NYSE: OPHC

The
Company is subject to the supervision and regulation of The Board of Governors of the Federal Reserve System (the “Federal Reserve”).
The Bank is subject to the supervision and regulation of the State of Florida Office of Financial Regulation (“OFR”) and
the FDIC. The Bank is a member of the Federal Home Loan Bank of Atlanta.

At
December 31, 2025, the Company had total assets of $1.1 billion, net loans of $947.3 million, total deposits of $931.8 million and stockholders’
equity of $121.9 million. During 2025, the Company had a net income of $16.6 million.

Banking
Products

The
Bank’s revenues are primarily derived from interest and fees received in connection with, real estate and other loans, interest
from securities and short-term investments, and service charges on payment transactions. The principal sources of funds for the Bank’s
lending activities are deposits, borrowings, repayment of loans, and the repayment, or maturity of securities. The Bank’s principal
expenses are the interest paid on deposits, and operating and general administrative expenses.

As
is the case with banking institutions generally, the Bank’s operations are materially and significantly influenced by general economic
conditions and by related monetary and fiscal policies of financial institution regulatory agencies, including the Federal Reserve and
the FDIC. Deposit flows and costs of funds are influenced by interest rates on competing investments and general market rates of interest.
Lending activities are affected by the demand for financing of real estate and other types of loans, which in turn is affected by the
interest rates at which such financing may be offered and other factors affecting local demand and availability of funds. The Bank faces
strong competition attracting deposits (its primary source of lendable funds) and originating loans.

1

The
Bank provides a range of consumer and commercial banking services to individuals and businesses. The basic services offered include demand
interest-bearing and noninterest-bearing accounts, money market deposit accounts, NOW accounts, time deposits, wire transfers, ACH services,
Visa debit and ATM cards, cash management, direct deposits, notary services, money orders, night depositories, cashier’s checks,
domestic collections, and banking by mail. The Bank provides ATM cards and Visa debit cards, as a part of the Star, Presto and Cirrus
networks, thereby permitting customers to utilize the convenience of ATMs worldwide. In December 2022, the Bank began participating as
a member of the IntraFi Network, which is the largest provider of reciprocal deposits. With IntraFi’s reciprocal deposit services,
the Bank can offer depositors access to FDIC insurance for an unlimited amount, well beyond the standard maximum of $250,000 for funds
placed into demand deposit accounts, money market deposit accounts, or CDs. The Bank does not have trust powers and provides no trust
services. The Bank makes multi-family real estate loans, residential real estate loans, commercial real estate loans, land and construction,
and consumer loans. The Bank offers business lending lines for working capital needs. Growing businesses can use the loans to expand
inventory, take discounts, offset receivables, or establish new structured financing and repayment plans that are consistent with the
cash flow of the business. The Bank provides U.S. Small Business Administration (“SBA”)
guaranteed loans to small and middle market businesses. The Bank achieved SBA preferred lender status on February 18, 2025.

Operating
and Business Strategy

Our
key strategic initiatives are designed to generate continued growth in earning assets, core transaction deposits, treasury management
and other fee income, while operating with an efficient cost. Continued emphasis on expansion of our South Florida customer base and
exploring additional niche lines of business are also part of our strategic plan. We believe providing our clients with reasonable solutions
that meet their business and personal needs fosters stability in our client base, builds full-service banking relationships, and allows
for profitable growth that enhances shareholder returns. We intend to deliver the solutions to clients in a very personalized manner
while investing in talent and leveraging modern technology to facilitate efficiency and decrease client pain points while enhancing our
competitiveness.

On
the loan side, management has implemented initiatives that have enabled us to grow our loan portfolio primarily with South Florida
and Florida generated relationships in the commercial real estate, owner-occupied commercial real estate, multifamily, and
commercial and industrial portfolios. The Company leverages decades of Board and management experience in healthcare and
specifically to skilled nursing facilities. The company provides stabilized owner-occupied and non-owner-occupied loans, as well as
accounts receivable-based asset-based-lending (“ABL”) lines of credit to skilled nursing facility clients. In coordination with our Treasury Cash
Management capabilities this has allowed us to expand relationships in these niche businesses to capture full relationships
including the business operating accounts. Where appropriate, out of area loans will be considered, subject to proper due diligence
to supplement portfolio diversification and increase interest income.

In
addition, we have built capabilities in Small Business Administration (SBA) lending, entering the space in late 2023 and being designated
as a Preferred Lender under the SBA’s Preferred Lenders Program (PLP) in the first quarter of 2025. Under the program the Bank
offers SBA-guaranteed 7A loans generally secured by accounts receivable, inventory, equipment, or real estate. diligence to further increase
interest income and for portfolio diversification purposes

In
late 2025, the Company formed OptimumHUD Loans, LLC (d/b/a) as OptimumFunding, LLC, a wholly owned non-bank subsidiary. When the
subsidiary commences operations, it is expected to support a focused suite of financing solutions, including bridge-to Housing and
Urban Development (“HUD”) financing to support acquisitions, refinancing and repositioning to facilitate a transition to
long-term HUD or Federal Housing Administration (“FHA”) financing and FHA and HUD loan origination capability for
multifamily and healthcare properties. The platform will deliver specialized expertise serving skilled nursing facilities, senior
housing, and multifamily assets, building upon the Company’s established lending relationships and sector
knowledge.

As
to deposits, we are focused on identifying deposit-growth opportunities among our existing customer base and prospects throughout
Florida and across other states within the United States. With respect to treasury management, our focus will remain on merchant
cash advance providers and the related electronic funds transfer line of business. The Bank has carved out a niche in the MCA
industry to provide treasury management services, including servicing of high-volumn ACH transactions to organizations with various
entities. Providing these services in a seamless fashion has allowed the Bank to gather low-cost deposits while generating
noninterest fee income. For this revenue source to increase further in a meaningful way, automation is necessary to further improve
efficiency. We continue to invest in necessary technology and expect efficiencies to continue to occur throughout 2026.

Going
forward, our strategic plan will continue to emphasize and build upon initiatives focused on strengthening credit oversight and
credit administrative processes and procedures, while identifying loan growth opportunities designed to enhance overall
profitability without sacrificing credit quality or underwriting standards. This strategy is supported by a risk-based,
comprehensive credit culture, and a strong credit administrative infrastructure that reinforces appropriate risk management
practices. We remain focused on full-service banking relationships and identifying deposit growth opportunities among our existing
customer base and prospects throughout Florida, and the United States. Strengthening our core funding capabilities is foundational
to supporting our growth in our targeted business and real estate markets, including our niche skilled nursing facility and merchant
cash advance markets.

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To
support this strategy, we are investing in experienced banking talent across our business development and retail teams while modernizing
our products and digital services. These initiatives include upgrading our core banking system and our online and mobile banking platforms.
Together, these investments are expected to improve client experience, expand our customer base, increase balance sheet diversification,
and enhance branch utilization.

Lending
Activities

The
Bank offers real estate, commercial and consumer loans to individuals and small businesses and other organizations that are located
in or conduct a substantial portion of their business in its market area. The Bank’s primary market area consists of Broward,
Miami-Dade, Palm Beach, Martin, and St. Lucie counties, and secondarily throughout the State of Florida. The Bank’s net loans
at December 31, 2025 were $947.3 million, or 85% of total assets, and its loan to deposits ratio was 103%. During 2025 net loans increased by $152.3 million, attributed to
the bank’s successful pursuit of new lending opportunities in South Florida. Loan balances increased by $180.8 million in
commercial real estate loans, $17.8 million in consumer loans, and $1.7 million in multi-family loans, offset by a decrease of $41.1
million in land and construction loans, $4.6 million in commercial loans, and $46,000 in residential real estate loans. The interest
rates charged on loans varied with the degree of risk, maturity, and amount of the loan, and are further subject to competitive
pressures, money market rates, availability of funds, and government regulations.

The
Bank’s loan portfolio is concentrated in three major areas: commercial real estate loans, residential real estate loans, and consumer loans, which consist primarily of home equity lines of credit. As of December 31, 2025, 95% of the loan portfolio consisted of loans secured by mortgages on real estate, of
which approximately 70% of the total loan portfolio was secured by commercial real estate properties. The real estate loans are located
primarily in the counties the Bank serves in the State of Florida.

The
Bank’s real estate loans are secured by mortgages and consist primarily of loans to individuals and businesses for the purchase
or improvement of, or investment in, real estate. These real estate loans were made at fixed or variable interest rates and are normally
variable rate mortgages which adjust annually after the initial three to five-year period of the loan. The Bank’s fixed rate loans
generally are for terms of five years or less and are repayable in monthly installments based on a maximum 30-year amortization schedule.

Loan
originations are derived primarily from director and employee referrals, existing customers, and direct marketing. Certain credit risks
are inherent in making loans. These include prepayment risks, risks resulting from uncertainties in the future value of collateral, risks
resulting from changes in economic and industry conditions including interest rates and risks inherent in dealing with individual borrowers.
A significant portion of the Bank’s portfolio is collateralized by real estate in South Florida, which is susceptible to local
economic downturns. The Bank attempts to minimize credit losses through various means. On most credits, it relies on the cash flow and
assets of a debtor as the source of repayment as well as the value of the underlying collateral. The Bank also generally limits its loans
to up to 80% of the value of the underlying real estate collateral. The Bank generally charges a prepayment penalty if a loan is repaid
within the first two to three years of origination to recover any costs it paid for the origination of the loan.

Deposit
Activities

Deposits
are the major source of the Bank’s funds for lending and other investment activities. Deposits are gathered throughout Florida and across other states within the United States, through the offering of a broad variety of deposit products, including checking accounts, money-market
accounts, regular savings accounts, term certificate of deposit accounts. The Company also gathers deposits via listing services. In
2025 and 2024 the Bank maintained fully FDIC-insured brokered deposits totaling $80 million and $105 million respectively. The Bank considers the majority of its regular
savings, demand, NOW, money market deposit accounts and certificates of deposit under $250,000 to be core deposits. Deposits are
insured up to the maximum amount allowed by law by the FDIC. The Company also facilitates depositor access to additional FDIC
insurance via the IntraFi network.

Maturity
terms, service fees, and withdrawal penalties are established by the Bank on a periodic basis. The determination of rates and terms is
predicated on funds acquisition and liquidity requirements, market rate competition, growth goals, and federal regulations.

Investments

The
Bank’s investment securities portfolio was approximately $25.2 million and $22.8 million at December 31, 2025 and 2024, respectively,
representing 2.3% and 2.5% of its total assets. At December 31, 2025, 47.7% of this portfolio was invested in mortgage-backed securities.
Mortgage-backed securities generally have a shorter life than the stated maturity. The Bank’s investments are managed in relation
to loan demand and deposit growth, and are generally used to provide for the investment of excess funds at minimal risk levels while
providing liquidity to fund increases in loan demand or to offset fluctuations in deposits.

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The
excess balance account is the excess cash the Bank has available over and above daily cash needs. This money is invested on an overnight
basis with the Federal Reserve.

Correspondent
Banking

Correspondent
banking involves one bank providing services to another bank which cannot provide that service for itself from an economic or practical
standpoint. The Bank is required to purchase correspondent services offered by larger banks, including check collections, purchase of
federal funds, security safekeeping, investment services, coin and currency supplies.

The
Bank has established a correspondent relationship with the Federal Reserve Bank. The Bank pays for such services in cash as opposed to
keeping compensating balances. The Bank may sell loan participations to other banks with respect to loans which exceed its lending limit.
The Bank may purchase loan participations to supplement loan demand.

Data
Processing

The
Bank outsources most of its data processing services, including an automated general ledger, deposit accounting, and loan sub-system.

Internet
Banking

The
Bank maintains a website at www.optimumbank.com where retail and business customers can access account balances, view
current account activity and previous statements, view images of paid checks, transfer funds between accounts, and pay bills. The
Bank offers its customers mobile access to their account information, with the option to setup alerts, and deposit checks across a
broad range of phones and mobile devices, and to send and receive payments through Zelle. The Bank also offers its business
customers remote deposit capture and online cash management services that include ACH origination and wire transfers using soft
token technology for security.

Competition

The
Bank encounters strong competition in making loans and attracting deposits. The deregulation of the banking industry and the widespread
enactment of state laws which permit multi-bank holding companies as well as an increasing level of interstate banking have created a
highly competitive environment for commercial banking. In one or more aspects of its business, the Bank competes with other commercial
banks, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking
companies, and other financial intermediaries. Most of these competitors, some of which are affiliated with bank holding companies, have
substantially greater resources and lending limits, and may offer certain services that the Bank does not currently provide. In addition,
many of its non-bank competitors are not subject to the same extensive federal regulations that govern federally insured banks. Recent
federal and state legislation has heightened the competitive environment in which financial institutions must conduct their business,
and the potential for competition among financial institutions of all types has increased significantly.

To
compete, the Bank relies upon specialized services, responsive handling of customer needs, and personal contacts by its officers, directors
and staff. Large multi-branch banking competitors tend to compete primarily by rate and the number and location of branches while smaller,
independent financial institutions tend to compete primarily by rate and personal service.

Human
Capital

The
Bank is committed to establishing personal relationships with its customers and providing personalized banking services that meet their
specific needs. The Bank’s employees are critical to achieving this goal. It is therefore crucial that the Bank continues to attract
and retain experienced and skilled employees.

As
part of these efforts, the Bank seeks to offer competitive compensation and benefits, maintain a community in which all employees are
empowered to perform their duties to the best of their abilities, and give employees the opportunity to contribute to the local community.

As
of December 31, 2025, the Bank had 98 full-time employees, including executive officers. The Company employed one individual. These employees
are not represented by a collective bargaining unit. The Bank considers its relations with its employees to be good.

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Compensation
and Benefits Program. The Bank’s compensation program is designed to attract and reward talented individuals who possess the skills
necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our shareholders.
The Bank provides its employees with compensation packages that include base salary and annual incentive bonuses. The Bank believes that
its compensation program provides fair and competitive compensation and aligns associate and shareowner interests, including by incentivizing
business and individual performance and integrating compensation with our business plans. In addition to cash compensation, the Bank
also offers employees benefits such as life and health insurance, paid time off, paid parental leave and a 401(k) plan.

Community
Involvement. The Bank aims to give back to the local community and believes that this commitment helps in our efforts to attract and
retain employees. The Bank encourages its employees to volunteer with local service organizations and philanthropic groups.

Health
and Safety. The success of the Bank’s business is fundamentally connected to the well-being of its employees. Accordingly, the
Bank is committed to the health, safety and the wellness of its employees. The Bank provides employees and their families with access
to a variety of flexible and convenient health and welfare programs, including benefits that support their physical and mental health
by providing tools and resources to help them improve or maintain their health status; and that offer choice where possible so they can
customize their benefits to meet their needs and the needs of their families.

Supervision
and Regulation

Banks
and their holding companies are extensively regulated under both federal and state law. The following is a brief summary of certain statutes,
rules, regulations and enforcement actions affecting the Company and the Bank. This summary is qualified in its entirety by reference
to the particular statutory and regulatory provisions referred to below and is not intended to be an exhaustive description of the statutes
or regulations applicable to the business of the Company or the Bank. Supervision, regulation, and examination of banks by regulatory
agencies are intended primarily for the protection of depositors, rather than shareholders.

Regulatory
Matters

Banks
and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy
guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and
certain off balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject
to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action.

Management
believes, as of December 31, 2025, that the Bank met all capital adequacy requirements to which it was subject. The Bank’s actual
capital amounts and percentages are presented in the table:

To Be Well Capitalized

Under Prompt Corrective

Actual
Action Regulations

(dollars in thousands)
Amount
%
Amount
%

As of December 31, 2025:

Tier 1 Capital to Total Assets
$ 125,467
11.39 %
$ 99,126
9.00 %

As of December 31, 2024:

Tier 1 Capital to Total Assets
$ 107,112
10.91 %
$ 88,381
9.00 %

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Company
Regulation

General.
As a bank holding company registered under the Bank Holding Company Act of 1956 (the “BHCA”), the Company is subject to
the regulation and supervision of, and inspection by, the Federal Reserve Board (“Federal Reserve” or “FRB”). The Company is
also required to file with the Federal Reserve annual reports and other information regarding its business operations, and those of
its subsidiaries. In the past, the BHCA limited the activities of bank holding companies and their subsidiaries to activities which
were limited to banking, managing or controlling banks, furnishing services to or performing services for their subsidiaries or
engaging in any other activity which the Federal Reserve determined to be so closely related to banking or managing or controlling
banks as to be properly incidental thereto. Under the Gramm-Leach-Bliley Financial Modernization Act of 1999 which is discussed
below, bank holding companies have the opportunity to seek broadened authority, subject to limitations on investment, to engage in
activities that are “financial in nature” if all of their subsidiaries depository institutions are well capitalized, well
managed, and have at least a satisfactory rating under the Community Reinvestment Act, which is also discussed below.

In
this regard, the BHCA prohibits a bank holding company, with certain limited exceptions, from (i) acquiring or retaining direct or indirect
ownership or control of more than 5% of the outstanding voting stock of any company which is not a bank or bank holding company, or (ii)
engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or performing services for
its subsidiaries, unless such non-banking business is determined by the FRB to be so closely related to banking or managing or controlling
banks as to be properly incident thereto. In making such determinations, the FRB is required to weigh the expected benefit to the public,
such as greater convenience, increased competition or gains in efficiency, against the possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices. Generally, bank holding companies,
such as the Company, are required to obtain prior approval of the Federal Reserve to engage in any new activity not previously approved
by the Federal Reserve.

Change
of Control. The BHCA also requires that every bank holding company obtain the prior approval of the Federal Reserve before it
may acquire all or substantially all of the assets of any bank, or ownership or control of any voting shares of any bank, if after such
acquisition it would own or control, directly or indirectly, more than 5% of the voting shares of such bank. In approving bank acquisitions
by bank holding companies, the Federal Reserve is required to consider the financial and managerial resources and future prospects of
the bank holding company and the banks concerned, the convenience and needs of the communities to be served, including the parties’
performance under the Community Reinvestment Act (discussed below) and various competitive factors. As described in greater detail below,
pursuant to the Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994 (the “Interstate Banking and Branching Act”),
a bank holding company is permitted to acquire banks in states other than its home state.

The
BHCA further prohibits a person or group of persons from acquiring “control” of a bank holding company unless the Federal
Reserve has been notified and has not objected to the transaction. Under a rebuttable presumption established by the Federal Reserve,
the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section
12 of the Exchange Act would, under the circumstances set forth in the presumption, constitute acquisition of control of the bank holding
company. In addition, any person or group of persons must obtain the approval of the Federal Reserve under the BHCA before acquiring
25% (5% in the case of an acquirer that is already a bank holding company) or more of the outstanding common stock of a bank holding
company, or otherwise obtaining control or a “controlling influence” over the bank holding company.

Interstate
Banking and Branching. The Interstate Banking and Branching Act provides for nationwide interstate banking and branching. Under
the law, interstate acquisitions of banks or bank holding companies in any state by bank holding companies in any other state are permissible
subject to certain limitations. Florida also has a law that allows out-of-state bank holding companies (located in states that allow
Florida bank holding companies to acquire banks and bank holding companies in that state) to acquire Florida banks and Florida bank holding
companies. The law essentially provides for out-of-state entry by acquisition only (and not by interstate branching) and requires the
acquired Florida bank to have been in existence for at least three years. Interstate branching and consolidation of existing bank subsidiaries
in different states is permissible. A Florida bank also may establish, maintain, and operate one or more branches in a state other than
Florida pursuant to an interstate merger transaction in which the Florida bank is the resulting bank.

Financial
Modernization. The Gramm-Leach-Bliley Financial Modernization Act of 1999 (the “GLB Act”) sought to achieve
significant modernization of the federal bank regulatory framework by allowing the consolidation of banking institutions with other types
of financial services firms, subject to various restrictions and requirements. In general, the GLB Act repealed most of the federal statutory
barriers which separated commercial banking firms from insurance and securities firms and authorized the consolidation of such firms
in a “financial services holding company.” The Bank has no current plans to utilize the structural options created by the
GLB Act.

6

Securities
Regulation and Corporate Governance. The Company’s common stock is registered with the Securities and Exchange Commission
(the “SEC”) under Section 12(b) of the Securities Exchange Act of 1934, and we are subject to restrictions, reporting requirements
and review procedures under federal securities laws and regulations. Our common stock is listed on NYSE American. As a publicly traded
Company, we adhere to the corporate governance reforms enacted under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”)
and the rules of the SEC and NYSE American, stock market adopted pursuant to the Sarbanes-Oxley Act. Among other things, these reforms,
effective as of various dates, require certification of consolidated financial statements by the chief executive officer and chief financial
officer, prohibit the provision of specified services by independent auditors, require pre-approval of independent auditor services,
define director independence and require certain committees, and a majority of a subject company’s board of directors, to consist
of independent directors, establish additional disclosure requirements in reports filed with the SEC, require expedited filing of reports,
require management evaluation and auditor attestation of internal controls, prohibit loans by the issuer (but not by certain depository
institutions) to directors and officers, set record-keeping requirements, mandate complaint procedures for the reporting of accounting
and audit concerns by employees, and establish penalties for non-compliance.

Bank
Regulation

General.
The Bank is chartered under the laws of the State of Florida, and its deposits
are insured by the FDIC to the extent provided by law. The Bank is subject to comprehensive regulation, examination and supervision by
the FDIC and the Florida Office of Financial Regulation (“Florida OFR”), and to other laws and regulations applicable to banks.
Such regulations include limitations on loans to a single borrower and to its directors, officers and employees; limitations on the types
of activities a state bank can conduct; restrictions on the opening and closing of branch offices; the maintenance of required capital
ratios; the granting of credit under equal and fair conditions; and the disclosure of the costs and terms of such credit. The Bank is
examined periodically by the FDIC and the Florida OFR, to whom it submits periodic reports regarding its financial condition and other
matters. The FDIC and the Florida OFR have a broad range of powers to enforce regulations under their jurisdiction, and to take discretionary
actions determined to be for the protection and safety and soundness of banks, including the institution of cease and desist orders and
the removal of directors and officers. The FDIC and the Florida OFR also have the authority to approve or disapprove mergers, consolidations,
and similar corporate actions.

Dividends.
The Company has not declared or paid dividends to its stockholders. The Company’s
ability to pay dividends is substantially dependent on the ability of the Bank to pay dividends to the Company. As a state-chartered bank,
the Bank is subject to dividend restrictions set by Florida law, the regulations of the Florida OFR and the FDIC. Except with the prior
approval of the Florida OFR, all dividends of any Florida bank must be paid out of retained net profits from the current period and the
previous two years, after deducting expenses, including losses and bad debts. As of December 31, 2025, the Bank paid one-time to the Company
totaled $500,000. However, under the Federal Deposit Insurance Act, an FDIC-insured institution may not pay any dividend if payment would
cause it to become undercapitalized or while it is undercapitalized. Further, the FDIC and the Florida OFR also have the general authority
to limit the dividend payment by banks if such payment may be deemed to constitute an unsafe and unsound practice. It is likely that those
agencies would view a Bank dividend which materially reduced the capital ratios of the Bank to be such an unsafe or unsound practice.

Loans
to One Borrower. Florida law generally allows a state bank such as the Bank to extend credit to any one borrower (and certain
related entities of such borrower) in an amount up to 25% of its capital accounts, provided that the unsecured portion may not exceed
15% of the capital accounts of the bank. Based upon the Bank’s capital, the maximum loan the Bank is currently permitted to make
to any one borrower (and certain related entities of such borrower) is approximately $32.7 million, provided the unsecured portion does
not exceed approximately $19.6 million.

Transactions
with Affiliates. Under federal law, federally insured banks are subject, with certain exceptions, to certain restrictions on
any extension of credit to their parent holding companies or other affiliates, on investment in the stock or other securities of affiliates,
and on the taking of such stock or securities as collateral from any borrower. In addition, banks are prohibited from engaging in certain
tie-in arrangements in connection with any extension of credit or the provision of any property or service.

Change
of Bank Control. Florida law restricts the amount of voting stock of a bank that a person may acquire without the prior approval
of banking regulators. The overall effect of such laws is to make it more difficult to acquire a bank by tender offer or similar means
than it might be to acquire control of another type of corporation. Consequently, shareholders of financial institutions are less likely
to benefit from the rapid increases in stock prices that often result from tender offers or similar efforts to acquire control of other
companies.

7

Under
Florida law, no person or group of persons may, directly or indirectly or acting by or through one or more persons, purchase or acquire
a controlling interest in any bank which would result in the change in control of that bank unless the Florida OFR first shall have approved
such proposed acquisition. A person or group will be deemed to have acquired “control” of a bank (i) if the person or group,
directly or indirectly or acting by or through one, or more other persons, owns, controls, or has power to vote 25% or more of any class
of voting securities of the bank, or controls in any manner the election of a majority of the directors of the bank, or (ii) if the Florida
OFR determines that such person exercises a controlling influence over the management or policies of the bank. In any case where a proposed
purchase of voting securities would give rise to a presumption of control, the person or group who proposes to purchase the securities
must first file written notice of the proposal to the Florida OFR for its review and approval. Subsections 658.27(2) and 658.28(3), Florida
Statutes, refer to a potential change of control of a financial institution at a 10% or more threshold and rebuttable presumption of
control. Accordingly, the name of any subscriber acquiring more than 10% of the voting securities of the Bank must be submitted to the
Florida OFR for prior approval.

USA
Patriot Act. The Bank is subject to the requirements of the USA Patriot Act, which was enacted in 2001 to provide the
federal government with powers to prevent, detect, and prosecute terrorism and international money laundering, and has resulted in promulgation
of several regulations that have a direct impact on banks. There are a number of programs that financial institutions must have in place
such as: (i) Bank Secrecy Act/Anti-Money Laundering programs to manage risk; (ii) Customer Identification Programs to determine the true
identity of customers, document and verify the information, and determine whether the customer appears on any federal government list
of known or suspected terrorist or terrorist organizations; and (iii) monitoring for the timely detection and reporting of suspicious
activity and reportable transactions. The Bank has devoted substantial attention and resources to compliance with these laws.

Other
Consumer Laws. Florida usury laws and federal laws concerning interest rates limit the amount of interest and various other charges
collected or contracted by a bank. The Bank’s loans are also subject to federal laws applicable to consumer credit transactions,
such as the:

●
Federal Truth-In-Lending Act governing disclosures of credit terms to consumer borrowers;

●
Community Reinvestment Act requiring financial institutions to meet their obligations to provide for the total credit needs of the communities
they serve, including investing their assets in loans to low and moderate-income borrowers;

●
Home Mortgage Disclosure Act requiring financial institutions to provide information to enable public officials to determine whether
a financial institution is fulfilling its obligations to meet the housing needs of the community it serves;

●
Equal Credit Opportunity Act prohibiting discrimination on the basis of race, creed or other prohibitive factors in extending credit;

●
Real Estate Settlement Procedures Act which requires lenders to disclose certain information regarding the nature and cost of real estate
settlements, and prohibits certain lending practices, as well as limits escrow account amounts in real estate transactions;

●
Fair Debt Collection Act governing the manner in which consumer debts may be collected by collection agencies;

●
Fair and Accurate Credit Transactions Act which establishes additional rights for consumers to obtain and correct credit reports, addresses
identity theft, and establishes additional requirements for consumer reporting agencies and financial institutions that provide adverse
credit information to a consumer reporting agency; and

●
The rules and regulations of various federal agencies charged with the responsibility of implementing such federal laws.

Such
laws and other consumer regulation matters are administered by the Consumer Financial Protection Bureau (the “Bureau”). The
Bureau is tasked with establishing and implementing rules and regulations under certain federal consumer protection laws with respect
to the conduct of providers of certain consumer financial products and services. The Bureau has rulemaking authority over many of the
statutes governing products and services offered to bank consumers.

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The
Bank’s deposit and loan operations are also subject to the following:

●
GLB Act privacy provisions, which require the Bank maintain privacy policies intended to safeguard consumer financial information,
to disclose these policies to its customers, and allow customers to “opt-out” of having their financial service providers
disclose their confidential financial information to non-affiliated third parties, subject to certain exceptions;

●
Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures
for complying with administrative subpoenas of financial records; and

●
Electronic Funds Transfer Act and Regulation E, which govern automatic deposits to, and withdrawals from, deposit accounts and customers’
rights and liabilities arising from the use of automated teller machines and other electronic banking services.

Other
Regulation

Enforcement
Powers. Congress has provided the federal bank regulatory agencies with an array of powers to enforce laws, rules, regulations
and orders. Among other things, the agencies may require that institutions cease and desist from certain activities, may preclude persons
from participating in the affairs of insured depository institutions, may suspend or remove deposit insurance, and may impose civil money
penalties against institution-affiliated parties for certain violations.

Community
Reinvestment Act. Bank holding companies and their subsidiary banks are subject to the provisions of the Community Reinvestment
Act of 1977 (the “CRA”) and the regulations promulgated thereunder by the appropriate bank regulatory agency. Under the terms
of the CRA, the appropriate federal bank regulatory agency is required, in connection with its examination of a bank, to assess such
bank’s record in meeting the credit needs of the community served by that bank, including low-and moderate-income neighborhoods.
The regulatory agency’s assessment of the Bank’s record is made available to the public. Further, such assessment is required
of any bank which has applied to charter a bank, obtain deposit insurance coverage for a newly chartered institution, establish a new
branch office that will accept deposits, relocate an office, or merge or consolidate with, or acquire the assets or assume the liabilities
of, a federally regulated financial institution. In the case of a bank holding company applying for approval to acquire a bank or other
bank holding company, the Federal Reserve will assess the record of each subsidiary bank of the applicant bank holding company, and such
records may be the basis for denying the application.

Effect
of Governmental Monetary Policies

The
Company’s earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government
and its agencies. The Federal Reserve monetary policies have had, and will likely continue to have, an important impact on the operating
results of financial institutions through its power to implement national monetary policy in order, among other things, to curb inflation
or combat a recession. The monetary policies of the Federal Reserve have major effects upon the levels of loans, investments and deposits
through its open market operations in United States Government securities and through its regulation of the discount rate on borrowings
of member banks. It is not possible to predict the nature or impact of future changes in monetary and fiscal policies.

Statistical
Profile and Other Financial Data

Reference
is hereby made to the statistical and financial data contained in the sections captioned “Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” for statistical and financial data providing a review of the Bank’s business
activities.