order, the Bank is required to take certain measures to improve its management, condition and operations, including actions to improve management practices and board supervision and independence, assure that its allowance for loan losses is maintained at an appropriate level and improve liquidity. The Consent Order requires the Bank to adopt and implement a compliance plan to address the Bank’s obligations under the Bank Secrecy Act and related obligations related to anti-money laundering. The Consent Order prohibits the payment of dividends by the Bank. The Consent Order continues the requirement for the Bank to maintain a Tier 1 leverage ratio of at least 8% and a total risk-based capital ratio of 12% beginning 90 days from the issuance of the Consent Order. At September 30, 2017, the Bank had a Tier 1 leverage ratio of 8.54%, and a total risk-based capital ratio of 14.42%.

	~~See Footnote 13 to the Consolidated Financial Statements included in the Company’s 2016 Form 10-K for additional information concerning the requirements of the Consent Order.~~

~~(continued)~~

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(9)Regulatory Matters, Continued.

Management believes, as of June 30, 2021 and December 31, 2020, that the Bank meets all capital adequacy requirements to which it is subject. The Bank’s actual capital amounts and percentages are presented in the table ($ in thousands):

Schedule of Capital Amounts, Ratios and Regulatory Thresholds

	Actual					To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework)
	Amount		%			Amount		%
As of June 30, 2021:
Tier I Capital to Total Assets		30,751		11.3	%		23,130		8.5	%

	Actual					To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework)
	Amount		%			Amount		%
As of December 31, 2020:
Tier I Capital to Total Assets		19,261		9.0	%		17,116		8.0	%

(10) Preferred Stock

During the first quarter of 2021, the Company issued 160 shares of Series B Participating Preferred Stock (the “Series B Preferred Stock”) to a related party at a cash price of $25,000 per share, or an aggregate of $4,000,000. The related party is a significant common stockholder.

During the second quarter of 2021, the Company issued 200 shares of Series B Participating Preferred Stock (the “Series B Preferred Stock”) to a non-related party at a cash price of $25,000 per share, or an aggregate of $5,000,000.

The Series B Preferred Stock has 0par value. Except in the case of liquidation, if the Company declares or pays a dividend or distribution on the common stock, the Company shall simultaneously declare and pay a dividend on the Series B Preferred Stock on a pro rata basis with the common stock determined on an as-converted basis assuming all Shares of Series B Preferred Stock had been converted immediately prior to the record date of the applicable dividend. At June 30, 2021, the Company had 760 shares of Series B Preferred Stock outstanding, which are convertible into 7,600,000 shares of common stock, at the option of the Company, subject to the prior fulfilment of the following conditions: (i) such conversion shall have been approved by the holders of a majority of the outstanding common stock of the Company; and (ii) such conversion shall not result in any holder of the Series B Preferred Stock and any persons with whom the holder may be acting in concert, becoming beneficial owners of more than 9.9% of the outstanding shares of the common stock. The number of shares issuable upon conversion is subject to adjustment based on the terms of the amended Certificate of Designation in the Amendment to the Company’s Articles of Incorporation filed on June 25, 2021 (the “Certificate of Designation”) The Preferred Stock has preferential liquidation rights over common stockholders and holders of junior securities. The liquidation price is the greater of $25,000 per share of preferred stock or such amount per share of preferred stock that would have been payable had all shares of the preferred stock been converted into common stock per the terms of the Certificate of Designation immediately prior to a liquidation. The Preferred Stock generally has no voting rights except as provided in the Certificate of Designation.

(11)Contingencies. Various claims 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 condensed consolidated financial statements.

(continued)

	*~~Regulatory Matters, Continued.~~*Management believes that the Bank has made substantial progress in improving its financial condition through a significant reduction in non-performing assets and the receipt of capital increases from investors since the 2010 Consent Order. The Bank is also making significant progress in resolving the other issues raised by the FDIC and the OFR including strengthening the senior management team with the addition of David Edgar as Chief Financial Officer in October 2017. Although the Bank has been hampered by difficulties in raising capital due to the default under the Junior Subordinated Debenture and the limits placed on the Company and the Bank under the prior Consent Order and the Written Agreement. Management intends to continue its efforts to meet the conditions of the New Consent Order and the Written Agreement.

	~~Company Written Agreement with Reserve Bank~~. On June 22, 2010, the Company and the Reserve Bank entered into a Written Agreement with respect to certain aspects of the operation and management of the Company. The Written Agreement prohibits, without the prior approval of the Reserve Bank, the payment of dividends, taking dividends or payments from the Bank, making any interest, principal or other distributions on trust preferred securities (including the Debenture), incurring, increasing or guaranteeing any debt, purchasing or redeeming any shares of stock, or appointing any new director or senior executive officer. Management believes that the Company is in substantial compliance with the requirements of the Written Agreement.

~~(10)~~	*~~Junior Subordinated Debenture.~~* On September 30, 2004, the Company issued a $5,155,000 junior subordinated debenture to an unconsolidated subsidiary (the “Debenture”). The Debenture has a term of thirty years. The interest rate was fixed at 6.4% for the first five years, and thereafter, the coupon rate floats quarterly at the three-month LIBOR rate plus 2.45% (3.78% at September 30, 2017). The Debenture is redeemable in certain circumstances. The terms of the Debenture allow the Company to defer payments of interest on the Debenture by extending the interest payment period at any time during the term of the Debenture for up to twenty consecutive quarterly periods. Beginning in 2010, the Company exercised its right to defer payment of interest on the Debenture. Interest payments deferred as of September 30, 2017 totaled $1,314,000. The Company has deferred interest payments with respect to the Debenture for the maximum allowable twenty consecutive quarterly payments. The holder of the Debenture can accelerate the $5,155,000 principal balance as a result of this default. Under the Written Agreement, the Company is not able to make these interest payments without the prior approval of the Federal Reserve Bank of Atlanta. Regulatory approval to pay accrued and unpaid interest has been denied.

	A Director of the Company has offered to purchase the Debenture and this offer has been approved by certain equity owners of the Trust that holds the Debenture. The Director has also agreed to enter into a forbearance agreement with the Company with respect to payments due under the Debenture upon consummation of the Director’s purchase of the debenture.

	In March of 2016, the Trustee received a direction from certain equity owners of the Trust that hold the Debenture to Sell the Debenture to a Director of the Company. Based upon the receipt of other conflicting directions, in August 26, 2016, the Trustee commenced an action in a Minnesota State Court seeking directions from the Court. The case was subsequently transferred to the United States District Court for the Southern District of New York, were the case is currently pending. The Company continues to pursue mechanisms for paying the accrued interest, such as raising additional capital.

~~(11)~~	*~~Reverse Common Stock Split.~~* Effective January 11, 2016 each ten shares of the Company’s common stock were converted into one share of common stock. Loss (earnings) per share for 2017 and 2016 has been adjusted to reflect the 1-for-10 reverse common stock split.

~~(12)~~	*~~Loan Loss Recovery.~~*On January 6, 2016, the Bank completed a sale of judgement on a defaulted credit that resulted in a $1.8 million recovery of previously charged-off amounts to the Allowance for Loan and Lease Losses (“ALLL”). This increased the balance of the ALLL to approximately $4.2 million. On February 12, 2016, and amended May 6, 2016, pursuant to the terms and requirements of the Consent Order, Management submitted a written request to the FDIC for a partial reversal of the ALLL. The FDIC has requested additional information to assess the Bank’s request for a reversal. As of this date, the FDIC has not reached a final decision in regards to the Bank’s request.

~~(13)~~	*~~Reclassification.~~*During the quarter ended March 31, 2016, the Company agreed to issue 46,296 shares to the Bank’s Chairman as compensation. The Company recorded compensation expense of $200,000 based on the fair market value of the shares at that time, and reflected the issuance of the shares as an increase in stockholders’ equity. The Bank’s Chairman has not yet taken delivery of the shares. As a result, during the quarter ended September 30, 2016, the Company determined to reclassify the transaction as a liability of the Company (rather than an increase in stockholders’ equity) until the issuance of the shares. As of December 31, 2016, an accrued liability totaling $200,000 was recorded in connection with these shares.

~~(14)~~	*~~Brokered Deposits.~~*Under the terms of the Consent Order, the Bank is not permitted to solicit brokered deposits. In March 2017, the FDIC notified the Bank that it considers a significant portion of the Bank’s certificates of deposit to be brokered deposits due to the rates paid on such deposits, even though such deposits were not obtained through any deposit brokers. The Bank has requested a waiver of the prohibition on brokered deposits from the FDIC which has been subsequently withdrawn. Consequently, the Bank can not renew or rollover the existing certificates of deposit that are viewed as brokered deposits, which have an adverse effect on the Bank’s liquidity. Management has identified several strategies to mitigate this issue and believes that the Bank’s liquidity will be sufficient. As of September 30, 2017, the Bank had $25.1 million in brokered deposits that will mature over the next two years. Management is exploring all alternatives to resolve this issue including, but not limited to, raising local deposits.

~~(15)~~	*~~Bank Secrecy Act (“BSA”) Lookback Review.~~*Under the terms of the Consent Order, the Bank is required to perform a BSA lookback review. The Bank estimates that the cost of the BSA lookback review will range from $250,000 to $300,000 based on an independent firm’s proposal for services. The proposal and ultimate agreement is subject to FDIC review and approval. Until the approval is received, these BSA services cannot be rendered. Once the BSA lookback review begins, the independent firm has 120 days to complete the work. As of September 30, 2017, the Bank has accrued $210,000 for the proposed services.

~~(continued)~~

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto presented elsewhere in this report. For additional information, refer to the consolidated financial statements and footnotes for the year ended December 31, ~~2016~~2020 in the Annual Report on Form 10-K.

The following discussion and analysis should also be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the control of the Company, including adverse changes in economic, political and market conditions, losses from the Company’s lending activities and changes in market conditions, the possible loss of key personnel, the impact of increasing competition, the impact of changes in government regulation, the possibility of liabilities arising from violations of federal and state securities laws and the impact of changes in technology in the banking industry. Although the Company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the Company’s actual results will not differ materially from any results expressed or implied by the Company’s forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance.

~~Regulatory Enforcement Actions~~Capital Levels

~~Bank Consent Order. On November 7, 2016, the Bank agreed to the issuance~~As of a Consent Order by the FDIC and the OFR (the “Consent Order”), which requires the Bank to take certain measures to improve its safety and soundness. The Consent Order supersedes the prior consent order that became effective in 2010. Pursuant to the Consent Order,June 30, 2021, the Bank is ~~required~~well capitalized under regulatory guidelines.

Refer to ~~take certain measures to improve its management, condition and operations, including actions to improve management practices and board supervision and independence, assure that its allowance~~Note 9 for ~~loan losses is maintained at an appropriate level and improve liquidity. The Consent Order requires~~ the ~~Bank to adopt and implement a compliance plan to address the Bank~~’s obligations under the Bank Secrecy Act and related obligations related to anti-money laundering. The Consent Order prohibits the payment of dividends by the Bank. The Consent Order continues the requirement for the Bank to maintain a Tier 1 leverage ratio of at least 8% and a total risk-based capital ratio of 12% beginning 90 days from the issuance of the Consent Order. At September 30, 2017, the Bank had a Tier 1 leverage ratio of 8.54%, and a total risk-based capital ratio of 14.42%.

~~See Footnote 13 to the Consolidated Financial Statements included in the Company’s 2016 Form 10-K for additional information concerning the requirements of the Consent Order.~~

~~(continued)~~

~~OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY~~

Management believes that the Bank has made substantial progress in improving its financial condition through a significant reduction in non-performing assets and the receipt of capital increases from investors since the 2010 Consent Order. The Bank is also making significant progress in resolving the other issues raised by the FDIC and the OFR including strengthening the senior management team with the addition of David Edgar as Chief Financial Officer in October 2017. Although the Bank has been hampered by difficulties in raising capital due to the default under the Debenture and the limits placed on the Company and the Bank under the prior Consent Order and the Written Agreement. Management intends to continue its efforts to meet the conditions of the New Consent Order and the Written Agreement.

~~Company Written Agreement with Reserve Bank~~. On June 22, 2010, the Company and the Reserve Bank entered into a Written Agreement with respect to certain aspects of the operation and management of the Company. The Written Agreement prohibits, without the prior approval of the Reserve Bank, the payment of dividends, taking dividends or payments from the Bank, making any interest, principal or other distributions on trust preferred securities (including the Debenture), incurring, increasing or guaranteeing any debt, purchasing or redeeming any shares of stock, or appointing any new director or senior executive officer. Management believes that the Company is in substantial compliance with the requirements of the Written Agreement.

~~Capital Levels~~

Quantitative measures established by regulation and by the Consent Order to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets. As of September 30, 2017, the Bank met the minimum applicable capital adequacy requirements for Total Capital to Risk – Weighted Assets, and for Tier I Capital to Total Assets.

~~OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY~~

~~The~~ Bank’s actual and required minimum capital ~~ratios were as follows (in thousands):~~ratios.

~~Regulatory Capital Requirements~~(continued)

Actual For Capital
Adequacy Purposes Minimum
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions Requirements of
Consent Order
Amount % Amount % Amount % Amount %
As of September 30, 2017:
Total Capital to Risk-Weighted Assets $ 10,472 14.42 % $ 5,809 8.0 % $ 7,262 10.02 % $ 8,714 12.00 %
Tier I Capital to Risk-Weighted Assets 9,527 13.12 % 4,357 6.0 % 5,809 8.0 % NA NA
Common equity Tier I capital to Risk-Weighted Assets 9,527 13.12 % 3,268 4.5 % 4,720 6.5 % NA NA
Tier I Capital to Total Assets 9,527 8.54 % 4,463 4.0 % 5,579 5.0 % 8,926 8.00 %

As of December 31, 2016:
Total Capital to Risk-Weighted Assets $ 10,662 12.79 % $ 6,609 8.0 % $ 8,261 10.0 % $ 9,913 12.0 %
Tier I Capital to Risk-Weighted Assets 9,498 11.50 % 4,957 6.0 % 6,609 8.0 % N/A N/A
Common equity Tier I capital to Risk-Weighted Assets 9,498 11.50 % 3,718 4.5 % 5,370 6.5 % N/A N/A
Tier I Capital to Total Assets 9,498 8.06 % 4,714 4.0 % 5,893 5.0 % 9,428 8.0 %

2719

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Financial Condition at ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~2020

Overview

The Company’s total assets ~~decreased~~increased by ~~$11.2~~approximately $59 million to ~~$108.5~~$294.1 million at ~~September~~June 30, ~~2017,~~2021, from ~~$119.7~~$235.1 million at December 31, ~~2016,~~2020, primarily due to ~~a reduction~~an increase in ~~total deposits.~~loans, cash and cash equivalents and debt securities. Total stockholders’ equity ~~decreased~~increased by approximately ~~$0.5~~$11.3 to $29.1 million at ~~September~~June 30, ~~2017~~2021, from ~~$3.1~~$17.8 million at December 31, ~~2016 to $2.6 million,~~2020, primarily due to proceeds from the sale of preferred stock, common stock and net earnings which was partially offset by the change in accumulated other comprehensive loss ~~of $510,000~~ for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017. As of September 30,2017, the Bank has provided for a reserve for BSA Compliancelookback of $210.000.~~2021.

The following table shows selected information for the periods ended or at the dates indicated:

	Six Months Ended June 30, 2021			Year Ended December 31, 2020

Average equity as a percentage of average assets		7.7	%		5.8	%

Equity to total assets at end of period		9.9	%		7.6	%

Return on average assets (1)		0.6	%		(0.5	)%

Return on average equity (1)		7.9	%		(7.8	)%

Noninterest expenses to average assets (1)		2.3	%		2.9	%

Nine Months Nine Months Year
Ended Ended Ended
September 30, 2017 September 30, 2016 December 31, 2016

Average equity as a percentage of average assets 2.22 % 2.59 % 2.6 %

Equity to total assets at end of period 2.42 % 2.73 % 2.6 %

Return on average assets (1) (.45 )% (0.34 )% (0.3 )%

Return on average equity (1) (18.15 )% (12.96 )% (12.5 )%

Noninterest expenses to average assets (1) 2.74 % 3.51 % 3.3 %

(1) Annualized for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 2016.~~2021.

~~OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY~~

Liquidity and Sources of Funds

The ~~Bank’s~~Company’s sources of funds include customer deposits, advances from the Federal Home Loan Bank of Atlanta (“FHLB”), ~~sales and~~ principal repayments and sales of ~~investment~~debt securities, loan repayments, ~~foreclosed real estate sales,~~ the use of Federal Funds markets, net earnings, if any, and loans taken out at the Federal Reserve Bank discount window.

Deposits are our primary source of funds. In order to increase its core deposits, the ~~Bank~~Company has priced its deposit rates competitively. The ~~Bank~~Company will adjust rates on its deposits to attract or retain deposits as needed. ~~Under~~

The Company increased deposits by $53.2 million during the ~~Consent Order, the interest rate that the~~six month period ending June 30, 2021. The proceeds were used to originate new loans, purchase debt securities and repay Federal Home Loan Bank pays on its market area deposits is restricted. It is possible that the Bank could experience a decrease in deposit inflows, or the migration of current deposits to competitor institutions, if other institutions offer higher interest rates than those permitted to be offered by the Bank. Despite these yield limitations, we believe that we have the ability to adjust rates on our deposits to attract or retain deposits as needed.advances.

In addition to obtaining funds from depositors, wethe Company may borrow funds from other financial institutions. At ~~September~~June 30, ~~2017,~~2021, the ~~Bank~~Company had outstanding borrowings of ~~$20,500,000,~~$18 million, against its ~~$31,300,000~~$63 million in established borrowing capacity with the FHLB. The ~~Bank’s~~Company’s borrowing facility is subject to collateral and stock ownership requirements, as well as prior FHLB consent to each advance. ~~In 2010, the Bank obtained~~The Company has an available discount window credit line with the Federal Reserve Bank, currently ~~$643,700.~~$430,000. The Federal Reserve Bank line is subject to collateral requirements and must be repaid within 90 days; each advance is subject to prior Federal Reserve Bank consent. ~~The Bank~~At June 30, 2021, the Company also ~~has a $2.5 million line~~had available lines of credit amounting to $9.5 million with ~~SunTrust, $750,000 line~~four correspondent banks to purchase federal funds. Disbursements on the lines of credit ~~with Servis First Bank and a $2.5 million line~~are subject to the approval of ~~credit with AloStar Bank.~~the correspondent banks. We measure and monitor our liquidity daily and believe our liquidity sources are adequate to meet our operating needs.

In the past, the Company, on an unconsolidated basis, relied on dividends from the Bank to fund its operating expenses, primarily expenses of being publicly held, and to make interest payments on the Company’s junior subordinated debenture (the “Debenture”). Under the Consent Order, the Bank is currently unable to pay dividends to the Company without prior regulatory approval. Additionally, under the Written Agreement, the Company may not pay interest payments on the Debenture or dividends on the Company’s common stock, incur any additional indebtedness at the Company level, or redeem the Company’s common stock without the prior regulatory approval of the Federal Reserve Bank. Since January 2010, the Company has deferred interest payments on the Debenture, which has been in default since 2015. See “Junior Subordinated Debenture” below.

Off-Balance Sheet Arrangements

~~The Company is a party~~Refer to ~~financial instruments with off-balance-sheet risk in the normal course of business~~Note 8 for Off-Balance Sheet Arrangements.

Junior Subordinated Debenture

Please refer 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 amounts recognized in the condensed consolidated balance sheet. The contract amounts of these instruments reflect the extent of the Company’s involvement in these financial instruments.Note 1 for discussion on this matter.

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. Since many of the commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis.(continued)

The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counter party. As of September 30, 2017, the Company had commitments to extend credit totaling $4.3 million.

2920

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

~~Junior Subordinated Debenture~~

~~On September 30, 2004, the Company issued a $5,155,000 junior subordinated debenture to an unconsolidated subsidiary (the “Debenture”). The Debenture has a term~~Item 2. Management’s Discussion and Analysis of ~~thirty years. The interest rate was fixed at 6.4% for the first five years,~~Financial Condition and thereafter, the coupon rate floats quarterly at the three-month LIBOR rate plus 2.45% (3.78% at September 30, 2017). The Debenture is redeemable in certain circumstances. The terms of the Debenture allow the Company to defer payments of interest on the Debenture by extending the interest payment period at any time during the term of the Debenture for up to twenty consecutive quarterly periods. Beginning in 2010, the Company exercised its right to defer payment of interest on the Debenture. Interest payments deferred as of September 30, 2017 totaled $1,314,000. The Company has deferred interest payments with respect to the Debenture for the maximum allowable twenty consecutive quarterly payments. The holder of the Debenture can accelerate the $5,155,000 principal balance as a result of this default. Under the Written Agreement, the Company is not able to make these interest payments without the prior approval of the Federal Reserve Bank of Atlanta. Regulatory approval to pay accrued and unpaid interest has been denied.

A Director of the Company has offered to purchase the Debenture and this offer has been approved by certain equity owners of the Trust that holds the Debenture. The Director has also agreed to enter into a forbearance agreement with the Company with respect to payments due under the Debenture upon consummation of the Director’s purchase of the debenture.

In March of 2016, the Trustee received a direction from certain equity owners of the Trust that hold the Debenture to Sell the Debenture to a Director of the Company. Based upon the receipt of other conflicting directions, in August 26, 2016, the Trustee commenced an action in a Minnesota State Court seeking directions from the Court. The case was subsequently transferred to the United States District Court for the Southern District of New York, were the case is currently pending. The Company continues to pursue mechanisms for paying the accrued interest, such as raising additional capital.

In the event the amounts due under the Debenture were accelerated, then the Trustee could undertake legal proceedings to obtain a judgment against the Company with respect to such amounts due under the Debenture. If this action were successful, then the Trustee could seek to affect a sale of the Bank to pay the amounts due under the Debenture.

~~OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY~~

Results of Operations (Continued)

Results of Operations

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest-rate spread; (v) net interest margin; and (vi) the ratio of average interest-earning assets to average interest-bearing liabilities.

Three Months Ended September 30,
2017 2016
Average
Balance Interest
and
Dividends Average
Yield/
Rate Average
Balance Interest
and
Dividends Average
Yield/
Rate
($ in thousands)
Interest-earning assets:
Loans $ 72,777 $ 972 5.34 % $ 85,020 $ 1,082 5.09 %
Securities 19,207 96 2.00 22,779 117 2.05
Other (1) 17,908 65 1.45 11,225 24 0.86

Total interest-earning assets/interest income 109,892 1,133 4.12 119,024 1,223 4.11

Cash and due from banks 1,156 910
Premise and equipment 2,612 2,696
Other (3,345 ) (1,005 )

Total assets $ 110,315 $ 121,625

Interest-bearing liabilities:
Savings, NOW and money-market deposits $ 21,657 27 .50 $ 22,960 29 0.51
Time deposits 49,945 140 1.12 59,069 152 1.03
Borrowings (2) 25,655 141 2.20 25,663 91 1.42

Total interest-bearing liabilities/ interest expense 97,257 308 1.27 107,692 272 1.01

Noninterest-bearing demand deposits 8,376 8,039
Other liabilities 2,026 2,534
Stockholders’ equity 2,656 3,360

Total liabilities and stockholders’ equity $ 110,315 $ 121,625

Net interest income $ 825 $ 951

Interest-rate spread (3) 2.85 % 3.10 %

Net interest-earnings assets $ 12,635 $ 11,332

Net interest margin (4) 3.00 % 3.20 %

Ratio of average interest-earning assets to average interest-bearing liabilities 1.13 1.11

	Three Months Ended June 30,
	2021								2020
				Interest		Average						Interest		Average
	Average			and		Yield/			Average			and		Yield/
(dollars in thousands)	Balance			Dividends		Rate⁽⁵⁾			Balance			Dividends		Rate⁽⁵⁾
Interest-earning assets:
Loans	$	182,136		$	2,178		4.78	%	$	126,385		$	1,561		4.94	%
Securities		24,306			86		1.42	%		10,053			49		1.95	%
Other (1)		39,274			26		0.26	%		13,204			16		0.48	%

Total interest-earning assets/interest income		245,716			2,290		3.73	%		149,642			1,626		4.35	%

Cash and due from banks		23,867								5,970
Premises and equipment		1,326								1,470
Other		1,687								1,173

Total assets	$	272,596							$	158,255

Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	121,476			122		0.40	%	$	70,402			213		1.21	%
Time deposits		18,270			31		0.68	%		29,521			142		1.92	%
Borrowings (2)		20,057			81		1.62	%		29,068			121		1.67	%

Total interest-bearing liabilities/interest expense		159,803			234		0.59	%		128,991			476		1.48	%

Noninterest-bearing demand deposits		89,047								19,234
Other liabilities		1,699								2,506
Stockholders’ equity		22,047								7,524

Total liabilities and stockholders’ equity	$	272,596							$	158,255

Net interest income				$	2,056							$	1,150

Interest rate spread (3)							3.14	%							2.87	%

Net interest margin (4)							3.35	%							3.07	%

Ratio of average interest-earning assets to average interest-bearing liabilities		1.54	%							1.16	%

Nine Months Ended September 30,
2017 2016
Average
Balance Interest
and
Dividends Average
Yield/
Rate Average
Balance Interest
and
Dividends Average
Yield/
Rate
($ in thousands)
Interest-earning assets:
Loans $ 76,583 $ 2,971 5.17 % $ 84,173 $ 3,156 5.00 %
Securities 19,622 306 2.08 23,454 367 2.09
Other (1) 16,985 162 1.27 11,433 75 0.87

Total interest-earning assets/interest income 113,190 3,439 4.05 119,060 3,598 4.03

Cash and due from banks 1,162 887
Premise and equipment 2,624 2,694
Other (3,164 ) (393 )

Total assets $ 113,812 $ 122,248

Interest-bearing liabilities:
Savings, NOW and money-market deposits $ 22,052 82 0.50 $ 23,719 89 0.50
Time deposits 53,609 442 1.10 62,203 461 0.99
Borrowings (2) 25,677 378 1.96 25,700 260 1.35

Total interest-bearing liabilities/ interest expense 101,338 902 1.29 111,622 810 0.97

Noninterest-bearing demand deposits 7,471 5,249
Other liabilities 2,193 2,208
Stockholders’ equity 2,810 3,169

Total liabilities and stockholders’ equity $ 113,812 $ 122,248

Net interest income $ 2,537 $ 2,788

Interest-rate spread (3) 2.76 % 3.06 %

Net interest-earning assets $ 11,852 $ 7,438

Net interest margin (4) 2.99 % 3.12 %

Ratio of average interest-earning assets to average interest-bearing liabilities 1.21 1.07

(1)	Includes interest-earning deposits with banks and Federal Home Loan Bank stock dividends.
(2)	Includes Federal Home Loan Bank advances, other borrowings and the junior subordinated debenture.
(3)	Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4)	Net interest margin is net interest income divided by average interest-earning assets.
(5)	Annualized.

(continued)

3221

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

	Six Months Ended June 30,
	2021								2020
				Interest		Average						Interest		Average
	Average			and		Yield/			Average			and		Yield/
(dollars in thousands)	Balance			Dividends		Rate⁽⁵⁾			Balance			Dividends		Rate⁽⁵⁾
Interest-earning assets:
Loans	$	172,611		$	4,025		4.66	%	$	116,565		$	2,974		5.10	%
Securities		25,014			177		1.42	%		10,478			95		1.81	%
Other (1)		33,386			53		0.32	%		12,326			60		0.97	%

Total interest-earning assets/interest income		231,011			4,255		3.68	%		139,369			3,129		4.49	%

Cash and due from banks		25,967								4,382
Premises and equipment		1,316								1,466
Other		2,097								911

Total assets	$	260,391							$	146,128

Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	117,193			256		0.44	%	$	63,831			439		1.38	%
Time deposits		19,540			78		0.80	%		31,407			318		2.03	%
Borrowings (2)		22,341			179		1.60	%		24,106			226		1.88	%

Total interest-bearing liabilities/interest expense		159,074			513		0.64	%		119,344			983		1.65	%

Noninterest-bearing demand deposits		79,657								16,899
Other liabilities		1,593								2,489
Stockholders’ equity		20,067								7,396

Total liabilities and stockholders’ equity	$	260,391							$	146,128

Net interest income		��		$	3,742							$	2,146

Interest rate spread (3)							3.04	%							2.84	%

Net interest margin (4)							3.24	%							3.08	%

Ratio of average interest-earning assets to average interest-bearing liabilities		1.45	%							1.17	%

(1)	Includes interest-earning deposits with banks and Federal Home Loan Bank stock dividends.
(2)	Includes Federal Home Loan Bank advances, other borrowings and the junior subordinated debenture.
(3)	Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4)	Net interest margin is net interest income divided by average interest-earning assets.
(5)	Annualized.

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Comparison of the Three-Month Periods Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020

	Three Months Ended					Increase /
	June 30,					(Decrease)
(dollars in thousands)	2021		2020			Amount			Percentage
Total interest income	$	2,290	$	1,626		$	664			41	%
Total interest expense		234		476			(242	)		-51	%
Net interest income		2,056		1,150			906			79	%
Provision for loan losses		397		523			(126	)		-24	%
Net interest income after provision for loan losses		1,659		627			1,032			165	%
Total noninterest income		302		33			269			815	%
Total noninterest expenses		1,517		1,007			510			51	%
Net earnings (loss) before income taxes		444		(347	)		791			228	%
Income taxes		-		-			-			-
Net earnings (loss)	$	444	$	(347	)		791			228	%
Net earnings (loss) per share - Basic and diluted	$	0.14	$	(0.12	)

~~General.~~Net ~~loss~~earnings (loss). Net earnings for the three months ended ~~September~~June 30, ~~2017,~~2021, was ~~$(56,000)~~$444,000 or ~~$(.05) loss~~$0.14 per basic and diluted share compared to a net ~~earnings~~loss of ~~$22,000~~$(347,000) or ~~$0.02 earnings~~$(0.12) per basic and diluted share for the ~~period~~three months ended ~~September~~June 30, ~~2016.~~2020. The increase in net earnings during the three months ended June 30, 2021 compared to three months ended June 30, 2020 is primarily attributed to a decrease in the provision for loan losses, increase in noninterest income and net interest income, partially offset by the increase in noninterest expense.

Interest ~~Income.~~Income. Interest income ~~decreased $90,000~~increased $664,000 for the three months ended ~~September~~June 30, ~~2017~~2021 compared to the three ~~months Ended September~~ended June 30, ~~2016.~~2020 due primarily to growth in the loan portfolio.

Interest Expense.Interest expense ~~on deposits and borrowings increased by $36,000~~decreased $242,000 to $234,000 for the three months ended ~~September~~June 30, ~~2017 from $272,000 for~~2021 compared to the ~~three months Ended September 30, 2016. Interest expense increased~~prior period, primarily due to ~~higher~~a decrease in interest paid on borrowings during the second and third quarter of 2017. In late March 2017, the Bank extended the maturities of $15.5 million in Federal Home loan Advances into longer fixed rate terms with higher interestbearing deposit rates. ~~The weighted average rate of these advances increased from 0.49% to 1.19%.~~

Provision for Loan Losses. ~~There was no provision~~Provision for loan losses ~~during~~amounted to $397,000 for the ~~2017 or 2016 period.~~three months ended June 30, 2021 compared to $523,000 for the three months ended June 30, 2020. The provision for loan losses is charged to operations as losses are estimated to have occurred in order to bring the total loan allowance for loan losses to a level deemed appropriate by management to absorb losses inherent in the portfolio at ~~September~~June 30, ~~2017.~~2021. Management’s periodic evaluation of the adequacy of the allowance is based upon historical experience, the volume and type of lending conducted by us, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral, loans identified as impaired, general economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. The allowance for loan losses totaled ~~$3.9~~$2.2 million or ~~5.37%~~1.15% of loans outstanding at ~~September~~June 30, ~~2017, as~~2021, compared to ~~$4.2~~$1.9 million or ~~4.91%~~1.23% of loans outstanding at ~~September 30, 2016. Management believes the balance in the allowance~~December 31, 2020. The provision for loan losses ~~at September 30, 2017 is significantly overfunded.~~during the second quarter of 2021 was primarily due to loan volume growth and the an evaluation of the other factors noted above.

Noninterest Income.Total noninterest income increased ~~by $23,000~~to $302,000 for the three months ended ~~September~~June 30, ~~2017,~~2021, from ~~$31,000 for the three months Ended September 30, 2016 due to significant fees collected on previously impaired loans.~~

~~Noninterest Expenses.~~ ~~Total noninterest expenses decreased $25,000 to $935,000~~$33,000 for the three months ended ~~September~~June 30, ~~2017 compared~~2020 due to ~~$960,000~~increased wire transfer and ACH fees related to an increase in business checking accounts of approximately $27.5 million during the three month period ended June 30, 2021.

Noninterest Expenses. Total noninterest expenses increased to $1,517,000 for the three months ~~Ended September~~ended June 30, ~~2016.~~2021 compared to $1,007,000 for the three months ended June 30, 2020 primarily due to an increase in salaries and employee benefits, professional fees, data processing, and other.

Comparison of the ~~Nine-Month~~Six-Month Periods Ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020

	Six Months Ended					Increase /
	June 30,					(Decrease)
(dollars in thousands)	2021		2020			Amount			Percentage
Total interest income	$	4,255	$	3,129		$	1,126			36	%
Total interest expense		513		983			(470	)		-48	%
Net interest income		3,742		2,146			1,596			74	%
Provision for loan losses		373		712			(339	)		-48	%
Net interest income after provision for loan losses		3,369		1,434			1,935			135	%
Total noninterest income		478		106			372			351	%
Total noninterest expenses		3,055		2,195			860			39	%
Net earnings (loss) before income taxes		792		(655	)		1,447			221	%
Income taxes		-		-			-			-
Net earnings (loss)	$	792	$	(655	)		1,447			221	%
Net earnings (loss) per share - Basic and diluted	$	0.24	$	(0.23	)

~~General.~~Net ~~loss~~earnings (loss). Net earnings for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, was ~~$(510,000)~~$792,000 or ~~$(.46) loss~~$0.24 per basic and diluted share compared to a net loss of ~~$(308,000)~~$(655,000) or ~~$(0.30) loss~~$(0.23) per basic and diluted share for the ~~nine nonths Ended September~~six months ended June 30, ~~2016.~~2020. The increase in net ~~loss was due~~earnings during the six months ended June 30, 2021 compared to six months ended June 30, 2020 is primarily attributed to a decrease in the provision for loan losses, increase in noninterest income and net interest income, ~~and a combination of higher professional fees and other non-interest expenses and a lower level of loan fees included~~partially offset by the increase in noninterest ~~income.~~expense.

Interest ~~Income.~~Income. Interest income ~~decreased by $159,000~~increased $1,126,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $3,598,000~~2021 compared to the six months ended June 30, 2020 due primarily to growth in the loan portfolio.

Interest Expense. Interest expense decreased $470,000 to $513,000 for the ~~nine~~six months ~~Ended September~~ended June 30, ~~2016,~~2021 compared to the prior period, primarily due to a decrease in interest ~~earnings assets.~~bearing deposit rates.

~~Interest Expense.~~ Interest expense on deposits and borrowings increased to $902,000 for the nine months ended September 30, 2017 from $810,000 for the nine months Ended September 30, 2016. Interest expense increased primarily due to higher interest paid on borrowings during 2017. In late March 2017, the Bank extended the maturities of $15.5 million in Federal Home Loan Advances into longer fixed rate terms with higher interest rates. The weighted average rate of these advances increased from 0.49% to 1.19%.

Provision for Loan Losses.~~There was no provision~~ Provision for loan losses amounted to $373,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017 or 2016.~~2021 compared to $712,000 for the six months ended June 30, 2020. The provision for loan losses is charged to operations as losses are estimated to have occurred in order to bring the total loan allowance for loan losses to a level deemed appropriate by management to absorb losses inherent in the ~~portfolio.~~portfolio at June 30, 2021. Management’s periodic evaluation of the adequacy of the allowance is based upon historical experience, the volume and type of lending conducted by us, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral, loans identified as impaired, general economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. The allowance for loan losses totaled ~~$3.9~~$2.2 million or ~~5.37%~~1.15% of loans outstanding at ~~September~~June 30, ~~2017,~~2021, compared to ~~$4.2~~$1.9 million or ~~4.91%~~1.23% of loans outstanding at ~~September 30, 2016. Management believes the balance in the allowance~~December 31, 2020. The provision for loan losses ~~at September~~during six months ended June 30, ~~2017 is significantly overfunded.~~2021 was primarily due to loan volume growth and the an evaluation of the other factors noted above.

Noninterest Income. Total noninterest income ~~decreased~~increased to ~~$71,000 from $125,000~~$478,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017, compared to~~2021, from $106,000 for the ~~nine~~six months ~~Ended September~~ended June 30, ~~2016~~2020 due to ~~gains on securities sales~~increased wire transfer and ACH fees related to an increase in business checking accounts of ~~$48,000 in 2016 compared to $7,000 in 2017 and reduced service charges and other fees.~~approximately $46.5 million during the six month period ended June 30, 2021.

Noninterest ~~Expenses.~~Expenses.Total noninterest expenses ~~decreased~~increased to ~~$3,118,000~~$3,055,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to ~~$3,221,000~~$2,195,000 for the ~~nine~~six months ~~Ended September~~ended June 30, ~~2016,~~2020 primarily due to ~~decreased~~an increase in salaries and employee benefits, ~~occupancy,~~ data processing, and ~~regulatory assessments.~~other.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Item 4. Controls and Procedures

The Company’s management evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report, and, based on this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that these disclosure controls and procedures are effective.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2017,~~2021, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

~~OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Non-Employee Director Share Issuances~~

~~On March 31, 2017,~~During the first quarter of 2021, the Company ~~agreed to issue 4,550~~issued a total of 160 shares of ~~its common~~Series B preferred stock to the Company’s non-employee directors under the Company’s 2011 Equity Incentive Plan and the Company’s Non-Employee Director Compensation Plan (the “Director Compensation Plan”) for attendance fees at board meetingsMichael Blisko, a director of the ~~Company. Under the Director Compensation Plan, which became effective on January 1, 2012, fees~~Company, for ~~attendance at board and committee meetings are payable 75% in shares of common stock and 25% in cash on~~ a ~~quarterly basis. The shares were issued at the~~purchase price of $3.15, the fair market value of the shares on the date of issuance. Pursuant to the Director Compensation Plan, a director must remain on the board as of the end of the year to earn the shares. Therefore, these shares with an aggregate value of $14,333 are recorded as a liability as of September 30, 2017.$4,000,000. The issuance of the shares ~~was~~in these transactions were exempt from registration pursuant to Section ~~4(2)~~4(a)(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. The Company used the proceeds to make capital contributions to the Bank in order to augment the Bank’s regulatory capital ratios.

During the second quarter of 2021, the Company issued a total of 200 shares of Series B preferred stock to a non-related party for a purchase price of $5,000,000. The issuance of the shares in these transactions were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. The Company used the proceeds to- make capital contributions to the Bank in order to augment the Bank’s regulatory capital ratios.

During the second quarter of 2021, the Company issued a total of 200 shares of preferred stock to a non-related party for a purchase price of $5,000,000. The issuance of the shares in these transactions were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering. The Company used the proceeds to augment the Bank’s regulatory capital ratios.

During June 2021, the Company issued 262,417 shares of its common stock in a private placement transaction to four accredited investors. All of the shares were sold at a price of $4.50 per share, except for 23,529 shares sold to one purchaser at a price of $4.25 per share. None of the investors was an officer, director or affiliate of the Company. The issuance of the shares in these transactions were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering.

~~Other Significant Share Issuance~~

~~On March 27, 2017,~~During July 2021, the Company ~~allocated 59,523~~issued an additional 205,823 shares of its common stock in a private placement transaction to four accredited investors at a price of $4.50 per share. None of these investors was an officer, director or affiliate of the Company other than Martin Schmidt, who is a director of the Company. Mr. Schmidt purchased 5,323 shares. The shares issued to Mr. Schmidt were issued to him pursuant to the Bank’s Chairman under the 2011 Equity Incentive Plan as compensation for services as a director at the price of $3.36 per share, the fair market value of the shares on the date of issuance. The aggregate value of $200,000 was also recorded as a liability because the Bank’s Chairman has yet to take delivery of the shares. In addition, in March 2016 the Company allocated 46,296 shares to the Bank’ s Chairman under the 2011 Equity Incentive Plan as compensation for services as a director at the price of $4.32 per share, the fair market value of the shares on the date of issuance. The aggregate value of $200,000 was also recorded as a liability because the Bank’s Chairman has yet to take delivery of the shares. The total liability recorded for these allocated shares is $400,000 as of September 30, 2017.company’s equity incentive plan. The issuance of the shares ~~was~~in these transactions were exempt from registration pursuant to Section ~~4(2)~~4(a)(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering.

Item 3. Defaults on Senior Securities

~~Junior Subordinated Debenture~~Previously disclosed.

On September 30, 2004, the Company issued a $5,155,000 junior subordinated debenture to an unconsolidated subsidiary (the “Debenture”). The Debenture has a term of thirty years. The interest rate was fixed at 6.4% for the first five years, and thereafter, the coupon rate floats quarterly at the three-month LIBOR rate plus 2.45% (3.78% at September 30, 2017). The Debenture is redeemable in certain circumstances. The terms of the Debenture allow the Company to defer payments of interest on the Debenture by extending the interest payment period at any time during the term of the Debenture for up to twenty consecutive quarterly periods. Beginning in 2010, the Company exercised its right to defer payment of interest on the Debenture. Interest payments deferred as of September 30, 2017 totaled $1,314,000. The Company has deferred interest payments with respect to the Debenture for the maximum allowable twenty consecutive quarterly payments. The holder of the Debenture can accelerate the $5,155,000 principal balance as a result of this default. Under the Written Agreement, the Company is not able to make these interest payments without the prior approval of the Federal Reserve Bank of Atlanta. Regulatory approval to pay accrued and unpaid interest has been denied.Item 4. Mine Safety Disclosures

Item 6. Exhibits

The exhibits ~~contained~~listed in the Exhibit Index following the signature page are filed with or incorporated by reference into this report.

3425

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			OPTIMUMBANK HOLDINGS, INC.
			(Registrant)

Date:August 11, 2021	~~November 13, 2017~~By:	~~By:~~	/s/ Timothy Terry
			Timothy Terry
			Principal Executive Officer

	By:	~~By:~~	/s/ ~~David L.Edgar~~Joel Klein
			~~David L.Edgar~~Joel Klein
			Principal Financial Officer

3526

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

EXHIBIT INDEX

Exhibit No.		Description

31.1		Certification of Principal Executive ~~and~~Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act

31.2		Certification of Principal Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act

~~31.2~~32.1		~~Certification of Principal Executive and Principal Financial Officer under 18 U.S.C. Section 1350~~

~~32.1~~		Certification of Principal Executive Officer

32.2		Certification of Principal Financial Officer

3627

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

EXHIBIT INDEX

Exhibit No.		Description

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

3728

Florida		55-0865043
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $.01 Par Value		OPHC		NASDAQ Capital Market

Large accelerated filer ~~[ ]~~☐		Accelerated filer ~~[ ]~~☐

Non-accelerated filer ~~[ ]~~☒	~~(Do not check if a smaller reporting company)~~	Smaller reporting company ~~[X]~~☒

Emerging ~~Growth Company [ ]~~		growth company ☐

	September 30, 2017			December 31, 2016			June 30, 2021			December 31, 2020
	(Unaudited)						(Unaudited)
Assets:
Cash and due from banks	$	18,330		$	17,563		$	44,022		$	25,523
Interest-bearing deposits with banks		184			77			30,125			29,106
Total cash and cash equivalents		18,514			17,640			74,147			54,629
Securities available for sale		16,199			20,222
Loans, net of allowance for loan losses of $3,903 and $3,915		69,194			76,999
Debt securities available for sale								21,979			18,893
Debt securities held-to-maturity (fair value of $1,811 and $3,549)								1,743			3,399
Loans, net of allowance for loan losses of $2,231 and $1,906								190,805			152,469
Federal Home Loan Bank stock		979			1,113			793			1,092
Premises and equipment, net		2,601			2,648			1,547			1,413
Right-of-use lease assets								1,012			904
Accrued interest receivable		366			380			1,091			1,336
Other assets		619			701			1,027			977

Total assets	$	108,472		$	119,703		$	294,144		$	235,112
Liabilities and Stockholders’ Equity:

Liabilities:
Noninterest-bearing demand deposits		8,813			7,131		$	105,582		$	58,312
Savings, NOW and money-market deposits		21,705			22,153			121,548			110,704
Time deposits		46,856			56,725			16,875			21,743

Total deposits		77,374			86,009			244,005			190,759

Federal Home Loan Bank advances		20,500			23,500			18,000			23,000
Junior subordinated debenture		5,155			5,155			1,228			2,068
Advanced payment by borrowers for taxes and insurance		518			221
Official checks		44			114			88			142
Operating lease liabilities								1,039			923
Other liabilities		2,252			1,623			612			386

Total liabilities		105,843			116,622			264,972			217,278

Commitments and contingencies (Notes 1, 8 and 9)
Commitments and contingencies (Notes 1, 8 and 11)								-
Stockholders’ equity:
Preferred stock, no par value; 6,000,000 shares authorized, 7 shares issued and outstanding in 2017 and 2016		—			—
Common stock, $.01 par value; 5,000,000 shares authorized, 1,103,447 shares issued and outstanding in 2017 and 2016		11			11
Preferred stock, 0 par value; 6,000,000 shares authorized:								—			—
Designated Series B, 0 par value, 760 shares authorized, 760 and 400 shares issued and outstanding								—			—
Common stock, $.01 par value; 10,000,000 shares authorized, 3,759,291 and 3,203,455 shares issued and outstanding								38			32
Additional paid-in capital		34,039			34,039			61,321			50,263
Accumulated deficit		(31,227	)		(30,717	)		(31,600	)		(32,392	)
Accumulated other comprehensive loss		(194	)		(252	)		(587	)		(69	)

Total stockholders’ equity		2,629			3,081			29,172			17,834
Total liabilities and stockholders’ equity	$	108,472		$	119,703		$	294,144		$	235,112

	2021			2020
	Six Months Ended
	June 30,
	2021			2020
Cash flows from operating activities:
Net earnings (loss)	$	792		$	(655	)
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
Provision for loan losses		373			712
Depreciation and amortization		104			85
Net (accretion) amortization of fees, premiums and discounts		(175	)		25
Decrease (increase) in accrued interest receivable		245			(526	)
Amortization of right of use asset		83			75
Net decrease in operating lease liabilities		(75	)		(68	)
Increase in other assets		(75	)		(254	)
Increase (Decrease) in official checks and other liabilities		220			(13	)
Net cash provided by (used in) operating activities		1,492			(619	)

Cash flows from investing activities:
Purchase of debt securities available for sale		(5,193	)		—
Principal repayments of debt securities available for sale		1,443			1,033
Principal repayments of debt securities held-to-maturity		1,690			763
Net increase in loans		(38,397	)		(34,291	)
Purchases of premises and equipment		(238	)		(147	)
Redemption (purchase) of FHLB stock		299			(450	)

Net cash used in investing activities		(40,396	)		(33,092	)

Cash flows from financing activities:
Net increase in deposits		53,246			36,698
Net (decrease) increase in FHLB Advances		(5,000	)		10,000
Increase in other borrowings		—			4,988
Proceeds from sale of preferred stock		9,000			2,500
Proceeds from sale of common stock		1,176			539

Net cash provided by financing activities		58,422			54,725

Net increase in cash and cash equivalents		19,518			21,014

Cash and cash equivalents at beginning of the period		54,629			8,934

Cash and cash equivalents at end of the period	$	74,147		$	29,948

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	490		$	921

Income taxes	$	—		$	—

Noncash transaction -
Change in accumulated other comprehensive loss, net change in unrealized (loss) gain on debt securities available for sale, net of income taxes	$	(518	)	$	86

Amortization of unrealized loss on debt securities transferred to held-to-maturity	$	80		$	48

Right-of use lease assets obtained in exchange for operating lease liabilities	$	191		$	—

Issuance of common stock for Junior Subordinated Debenture	$	847		$	—
Issuance of common stock for Junior Subordinated Debenture interest payable	$	41		$	—

	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements	31

Condensed Consolidated Balance Sheets - ~~September~~June 30, ~~2017~~2021 (unaudited) and December 31, ~~2016~~2020	31

Condensed Consolidated Statements of Operations - Three and ~~Nine~~Six Months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)	42

Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) - Three and ~~Nine~~Six Months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)	53

Condensed Consolidated Statements of Stockholders’ Equity - ~~Nine~~Three and Six Months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)	64

Condensed Consolidated Statements of Cash Flows ~~- Nine~~– Three and Six Months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 (unaudited)	7-85

Notes to Condensed Consolidated Financial Statements (unaudited)	9-246

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~25-~~3319

Item 4. Controls and Procedures	3325

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3425

Item 3. Defaults on Senior Securities	3425

Item 4. Mine Safety Disclosures	25

Item 5. Other Information	25

Item 6. Exhibits	3425

SIGNATURES	3526

	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss				Equity
																		Accumulated
	Preferred Stock												Additional					Other
	Series A				Series B				Common Stock				Paid-In		Accumulated			Comprehensive				Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss				Equity

Balance at December 31, 2019		—	$	—		—	$	—		2,853,171	$	28		$  38,994	$	(31,610	)	$	(205	)		$	7,207

Proceeds from the sale of common stock (unaudited)		—		—		—		—		98,182		1		538		—			—				539

Proceeds from the sale of preferred stock (unaudited)
Proceeds from the sale of preferred stock, shares (unaudited)
Common stock issued for junior subordinated debenture interest payable (unaudited)
Common stock issued for junior subordinated debenture interest payable, shares (unaudited)
Net loss for the three months ended March 31, 2020 (unaudited)		—		—		—		—		—		—		—		(308	)		—				(308	)

Net change in unrealized loss on debt securities available for sale, net of income taxes (unaudited)		—		—		—		—		—		—		—		—			35				35

Amortization of unrealized loss on debt securities transferred to held-to-maturity, net of income taxes (unaudited)		—		—		—		—		—		—		—		—			18				18

Balance at March 31, 2020 (unaudited)		—		—		—		—		2,951,353		29		39,532		(31,918	)		(152	)			7,491

Proceeds from the sale of preferred stock (unaudited)		—		—		100		—		—		—		2,500		—			—				2,500

Net loss for the three months ended June 30, 2020 (unaudited)		—		—		—		—		—		—		—		(347	)		—				(347	)

Net change in unrealized gain on debt securities available for sale, net of income taxes (unaudited)		—		—		—		—		—		—		—		—			15				15

Amortization of unrealized loss on debt securities transferred to held-to-maturity, net of income taxes (unaudited)		—		—		—		—		—		—		—		—			18				18

Balance at June 30, 2020 (unaudited)		—		—		100		—		2,951,353		29		42,032		(32,265	)		(119	)			9,677

Balance at December 31, 2020		—		—		400		—		3,203,455		32		50,263		(32,392	)		(69	)			17,834

Proceeds from the sale of preferred stock (unaudited)		—		—		160		—		—		—		4,000		—			—				4,000

Common stock issued for junior subordinated debenture interest payable (unaudited)		—		—		—		—		11,042		—		41		—			—				41
Common stock issued for junior subordinated debenture interest payable (unaudited)		—		—		—		—		11,042		—		41		—			—				41

Net change in unrealized gain on loss securities available for sale (unaudited)		—		—		—		—		—		—		—		—			(922	)			(922	)

Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)		—		—		—		—		—		—		—		—			22				22

Net earnings (unaudited)		—		—		—		—		—		—		—		348			—				348

Balance at March 31, 2021 (unaudited)		—		—		560	$	—		3,214,497	$	32	$	54,304	$	(32,044	)	$	(969	)		$	21,323

Proceeds from the sale of preferred stock (unaudited)		—		—		200		—		—		—		5,000		—			—				5,000

Proceeds from the sale of common stock (unaudited)		—		—		—		—		262,417		3		1,173		—			—				1,176

Common stock issued for junior subordinated debenture (unaudited)		—		—		—		—		282,377		3		844		—			—				847

Net change in unrealized gain on debt securities available for sale (unaudited)		—		—		—		—		—		—		—		—			349				349

Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)		—		—		—		—		—		—		—		—			33		��		33

Net earnings (loss) (unaudited)		—		—		—		—		—		—		—		444			—				444
Net earnings for three months ended June 30, 2021 (unaudited)		—		—		—		—		—		—		—		444			—				444

Balance at June 30, 2021 (unaudited)		—		—		760		—		3,759,291		38		61,321		(31,600	)		(587	)			29,172

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016

Interest income:
Loans	$	972		$	1,082	$	2,971		$	3,156
Securities		96			117		306			367
Other		65			24		162			75

Total interest income		1,133			1,223		3,439			3,598

Interest expense:
Deposits		167			181		524			550
Borrowings		141			91		378			260

Total interest expense		308			272		902			810

Net interest income		825			951		2,537			2,788

Provision for loan losses		—			—		—			—

Net interest income after provision for loan losses		825			951		2,537			2,788

Noninterest income:
Service charges and fees		44			22		55			63
Gain on sale of securities available for sale		7			2		7			48
Other		3			7		9			14

Total noninterest income		54			31		71			125

Noninterest expenses:
Salaries and employee benefits		423			430		1,301			1,385
Occupancy and equipment		91			112		293			346
Data processing		96			77		262			250
Professional fees		134			151		526			480
Insurance		24			27		72			78
Regulatory assessment		50			74		152			221
Other		117			89		512			461

Total noninterest expenses		935			965		3,118			3,263

Net (loss) earnings	$	(56	)	$	22	$	(510	)	$	(308	)

Net (loss) earnings per share-
Basic and diluted	$	(.05	)	$	.02	$	(.46	)	$	(0.30	)

~~(1)~~	*~~General.~~*OptimumBank Holdings, Inc. (the “Holding Company”) is a one-bank holding company and owns 100% of OptimumBank (the “Bank”), a Florida-chartered commercial bank. The Bank’s wholly-owned subsidiaries are OB Real Estate Management, LLC and OB Real Estate Holdings, LLC, both of which were formed in 2009; OB Real Estate Holdings 1692 and OB Real Estate Holdings 1704 formed in 2012, collectively, (the “Real Estate Holding Subsidiaries”). The Holding Company’s only business is the operation of the Bank and its subsidiaries (collectively, the “Company”). The Bank’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”). The Bank offers a variety of community banking services to individual and corporate customers through its three banking offices located in Broward County, Florida. OB Real Estate Management, LLC is primarily engaged in managing foreclosed real estate. This subsidiary had no activity in 2017 and 2016. All other subsidiaries are primarily engaged in holding and disposing of foreclosed real estate.

	~~Basis of Presentation~~.In the opinion of management, the accompanying condensed consolidated financial statements of the Company contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at September 30, 2017, and the results of operations and comprehensive loss for the three and nine month periods ended September 30, 2017 and 2016, and cash flows for the nine month periods ending September 30, 2017 and 2016. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year.

	~~Going Concern Status~~.The Company is in default with respect to its $5,155,000 Junior Subordinated Debenture (“Debenture”) due to its failure to make certain required interest payments under the Debenture. The Trustee of the Debenture (the “Trustee”) or the holders of the Debenture are entitled to accelerate the payment of the $5,155,000 principal balance plus accrued and unpaid interest totaling $1,314,000 at September 30, 2017. To date the Trustee has not accelerated the outstanding balance of the Debenture. No adjustments to the accompanying condensed consolidated financial statements have been made as a result of this uncertainty. During the third quarter of 2021, the Company issued 407,195 shares of common stock in exchange for the remaining 1,228 Trust Preferred Securities. For accounting purposes, the Trust Preferred Securities acquired by the Company were deemed to be cancelled. As a result, the Company cancelled $1,228,000 in principal amount of the Trust Preferred Securities and increased its stockholders’ equity by the same amount. As result, the Company has acquired all of the Trust Preferred Securities and is in the process of cancelling them and terminating the Trust. The principal owed by the Company in connection with the Junior Subordinated Debenture was $1,228,000 at June 30, 2021 and $2,068,000 at December 31, 2020, respectively. The accrued interest owed by the Company associated with the Junior Subordinated Debenture was $12,000 at June 30, 2021 and $30,000 at December 31, 2020, respectively and is presented on the accompanying consolidated balance sheet under the caption “Other liabilities”. (continued) Management’s plans with regard to this matter are as follows: A Director of the Company has offered to purchase the Debenture and this offer has been approved by certain equity owners of the Trust that holds the Debenture. The Director has also agreed to enter into a forbearance agreement with the Company with respect to payments due under the Debenture upon consummation of the Director’s purchase of the Debenture. In March 2016, the Trustee received a direction from certain equity owners of the Trust that holds the Debenture to sell the Debenture to a Director of the Company. Based upon the receipt of conflicting directions from other debt holders of the Trust, in August 2016, the Trustee commenced an action in a Minnesota State Court seeking directions from the Court. The case was subsequently transferred to United States District Court for the Southern District of New York, where the case is currently pending. The Company continues to pursue mechanisms for paying the accrued interest, such as raising additional capital.

	*~~Comprehensive Loss~~*GAAP generally requires that recognized revenue, expenses, gains and losses be included in operations. 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 condensed consolidated balance sheets, such items along with net (loss) earnings, are components of comprehensive loss. The only component of comprehensive loss is the net change in the unrealized loss (gain) on the securities available for sale.

	*~~Income Taxes.~~* The Company assessed its earnings history and trends and estimates of future earnings, and determined that the deferred tax asset could not be realized as of September 30, 2017. Accordingly, a valuation allowance was recorded against the net deferred tax asset.

	~~(continued)~~

~~(1)~~	*~~General, Continued.~~*
*(1)General, Continued.***	*~~Recent Pronouncements.~~~~In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01,~~~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~, which is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The ASU requires equity investments to be measured at fair value with changes in fair values recognized in net earnings, simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identity impairment and eliminates the requirement to disclose fair values, the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost. The ASU also clarifies that the Company should evaluate the need for a valuation allowance on a deferred tax asset related to available for-sale debt securities in combination with the Company’s other deferred tax assets. The ASU is effective for the Company beginning January 1, 2018. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements. ~~In February 2016, the FASB issued ASU 2016-2,~~~~Leases (Topic 842)~~* which will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with term of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The new ASU will require both types of leases to be recognized on the balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements. Early application will be permitted. ~~In March 2016, the FASB issued ASU No. 2016-09,~~~~Compensation-Stock Compensation (Topic 718)~~ intended to improve the accounting for employee share-based payments. The ASU affects all organizations that issue share-based payment awards to their employees. The ASU simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the consolidated statement of cash flows. The ASU was effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has evaluated the effect of ASU and determined it has no material effect on its condensed consolidated financial statements. ~~In June 2016, the FASB issued ASU No. 2016-13~~~~Financial Instruments-Credit Losses (Topic 326).~~ The ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by the Company. The ASU requires the Company to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The Company will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU will take effect for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements.

	~~In March 2017, FASB issued ASU 2017-08,~~~~Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20)~~ which amends the accounting for the amortization of premiums for certain purchased callable debt securities by shortening the amortization period to the earliest call date. ASU 2017-08 is effective for interim and annual periods beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2017-08 may have, if any, on its condensed consolidated financial statements.

	In May 2017, the FASB issued new guidance related to Stock Compensation, Scope of Modification Accounting. The new guidance provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Accounting Standards Codification Topic 718, Compensation—Stock Compensation. An entity will not apply modification accounting to a share-based payment award if all of the following are the same immediately before and after the change: (i) the award’s fair value, (ii) the award’s vesting conditions and (iii) the award’s classification as an equity or liability instrument. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted. The Company is in the process of determining the effect of the amendments on its condensed consolidated financial statements.

	In July 2017, the FASB issued ASU 2017-11, The ASU amends ASC 815 which makes limited changes to the Board’s guidance on classifying certain financial instruments as either liabilities or equity. The ASU’s objective is to improve (1) the accounting for instruments with “down-round” provisions and (2) the readability of the guidance in ASC 480 on distinguishing liabilities from equity by replacing the indefinite deferral of certain pending content with scope exceptions. In addition, the ASU amends the guidance on the recognition and measurement of freestanding equity-classified instruments (e.g., warrants) by adding requirements to ASC 260 for entities that disclose earnings per share (EPS). The ASU is effective for annual reporting periods beginning after December 15, 2018, early adoption is permitted upon its issuance. The Company currently has no financials instruments related to this ASU. As a result, the adoption of this guidance is not expected to be material to the condensed consolidated financial statements. In August 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-12, which amends the hedge accounting recognition and presentation requirements in ASC 815. The Board’s objectives in issuing the ASU are to improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting by preparers. The ASU is effective for fiscal years beginning after December 15, 2018, early adoption is permitted upon its issuance. The Company currently has no hedging relationships. As a result, the adoption of this guidance is not expected to be material to the condensed consolidated financial statements.

	*~~Reclassification.~~*~~Certain amounts have been reclassified to conform to the 2017 condensed consolidated financial statement presentation.~~

	June 30,			December 31,
	2021			2020

Unrealized (loss) gain on debt securities available for sale	$	(523	)	$	50
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity		(64	)		(144	)
Income tax benefit		—			25

Accumulated other comprehensive loss	$	(587	)	$	(69	)

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value

At June 30, 2021:
Available for sale:
SBA Pool Securities	$	1,219	$	1	$	(29	)	$	1,191
Collateralized mortgage obligations		296		17		—			313
Taxable municipal securities		10,241		4		(263	)		9,982
Mortgage-backed securities		10,746		29		(282	)		10,493
Total	$	22,502	$	51	$	(574	)	$	21,979

Held-to-maturity:
Collateralized mortgage obligations	$	1,369	$	59		—		$	1,428
Mortgage-backed securities		374		9		—			383
Total	$	1,743	$	68		—		$	1,811

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

At September 30, 2017:
Securities Available for Sale:
Collateralized mortgage obligations	$	9,181	$	—	$	(299	)	$	8,882
SBA Pool Securities		7,330		8		(21	)		7,317

Total	$	16,511	$	8	$	(320	)	$	16,199

At December 31, 2016:
Securities Available for Sale:
Collateralized mortgage obligations	$	10,157	$	—	$	(405	)	$	9,752
SBA Pool Securities		10,470		—		—			10,470

Total	$	20,627	$	—	$	(405	)	$	20,222

	Three Months Ended September 30,					Nine Months Ended September 30,
	2017		2016			2017		2016

Proceeds from sales of securities	$	2,278	$	8,180		$	2,278	$	18,028

Gross gains from sale of securities		7		20			7		66
Gross losses from sale of securities		—		(18	)		—		(18	)

Net gain from sales of securities	$	7	$	2		$	7	$	48

	At September 30, 2017
	Over Twelve Months				Less Than Twelve Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses			Fair Value

Securities Available for Sale:
Collateralized mortgage obligations	$	(299)	$	8,882	$	—		$	—
SBA Pool Securities		—		—		(21	)		4,091
	$	(299)	$	8,882	$	(21	)	$	4,091

	At December 31, 2016
	Over Twelve Months					Less Than Twelve Months
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value

Securities Available for Sale-
Collateralized mortgage obligations	$	(46	)	$	864	$	(359	)	$	8,888

	At September 30, 2017			At December 31, 2016

Residential real estate	$	26,564		$	27,334
Multi-family real estate		6,142			5,829
Commercial real estate		30,637			29,264
Land and construction		3,037			5,681
Commercial		5,390			10,514
Consumer		1,025			1,829

Total loans		72,795			80,451

Add (deduct):
Net deferred loan fees, costs and premiums		302			463
Allowance for loan losses		(3,903	)		(3,915	)

Loans, net	$	69,194		$	76,999

	Residential Real Estate		Multi-Family Real Estate		Commercial Real Estate			Land and Construction			Commercial			Consumer			Unallocated			Total			Residential			Multi-Family		Commercial		Land and
Three Months Ended September 30, 2017:
																							Real Estate			Real Estate		Real Estate		Construction			Commercial			Consumer			Unallocated			Total
Three Months Ended June 30, 2021:

Beginning balance	$	302	$	62	$	769		$	61		$	67		$	148		$	2,486		$	3,895		$	396		$	238	$	843	$	46		$	99		$	268		$	—		$	1,890
Provision (credit) for loan losses		322	$	—	$	6		$	(2	)	$	(2	)	$	(3	)	$	(321	)	$	—			74			154		95		7			(31	)		98			—			397
Charge-offs		—	$	—	$	—		$	—		$	—		$	(3	)	$	—		$	(3	)		—			—		—		—			(10	)		(60	)		—			(70	)
Recoveries		—	$	—	$	—		$	6		$	—		$	5		$	—		$	11			2			—		—		4			—			8			—			14

Ending balance	$	624	$	62	$	775		$	65		$	65		$	147		$	2,165		$	3,903		$	472		$	392	$	938	$	57		$	58		$	314		$	—		$	2,231

Three Months Ended September 30, 2016:
Three Months Ended June 30, 2020:
Beginning balance	$	262	$	39	$	1,012		$	64		$	200		$	156		$	2,507		$	4,240		$	582		$	123	$	729	$	50		$	578		$	136		$	—		$	2,198
Provision (credit) for loan losses		58		19		89			(4	)		48			75			(285	)		—			132			30		159		(6	)		42			166			—			523
Charge-offs		—		—		(14	)		—			—			(72	)		—			(86	)		—			—		—		—			—			(67	)		—			(67	)
Recoveries		—		—		—			6			—			9			—			15			3			—		—		6			—			1			—			10

Ending balance	$	320	$	58	$	1,087		$	66		$	248		$	168		$	2,222		$	4,169		$	717		$	153	$	888	$	50		$	620		$	236		$	—		$	2,664

Nine Months ended September 30, 2017:
Six Months Ended June 30, 2021:

Beginning balance	$	310	$	58	$	787		$	120		$	188		$	165		$	2,287		$	3,915		$	463		$	253	$	884	$	52		$	103		$	151		$	—		$	1,906
Provision (credit) for loan losses		314	$	4	$	(12	)	$	(73	)	$	(123	)	$	12		$	(122	)	$	—
Provision (Credit) for loan losses																								(17	)		139		54		(3	)		(35	)		235			—			373
Charge-offs		—	$	—	$	—		$	—		$	—		$	(43	)	$	—		$	(43	)		—			—		—		—			(10	)		(80	)		—			(90	)
Recoveries		—	$	—	$	—		$	18		$	—		$	13		$	—		$	31			26			—		—		8			—			8			—			42

Ending balance	$	624	$	62	$	775		$	65		$	65		$	147		$	2,165		$	3,903		$	472		$	392	$	938	$	57		$	58		$	314		$	—		$	2,231

Nine Months Ended September 30, 2016:
Six Months Ended June 30, 2020:

Beginning balance	$	116	$	26	$	1,085		$	77		$	120		$	151		$	720		$	2,295		$	531		$	82	$	624	$	21		$	573		$	152		$	26		$	2,009
Provision (credit) for loan losses		204		32		(2,033	)		(29	)		128			196			1,502			—
(Credit) provision for loan losses																								179			71		264		17			47			160			(26	)		712
Charge-offs		—		—		(14	)		—			—			(195	)		—			(209	)		—			—		—		—			—			(77	)		—			(77	)
Recoveries		—		—		2,049			18			—			16			—			2,083			7			—		—		12			—			1			—			20

Ending balance	$	320		58		1,087			66			248			168			2,222			4,169		$	717		$	153	$	888	$	50		$	620		$	236		$	—		$	2,664

	Residential Real Estate		Multi- Family Real Estate		Commercial Real Estate		Land and Construction		Commercial		Consumer		Unallocated		Total
At September 30, 2017:
Individually evaluated for impairment:
Recorded investment	$	1,354	$	—	$	981	$	—	$	—	$	—	$	—	$	2,335
Balance in allowance for loan losses	$	336	$	—	$	76	$	—	$	—	$	—	$	—	$	412

Collectively evaluated for impairment:
Recorded investment	$	25,210	$	6,142	$	29,656	$	3,037	$	5,390	$	1,025	$	—	$	70,460
Balance in allowance for loan losses	$	288	$	62	$	699	$	65	$	65	$	147	$	2,165	$	3,491

At December 31, 2016:
Individually evaluated for impairment:
Recorded investment	$	375	$	—	$	1,004	$	—	$	—	$	—	$	—	$	1,379
Balance in allowance for loan losses	$	—	$	—	$	104	$	—	$	—	$	—	$	—	$	104

Collectively evaluated for impairment:
Recorded investment	$	26,959	$	5,829	$	28,260	$	5,681	$	10,514	$	1,829	$	—	$	79,072
Balance in allowance for loan losses	$	310	$	58	$	683	$	120	$	188	$	165	$	2,287	$	3,811

	Residential		Multi- Family		Commercial		Land and
	Real Estate		Real Estate		Real Estate		Construction		Commercial		Consumer		Unallocated		Total
At June 30, 2021:
Individually evaluated for impairment:
Recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Balance in allowance for loan losses	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Collectively evaluated for impairment:
Recorded investment	$	33,517	$	31,210	$	79,402	$	4,553	$	34,777	$	10,701	$	—	$	194,160
Balance in allowance for loan losses	$	472	$	392	$	938	$	57	$	58	$	314	$	—	$	2,231

At December 31, 2020:
Individually evaluated for impairment:
Recorded investment	$	—	$	—	$	2,193	$	—	$	—	$	—	$	—	$	2,193
Balance in allowance for loan losses	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Collectively evaluated for impairment:
Recorded investment	$	28,997	$	19,210	$	72,205	$	4,750	$	21,849	$	5,715	$	—	$	152,726
Balance in allowance for loan losses	$	463	$	253	$	884	$	52	$	103	$	151	$	—	$	1,906

~~(3)~~	*~~Loans, Continued.~~* *~~Residential Real Estate, Multi-Family Real Estate, Commercial Real Estate, Land and Construction.~~* All loans are underwritten in accordance with policies set forth and approved by the Board of Directors (the “Board”), including repayment capacity and source, value of the underlying property, credit history and stability. Multi-family and commercial real estate loans are secured by the subject property and are underwritten based upon standards set forth in the policies approved by the Company’s Board. Such standards include, among other factors, loan to value limits, cash flow coverage and general creditworthiness of the obligors. Construction loans to borrowers finance the construction of owner occupied and leased properties. These loans are categorized as construction loans during the construction period, later converting to commercial or residential real estate loans after the construction is complete and amortization of the loan begins. Real estate development and construction loans are approved based on an analysis of the borrower and guarantor, the viability of the project and on an acceptable percentage of the appraised value of the property securing the loan. Real estate development and construction loan funds are disbursed periodically based on the percentage of construction completed. The Company carefully monitors these loans with on-site inspections and requires the receipt of lien waivers on funds advanced. Development and construction loans are typically secured by the properties under development or construction, and personal guarantees are typically obtained. Further, to assure that reliance is not placed solely on the value of the underlying property, the Company considers the market conditions and feasibility of proposed projects, the financial condition and reputation of the borrower and guarantors, the amount of the borrower’s equity in the project, independent appraisals, cost estimates and pre-construction sales information. The Company also makes loans on occasion for the purchase of land for future development by the borrower. Land loans are extended for future development for either commercial or residential use by the borrower. The Company carefully analyzes the intended use of the property and the viability thereof.

	*~~Commercial.~~*Commercial business loans and lines of credit consist of loans to small- and medium-sized companies in the Company’s market area. Commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Primarily all of the Company’s commercial loans are secured loans, along with a small amount of unsecured loans. The Company’s underwriting analysis consists of a review of the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower. These loans are generally secured by accounts receivable, inventory and equipment. Commercial loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, which makes them of higher risk than residential loans and the collateral securing loans may be difficult to appraise and may fluctuate in value based on the success of the business. The Company seeks to minimize these risks through its underwriting standards.

	*~~Consumer.~~*Consumer loans are extended for various purposes, including purchases of automobiles, recreational vehicles, and boats. Also offered are home improvement loans, lines of credit, personal loans, and deposit account collateralized loans. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Loans to consumers are extended after a credit evaluation, including the creditworthiness of the borrower(s), the purpose of the credit, and the secondary source of repayment. Consumer loans are made at fixed and variable interest rates. Risk is mitigated by the fact that the loans are of smaller individual amounts.

	Pass		OLEM (Other Loans Especially Mentioned)		Sub- Standard		Doubtful		Loss		Total

At June 30, 2021:
Residential real estate	$	31,007	$	—	$	2,510	$	—	$	—	$	33,517
Multi-family real estate		31,210		—		—		—		—		31,210
Commercial real estate		74,886		4,516		—		—		—		79,402
Land and construction		4,553		—		—		—		—		4,553
Commercial		34,424		353		—		—		—		34,777
Consumer		10,701		—		—		—		—		10,701

Total	$	186,781	$	4,869	$	2,510	$	—	$	—	$	194,160

At December 31, 2020:
Residential real estate	$	28,151	$	—	$	846	$	—	$	—	$	28,997
Multi-family real estate		19,210		—		—		—		—		19,210
Commercial real estate		66,089		4,449		3,860		—		—		74,398
Land and construction		4,750		—		—		—		—		4,750
Commercial		20,735		1,114		—		—		—		21,849
Consumer		5,715		—		—		—		—		5,715

Total	$	144,650	$	5,563	$	4,706	$	—	$	—	$	154,919

	Pass		OLEM (Other Loans Especially Mentioned)		Sub- standard		Doubtful		Loss		Total
At September 30, 2017:
Residential real estate	$	22,820	$	3,375	$	369	$	—	$	—	$	26,564
Multi-family real estate		6,142	$	—	$	—	$	—	$	—	$	6,142
Commercial real estate		26,773	$	2,883	$	981	$	—	$	—	$	30,637
Land and construction		651	$	2,386	$	—	$	—	$	—	$	3,037
Commercial		3,133	$	2,257	$	—	$	—	$	—	$	5,390
Consumer		1,025	$	—	$	—	$	—	$	—	$	1,025

Total	$	60,544	$	10,901	$	1,350	$	—	$	—	$	72,795

At December 31, 2016:
Residential real estate	$	25,326	$	1,633	$	375	$	—	$	—	$	27,334
Multi-family real estate		5,829		—		—		—		—		5,829
Commercial real estate		25,979		1,174		2,111		—		—		29,264
Land and construction		5,636		45		—		—		—		5,681
Commercial		8,768		—		1,746		—		—		10,514
Consumer		1,823		—		6		—		—		1,829

Total	$	73,361	$	2,852	$	4,238	$	—	$	—	$	80,451

	Pass – Aa Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. These are loans that conform in all aspects to bank policy and regulatory requirements, and no repayment risk has been identified.

	OLEM – Anan Other Loan Especially Mentioned has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company’s credit position at some future date.

	Substandard – Aa Substandard loan is inadequately protected by the current ~~sound~~net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Included in this category are loans that are current on their payments, but the Bank is unable to document the source of repayment. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

	Doubtful – Aa loan classified as Doubtful has all the weaknesses inherent in one classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. The Company charges off any loan classified as Doubtful.

	Loss – Aa loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be ~~affected~~effected in the future. The Company fully charges off any loan classified as Loss.

	Accruing Loans
	30-59 Days Past Due			60-89 Days Past Due			Greater Than 90 Days Past Due			Total Past Due			Current				Nonaccrual Loans			Total Loans
At September 30, 2017:
Residential real estate	$		—	$		—	$		—	$		—		$		26,564	$		—	$		26,564
Multi-family real estate			—			—			—			—				6,142			—			6,142
Commercial real estate			—			—			—			—				30,637			—			30,637
Land and construction			—			—			—			—				3,037			—			3,037
Commercial			—			—			—			—				5,390			—			5,390
Consumer			—			—			—			—				1,025			—			1,025

Total	$		—	$		—	$			$		—		$		72,795	$		—	$		72,795

At December 31, 2016:
Residential real estate		$	—		$	—		$	—		$	—			$	26,959		$	375		$	27,334
Multi-family real estate			—			—			—			—				5,829			—			5,829
Commercial real estate			—			—			—			—				29,264			—			29,264
Land and construction			—			—			—			—				5,681			—			5,681
Commercial			—			—			—			—				10,514			—			10,514
Consumer			—			6			—			6				1,823			—			1,829

Total		$	—		$	6		$	—		$	6			$	80,070		$	375		$	80,451

	Accruing Loans
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Past		Total Past Due		Current		Nonaccrual Loans		Total Loans

At June 30, 2021:
Residential real estate	$	—	$	—	$	—	$	—	$	33,517	$	—	$	33,517
Multi-family real estate		—		—		—		—		31,210		—		31,210
Commercial real estate		—		—		—		—		79,402		—		79,402
Land and construction		—		—		—		—		4,553		—		4,553
Commercial		—		—		—		—		34,777		—		34,777
Consumer		41		29		—		70		10,631		—		10,701

Total	$	41	$	29	$	—	$	70	$	194,090	$	—	$	194,160

	Accruing Loans
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Nonaccrual Loans		Total Loans
*At December 31, 2020:*
Residential real estate	$	977	$	—	$	—	$	977	$	28,020	$	—	$	28,997
Multi-family real estate		—		—		—		—		19,210		—		19,210
Commercial real estate		—		—		—		—		72,205		2,193		74,398
Land and construction		—		—		—		—		4,750		—		4,750
Commercial		—		—		—		—		21,849		—		21,849
Consumer		6		—		—		6		5,709		—		5,715

Total	$	983	$	—	$	—	$	983	$	151,743	$	2,193	$	154,919

	Bank			Consent Order Regulatory Requirement

Tier I capital to total average assets		8.54	%		8.00	%

Tier I capital to risk-weighted assets		13.12	%		NA	%

Common equity Tier I capital to risk-weighted assets		13.12	%		NA	%

Total capital to risk-weighted assets		14.42	%		12.00	%

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Weighted-average number of common shares outstanding used to calculate basic and diluted (loss) earnings per common share		1,103,447		1,097,644		1,103,447		1,024,704

	Fair Value		Level 1		Level 2		Level 3		Total Losses		Losses Recorded in Operations
*At September 30, 2017-*
Residential real estate	$	1,018	$	—	$	—	$	1,018	$	461	$	—

	At September 30, 2017							At December 31, 2016
	Carrying Amount		Fair Value			Level		Carrying Amount		Fair Value			Level
Financial assets:
Cash and cash equivalents	$	18,514	$	18,514			1	$	17,640	$	17,640			1
Securities available for sale		16,199		16,199			2		20,222		20,222			2
Loans		69,194		69,095			3		76,999		76,829			3
Federal Home Loan Bank stock		979		979			3		1,113		1,113			3
Accrued interest receivable		366		366			3		380		380			3

Financial liabilities:
Deposit liabilities		77,374		77,935			3		86,009		86,364			3
Federal Home Loan Bank advances		20,500		20,458			3		23,500		23,500			3
Junior subordinated debenture		5,155		NA	⁽¹⁾		3		5,155		N/A	⁽¹⁾		3
Off-balance sheet financial instruments		—		—			—		—		—			—

	Actual					For Capital Adequacy Purposes					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions					Requirements of Consent Order
	Amount		%			Amount		%			Amount		%			Amount		%
As of September 30, 2017:
Total Capital to Risk-Weighted Assets	$	10,472		14.42	%	$	5,809		8.0	%	$	7,262		10.0	%	$	8,714		12.00	%
Tier I Capital to Risk-Weighted Assets		9,527		13.12	%		4,357		6.0	%		5,809		8.0	%		NA		NA
Common equity Tier I capital to Risk-Weighted Assets		9,527		13.12	%		3,268		4.5	%		4,720		6.5	%		NA		NA
Tier I Capital to Total Assets		9,527		8.54	%		4,463		4.0	%		5,579		5.0	%		8,926		8.00	%

As of December 31, 2016:
Total Capital to Risk-Weighted Assets	$	10,662		12.79	%	$	6,609		8.0	%	$	8,261		10.0	%	$	9,913		12.0	%
Tier I Capital to Risk-Weighted Assets		9,498		11.50	%		4,957		6.0	%		6,609		8.0	%		N/A		N/A
Common equity Tier I capital to Risk-Weighted Assets		9,498		11.50	%		3,718		4.5	%		5,370		6.5	%		N/A		N/A
Tier I Capital to Total Assets		9,498		8.06	%		4,714		4.0	%		5,893		5.0	%		9,428		8.0	%

	Nine Months			Nine Months			Year
	Ended			Ended			Ended
	September 30, 2017			September 30, 2016			December 31, 2016

Average equity as a percentage of average assets		2.22	%		2.59	%		2.6	%

Equity to total assets at end of period		2.42	%		2.73	%		2.6	%

Return on average assets (1)		(.45	)%		(0.34	)%		(0.3	)%

Return on average equity (1)		(18.15	)%		(12.96	)%		(12.5	)%

Noninterest expenses to average assets (1)		2.74	%		3.51	%		3.3	%