(1) The number of shares issuable to Mr. Blisko is limited because he is currently the Company will determine the applicable per share pricebeneficial owner of the common stock to be issued (the lower of $3.00 or the closing market price of the common stock on the expiration date). The Company will then accept the tenders of Trust Preferred Securities with an aggregate value of up to the lesser of $2,100,000 or the closing market price on the termination date of the exchange offer multiplied by 700,000, provided that in no event will the Company issue more than 700,000598,388 shares of common stock. In the event the aggregate value

(2) The number of the Trust Preferred Securities that are tendered exceeds these limits, then the Company will accept a pro rata amountshares issuable to Empire Indemnity is limited because Empire Indemnity is controlled by Mr. Gubin and Mr. Blisko, who beneficially own 689,815 shares and 598,388 shares, respectively.

(3) The number of Trust Preferred Securities from the tendering holders and return the excess Trust Preferred Securities. As a result, the per share price of the shares of common stock issued will be the same for each tendering holder.

Each tendering holder must representissuable to the Company that it would not beMr. Gross is limited because he is currently the beneficial owner of more than 9.9%245,000 shares of the common stock upon consummation of the exchange offer. No holder may tender any Trust Preferred Securities if acceptance of such tenders in full by the Company would result in such holder being the beneficial owner of more than 9.9% of the common stock.

All shares of common stock issuable pursuant tothat are issued upon the exchange offerconversion of the Series B Preferred will constitute restricted securities for purposes“restricted securities” under Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”). The Company will not provide any registration rights with regard to such shares of common stock. Any shares of common stock issued in the exchange offer willconversion would be issued in reliance on the exemption from registration contained in Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.

Nasdaq Marketplace Rule 5635(d)

The Company’s common stock is currently listed on The Nasdaq Capital Market and, as such, we are subject to Nasdaq Marketplace Rules.

Nasdaq Marketplace Rule 5635(d) (“Rule 5635(d)”) requires the Company to obtain shareholder approval prior to the issuance of its common stock in connection with certain non-public offerings. Rule 5635(d) applies when:

● the offering involves the sale, issuance or potential issuance by the Company of common stock equal to 20% or more of the common stock outstanding before the issuance; and

● the offering price is less than the current market price.

Rule 5635(d) will apply because the number of shares that could be issued in the exchange offer will exceed the 20% threshold and the offering price may be less than the current market price. As a result, the Company is required to obtain shareholder approval of the offering.

Potential Effect of Exchange Offer

If the exchange offer is approved by the shareholders, the Company would commence the exchange offer within 120 days after the annual meeting of shareholders. The exchange offer would be made to the then current holders of the Trust Preferred Securities.

The price for the common stock to be offered in the exchange offer would be equal to the lesser of (i) $3.00 per share, or (ii) the closing market price on the termination date. The closing market price of the common stock on March 31, 2021, was $3.87 per share. Assuming that the market price does not change during the term of the exchange offer, then the price for the common stock would be $3.00 per share.

The potential effects of the exchange offer would be as follows:

Interest of Certain Directors and Director Nominee in the Exchange Offer

Currently, all 2,068 of the outstanding Trust Preferred Securities are owned by Preferred Shares, LLC, an affiliate of Mr. Gubin, a Director of the Company.

Preferred Shares, LLC has indicated that it expects to sell 847.1 Trust Preferred Securities to an affiliate of Mr. Chan, one of the Company’s directors, in exchange for $1,200,102, to sell 622.7 Trust Preferred Securities to an affiliate of Mr. Blisko, one of the nominees for director, in exchange for $788,690 and to sell the remaining 598.9 Trust Preferred Securities to three non-affiliated third parties in exchange for $758.651. Each of the proposed purchasers is an accredited investor with whom Mr. Gubin had a substantive pre-existing business or personal relationship.

If each of these persons elect to participate in the exchange offer and assuming the price in the exchange offer is $3.00 per share and all accrued interest is paid in cash, then the affiliate of Mr. Chan would receive 282,377 shares of the Company’s common stock, the affiliate of Mr. Blisko would receive 207,550 shares and the three non-affiliated third parties would receive 199,645 shares.

Reasons for the Exchange Offer

The Board believes that the exchange of additional Trust Preferred Securities for common stock would be in the best interest of the Company and its shareholders. The Board believes that the long-term stability of the Company depends on the Company’s ability to eliminate the Trust Preferred Securities through a combination of share exchanges and payments.

As noted above, the exchange offer will also result in an increase in the Company’s stockholders’ equity based on the value of the Trust Preferred Securities acquired by the Company in the exchange.

In considering this matter, the Board has also concluded that it would be necessary to offer the common stock at a discount to its market price in order to induce the holders of the Trust Preferred Securities to participate in the exchange. Assuming that the common stock will be offered at $3.00 per share, the current discount would be approximately 22.5% from the closing market price of $3.87 per share as of March 31, 2021. The Board also noted that the price of $3.00 per share was 24.5% greater that the book value per commons share of $2.45 per share on December 31, 2020.

The Board was aware that Moishe Gubin, a director of the Company, had a conflict of interest with respect to this matter in light of his ownership of the current holder of the Trust Preferred Securities, and that Mr. Chan had a conflict of interest in light of his prospective purchase of the Trust Preferred Securities and participation in the exchange offer. To address these issues, each of them abstained from voting on this matter.

Vote Required

The approval of Proposal No. 2 requires the affirmative vote of the majority of the votes cast for this proposal. As such, abstentions and broker non-votes will not affect the outcome of the vote, but will be counted for determining the existence of a quorum

Board Recommendation for Proposal No. 2

The Board determined that Proposal No. 2 is advisable and in the best interest of our shareholders and recommended that our shareholders vote in favor of Proposal No. 2.

In reaching its determination to approve Proposal No. 2, the Board considered a number of factors, including:

● the conversion of the Series B Preferred would eliminate the Series B Preferred, which would facilitate the Company’s ability to issue future series of preferred stock, because the Series B Preferred is entitled to be senior to any other class of preferred stock;

● the conversion of the Series B Preferred would eliminate the liquidation preference of Series B Preferred;

● the conversion of the Series B Preferred would increase the total number of shares of common stock that could potentially be sold into the existing public market, subject to applicable securities laws, which could facilitate the development of a more robust public market for the common stock;

● our financial condition, results of operations, cash flow and liquidity, including our outstanding debt obligations, which required us to raise additional capital for ongoing cash needs;

● the willingness of the holders of the Series B Preferred to make further investments in the Company following the conversion of the Series B Preferred;

● the interests of Moishe Gubin, our Chairman, and Michael Blasio, one of our directors, in the conversion by virtue of their beneficial ownership of the Series B Preferred;

● the dilution to our current common shareholders that would occur upon the conversion of the Series B Preferred.

In view of the variety of factors considered in connection with the evaluation of the conversion of the Series B Preferred and the complexity of these matters, the Board did not find it practicable to, and did not, quantify or otherwise attempt to assign any relative weight to the various factors considered. In addition, in considering the various factors, individual members of the Board may have assigned different weights to different factors.

After evaluating these factors for and against the conversion of the Series B Preferred, and based upon their knowledge of our business, financial condition and prospects, potential financing alternatives (or lack thereof), and the views of our management, the Board concluded that the conversion of the Series B Preferred is in our best interest and in the best interests of our shareholders, and recommends that all shareholders vote “FOR” the approval of Proposal No. 2.

NASDAQ Stockholder Approval Requirements

Our common stock is listed on The NASDAQ Stock Market (“NASDAQ”) and trades under the ticker symbol OPHC. The approval of the conversion of the Series B Preferred requires shareholder approval under NASDAQ Rules 5635(b), 5635(c) and 5635(d).

NASDAQ Marketplace Rule 5635(b) requires shareholder approval of security issuances when the issuance or potential issuance will result in a change of control of the company. NASDAQ has generally taken the position that any issuance that results in an investor or group of investors obtaining a 20% or greater interest or a right to acquire that interest on a post-transaction basis, and that ownership position would be the largest position in the company, would be presumed to be a change of control. Assuming the full conversion of the Series B Preferred and the receipt of all required regulatory approvals, it is possible that Moishe Gubin or Michael Blisko or one of their affiliates could become the owner of more than 20% of the voting power of the Company on a post-transaction basis and be the Company’s largest shareholder. By approving Proposal No. 2, you are approving the proposal for purposes of the requirements under NASDAQ Marketplace Rule 5635(b), which may result in Moishe Gubin or Michael Blisko or one of their affiliates obtaining a greater than 20% interest in the Company on a post-transaction basis, which ownership position would be the largest position in the Company.

NASDAQ Marketplace Rule 5635(c) requires shareholder approval of security issuances at below fair market value made to officers, directors, employees or consultants, or affiliated entities of any such persons. Proposal No. 2 will result in shares of common stock being issued to directors Moishe Gubin and Michael Blisko and certain of their affiliates at a price which may be deemed to be below the fair market value of our common stock at the time the Company sold the Series B Preferred to these holders (as described above). By approving Proposal No. 2, you are approving the proposal for purposes of the requirements under NASDAQ Marketplace Rule 5635(c), which may result in Moishe Gubin or Michael Blisko or one of their affiliates acquiring shares of common stock at a price of less than fair market value.

NASDAQ Marketplace Rule 5635(d) requires shareholder approval in connection with a transaction other than a public offering involving the sale or issuance by the issuer of common stock (or securities convertible into or exchangeable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for a price that is less than the greater of the “Minimum Price.” For purposes of Rule 5635(d), the “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (for the five trading days immediately preceding the signing of the binding agreement. In the case of the Series B Preferred, the conversion price of the Series B Preferred was lower than the Minimum Price in the case of six of the seven sales of the Series B Preferred, as reflected in the following table:

Based on the Minimum Price of our common stock on each date on which the Company entered into binding agreements to sell shares of the Series B Preferred, the Minimum Price was less than the conversion price for such share, expect in the case of the shares of the Series B-3 Preferred. As noted above, the conversion of these shares could result in the issuance of common shares representing more than 20% of our common stock.

We are requesting in this Proposal No. 2 that our shareholders approve the issuance of the common stock issuable upon conversion of the Series B Preferred in accordance with NASDAQ Marketplace Rules 5635(b), (c), and (d).

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” APPROVAL OF THE ISSUANCE OF UP TO 11,113,889 SHARES OF COMMON STOCK UPON CONVERSION OF THE SERIES B PREFERRED STOCK PREVIOUSLY ISSUED BY THE COMPANY .

PROPOSAL NO. 3

AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK

Overview

The Company’s board of directors has unanimously approved a proposal to amend its articles of incorporation to increase the authorized shares of common stock of the Company from 10,000,000 shares to 30,000,000 shares, subject to stockholder approval. The board has declared this amendment to be advisable and recommended that this proposal be presented to the Company’s stockholders for approval.

If the Company’s stockholders approve this Proposal No. 3, the Company expects to file articles of amendment to the Company’s articles of incorporation with the Secretary of State of the State of Florida. Upon filing, the articles of amendment the authorized number of shares of common stock will increase from 10,000,000 to 30,000,000.

On the date of this proxy statement, the Company had an aggregate of 7,250,218 outstanding shares of common stock outstanding and had 39,318 shares of common stock available for issuance under the Company’s stock option plan. If the shareholders approve the conversion of the Series B Preferred as set forth in Proposal No. 2, the Company could potentially issue up to 11,113,889 additional shares of common stock. If the shareholders approve the increase in the number of shares that may be issued under the Company’s stock option plan from 550,000 shares to 1.050,000 shares as described in Proposal No. 4, the Company could potentially issue up to 500,000 additional shares of common stock. If all of the foregoing shares were issued, the Company would have 18,903,425 outstanding shares of common stock.

Reasons for the Increase in Authorized Shares

The primary reason for the proposed increase in the authorized shares is to facilitate the sale of additional shares of the Company’s common stock in order to provide additional capital to the Bank in order to support its continued growth. In this regard, the Bank’s total assets have grown from $235 million at December 31, 2020 to $585 million at December 31, 2022. The Company currently expects that the Bank will be able to continue its rapid growth provided that the Company raises additional capital to support such growth. The Company intends to raise such additional capital in 2023 through one or more public or private offerings of shares. The Company has not entered into any agreements or commitments with respect to any such offering and the terms of such offerings have not been determined. The authorization of the proposed increase is expected to provide the Company with the ability to issue enough additional shares to meet its capital requirements for at least the next 12 months.

The secondary reason for the proposed increase is to provide the Company with sufficient shares to be able to reserve as sufficient number of shares of common stock to permit the issuance of the proposed increased number of shares under the Company’s stock option and to permit the conversion of the Series B Preferred into common stock when approved by the Company and the shareholders.

In the case of the stock option plan, the Company is separately seeking shareholder approval in Proposal No. 4 to increase the authorized number of shares that may be issued under the plan from 550,000 to 1,050,000.

In the case of the Series B Preferred, the Company is separately seeking shareholder approval in Proposal No. 2 to permit the Company, at its option, to convert up to 1,360 outstanding shares of Series B Preferred into 11,113,889 shares of common stock.

The increase in the authorized number of common stock would provide the Company with sufficient shares to be able to issue the additional shares under the stock option plan and to convert its Series B preferred stock into common stock in the event that the Board determines that such conversion is in the best interests of the Company and its shareholders. The approval of the increase of the authorized shares will not constitute shareholder approval for increase in the shares available under the stock option plans or approval of the conversion of the Series B Preferred, which are being sought separately by the Company in Proposal No. 2 and Proposal No. 4.

If Proposal No.3 is approved, then the Company would reserve an additional 500,000 shares for issuance under the plan and 11,113,889 shares for issuance upon the conversion of the Series B Preferred. After taking account of the 7,250,218 currently outstanding common shares of the Company, the Company would then have 11,096,575 shares available for issuance for other purposes.

The Company desires to have additional shares available for other business and financial purposes in the future. The additional shares may be used for various purposes without further stockholder approval, except as may be required by applicable law, regulations promulgated by government agencies, the rules of the NASDAQ or other market or exchange on which Company common stock is then listed. These purposes may include, among others:

● providing equity incentives to employees, officers or directors;

● establishing strategic relationships with other companies; and

● expanding the business of the Company through the acquisition of other financial institutions.

The terms of additional shares of common stock will be identical to those of the currently outstanding shares of the Company’s common stock. However, because holders of the Company’s common stock have no preemptive rights to purchase or subscribe for any unissued stock of the Company, the issuance of any additional shares of common stock authorized as a result of the increase in the number of authorized shares of common stock will reduce the current stockholders’ percentage of ownership interest in the total outstanding shares of common stock.

Effects of the Increase in Authorized Shares

The proposed increase in the authorized number of shares of common stock could have a number of other effects on the stockholders of the Company depending upon the exact nature and circumstances of any actual issuances of authorized but unissued shares. The increase could have an anti-takeover effect, in that additional shares could be issued (within the limits imposed by applicable law) in one or more transactions that could make a change in control or takeover of the Company more difficult. For example, additional shares could be issued by the Company so as to dilute the stock ownership or voting rights of persons seeking to obtain control of the Company. Similarly, the issuance of additional shares to certain persons allied with the Company’ management could have the effect of making it more difficult to remove the Company’ management by diluting the stock ownership or voting rights of persons seeking to cause such removal.

Vote Required; Recommendation of Company Board of Directors

Assuming the existence of a quorum, the affirmative vote of the majority of the votes cast for this proposal iswill be required to approve this matter.for approval. As such, abstentions and broker non-votes will not affect the outcome of the vote, but will be counted for determining the existence of a quorum

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERSSTOCKHOLDERS VOTE “FOR” APPROVALPROPOSAL NO. 3 TO APPROVE AN AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE ISSUANCE OF UP TO 700,000 SHARES OF COMMON STOCK IN EXCHANGE FOR TRUST PREFERRED SECURITIES ISSUED BY OPTIMUMBANK CAPITAL TRUST I IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(D).TO 30,000,000 SHARES.

proposal no. 3PROPOSAL NO. 4

APPROVAL OF AN AMENDMENT TO THE PARTICIPATIONCOMPANY’S 2018 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF CERTAIN DIRECTORS OFSHARES THAT MAY BE ISSUED UNDER THE COMPANY IN THE EXCHANGE OFFER FOR THE TRUST PREFERRED SECURITIES DESCRIBED IN PROPOSAL 2PLAN

The Company has adopted the 2018 Equity Incentive Plan. The plan allows the Company to provide equity compensation to employees and directors, under a shareholder-approved plan, and enables the Company to attract and retain qualified persons to serve as directors and officers.

As of the date of this proxy statement, the Company has issued 542,682 shares under the plan. As a result, there are only 39,318 additional shares available for issuance under the plan.

The Board of Directors of the Company believes that equity compensation is seekinga key aspect of the Company’s ability to attract and retain qualified directors and officers. During 2022, the Company issued 67,182 shares to Moishe Gubin, as part of his compensation for his services as a Director, and 2,944 shares to Timothy Terry, as part of his compensation for his services as President of the Bank. The Company granted an additional 24,493 shares to other employees in 2022. The Company has no outstanding stock options or other equity awards.

The Board has approved an amendment to increase the aggregate number of shares of common stock authorized for issuance under the plan from 550,000 to 1,050,000 shares, subject to shareholder approval, in order to ensure that the Company is able to continue to grant equity compensation at levels determined appropriate by the Board.

Summary of the Plan

The principal features of the plan are summarized below.

Plan Administration. The plan is administered by our Board of Directors, a proposalmajority of whom meet the NASDAQ standard for director independence, and/or our Board’s Compensation Committee, which consists of at least two members of the Board, each of whom meets the NASDAQ standard for director independence. The Board through its Compensation Committee, has the sole authority, among other things, to:

● Select participants and grant awards,

● Determine the number of shares to authorize affiliatesbe subject to the types of Mr. Gubinawards,

● Determine the terms and Mr. Chan,conditions upon which awards will be granted under the plan, including the vesting requirements of awards,

● Prescribe the form and terms of award agreements,

● Establish procedures and regulations for the administration of the plan,

● Interpret the plan, and

● Make all determinations necessary or advisable for administration of the plan.

Eligibility. The directors and employees of the Company and an affiliate of Mr. Blisko, a director nominee,its subsidiaries are eligible to participate in the exchange offerplan.

Awards. The plan provides for the Trust Preferred Securities describedgrant of incentive and non-statutory options, bonus shares, restricted shares, and performance shares, as such terms are defined in Proposal 2.the plan.

Shares Subject to the Plan. If the amendment is approved, the number of shares of common stock that may be issued under the plan will increase from 550,000 shares to 1,050,000 shares. If any shares are subject to an award under the plan that is forfeited, cancelled, expires, lapses or otherwise terminates without the issuance of such shares, those shares will again be available for grant under the plan. Likewise, shares that are tendered to the Company by a participant as full or partial payment of the exercise price of any stock option granted under the plan or in payment of any withholding tax incurred in connection with any award under the plan will be available for issuance under the plan. The participationshares issued under the plan may consist, in whole or in part, of an affiliateauthorized but unissued shares or treasury shares.

Adjustments. In the event of a directormerger or consolidation (in each case where the shares of the Company are converted into stock and/or cash of another entity), or any corporate structure affecting Company common stock, adjustments and other substitutions will be made to the plan, including adjustments in the Trust Preferred Securities exchange requiresmaximum number of shares subject to the approval ofplan and other numerical limitations. Adjustments will also be made to awards under the Company’s shareholders under Nasdaq Marketplace Rule 5635(c).plan as the Board in its sole discretion deems equitable or appropriate.

Nasdaq Marketplace Rule 5635(c) (“Rule 5635(c)”) requires shareholder approvalOptions. Incentive and non-statutory options to purchase shares of any issuance of the Company’sCompany common stock may be granted under the plan, either alone or in addition to other awards and for no consideration or for such consideration as the Company’s officers, directors and employeesBoard and/or Compensation Committee may determine or as may be required by applicable law. The price at which a price that is less than fair market value. Under Rule 5635(c), the issuance of common stock at a priceshare may be purchased under an option may not be less than the market value of a share on the date the option is granted. Market value means the last reported sale price of Company common stock reported on The Nasdaq Capital Market on the relevant date of determination. The plan permits the Board and/or Compensation Committee to establish the term of each option, but its term may not exceed ten years. Options may be exercised for whole shares only. If an option would otherwise be exercisable for fractional shares, the option is consideredrounded down to the nearest whole share amount. Options may vest and become fully exercisable in the event a formchange in control occurs as described below. The plan contains various provisions governing the participant’s right to exercise an option upon the termination of “equity compensation.”the participant’s employment with the Company.

As discussedRestricted Stock. Restricted stock awards may be issued to participants for no cash consideration, or for such minimum consideration as may be required by applicable law, either alone or in Proposal 2 above,addition to other awards granted under the plan. Restricted stock vests and becomes fully exercisable as determined by the Board. Restricted stock vests and becomes fully exercisable in the event: (i) a change in control occurs, as described below, and service is terminated within 12 months thereafter; or (ii) of the death or disability of the participant. If a participant’s service with the Company is seekingterminated, the participant will forfeit any unvested restricted stock (except in certain cases following a change in control).

Performance Share Awards. Other awards of Company common stock that are valued in whole or in part by reference to, or are otherwise based on, Company common stock or the attainment by the Company of certain performance goals, may be granted to participants, either alone or in addition to other awards. Stock awards are paid in shares of Company common stock. Shares granted as stock awards may be issued for no cash consideration or for such minimum consideration as may be required by applicable law. At the time the performance goals established have been attained or otherwise satisfied within the performance cycle, the payment of the performance shares in the name of the participant will be made at the end of the performance cycle.

Bonus Shares and Awards in Lieu of Obligations. Bonus share awards may be issued to participants as a bonus or in consideration for past services actually rendered for the Company, or in lieu of obligations of the Company to pay cash or deliver other property under the plan or under other plans or compensation arrangements. The bonus shares can be awarded under terms and agreements that are determined by the Compensation Committee and/or the Board.

Change in Control. Unless otherwise determined by the Board and/or Compensation Committee at the time of the grant of an award, in the event of a change in control of the Company, all outstanding stock options will become fully vested. If a participant’s service with the Company is involuntarily terminated at any time within twelve months after a change in control, and unless otherwise determined by the Board and/or Compensation Committee at the time of the grant of an award, any restricted period with respect to restricted shares will lapse and all such shares will become fully vested.

A “change in control” means, with certain exceptions: (i) an acquisition of beneficial ownership of 50% or more of the outstanding common stock; (ii) a merger in which the Company is not the surviving entity, or a sale by the Company or the Bank of all or substantially all of its assets; or (iii) the acquisition by any person or group by means of a merger, consolidation or purchase of 80% or more of its outstanding shares.

Effective Date, Term, Amendment and Termination. The plan will remain in effect until the earlier of (a) the date that no additional shares are available for issuance, (b) the date the plan is terminated by the Board of Directors in accordance with its terms or (c) the tenth anniversary of the date of the original shareholder approval of a proposalthe plan. Termination will not affect grants and awards then outstanding under the plan. The Board of Directors may terminate or amend the plan at any time without shareholder approval, unless such approval is necessary to issuecomply with the Securities Exchange Act of 1934, the Internal Revenue Code, NASDAQ rules, or other applicable law. No termination, amendment or modification of the plan may in any manner affect any award previously granted under the plan without the consent of the participant to upwhom the award was granted or the transferee of the award.

Restriction on Transfer. Awards granted under the plan are generally non-transferable, except by will or the laws of descent and distribution. The Board may permit participants to 700,000transfer awards (other than stock options) to members of their immediate family, to one or more trusts solely for the benefit of such immediate family members, and to partnerships into which such family members or trusts are the only partners.

Other Provisions. The Board may establish procedures providing for the delivery of shares of the Company’sCompany common stock, in exchange for Trust Preferred Securities issued by OptimumBank Capital Trust I.satisfaction of withholding tax obligations.

AtFederal Income Tax Consequences. Under present law, the presentfollowing are the U.S. federal income tax consequences generally arising with respect to stock options, restricted stock, bonus shares and performance share awards:

Upon exercising a non-statutory option, a participant must recognize ordinary compensation income equal to the difference between the fair market value of the shares on the date of exercise and the exercise price. The Company will be entitled to a deduction for the same amount. Upon sale of such shares by the optionee, any difference between the sales price and fair market value on the date of exercise will be treated as a long-term capital gain (loss) if the stock has been held for at least 12 months.

For an incentive stock option, the optionee generally will recognize no taxable income upon grant or exercise of the option. If the acquired stock is held for at least two years from date of grant and one year from date of exercise, any gain or loss realized upon disposition of the shares will be treated as long-term capital gain (loss). If the acquired stock is sold prior to the satisfaction of these holding period requirements, the difference between the option price and the fair market value of the shares on the date of exercise will be treated as ordinary compensation income. The Company will be entitled to a deduction for the same amount. If compensation is recognized and the stock is sold, any difference between fair market value on date of exercise and the sales price will be recognized as either short or long term capital gain or loss, depending upon the amount of time the owneracquired stock was held. For alternative minimum tax purposes, the exercise of an incentive stock option will create an adjustment item in the year of exercise equal to the difference between the option price and fair market value on date of exercise. This adjustment item will create an adjusted tax basis for alternative minimum tax purposes different from regular tax purposes in the stock equal to the fair market value on date of exercise.

Recipients of restricted stock awards will recognize ordinary income in an amount equal to the fair market value of the Trust Preferred Securities is Preferred Shares, LLC, an affiliateshares of Mr. Gubin, who isCompany common stock granted to them at the time that the shares vest and become transferable. A recipient of a directorrestricted stock award may, however, elect to accelerate the recognition of income with respect to his or her grant to the Company.time when shares of common stock are first transferred to him or her, notwithstanding the vesting schedule of such awards. The Company will be entitled to deduct as a compensation expense for tax purposes the same amounts recognized as income by recipients of restricted stock awards in the year in which such amounts are included in income.

Preferred Shares, LLC has indicated that it expectsPerformance share and bonus share awards result in the recognition of ordinary income in an amount equal to sell 847.1 Trust Preferred Securitiesthe fair market value of shares of Company common stock paid to an affiliate of Mr. Chan, one ofparticipants. The Company will be entitled to deduct as a compensation expense for tax purposes the Company’s directors, in exchange for $1,200,102, to sell 622.7 Trust Preferred Securities to an affiliate of Mr. Blisko, one of the nominees for director, in exchange for $788,690 and to sell the remaining 598.9 Trust Preferred Securities to three non-affiliated third parties in exchange for $758.651. Each of the proposed purchasers is an accredited investor with whom Mr. Gubin had a substantive pre-existing business or personal relationship.same amounts recognized as income by plan participants.

If each of these persons elect to participate in the exchange offer and assuming the price in the exchange offer is $3.00 per share and all accrued interest is paid in cash, then the affiliate of Mr. Chan would receive 282,377 shares of the Company’s common stock, the affiliate of Mr. Blisko would receive 207,550 shares and the three non-affiliated third parties would receive 199,645 shares.

As a result, any exchange of the Trust Preferred Securities held by Preferred Shares, LLC would be subject to the requirements of Rule 5635(c).Other Information

The CompanyBoard has not made any determination as to the allocation of benefits or amounts under the plan if approved by shareholders. If the plan is requestingnot approved by shareholders, the Board of Directors will consider other alternatives for performance-based compensation. The plan is not exclusive and does not limit the authority of the Board or its shareholdersCommittees to approve the participation of Preferred Shares, LLC and the affiliates of Mr. Chan and Mr. Blisko in the exchange.grant awards or authorize any other compensation, with or without reference to shares, under any other plan or authority.

As discussed in Proposal 2, the Board believes that the exchange of additional Trust Preferred Securities for common stock would be in the best interest of the Company and its shareholders. The participation of Preferred Shares, LLC, and the affiliates of Mr. Chan and Mr. Blisko in the exchange would significantly enhance the Company’s ability to achieve the goals of the exchange offer.

As discussed in Proposal 2, the exchange offer may be made at a price that is less than the current market price. In considering this matter, the Board has concluded that it would be necessary to offer the common stock at a discount to its market price in order to induce the holders of the Trust Preferred Securities to participate in the exchange. Assuming that the common stock will be offered at $3.00 per share, the current discount would be approximately 22.5% from the closing market price of $3.87 per share as of March 31, 2021. Under Rule 5635(c), this discount is treated as a form of equity compensation that requires shareholder approval.

The other potential effects of the exchange offer are discussed in Proposal 2.

Interest of Directors in the Exchange Offer

Currently, all 2,068 of the outstanding Trust Preferred Securities are owned by Preferred Shares, LLC, an affiliate of Mr. Gubin, a Director of the Company.

Preferred Shares, LLC has indicated that it expects to sell 847.1 Trust Preferred Securities to an affiliate of Mr. Chan, one of the Company’s directors, in exchange for $1,200,102, to sell 622.7 Trust Preferred Securities to an affiliate of Mr. Blisko, one of the nominees for director, in exchange for $788,690 and to sell the remaining 598.9 Trust Preferred Securities to three non-affiliated third parties in exchange for $758.651. Each of the proposed purchasers is an accredited investor with whom Mr. Gubin had a substantive pre-existing business or personal relationship.

If each of these persons elect to participate in the exchange offer and assuming the price in the exchange offer is $3.00 per share and all accrued interest is paid in cash, then the affiliate of Mr. Chan would receive 282,377 shares of the Company’s common stock, the affiliate of Mr. Blisko would receive 207,550 shares and the three non-affiliated third parties would receive 199,645 shares.

Each of the proposed transferees is an accredited investor with whom Mr. Gubin had a substantive pre-existing business or personal relationship.

As described in Proposal 2, the Board was aware that Mr. Gubin and Mr. Chan, directors of the Company, had a conflict of interest with respect to this matter. To address these issues, both of them abstained from voting on this matter.

Vote Required for Approvaland Recommendation of Board of Directors

Assuming the existencepresence of a quorum, the affirmative vote of the majority of the votes cast for this proposal iswill be required to approve this matter. Approvalfor approval. As such, abstentions and broker non-votes will not affect the outcome of this Proposal 3 is subject to the approvalvote, but will be counted for determining the existence of Proposal 2.a quorum.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN THE NUMBER OF SHARES THAT MAY BE ISSUED UNDER COMPANY’S 2018 EQUITY INCENTIVE PLAN.

PROPOSAL NO. 5

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the shareholders of the Company are entitled to vote at the annual meeting on the compensation of the Company’s named executive officers, as disclosed in the Executive Compensation section and accompanying compensation tables contained in this Proxy Statement. Pursuant to the Dodd-Frank Act, the shareholder vote on executive compensation is an advisory vote only, and it is not binding on Company or the Board of Directors.

Although the vote is non-binding, the Board of Directors values the opinions of the shareholders and will consider the outcome of the vote when making future compensation decisions.

The Company’s current executive compensation program is designed to provide a competitive level of annual cash and equity compensation that will allow the Company to attract, motivate and retain individuals with the skills required to achieve the Company’s performance goals. At the present time, the Company is not utilizing any other long term compensation for the Company’s executive officers.

The advisory vote regarding the compensation of the named executive officers shall be approved if the votes cast in favor of the proposal exceed the votes cast against the proposal. Abstentions will not be counted as either votes cast for or against the proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE PARTICIPATION OF CERTAIN DIRECTORSCOMPENSATION OF THE COMPANYNAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE EXCHANGE OFFER FOR THE TRUST PREFERRED SECURITIES DESCRIBEDEXECUTIVE COMPENSATION SECTION AND ACCOMPANYING COMPENSATION TABLES CONTAINED IN IN PROPOSAL 2.THIS PROXY STATEMENT.

PROPOSAL NO. 6

ADVISORY VOTE ON FREQUENCY OF SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION

Under the Dodd-Frank Act, the shareholders of the Company are entitled to vote at the annual meeting regarding whether the advisory vote on executive compensation should occur every one, two or three years. Under regulations issued by the SEC, shareholders shall also have the option to abstain from voting on the matter. Pursuant to the Dodd-Frank Act, the shareholder vote on the frequency of the advisory vote on executive compensation is an advisory vote only, and it is not binding on Company or the Board of Directors.

Although the vote is non-binding, the Board values the opinions of the shareholders and will consider the outcome of the vote when determining the frequency of the shareholder vote on executive compensation.

The Board of Directors has determined that an advisory shareholder vote on executive compensation every three years is the best approach for Company and its shareholders for following reasons:

● A three-year cycle will provide investors with sufficient time to evaluate the effectiveness of the Company’s incentive programs, compensation strategies and the total Company performance; and

● A three-year cycle provides the Board of Directors with sufficient time to thoughtfully evaluate and respond to shareholder input and effectively implement any desired changes to Company’ executive compensation program.

The advisory vote regarding the frequency of the shareholder vote described in this Proposal No. 5 shall be determined by a plurality of the votes cast. Abstentions will not be counted as either votes cast for or against the proposal.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR THREE YEARS” ON PROPOSAL NO. 6 REGARDING THE FREQUENCY OF THE SHAREHOLDER VOTE TO ON EXECUTIVE COMPENSATION.

PROPOSAL NO. 4

PROPOSAL NO. 7

RATIFICATION OF INDEPENDENT AUDITOR

The Audit Committee has selected Hacker, Johnson & Smith, P.A. (“Hacker Johnson”) as the Company’s independent auditor for fiscal year 2021,2023, and the Board asks shareholders to ratify that selection. Although current law, rules, and regulations, as well as the charter of the Audit Committee, require the Audit Committee to engage, retain, and oversee the Company’s independent auditor, the Board considers the selection of the independent auditor to be an important matter of shareholder concern and is submitting the selection of Hacker Johnson for ratification by shareholders as a matter of good corporate governance.

Assuming the existence of a quorum, the affirmative vote of the majority of the shares represented in person or by proxyvotes cast for this proposal will be required for approval. As such, abstentions and entitled tobroker non-votes will not affect the outcome of the vote, atbut will be counted for determining the meeting is required to approve this matter.existence of a quorum.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF HACKER, JOHNSON & SMITH, P.A. AS THE COMPANY’S INDEPENDENT AUDITOR FOR FISCAL YEAR 2021.2023.

AUDIT COMMITTEE REPORT

The Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 20202022 with the Company’s management and has discussed with the independent auditors, Hacker, Johnson & Smith, P.A., communications pursuant to applicable auditing standards. In addition, Hacker, Johnson & Smith, P.A. has provided the Audit Committee with the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Hacker, Johnson & Smith, P.A., the independent auditor’s independence.

Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20202022 and selected Hacker, Johnson & Smith, P.A. as the Company’s independent auditor for 2021.2023.

INDEPENDENT ACCOUNTANTS

Hacker, Johnson & Smith, P.A., the Company’s independent registered public accounting firm, audited the Company’s consolidated financial statements for the fiscal year ended December 31, 2020.2022.

Audit Fees

The following table is a summary of the fees billed to the Company by Hacker, Johnson & Smith, P.A. for professional services rendered for the years ended December 31, 20202021 and 2019:2022:

Audit Fees. Consists of fees billed for professional services rendered for the audit of the Company’s financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by Hacker, Johnson & Smith, P.A. in connection with statutory and regulatory filings or engagements.

Pre-approved Services. Consistent with SEC rules regarding auditor independence, the Company’s Audit Committee Charter requires the Audit Committee to pre-approve all audit services and non-audit services permitted by law and Audit Committee policy (including the fees and terms of such services) to be performed for the Company by the independent auditors, subject to the “de minimis” exceptions for non-audit services described in SEC rules that are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may delegate pre-approval authority to a member of the committee. The decisions of any committee member to whom pre-approval is delegated must be presented to the Audit Committee at its next scheduled meeting.

A representative from Hacker, Johnson & Smith, P.A., independent public auditors for the Company for 20192021 and 2020,2022, is expected to be present at the annual meeting, will have an opportunity to make a statement, and will be available to respond to appropriate questions.

MANAGEMENT

Officers of the Company

The Board of Directors is seeking to appoint Moishe Gubin as the Company’s Chief Executive Officer. Mr. Gubin has submitted requests for the required regulatory approvals to serve as Chief Executive Officer of the Company. These requests are currently pending.

Since June 2016, Timothy Terry, President and Chief Executive Officer of the Bank, has been acting as the Principal Executive Officer for the Company, and since February 2020, Joel Klein, a director of the Company has been acting as the Principal Financial Officer for the Company.

The background of Mr. Terry is set forth below. The background of Mr. Klein is set forth in the section of this proxy statement entitled “Proposal No. 1 – Election of Directors.”

Timothy Terry, age 65,66, was appointed President and Chief Executive Officer of the Bank in February 2013 and was appointed Chief Operating Officer of the Bank in 2018. Mr. Terry has been in banking for 35 years and most recently served as President/CEO of Putnam State Bank in Palatka, Florida. Prior to joining OptimumBank, he served as President, CEO and Senior Loan Officer for Enterprise Bank of Florida in North Palm Beach, Florida, and held senior lending, branch administration & sales management positions at Palm Beach National Bank & Trust, Flagler National Bank of the Palm Beaches and Comerica Bank. Mr. Terry received his BBA degree in finance from Western Michigan University located in Kalamazoo, Michigan. He is also a graduate of the American Bankers Association Stonier Graduate School of Banking at the University of Delaware.

MANAGEMENT COMPENSATION

The following table shows the compensation paid by the Company and the Bank for 20192021 and 20202022 to the persons acting as principal executive officer and principal financial officer during this period.

Summary Compensation Table

Stock Options

No stock options were granted to any of the executive officers in 2020.2022 or 2021. None of the Company’s executive officers holds any stock options.

Stock Grants

In 2020,2022, the Company made a restricted stock grant to Mr. Terry of 5,9762,944 shares of common stock, valued at $18,765.$11,571.

Director Compensation

Each Director receives compensation for serving on the Board of Directors and committees of the Board. Mr. Gubin, who serves as Chairman of the Board, receives a $15,000 as an annual retainer, and all other directors receive $7,500 as an annual retainer. Additionally, Mr. Gubin receives $1,650 for each Board meeting attended, and all other directors receive $1,100 for each Board meeting attended. At the present, the Company does not have any person serving as the Chairman of the Board. Mr. Gubin receives additional compensation for each Board meeting attended because he has performed many of the duties that would otherwise be performed by a Chairman of the Board. For Audit Committee meetings, the Chairman receives compensation of $400 for each meeting attended, and the other members receive $300. For Compensation Committee meetings, Mr. Gubin, as Chairman, receives compensation of $125$350 for each meeting attended and the other members receive $100.$200.

Mr. Gubin also receives $200,000$275,000 per year for additional services as a director, payable in shares of the Company’s common stock (based on the fair market value on the date of issuance). These additional services include his generally spending approximately one week per month in the Bank’s offices. He is also actively involved in the Bank’s marketing efforts for new loan business and deposits and in the Company’s investor relations efforts.

Director Compensation Table For 20202022

PAY VERSUS PERFORMANCE

Pay Versus Performance Table for 2022 and 2021

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

This following table sets forth information regarding the beneficial ownership of the common stock as of March 31, 2021,February 28, 2023, for:

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and investment power with respect to the securities. The persons named in the table have sole voting and investment power or have shared voting and investment power with a spouse with respect to all shares of common stock shown as beneficially owned by them, unless otherwise indicated in these footnotes.

DELINQUENT SECTION 16(A) REPORTS

Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, as well as persons who own 10% or more of a class of the Company’s equity securities, to file reports of their ownership of the Company’s securities, as well as statements of changes in such ownership, with the SEC. The Company believes that all such filings required during 20202022 were made on a timely basis, except for four Form 4s for Mr. Gubin, two Form 4s for Mr. Gubin,Blisko, one Form 4 for Mr. Schmidt,Terry and one Form 3 and one Form 4 for Mr. Klein and one Form 5 for Mr. Terry.Newman.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since January 1, 2020,2022, except as described below, there have been no transactions or any proposed transactions in which the Company was or is a party, in which the amount involved exceeded $120,000, and in which a director, director nominee, executive officer, holder of more than 5% of the Company’s common stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.

Purchase of Series B Preferred StockShares by Affiliates

During 2020,2022, the Company issued 400sold 202,000 shares of itscommon stock to Michael Blisko at a cash price of $4.50 per share, or a total of $909,000.

During 2022, the Company sold 260 shares of Series BB-2 preferred stock to an affiliate of Moishe Gubin and Michael Blisko a nominee for director, at a cash price of $25,000 per share, or an aggregatea total of $10 million.$6,500,000.

During 2022, the Company sold 340 shares of Series B-3 preferred stock to an affiliate of Moishe Gubin and Michael Blisko at a price of $25,000 per share, or a total of $8,500,000.

During 2022, the Company sold 190,000 shares of common stock to an affiliate of Moishe Gubin at a cash price of $4.50 per share, or a total of $855,000.

During 2022, the Company sold 202,000 shares of common stock to an affiliate of Chan Heng Fai Ambrose at a cash price of $4.50 per share, or a total of $909,000.

During 2022, the Company sold 17,000 shares of common stock to Steven Newman at a cash price of $4.50 per share, or a total of $76,500.

Loans to Officers, Directors and Affiliates

The Bank offers loans in the ordinary course of business to its directors and employees, including executive officers, their related interests and immediate family members. Applicable law and Bank policy require that these loans be on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties, and must not involve more than the normal risk of repayment or present other unfavorable features. Loans to individual employees, directors and executive officers must also comply with the Bank’s lending policies and statutory lending limits, and directors with a personal interest in any loan application are excluded from the consideration of such loan application.

SHAREHOLDER PROPOSALS FOR 20222023 ANNUAL MEETING

Proposals of shareholders of the Company that are intended to be presented by such shareholders at the Company’s 20222023 annual meeting of shareholders and that shareholders desire to have included in the Company’s proxy materials relating to such meeting must be received by the Company at its corporate offices no later than December 21, 2021,[_________], 2023, which is 120 calendar days prior to the anniversary of this year’s mailing date. Upon timely receipt of any such proposal, the Company will determine whether or not to include such proposal in the proxy statement and proxy in accordance with applicable regulations governing the solicitation of proxies.

If a shareholder wishes to present a proposal at the Company’s 20222024 annual meeting or to nominate one or more Directors and the proposal is not intended to be included in the Company’s proxy statement relating to that meeting, the shareholder must give advance written notice to the Company by March 13, 2022,[___________], 2024, as required by SEC Rule 14a-4(c)(1).

Any shareholder filing a written notice of nomination for Director must describe various matters regarding the nominee and the shareholder, including such information as name, address, occupation and shares held. Any shareholder filing a notice to bring other business before a shareholder meeting must include in such notice, among other things, a brief description of the proposed business and the reasons for the business, and other specified matters. Copies of those requirements will be forwarded to any shareholder upon written request.

SOLICITATION OF PROXIES

The proxy accompanying this Proxy Statement is solicited by the Board of Directors of the Company. All of the costs of solicitation of proxies will be paid by the Company. We may also reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in sending proxy materials to the beneficial owners of the Company’s shares of common stock. In addition to solicitations by mail, the Company’s directors, officers and employees, including those of the Bank, may solicit proxies personally, by telephone or otherwise, but will not receive any additional compensation for their services.

OTHER MATTERS

Management does not know of any matters to be presented at the meeting other than those set forth above. However, if other matters come before the meeting, it is the intention of the persons named in the accompanying proxy to vote the shares represented by the proxy in accordance with the recommendations of management on such matters, and discretionary authority to do so is included in the proxy.

HOW TO OBTAIN EXHIBITS TO FORM 10-K AND OTHER INFORMATION

A copy of the Company’s annual report on Form 10-K for the fiscal year ended December 31, 20202022 is included with this proxy statement. We will mail without charge copies of any particular exhibit to the Company’s Form 10-K upon written request. Requests should be sent to OptimumBank Holdings, Inc., Attn: Mary Franco, 2929 East Commercial Boulevard, Suite 303, Fort Lauderdale, FL 33308. Our proxy statement, annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, as well as any amendment to those reports, are also available free of charge through the SEC’s website, www.sec.gov.

Financial informationFINANCIAL INFORMATION

The following financial statements and related information of the Company are attached to this Proxy StatementStatement:

● Attached as Exhibit A:A are the Audited consolidated balance sheets of the Company, as of December 31, 2022 and December 31, 2021, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the years then ended and the related notes.

● Attached as Exhibit B is Management’s Discussion and Analysis of Financial Condition and Results of Operations for the years ended December 31, 2022 and 2021.

Exhibit A

Audited Financial Statements For The Years Then Ended December 31, 2022 And 2021

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors

OptimumBank Holdings, Inc.

Fort Lauderdale, Florida:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of OptimumBank Holdings, Inc. and subsidiary (the “Company”) as of December 31, 20202022 and 20192021 and the related consolidated statements of operations,earnings, comprehensive loss,(loss) income, stockholders’ equity and cash flows for the years then ended and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 20202022 and 2019,2021, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, the Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of General Reserve Portion of the Allowance for Loan Losses - Evaluation of the Qualitative Adjustments

As described in Notes 1 and 3 to the consolidated financial statements, management determines the general reserve portion of the allowance for loan losses using actual historical loss experience for each individual loan category, as well as evaluating whether qualitative adjustments are necessary. As of December 31, 2020,2022, the allowance for loan losses was $1.9$5.8 million which consists of two components: the allowance for loans individually evaluated for impairment (“special reserves”), none at December 31, 2020, and the allowance for loans collectively evaluated for impairment (“general reserve”), representing $1.9$5.8 million. The general reserve covers loans that are not individually classified as impaired. In evaluating whether qualitative adjustments are necessary, management considers (1) changes in national, regional and local economic conditions that affect the collectability of the loan portfolio (2) changes in collateral value of loans (3) changes in lending policies and procedures, risk selection and underwriting standards (4) changes in the volume and severity of past due loans, nonaccrual loans or loans classified special mention, substandard, doubtful or loss (5) the existence and effect of any concentrations of credit and changes in the level of such concentrations (6) changes in the nature and volume of the loan portfolio and terms of loans, (7) changes in the experience, ability and depth of lending management and other relevant staff, (8) quality of loan review, and Board of Directors oversight, (9) the effect of other external factors, trends or uncertainties that could affect management’s estimate of probable losses, such as competition and industry conditions.

The principal considerations for our determination that performing procedures relating to the evaluation of qualitative adjustments used in the calculation of the general reserve portion of the allowance for loan losses is a critical audit matter are as follows: Significant judgment used by management when evaluating the qualitative adjustments, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing audit procedures and evaluating audit evidence relating to the qualitative adjustments.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included among others, testing management’s process for evaluating qualitative adjustments by (i) evaluating the appropriateness of the methodology management used in evaluating the qualitative adjustments, (ii) testing the inputs used in the estimate of qualitative adjustments, including the completeness and accuracy of underlying historical loss data, and (iii) evaluating the reasonableness of the qualitative adjustments given current microeconomic trends and portfolio characteristics.

(PCAOB ID: 400)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

See accompanying notes to Consolidated Financial Statements

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Operations
Earnings

(In thousands)

See Accompanying Notes to Consolidated Financial Statements.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Loss
(Loss) Income

(In thousands)

See Accompanying Notes to Consolidated Financial Statements.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 20202022 and 2019
2021

(Dollars in thousands except per share amounts)