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

 Schedule of Amortized Cost and Approximate Fair Values of Debt Securities 

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(2) Debt Securities, Continued.

As of March 31, 2026, debt securities with a fair value of $52.1 million were pledged as collateral to the Federal Reserve Bank. There were no sales of debt securities during the three-month ended March 31, 2026, and 2025.

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

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

At March 31, 2026 and December 31, 2025, the unrealized losses on 42 investment debt securities, respectively, were caused by interest-rate changes and other market conditions.

The Company performed an analysis that determined that the mortgage-backed securities, collateralized mortgage obligations, and U.S. government securities, have a zero expected credit loss as they have the full faith and credit backing of the U.S. government or one of its agencies. Municipal bonds that do not have a zero expected credit loss are evaluated at least quarterly to determine whether there is a credit loss associated with a decline in fair value. At March 31, 2026 and December 31, 2025 all municipal securities were rated as investment grade. All debt securities in an unrealized loss position as of March 31, 2026 and December 31, 2025 continue to perform as scheduled and the Company does not believe that there is a credit loss or that credit loss expense is necessary. Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. The Company does not currently intend to sell the investments within the portfolio, and it is not more-likely-than-not that a sale will be required.

Management continues to monitor all of our investments with a high degree of scrutiny. There can be no assurance that in a future period, conditions may exist at that time indicating that some or all of the Company’s securities may be sold that would require a charge to earnings as credit loss expense in such period.

The majority of the Company’s debt securities available-for-sale and held-to-maturity have contractual maturity dates which are greater than ten years as of March 31, 2026. Expected maturities of these debt securities will differ from contractual maturities because borrowers have the right to call or repay obligations with or without call or prepayment penalties

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)