(9) Commitments And Contingencies

Off- Balance Sheet Financial Instruments. The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit, unused lines of credit, and standby letters of credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the condensed consolidated balance sheets. The contract amounts of these instruments reflect the extent of involvement the Company has in these financial instruments.

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of credit, is based on management’s credit evaluation of the counterparty.

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

Commitments to extend credit, unused lines of credit, and standby letters of credit typically result in loans with a market interest rate when funded. A summary of the contractual amounts of the Company’s financial instruments with off-balance sheet risk at June 30, 2026 follows (dollars in thousands):

 Schedule of Off-Balance Sheet Risks of Financial Instruments

Guarantees. The Company, through its holding company, has entered into credit enhancement arrangements pursuant to which it guarantees certain borrowings of its financing subsidiary from third-party lenders.

Under these arrangements, the Company may, on a loan-by-loan basis, guarantee the repayment of amounts borrowed by the financing subsidiary. The guarantees are intended to enhance the subsidiary’s ability to obtain financing and generally remain in effect until the underlying borrowings are repaid.

If the financing subsidiary fails to perform under the terms of the underlying borrowing arrangements, the Company may be required to make payments to lenders for amounts outstanding under such borrowings.

The maximum potential amount of future payments under these guarantees represents the contractual amounts of the underlying borrowings subject to the guarantees and is not reduced by amounts that may be recoverable under indemnification or recourse arrangements. The Company has entered into agreements pursuant to which the financing subsidiary is required to reimburse the Company for any amounts paid under the guarantees, including applicable interest and associated costs. While such arrangements provide for reimbursement, they do not relieve the Company of its primary obligation under the guarantees.

The Company evaluates these arrangements in accordance with ASC 460, Guarantees, and ASC 450, Contingencies, and establishes accruals when losses are considered probable and reasonably estimable. If a loss is reasonably possible but not probable, or if the amount of loss cannot be reasonably estimated, the Company discloses the nature of the contingency.

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

In the opinion of management, there are no matters as of June 30, 2026 that are expected to have a material effect on the Company’s condensed consolidated financial statements.