----

----

|                                                                   | Page          |
|------------------------------------------------------------------------|---------------|
|                                                                   |          |
| Letter      to Shareholders                                            |   1 |
| Business      of the Company                                           |   3 |
| Selected      Consolidated Financial Information                       |   4 |
| Management’s      Discussion and Analysis of Financial Condition |          |
|    and      Results of Operations                       |   6 |
| Report      of Independent Registered Public Accounting Firm           | 27            |
| Consolidated      Financial Statements                                 | 28            |
| Notes      to Consolidated Financial Statements                        | 33            |
| Common      Stock Information                                          | 66            |
| Directors      and Executive Officers                                  | 67            |
| Corporate      Information                                             | 68            |

----

----

----

----

|                                                           |   |   | At      June 30,                                        |
|----------------------------------------------------------------|--------|--------|---------------------------------------------------------|
|                                                           |   |   | 2010                                                    |   | 2009 |   | 2008 |   | 2007 |   | 2006 |
|                                                           |   |   | (In      thousands)                                     |
| FINANCIAL      CONDITION DATA:                                 |   |   |                                                    |   |   |   |   |   |   |   |
| Total      assets                                              |   | $      | 211,657                                                 | $ | 229,915 | $ | 249,232 | $ | 241,331 | $ | 228,395 |
| Loans      receivable, net                                     |   |   | 108,683                                                 |   | 133,162 |   | 167,035 |   | 158,993 |   | 141,987 |
| Cash,      interest-bearing deposits                           |   |   |                                                    |   |   |   |   |   |   |   |   |
|   and      securities                                |   |   | 90,156                                                  |   | 81,335 |   | 64,195 |   | 65,498 |   | 69,007 |
| Deposits                                                       |   |   | 180,075                                                 |   | 189,218 |   | 194,593 |   | 190,090 |   | 179,141 |
| Retail      repurchase agreements                              |   |   | 5,352                                                   |   | 5,713 |   | 4,648 |   | 2,103 |   | - |
| Borrowed      funds                                            |   |   | 3,000                                                   |   | 10,000 |   | 22,000 |   | 22,000 |   | 22,000 |
| Stockholders'      equity                                      |   |   | 22,611                                                  |   | 23,764 |   | 27,100 |   | 26,468 |   | 26,291 |
|                                                           |   |   |                                                    |   |   |   |   |   |   |   |   |
|                                                           |   |   |  Years      Ended June 30,                         |
|                                                           |   |   | 2010                                                    |   | 2009 |   | 2008 |   | 2007 |   | 2006 |
|                                                           |   |   |  (In      thousands, except per share information) |
| OPERATING      DATA:                                           |   |   |                                                    |   |   |   |   |   |   |   |   |
|                                                           |   |   |                                                    |   |   |   |   |   |   |   |   |
| Interest      income                                           |   | $      | 9,777                                                   | $ | 12,366 | $ | 14,828 | $ | 13,724 | $ | 12,913 |
| Interest      expense                                          |   |   | 3,266                                                   |   | 5,443 |   | 7,451 |   | 7,354 |   | 5,987 |
| Net      interest income                                       |   |   | 6,511                                                   |   | 6,923 |   | 7,377 |   | 6,370 |   | 6,926 |
| Provision      for loan losses                                 |   |   | 852                                                     |   | 5,314 |   | 1,291 |   | 426 |   | 1,520 |
| Net      interest income after provision                       |   |   |                                                    |   |   |   |   |   |   |   |   |
|   for      loan losses                               |   |   | 5,659                                                   |   | 1,609 |   | 6,086 |   | 5,944 |   | 5,406 |
| Impairment      of and gains/(losses) on  securities |   |   |    -                                     |   |    143 |   | - |   | 177 |   | (421) |
| Non-interest      income, excluding                            |   |   |                                                    |   |   |   |   |   |   |   |   |
|  gains      (losses) on securities                        |   |   | 1,535                                                   |   | 2,514 |   | 2,903 |   | 2,127 |   | 1,902 |
| Non-interest      expense                                      |   |   | 7,637                                                   |   | 9,834 |   | 8,557 |   | 8,094 |   | 7,151 |
| Income      (loss) before taxes                                |   |   | (443)                                                   |   | (5,568) |   | 432 |   |  154 |   | (264) |
| Income      tax expense (benefit)                              |   |   | 1,041                                                   |   | (1,532) |   |   69 |   | (118) |   |    (91) |
| Net      income (loss)                                         |   | $      | (1,484)                                                 | $ | (4,036) | $ | 363 | $ |  272 | $ | (173) |
| Basic      earnings (loss) per share                           |   | $      | (0.96)                                                  | $ | (2.60) | $ | 0.23 | $ |  0.18 | $ | (0.11) |
| Diluted earnings (loss) per      share                         |   | $      |     (0.96)                          | $ |      (2.60) | $ | 0.23 | $ |  0.18 | $ | (0.11) |
| Dividends      per share                                       |   | $      | 0.00                                                    | $ | 0.10 | $ | 0.00 | $ | 0.08 | $ | 0.16 |

----

|                                                           |   |   | At      or For the Years Ended June 30, |   |        |
|----------------------------------------------------------------|--------|--------|-----------------------------------------|--------|-------------|
|                                                           |   |   | 2010                                    |   | 2009        |   | 2008 |   | 2007 |   | 2006 |   |   |
| KEY      OPERATING RATIOS:                                     |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
|                                                           |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
| Return      on average assets                                  |   |   | N/A                                     | %      | N/A         | % |   0.15 | % |   0.09 | % | N/A | % |   |
| Return      on average equity                                  |   |   | N/A                                     |   | N/A         |   |   1.34 |   |   0.77 |   | N/A |   |   |
| Average      equity to average assets                          |   |   | 11.07                                   |   | 10.70       |   | 11.05 |   | 11.32 |   | 11.52 |   |   |
| Interest      rate spread for period                           |   |   | 3.11                                    |   | 2.94        |   | 3.01 |   | 2.71 |   | 2.96 |   |   |
| Net      interest margin for period                            |   |   | 3.28                                    |   | 3.16        |   | 3.30 |   | 3.01 |   | 3.21 |   |   |
| Non-interest      expense to average  assets         |   | 3.52   |                                    | 4.00   |        | 3.49 |   | 3.46 |   | 2.88 |   |
| Average      interest-earning assets to                        |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
|   interest-bearing      liabilities                  |   |   | 109.81                                  |   | 108.87      |   | 108.95 |   | 108.66 |   | 108.98 |   |   |
| Allowance      for loan losses to total loans                  |   |   |                                    |   |        |   |   |   |   |   |
|   at      end of period                              |   |   | 2.28                                    |   | 3.05        |   | 1.65 |   | 1.59 |   | 1.67 |   |   |
| Net      charge-offs to average loans                          |   |   |                                    |   |        |   |   |   |   |
|   outstanding      during the period                 |   |   | 2.21                                    |   | 2.63        |   | 0.74 |   | 0.14 |   | 1.29 |   |   |
| Ratio      of non-performing assets to total  assets | 6.19   |   | 5.23                                    |   | 1.56        |   | 1.47 |   | 2.21 |   |
| Ratio      of loan loss allowance to                           |   |   |                                    |   |        |   |   |   |   |
|   non-performing      assets                         |   |   | 30.13                                   |   |  83.40 |   |  72.10 |   | 79.08 |   | 184.52 |   |   |
| Dividend      payout ratio                                     |   |   |  N/A                               |   | N/A         |   | - |   | 44.44 |   | N/A |   |   |
|                                                           |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
|                                                           |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
|                                                           |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
|                                                           |   |   | June      30,                           |   |        |
| OTHER      DATA:                                               |   |   | 2010                                    |   | 2009        |   | 2008 |   | 2007 |   | 2006 |   |   |
|                                                           |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
| Number      of:                                                |   |   |                                    |   |        |   |   |   |   |   |   |   |   |
|   Loans      outstanding                             |   |   | 2,370                                   |   | 2,802       |   |   3,388 |   | 3,450 |   | 3,644 |   |   |
|   Deposit      accounts                              |   |   | 20,163                                  |   | 21,965      |   | 23,221 |   | 23,983 |   | 24,724 |   |   |
|   Full      service offices                          |   |   | 11                                      |   | 11          |   | 11 |   | 11 |   | 10 |   |   |
|                                                           |   |   |                                    |   |        |   |   |   |   |   |   |   |   |

----

----

----

----

| ·   | Increase      assets during any quarter; |
|--------------------|------------------------------------------|

| ·   | Pay      dividends; |
|--------------------|---------------------|

| ·   | Increase      brokered deposits; |
|--------------------|----------------------------------|

| ·   | Repurchase      shares of the Company’s outstanding common stock;  and |
|--------------------|------------------------------------------------------------------------------|

| ·   | Issue      any debt securities or incur any debt (other than that incurred in the      normal course of business). |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

----

| ·   | develop      a business plan for enhancing, measuring and maintaining profitability,      increasing earnings, improving liquidity, maintaining capital levels,      acceptable to the OTS; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ensure      the Savings Bank’s compliance with applicable laws, rules, regulations and      agency guidelines, including the terms of the  order; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not      appoint any new director or senior executive officer or change the      responsibilities of any current senior executive officers without      notifying the OTS; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not      enter into, renew, extend or revise any compensation or benefit agreements      for directors or senior executiveofficers; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not      make any indemnification, severance or golden parachute      payments; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | enhance      its asset classification policy; |
|--------------------|-----------------------------------------------|

| ·   | provide      progress reports to the OTS regarding certain classified      assets; |
|--------------------|------------------------------------------------------------------------------------|

| ·   | submit      a comprehensive plan for reducing classified  assets; |
|--------------------|-------------------------------------------------------------------|

| ·   | develop      a plan to reduce its concentration in certain loans contained in the loan      portfolio and that addresses the assessment, monitoring and control of the      risks associated with the commercial real estate  portfolio; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not      enter into any arrangement or contract with a third party service provider      that is significant to the overall operation or financial condition of the      Savings Bank, or that is outside the normal course of business;      and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | prepare      and submit progress reports to the OTS. The OTS orders will remain in      effect until modified or terminated by theOTS. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                      | At      or for theYear      Ended June 30,                                 |   |
|-----------------------------------------------------------|----------------------------------------------------------------------------|--------|
|                                                      | 2010                                                                       |   | 2009 |   |
| Non-performing assets:                                    |                                                                       |   |   |   |
|  Past      due over 90 days                          | $                -       |   |  $      288 |   |
|  Non-accrual      loans                              | 3,927                                                                      |   | 3,024 |   |
|  Other                                               | -                                                                          |   | - |   |
| Total      non-performing loans                           | 3,927                                                                      |   | 3,312 |   |
|  Real      estate owned                              | 3,885                                                                      |   | 1,549 |   |
|  Repossessed      assets                             | 61                                                                         |   | 158 |   |
|  Impaired      loans not past due                    | 5,228                                                                      |   | 7,013 |   |
| Total      non-performing assets                          | $   13,101                                                  |   | $      12,032 |   |
|                                                      |                                                                       |   |   |   |
| Classified loans:                                         |                                                                       |   |   |   |
|  Loss                                                | $                 - |   | $           - |   |
|  Doubtful                                            | -                                                                          |   | 4,189 |   |
|  Substandard                                         | 7,678                                                                      |   | 6,137 |   |
|      Total      classified loans | 7,678                                                                      |   | 10,326 |   |
|      Special      Mention loans  | 1,477                                                                      |   | - |   |
|      Total      loans of concern | $    9,155                                             |   | $  10,326 |   |
|                                                      |                                                                       |   |   |   |
| Net      charge-offs                                      | $    2,661                                                  |   | $    3,925 |   |
| Provision      for loan losses                            | $            852                             |   | $    5,314 |   |

----

----

----

----

----

----

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----

----

|                                                        | At      June 30, |   |   | Years      Ended June 30 |
|-------------------------------------------------------------|------------------|--------|--------|--------------------------|
|                                                        | 2010             |   |   | 2010                     |   |   | 2009 |   |
| Weighted      average yield                                 |             |   |   |                     |   |   |   |   |
|     on      loan portfolio              | 6.16             | %      |   | 6.24                     | % |   | 6.54 | % |
| Weighted      average yield                                 |             |   |   |                     |   |   |   |   |
|     on      securities                  | 3.83             |   |   | 3.88                     |   |   | 4.97 |   |
| Weighted      average yield on other                        |             |   |   |                     |   |   |   |   |
|     interest-earning      assets        | 0.71             |   |   | 0.91                     |   |   | 0.69 |   |
| Weighted      average yield                                 |             |   |   |                     |   |   |   |   |
|     on      all interest-earning assets | 4.76             |   |   | 4.92                     |   |   | 5.64 |   |
| Weighted      average rate                                  |             |   |   |                     |   |   |   |   |
|     paid      on total deposits         | 1.39             |   |   | 1.77                     |   |   | 2.41 |   |
| Weighted      average rate paid on retail                   |             |   |   |                     |   |   |   |   |
|     repurchase      agreements          | 1.47             |   |   | 1.45                     |   |   | 1.71 |   |
| Weighted      average rate paid on other                    |             |   |   |                     |   |   |   |   |
|     interest-bearing      liabilities   | 4.94             |   |   | 3.18                     |   |   | 5.14 |   |
| Weighted      average rate paid on                          |             |   |   |                     |   |   |   |   |
|     All      interest-bearing liabilities          | 1.45   |   |   | 1.80   |   |   | 2.70   |   |
|------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Interest      rate spread (spread                                      |   |   |   |   |   |   |   |   |
|     between      weighted average                  |   |   |   |   |   |   |   |   |
|     rate      on all interest-earning assets       |   |   |   |   |   |   |   |   |
|     and      all interest-bearing liabilities)     | 3.31   |   |   | 3.11   |   |   | 2.94   |   |
| Net      interest margin (net interest                                 |   |   |   |   |   |   |   |   |
|     income      (expense) as a percentage          |   |   |   |   |   |   |   |   |
|      of      average interest-earning assets) | N/A    |   |   | 3.28   |   |   | 3.16   |   |

----

|                                                                  |                                                        | Years      Ended June 30,                                   |                                                      |                                                                 |
|-----------------------------------------------------------------------|-------------------------------------------------------------|-------------------------------------------------------------|-----------------------------------------------------------|----------------------------------------------------------------------|
|                                                                  |                                                        | 2010                                                        |                                                      |                                                                 | 2009 |   |   |
|                                                                  |                                                        |                                                        |                                                      | Interest                                                             |   |   |   |   |   |   | Interest |   |   |   |
|                                                                  |                                                        | Average                                                     |                                                      | and                                                                  |   | Yield/ |   |   | Average |   | and | Yield/ |   |   |
|                                                                  |                                                        | Balance(2)                                                  |                                                      | Dividends                                                            |   |    Cost |   |   | Balance(2) |   | Dividends |    Cost |   |   |
|                                                                  |                                                        | (Dollars      in thousands)                                 |                                                      |
| Interest-earning      assets:                                         |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
|   Loans(1)                                                  |                                                        |  $  120,468                                  |                                                      |  $   7,518                                       |   | 6.24 | % |   |  $      149,325 |   |  $    9,770 | 6.54 | % |   |
|   Securities                                                |                                                        |        51,995            |                                                      |       2,020                            |   | 3.88 |   |   |       49,320 |   |        2,452 | 4.97 |   |   |
|   Other                                                     |                                                        |        26,336            |                                                      |          239            |   | 0.91 |   |   |       20,747 |   |           144 | 0.69 |   |   |
|      Total      interest-earning assets      |                                                        |      198,799                       |                                                      |       9,777                            |   | 4.92 |   |   |     219,392 |   |      12,366 | 5.64 |   |   |
| Non-interest      earning assets                                      |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
|   Office      properties and equipment, net                 |          6,311 |                                                        |                                                      |                                                                 |   |   |   |         6,793 |   |   |   |   |   |
|   Real      estate, net                                     |                                                        |          3,016 |                                                      |                                                                 |   |   |   |   |         1,651 |   |   |   |   |   |
|   Other      non-interest earning assets                    |                                                        |          8,766 |                                                      |                                                                 |   |   |   |   |       13,757 |   |   |   |   |   |
|      Total      assets                       |                                                        |  $  216,892                                  |                                                      |                                                                 |   |   |   |   |  $ 241,593 |   |   |   |   |   |
|                                                                  |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                    |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
|   Savings      and Money Market savings accounts            |  $    46,738                       |                                                        |          631 |                                                                 | 1.35 |   |   |  $   46,210 |   |           913 | 1.98 |   |   |
|   Checking      and Super Saver accounts                    |                                                        |        42,459            |                                                      |          362            |   | 0.85 |   |   |       41,835 |   |           407 | 0.97 |   |   |
|   Certificates      of deposit                              |                                                        |        81,319            |                                                      |       2,022                            |   | 2.49 |   |   |       85,598 |   |        2,862 | 3.34 |   |   |
|      Total      deposits                     |                                                        |      170,516                       |                                                      |       3,015                            |   | 1.77 |   |   |     173,643 |   |        4,182 | 2.41 |   |   |
|   Retail      repurchase agreements                         |                                                        |          4,837 |                                                      |            70 |   | 1.45 |   |   |         5,029 |   |             86 | 1.71 |   |   |
|   Advances  from      Federal Home Loan Bank      |          5,692 |                                                        |          181 |                                                                 | 3.18 |   |   |       22,846 |   |        1,175 | 5.14 |   |   |
|      Total      interest-bearing liabilities |                                                        |      181,045                       |                                                      |       3,266                            |   | 1.80 |   |   |     201,518 |   |        5,443 | 2.70 |   |   |
| Non-interest      bearing liabilities:                                |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
|   Other      liabilities                                    |                                                        |        11,837            |                                                      |                                                                 |   |   |   |   |       14,217 |   |   |   |   |   |
|      Total      liabilities                  |                                                        |      192,882                       |                                                      |                                                                 |   |   |   |   |     215,735 |   |   |   |   |   |
| Stockholders'      equity                                             |                                                        |        24,010            |                                                      |                                                                 |   |   |   |   |       25,858 |   |   |   |   |   |
|      Total      liabilities and              |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
|        stockholders'      equity   |                                                        |  $  216,892                                  |                                                      |                                                                 |   |   |   |   |  $ 241,593 |   |   |   |   |   |
| Net      interest income                                              |                                                        |                                                        |                                                      |  $   6,511                                       |   |   |   |   |   |   |  $    6,923 |   |   |   |
| Interest      rate spread                                             |                                                        |                                                        |                                                      |                                                                 |   | 3.11 | % |   |   |   |   | 2.94 | % |   |
| Net      interest margin                                              |                                                        |                                                        |                                                      |                                                                 |   | 3.28 | % |   |   |   |   | 3.16 | % |   |
| Ratio      of average interest-earning                                |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
|   assets      to average interest-                          |                                                        |                                                        |                                                      |                                                                 |   |   |   |   |   |   |   |   |   |   |
|   bearing      liabilities                                  |                                                        | 109.8%                                                      |                                                      |                                                                 |   |   |   |   | 108.9% |   |   |   |   |   |

| (1)   | Average      balances include non-accrual loans and loans 90 days or more past due. The      corresponding interest up to the date of non-accrual status has been      included in the "Interest and Dividends"column. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Average      balances for a period have been calculated using the average monthly      balances for the respectiveyear. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------|

----

|                                                | Increase/(Decrease)                                                                                 |   | Increase/(Decrease)                                                                                |
|-----------------------------------------------------|-----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|
|                                                | Due      to                                                                                         |   | Due      to                                                                                        |
|                                                |                                                                                                |   |                                                                                               |   |   |   |   |   |   |   |   |
|                                                | Volume                                                                                              |   | Rate                                                                                               |   | Net |   | Volume |   | Rate |   | Net |
|                                                | (In      thousands)                                                                                 |
| Interest-earning      assets:                       |                                                                                                |   |                                                                                               |   |   |   |   |   |   |   |   |
|   Loans      (1)                          |  $      (1,820)                                                  |   |  $         (432)                                 |   |  $      (2,252) |   |  $         (844) |   |  $      (1,306) |   |  $      (2,150) |
|   Securities                              |               133             |   |             (565)                      |   |             (432) |   |               230 |   |             (148) |   |                 82 |
|   Other                                   |                 44  |   |                 51 |   |                 95 |   |                 95 |   |             (489) |   |             (394) |
| Total      net change in income on                  |                                                                                                |   |                                                                                               |   |   |   |   |   |   |   |   |
|   interest-earnings      assets           |          (1,643)                                       |   |             (946)                      |   |          (2,589) |   |             (519) |   |          (1,943) |   |          (2,462) |
|                                                |                                                                                                |   |                                                                                               |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                  |                                                                                                |   |                                                                                               |   |   |   |   |   |   |   |   |
|   Interest-bearing      deposits          |               (74)            |   |          (1,093)                                      |   |          (1,167) |   |             (260) |   |          (1,687) |   |          (1,947) |
|   Retail      repurchase agreements       |                 (3) |   |               (13)           |   |               (16) |   |                 77 |   |               (27) |   |                 50 |
|   Other      interest-bearing liabilities |             (659)                       |   |             (335)                      |   |             (994) |   |                 49 |   |             (160) |   |             (111) |
| Total      net change in expense on                 |                                                                                                |   |                                                                                               |   |   |   |   |   |   |   |   |
|   interest-bearing      liabilities       |             (736)                       |   |          (1,441)                                      |   |          (2,177) |   |             (134) |   |          (1,874) |   |          (2,008) |
| Net      change in net interest income              |  $         (907)                                  |   |  $           495                       |   |  $         (412) |   |  $         (385) |   |  $           (69) |   |  $         (454) |
|                                                |                                                                                                |   |                                                                                               |   |   |   |   |   |   |   |   |

----

----

| Commitments:                              |                                                |   |
|-------------------------------------------|-----------------------------------------------------|--------|
|                                      | (In      thousands)                                 |   |
| Fixed      rate loans                     |  $     232            |   |
| Adjustable      rate loans                |         362 |   |
| Undisbursed      balance of loans closed  |         912 |   |
| Unused      lines of credit               |       3,659           |   |
| Commercial      standby letters of credit |         132 |   |
|    Total                   |  $   5,297                      |   |
|                                      |                                                |   |

----

|                    |   |                              |   |                                                                |   |    |   | Net      Portfolio as % of |   |
|-------------------------|--------|-----------------------------------|--------|---------------------------------------------------------------------|--------|---------|--------|----------------------------|--------|
|                    |   | Net      Portfolio Value          |   | Portfolio      Value of Assets                                      |   |
| Basis      Point ("bp") |   | Dollar                            |   | Dollar                                                              |   | Percent |   | Net      Portfolio         |   |   |   |
| Change      in Rates    |   | Amount                            |   | Change(1)                                                           |   | Change  |   | Value      Ratio(2)        |   | Change(3) |   |
|                    |   |  (Dollars      in thousands) |   |
| 300                     | bp     | $      31,041                     |   | $      1,473                                                        |   | 5       | %      | 14.15                      | %      | 70 | bp |
| 200                     |   |    30,949          |   |    1,381                                             |   | 5       |   | 14.07                      |   | 62 |   |
| 100                     |   | 30,558                            |   |           990     |   | 3       |   | 13.88                      |   | 43 |   |
|  50                |   | 29,862                            |   |         294                 |   | 1       |   | 13.58                      |   | 13 |   |
| -                       |   |    39,568          |   |            - |   | -       |   | 13.45                      |   | - |   |
|  (50)              |   |    28,727          |   |     (841)                                       |   | (3)     |   | 13.10                      |   | (35) |   |
| (100)                   |   | 28,068                            |   | (1,500)                                                             |   | (5)     |   | 12.83                      |   | (62) |   |

| (1) | Represents      the increase (decrease) of the estimated net portfolio value at the      indicated change in interest rates compared to the net portfolio value      assuming no change in interestrates. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Calculated      as the estimated net portfolio value divided by the portfolio value of      total assets. |
|-----|-----------------------------------------------------------------------------------------------------------|

| (3) | Calculated      as the increase (decrease) of the net portfolio value ratio assuming the      indicated change in interest rates over the estimated net portfolio value      ratio assuming no change in interestrates. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                   |   | June      30, |   | March      31,     |   | June      30,      |
|--------------------------------------------------------|--------|---------------|--------|--------------------|--------|--------------------|
|                                                   |   | 2010          |   | 2010               |   | 2009               |
|  Pre-shock      net portfolio                     |   |          |   |               |   |               |
|     Value      ratio               |   | 13.45%        |   | 16.73%             |   | 15.26%             |
|  Post-shock      net portfolio                    |   |          |   |               |   |               |
|     Value      ratio (Up 200 bp)   |   | 14.07%        |   | 16.70%             |   | 15.83%             |
|  Increase      (decrease) in portfolio            |   |          |   |               |   |               |
|     Value      ratio (Up 200 bp)   |   | 62      bp    |   |  (3)      bp  |   |  57      bp   |
|  Post-shock      net portfolio                    |   |          |   |               |   |               |
|     Value      ratio (Down 100 bp) |   | 12.83%        |   | 16.29%             |   | 14.61%             |
|  Increase      (decrease) in portfolio            |   |          |   |               |   |               |
|     Value      ratio (Down 100 bp) |   | (62)      bp  |   |  (44)      bp |   |  (65)      bp |

----

----

| FIRST      BANCSHARES, INC. AND SUBSIDIARIES                           |                                                                                                    |
|------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                                                   |                                                                                                    |
| CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION                    |                                                                                                    |
|                                                                   | -      - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -      - - - - - - - - - |
| June      30, 2010 and 2009                                            |                                                                                                    |
|                                                                   |                                                                                                    |   | 2010 |   |   | 2009 |   |
| ASSETS                                                                 |                                                                                                    |   |   |   |   |   |
| Cash      and cash equivalents                                         | $                                                                                                       | 20,182,593 |   | $ | 26,217,607 |   |
| Certificates      of deposit purchased                                 |                                                                                                    | 7,221,578 |   |   | 5,628,062 |   |
| Securities      available-for-sale                                     |                                                                                                    | 60,304,479 |   |   | 45,316,804 |   |
| Securities      held to maturity. fair value at:                       |                                                                                                    |   |   |   |   |   |
|         June 30, 2010, $2,072,084; June 30, 2009, $2,626,106 |                                                                                                    | 2,012,940 |   |   | 2,591,510 |   |
| Federal      Home Loan Bank stock, at cost                             |                                                                                                    | 434,000 |   |   | 1,580,800 |   |
| Loans      receivable, net allowance for loan losses at:               |                                                                                                    |   |   |   |   |   |
|         June 30, 2010, $2,526,862; June 30, 2009, $4,185,326 |                                                                                                    | 108,683,381 |   |   | 133,162,106 |   |
| Loans      held for sale                                               |                                                                                                    | - |   |   | 820,270 |   |
| Accrued      interest receivable                                       |                                                                                                    | 819,752 |   |   | 955,037 |   |
| Prepaid      FDIC insurance premiums                                   |                                                                                                    | 1,196,465 |   |   | 82,548 |   |
| Prepaid      expenses                                                  |                                                                                                    | 380,487 |   |   | 317,205 |   |
| Property      and equipment, net                                       |                                                                                                    | 6,051,423 |   |   | 6,669,373 |   |
| Real      estate owned and other repossessed assets, net               |                                                                                                    | 3,945,628 |   |   | 1,706,615 |   |
| Intangible      assets, net                                            |                                                                                                    | 135,241 |   |   | 185,355 |   |
| Deferred      tax asset, net                                           |                                                                                                    | - |   |   | 1,838,785 |   |
| Income      taxes receivable                                           |                                                                                                    | 152,975 |   |   | 274,583 |   |
| Bank-owned      life insurance                                         |                                                                                                    | - |   |   | 2,154,025 |   |
| Other      assets                                                      |                                                                                                    | 136,031 |   |   | 414,608 |   |
|           Total assets                             | $                                                                                                       | 211,656,973 |   | $ | 229,915,293 |   |
|                                                                   |                                                                                                    |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS'      EQUITY                              |                                                                                                    |   |   |   |   |   |
|                                                                   |                                                                                                    |   |   |   |   |   |   |
| Deposits                                                               | $                                                                                                       | 180,075,425 |   | $ | 189,217,878 |   |
| Retail      repurchase agreements                                      |                                                                                                    | 5,352,402 |   |   | 5,713,382 |   |
| Advances      from Federal Home Loan Bank                              |                                                                                                    | 3,000,000 |   |   | 10,000,000 |   |
| Accrued      expenses                                                  |                                                                                                    | 617,915 |   |   | 1,220,142 |   |
|           Total liabilities                        |                                                                                                    | 189,045,742 |   |   | 206,151,402 |   |
|                                                                   |                                                                                                    |   |   |   |   |   |   |
| Commitments      and contingencies (Note 13)                           |                                                                                                    |   |   |   |   |   |
|                                                                   |                                                                                                    |   |   |   |   |   |   |
| Preferred      stock, $.01 par value; 2,000,000 shares authorized,     |                                                                                                    |   |   |   |   |   |
|         none issued                                          |                                                                                                    | - |   |   | - |   |
| Common      stock, $.01 par value; 8,000,000 shares authorized,        |                                                                                                    |   |   |   |   |   |
|         issued 2,895,036 in 2010 and in 2009, outstanding    |                                                                                                    |   |   |   |   |   |
|         1,550,815 in 2010 and in 2009                        |                                                                                                    | 28,950 |   |   | 28,950 |   |
| Paid-in      capital                                                   |                                                                                                    | 18,056,714 |   |   | 18,047,257 |   |
| Retained      earnings – substantially restricted                |                                                                                                    | 22,538,555 |   |   | 24,022,637 |   |
| Treasury      stock, at cost - 1,344,221 shares in 2010 and in 2009    |                                                                                                    | (19,112,627 | ) |   | (19,112,627 | ) |
| Accumulated      other comprehensive income                            |                                                                                                    | 1,099,639 |   |   | 777,674 |   |
| Total      stockholders' equity                                        |                                                                                                    | 22,611,231 |   |   | 23,763,891 |   |
| Total      liabilities and stockholders' equity                        | $                                                                                                       | 211,656,973 |   | $ | 229,915,293 |   |
|                                                                   |                                                                                                    |
| See      notes to the consolidated financial statements                |                                                                                                    |

----

|                                                                            |                                                                                  |   |                                                                                 |   |   |
|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|--------|
|  FIRST      BANCSHARES, INC. AND SUBSIDIARIES                              |
|                                                                            |
| CONSOLIDATED      STATEMENTS OF OPERATIONS                                      |
| -      - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -      - |
| Years      Ended June 30, 2010 and 2009                                         |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
|                                                                            | 2010                                                                                  |   | 2009                                                                                 |   |   |
| Interest      Income:                                                           |                                                                                  |   |                                                                                 |   |   |
|   Loans      receivable                                               |  $     7,517,826                                        |   |  $     9,770,332                                       |   |   |
|   Securities                                                          |         2,045,358                             |   |         2,452,442                            |   |   |
|   Other      interest-earning assets                                  |            213,568             |   |            142,832            |   |   |
|       Total      interest income                  |       9,776,752                                         |   |       12,365,606                                       |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
| Interest      Expense:                                                          |                                                                                  |   |                                                                                 |   |   |
|   Deposits                                                            |         3,015,281                             |   |         4,181,951                            |   |   |
|   Retail      repurchase agreements                                   |              69,778  |   |              85,577 |   |   |
|   Advances      from Federal Home Loan Bank                           |         181,183                               |   |         1,175,562                            |   |   |
|      Total      interest expense                       |         3,266,242                             |   |         5,443,090                            |   |   |
|      Net      interest income                          |         6,510,510                             |   |         6,922,516                            |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
| Provision      for loan losses                                                  |         852,182                               |   |         5,313,801                            |   |   |
|      Net      interest income after                    |                                                                                  |   |                                                                                 |   |   |
|        provision      for loan losses        |         5,658,328                             |   |         1,608,715                            |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
| Non-interest      Income:                                                       |                                                                                  |   |                                                                                 |   |   |
|   Service      charges and other fee income                           |         1,510,334                             |   |         1,907,418                            |   |   |
|   Gain      on the sale of loans                                      |           44,937                    |   |           531,865                  |   |   |
|   Gain      on sale of securities                                     |            -                   |   |            142,783            |   |   |
|   Gain      on sale of property and equipment                         |                                                                                  |   |                                                                                 |   |   |
|      and      real estate owned                        |              35,257  |   |              24,011 |   |   |
|   Write-down      on real estate owned                                |         (181,115)                             |   |         (265,654)                            |   |   |
|   Income      from bank-owned life insurance                          |            15,064              |   |            150,616            |   |   |
|   Other                                                               |            110,908             |   |            165,476            |   |   |
|      Total      non-interest income                    |         1,535,385                             |   |         2,656,515                            |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
| Non-interest      Expense:                                                      |                                                                                  |   |                                                                                 |   |   |
|   Compensation      and employee benefits                             |         3,630,094                             |   |         4,425,787                            |   |   |
|   Occupancy      and equipment                                        |         1,374,441                             |   |         1,626,520                            |   |   |
|   Professional      fees                                              |            531,380             |   |            446,095            |   |   |
|   Deposit      insurance premiums                                     |            603,419             |   |            256,157            |   |   |
|   Other                                                               |         1,497,530                             |   |         3,078,882                            |   |   |
|      Total      non-interest expense                   |         7,636,864                             |   |         9,833,441                            |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
|      Loss      before income taxes                     |      (443,151)                                               |   |      (5,568,211)                                            |   |   |
| Income      taxes (benefit)                                                     |   1,040,931                                                                 |   |   (1,531,751)                                                              |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
|      Net      loss                                     | $   (1,484,082)                                                        |   |  $ (4,036,460)                                                                  |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
|      Basic      loss per share                         |  $                 (0.96) |   |  $          (2.60)            |   |   |
|                                                                            |                                                                                  |   |                                                                                 |   |   |
|      Diluted      loss per share                       | $                 (0.96)       |   | $               (2.60)                  |   |   |
|                                                                            |                                                                                  |
| See      notes to the consolidated financial statements                         |                                                                                  |

----

|     FIRST      BANCSHARES, INC. AND      SUBSIDIARIES               |
|-----------------------------------------------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF STOCKHOLDERS' EQUITY                                    |
| -      - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -      - |
| Years      Ended June 30, 2010 and 2009                                                 |
|                                                                                    | Common |   |   |   |   |   |   |   | Accumulated      Other |   | Total |
|                                                                                    | Stock |   | Paid-in |   | Retained |   | Treasury |   | Comprehensive |   | Stockholders' |
|                                                                                    | Shares |   | Amount |   | Capital |   | Earnings |   | Stock |   | Income      (Loss) |   | Equity |
| Balances      at June 30, 2008                                                          | 1,550,815 | $ |    28,950 | $ |         18,019,852 | $ |              28,214,183 | $ |    (19,112,627) | $ |      (50,786) | $ |      27,099,572 |
| Comprehensive      income:                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      loss                                                               |             - |   |               - |   |                          - |   |                 (4,036,460) |   |                        - |   |                    - |   |       (4,036,460) |
|   Other      comprehensive income, net of tax:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Change      in unrealized gain (loss) on                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     securities      available-for-sale, net of deferred             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     income      taxes of $426,782                                   | - |   | - |   | - |   | - |   | - |   |              922,696 |   |            922,696 |
|  Reclassification      adjustment net of deferred                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     income      taxes of $48,547                                    |   |   |   |   |   |   |   |   |   |   |   |   | (94,236) |
|       Total      Comprehensive Income                     |   |   |   |   |   |   |   |   |   |   |   |   |   (3,208,000) |
|   Dividends      paid ($0.10 per share)                                       |   |   |   |   |   |   | (155,086) |   |   |   |   |   | (155,086) |
|   Stock      based compensation                                               |               - |   |               - |   |             27,405 |   |                             - |   |           - |   |                   - |   |           27,405 |
| Balances      at June 30, 2009                                                          | 1,550,815 |   |     28,950 |   |         18,047,257 |   |              24,022,637 |   |    (19,112,627) |   | 777,674 |   |      23,763,891 |
| Comprehensive      income:                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net      loss                                                               |             - |   |               - |   |                          - |   |             (1,484,082) |   |                        - |   |                    - |   | (1,484,082) |
|   Other      comprehensive income, net of tax:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Change      in unrealized gain (loss) on                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     securities      available-for-sale, net of deferred             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     income      taxes of $165,861                                   | - |   | - |   | - |   | - |   | - |   | 321,965 |   | 321,965 |
|       Total      Comprehensive Income                     |   |   |   |   |   |   |   |   |   |   |   |   |     (1,162,117) |
|   Stock      based compensation                                               |               - |   |               - |   | 9,457 |   |                             - |   |           - |   |                   - |   | 9,457 |
| Balances      at June 30, 2010                                                          | 1,550,815 | $ |   28,950 | $ |      18,056,714 | $ |            22,538,555 | $ |    (19,112,627) | $ |     1,099,639 | $ |   22,611,231 |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to the consolidated financialstatements                                  |

----

| FIRST      BANCSHARES, INC. AND SUBSIDIARIES                                                                        |                                                                                                         |
|---------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
|                                                                                                                |                                                                                                         |
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                                                          |                                                                                                         |
| -      - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -      -                             |                                                                                                         |
| Years      Ended June 30, 2010 and 2009                                                                             |                                                                                                         |
|                                                                                                                | 2010                                                                                                         |   | 2009 |   |   |   |
| Cash      flows from operating activities:                                                                          |                                                                                                         |   |   |   |   |   |
|   Net      loss                                                                                           |  $        (1,484,082)                                           |   |  $     (4,036,460) |   |   |   |
|   Adjustments      to reconcile net income  to net                                              |                                                                                                         |   |   |   |   |   |
|     cash      provided by operating activities:                                                 |                                                                                                         |   |   |   |   |   |
|       Depreciation                                                                    |           552,515                                          |   |               658,854 |   |   |   |
|       Amortization                                                                    |                  50,114 |   |                 50,115 |   |   |   |
|       Net      premium amortization and (discount accretion) onsecurities             |                (43,485)           |   |             (199,427) |   |   |   |
|       Stock      based compensation                                                   | 9,457                                                                                                        |   | 27,405 |   |   |   |
|       Gain      on sale of securities                                                 | -                                                                                                            |   | (142,783) |   |   |   |
|       Provision      for loan losses                                                  |           852,182                                          |   |           5,313,801 |   |   |   |
|       Write      down on real estate owned                                            | 181,115                                                                                                      |   | 265,654 |   |   |   |
|       Gain      on the sale of loans                                                  | (44,937)                                                                                                     |   | (531,865) |   |   |   |
|       Proceeds      from the sale of loans originated for sale                        | 1,576,243                                                                                                    |   | 23,883,603 |   |   |   |
|       Loans      originated for sale                                                  | (691,130)                                                                                                    |   | (23,036,252) |   |   |   |
|       Deferred      income taxes                                                      | 1,672,924                                                                                                    |   | (1,469,879) |   |   |   |
|       Gain      on sale of property and equipment                                     |                                                                                                         |   |   |   |   |   |
|         and      real estate owned                                          | (39,236)                                                                                                     |   | (9,993) |   |   |   |
|       (Gain)      loss on the sale of other repossessed assets                        | 3,176                                                                                                        |   | (14,018) |   |   |   |
|       Increase      in cash surrender value on bank-owned                             |                                                                                                         |   |   |   |   |   |
|         life      insurance                                                 |              (15,064)                       |   |             (150,616) |   |   |   |
|       Net      change in operating accounts:                                          |                                                                                                         |   |   |   |   |   |
|         Accrued      interest receivable, prepaid expenses and other assets |                330,674            |   |               150,243 |   |   |   |
|         Deferred      loan costs                                            |                  21,171 |   |                 69,441 |   |   |   |
|          Income      taxes receivable                                  |  121,608                                                                                                |   |  (216,930) |   |   |   |
|         FDIC      insurance                                                 | (1,113,917)                                                                                                  |   | (55,828) |   |   |   |
|         Accrued      expenses                                               |              (602,227)                      |   |              328,822 |   |   |   |
|           Net      cash provided by operating activities          |             1,337,101                            |   |             883,887 |   |   |   |
| Cash      flows from investing activities:                                                                          |                                                                                                         |   |   |   |   |   |
|   Purchase      of certificates of deposit purchased                                                      | (8,725,856)                                                                                                  |   | (5,256,669) |   |   |   |
|   Maturities      of certificates of deposit purchased                                                    |             7,132,340                            |   |               195,407 |   |   |   |
|   Purchase      of securities available-for-sale                                                          |         (36,691,737)                                                 |   |       (24,756,669) |   |   |   |
|   Proceeds      from sale of securities available-for-sale                                                | -                                                                                                            |   |            6,120,121 |   |   |   |
|   Proceeds      from maturities of securities                                                             |                                                                                                         |   |   |   |   |   |
|     available-for-sale                                                                          |              22,235,498                     |   |          15,749,618 |   |   |   |
|   Proceeds      from maturities of securities                                                             |                                                                                                         |   |   |   |   |   |
|     held      to maturity                                                                       |             578,445                              |   |            1,581,238 |   |   |   |
|   Purchase      of Federal Home Loan Bank stock                                                           |        -                                                                  |   |        (261,500) |   |   |   |
|   Proceeds      from redemption of Federal Home Loan Bank stock                                           |        1,146,800                                                          |   |        293,900 |   |   |   |
|   Net      (increase) decrease in loans receivable                                                        |          19,716,395                                             |   |          26,161,802 |   |   |   |
|   Proceeds      from surrender of bank owned life insurance                                               | 2,169,089                                                                                                    |   | 4,117,951 |   |   |   |
|   Purchases      of property and equipment                                                                |           (248,035)                                        |   |           (502,403) |   |   |   |
|   Proceeds      from sale of property and equipment                                                       |              313,471                        |   |              84,257 |   |   |   |
|   Capital      expenditures on real estate owned                                                          | (22,000)                                                                                                     |   | - |   |   |   |
|   Proceeds      from sale of real estate owned and other repossessedassets                                |              1,526,908                      |   |            1,261,270 |   |   |   |
|           Net      cash provided by investing activities          |     9,131,318                                                                            |   |          24,788,323 |   |   |   |
| Continued                                                                                                           |

----

|                                                                                    |
|-----------------------------------------------------------------------------------------|
| FIRST BANCSHARES, INC. AND      SUBSIDIARIES                                            |
|                                                                                    |
| CONSOLIDATED      STATEMENTS OF CASH FLOWS (Continued)                                  |
| -      - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -      - |
| Years      Ended June 30, 2010 and 2009                                                 |
|                                                                                    |   |   |   |   |   |
|                                                                                    | 2010 |   | 2009 |   |   |
| Cash      flows from financing activities:                                              |   |   |   |   |   |
|   Net      change in deposits                                                 |  $         (9,142,453) |   |  $      (5,375,405) |   |   |
|   Net      change in retail repurchase agreements                             | (360,980) |   | 1,065,795 |   |   |
|   Payments      on borrowed funds                                             | (7,000,000) |   | (19,000,000) |   |   |
|   Proceeds      from borrowed funds                                           | - |   | 7,000,000 |   |   |
|   Cash      dividends paid                                                    |         - |   |         (155,086) |   |   |
|        Net      cash used in financing activities    |           (16,503,433) |   |           (16,464,696) |   |   |
|                                                                                    |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                               |            (6,035,014) |   |             9,207,514 |   |   |
|                                                                                    |   |   |   |   |   |
| Cash      and cash equivalents -                                                        |   |   |   |   |   |
|   Beginning      of period                                                    |              26,217,607 |   |              17,010,093 |   |   |
| Cash      and cash equivalents -                                                        |   |   |   |   |   |
|   end      of period                                                          |  $          20,182,593 |   |  $      26,217,607 |   |   |
|                                                                                    |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |
| Supplemental      disclosures of cash flow information:                                 |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |
|   Cash      paid during the year for:                                         |   |   |   |   |   |
|     Interest      on deposits and                                   |   |   |   |   |   |
|       other      borrowings                               |  $            3,448,021 |   |  $        5,398,180 |   |   |
|     Income      taxes                                               | $             (754,601) |   | $                       - |   |   |
|                                                                                    |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |
| Supplemental      schedule of non-cash investing and                                    |   |   |   |   |   |
|   financing      activities:                                                  |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |
|   Loans      transferred to real estate owned                                 | $             3,888,976 |   | $         2,325,576 |   |   |
|                                                                                    |   |   |   |   |   |
|                                                                                    |
| See      notes to consolidated financialstatements                                      |

----

|        Nature of b | usiness      – First Bancshares, Inc., a Missouri corporation      (“Company”),  was organized onSeptember 30, 1993 for the purpose      of becoming a unitary savings and loan holding company for First Home      Savings Bank (”Savings Bank”).  The Savings Bank is primarily      engaged in providing a full range of banking and mortgage services to      individual and corporate customers in southern Missouri.  The      Company and Savings Bank are also subject to the regulation of certain      federal and state agencies and undergo periodic examinations by those      regulatory authorities. |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Principles o | f      consolidation – The accompanying consolidated financial statements include      the accountsof the Company, and its wholly-owned subsidiaries, the Savings      Bank and SCMG, Inc. (formerly South Central Missouri Title, Inc.) and the      wholly-owned subsidiaries of the Savings Bank, Fybar Service Corporation      and First Home Investments.  In consolidation, all significant      intercompany balances and transactions have been    eliminated. |
|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Estimates – | In      preparing the consolidated financial statements in conformity with      accounting principles generally accepted in the United States of America,      management is required to make estimates and assumptions that affect the      reported amounts of assets and liabilities and disclosure of contingent      assets and liabilities as of the date of the balance sheet and reported      amounts of revenues and expenses during the reporting      period.  Actual results could differ from those      estimates.  Material estimates that are particularly susceptible      to significant change in the near term relate to the determination of the      fair value of financial instruments, the allowance for loan losses and the      deferred tax valuation. |
|-------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Segment re | porting      - An operating segment is defined as a component of a business for which      separate financial information is available that is evaluated regularly by      the chief operating decision maker in deciding how to allocate resources      and evaluate performance. The Company has one operating segment, community      banking. |
|------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Consolidat | ed      statements of cash flows – For purposes of the consolidated statements of      cash flows, cash consists of cash on hand and deposits with other      financial institutions.  Cash equivalents include highly-liquid      instruments with an original maturity of three months or less. Cash flows      from loans and deposits are reportednet. |
|------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Certificate | s      of deposit purchased – These are funds placed on deposit at other      financial institutions which mature in one year or less and do not, at any      one financial institution, aggregate to more than the insurance of      accounts limitation. |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Securities |  –      Securities which are designated as held-to-maturity are designated as such      because the Company has the ability and intent to hold these securities to      maturity.  Such securities are reported at amortized      cost. |
|------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | All      other securities are designated as available-for-sale, a designation which      provides the Company with certain flexibility in managing its investment      portfolio.  Such securities are reported at fair value; net      unrealized gains and losses are excluded from income and reported net of      applicable income taxes as a separate component of stockholders’      equity. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (1) | SUMMARY OF SIGNIFICANT      ACCOUNTING POLICIES(CONTINUED) |
|-----|------------------------------------------------------------|

|        Federal Home | Loan      Bank stock - The Savings Bank, as a member of the Federal Home Loan Bank      (“FHLB”) system, is required to maintain an investment in capital stock of      the FHLB of Des Moines.  The stock does not have a readily      determinable fair market value and, as such, is carried at cost and      evaluated for impairment in accordance with ASC 942-325-35. In accordance      with the guidance, the stock’s value is determined by the ultimate      recoverability of the par value rather than recognizing temporary      declines. The determination of whether the par value will ultimately be      recovered is influenced by criteria such as the following: (a) The      significance of the decline in net assets of the Federal Home Loan Bank as      compared to the capital stock amount and the length of time the situation      has persisted; (b) Commitments by the Federal home Loan Bank to make      payments in relation to the operating performance; (c) The impact of      legislative and regulatory changes on the customer base of the Federal      Home Loan Bank, and; (d) The liquidity position of the Federal Home Loan      Bank. |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Prepaid insur | ance      assessment – In November 2009, the Federal Deposit Insurance Corporation      (FDIC) adopted a final rule amending the assessment regulations to require      depository institutions to prepay their quarterly risk-based assessment      for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. The      payment of $1.6 million, which was made December 30, 2009, was recorded as      a prepaid asset and is being amortized over the assessment      period. |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Loans receiv | able –      Loans that management has the intent and ability to hold for the      foreseeable future or until maturity or payoff are stated at their      principal amount outstanding, net of deferred  loan |
|--------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (1) | SUMMARY OF SIGNIFICANT      ACCOUNTING POLICIES(CONTINUED) |
|-----|------------------------------------------------------------|

|        Allowance for |  loan      losses – The allowance for loan losses is established as losses are      estimated to have occurred through a provision for loan losses charged to      earnings.  Loan losses are charged against the allowance when      management believes the collectability of a loan balance is unlikely.      Subsequent recoveries, if any, are credited to the    allowance. |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

----

| (1) | SUMMARY OF SIGNIFICANT      ACCOUNTING POLICIES(CONTINUED) |
|-----|------------------------------------------------------------|

|        Loans held for |  sale      – Loans held for sale are originated and intended for sale on the      secondary market on a loan by loan basis with terms established with both      the borrower and the investor prior to commitment and closing. Funding by      the investor, based on the established terms, generally takes place in      three to four weeks. Loans held for sale are carried at cost, which      approximates fair value, due to the short term nature of the loans. Gains      on loans sold are recognized based on the net cash flow of each sale.      Loans are generally sold with servicing rights  released. |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Property and e | quipment      and related depreciation – Land is stated at cost. Property and equipment      are stated at cost, net of accumulated depreciation.  Property      and equipment depreciation is principally computed by applying the      following methods and estimatedlives: |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  Category                        |   |  Estimated Life   |   |  Method        |
|---------------------------------------|--------|------------------------|--------|---------------------|
|  Automobiles                     |   |  5    Years       |   |  Straight-line |
|  Office      furniture, fixtures |   |                   |   |                |
|  and      equipment              |   |  3-10      Years  |   |  Straight-line |
|  Buildings                       |   |  15-40      Years |   |  Straight-line |
|  Investment      real estate     |   |  15-40      Years |   |  Straight-line |

|        Intangible ass | ets      – The intangible asset relates to customer relationships that were      acquired in connection with the acquisition of two      branches.  The premium paid by the Savings Bank for the branches      is being amortized on a straight-line basis over 15  years. |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Bank-owned l | ife      insurance – Bank-owned life insurance is carried at its cash surrender      value.  Changes in cash surrender value are recorded in      non-interest income. |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Income taxes | – Deferred      taxes are determined using the liability (or balance sheet) method whereby      deferred tax assets are recognized for deductible temporary differences      and operating loss and tax credit carry-forwards and deferred tax      liabilities are recognized for taxable temporary differences. Temporary      differences are the differences between the reported amounts of assets and      liabilities and their tax bases.  Deferred tax assets are      reduced by a valuation allowance when, in the opinion of management, it is      more likely than not that some portion or all of the deferred tax assets      will not be realized.  Deferred tax assets and liabilities are      adjusted for the effects of changes in tax laws and rates on the date of      enactment. As a result of the Company’s operating results over the five      year period ended June 30, 2010, management provided a valuation allowance      for the deferred tax assets of both the Company and the Savings Bank as of      June 30, 2010. |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (1) | SUMMARY OF SIGNIFICANT      ACCOUNTING POLICIES(CONTINUED) |
|-----|------------------------------------------------------------|

|   | The      Company is no longer subject to U. S. federal or state and local income      tax examinations by tax authorities for years before fiscal      2008. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Real estate ow | ned      and repossessed assets – Includes real estate and other assets acquired in      the settlement of loans, which is recorded at the estimated fair value      less the estimated costs to sell the asset.  Any write down at      the time of foreclosure/repossession is charged against the allowance for      loan losses.  Subsequently, net expenses related to holding the      property and declines in the market value are charged against      income. |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Earnings per s | hare      – Basic earnings per share is computed by dividing net income available to      common stockholders by the weighted average number of common shares      outstanding during the period.  Diluted earnings per share      reflects the potential dilution that could occur if securities or other      contracts to issue common stock were exercised or resulted in the issuance      of common stock that would share in the earnings of the      Company.  Dilutive potential common shares are added to weighted      average shares used to compute basic earnings per share.  The      number of shares that would be issued from the exercise of stock options      has been reduced by the number of shares that could have been purchased      from the proceeds at the average market price of the Company’s      stock. |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Comprehensiv | e income      – Accounting principles generally require that recognized revenue,      expenses, gains and losses be included in net income.  Although      certain changes in assets and liabilities, such as unrealized gains and      losses on available-for-sale securities, are reported as a separate      component of the equity section of the balance sheet, such items, along      with net income, are components of comprehensive  income. |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Employee sto | ck      options – The Company has stock-based employee compensation plans which      are described more fully in Note 10, Employee Benefit    Plans. |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | estimate      the fair value of stock option grants.  Cash flows resulting      from the tax benefits of tax deductions in excess of the compensation cost      recognized for those options are presented as financing cash      flows. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Revenue recog | nition      – Deposit account transaction fees and other ancillary non-interest income      related to the Savings Bank’s deposit and lending activities are      recognized as services areperformed. |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Transfers of fin | ancial      assets – Transfers of financial assets are accounted for as sales only      when control over the assets has been surrendered. Control over      transferred assets is deemed to be surrendered when: (1) the assets have      been isolated from the Company, (2) the transferee obtains the right to      pledge or exchange the assets it received, and no condition both      constrains the transferee from taking advantage of its right to pledge or      exchange and provides more than a modest benefit to the transferor, and      (3) the Company does not maintain effective control over the transferred      assets through an agreement to repurchase them before their maturity or      the ability to unilaterally cause the holder to return specific      assets. |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Impairment of l | ong-lived      assets – Long-lived assets, including property and equipment and      intangible assets, are reviewed for impairment whenever events or changes      in circumstances indicate the carrying amount of an asset may not be      recoverable. If such assets are considered to be impaired, the impairment      to be recognized is measured by the amount by which the carrying amount of      the assets exceeds the fair value of theassets. |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        New accountin | g standards      – Accounting Standards      Codification. The Financial Accounting Standards Board’s (“FASB”)      Accounting Standards Codification (“ASC”) became effective on July 1,      2009. At that date, the ASC became FASB’s officially recognized source of      authoritative U. S. generally accepted accounting principles (“GAAP”)      applicable to all public and non-public non-governmental entities,      superseding existing FASB, American Institute of Certified Public      Accountants (“AICPA”), Emerging Issues Task Force (EITF) and related      literature. Rules and interpretive releases of the SEC under the authority      federal securities laws are also sources of GAAP for SEC registrants. All      other accounting literature is considered non-authoritative. The switch to      the ASC affects the way companies refer to U. S. GAAP in financial      statements and accounting policies. Citing particular content in the ASC      involves specifying the unique numeric path to the content through the      Topic, Subtopic, Section and Paragraph  structure. |
|---------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| (1) | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES      (CONTINUED) |
|-----|-------------------------------------------------------------|

|                                               |    |  Amortized  |    |  Gross Unrealized |    |  Fair        |
|----------------------------------------------------|---------|------------------|---------|------------------------|---------|-------------------|
|                                               |    |  Cost       |    |  Gains            |    |  Losses      |   |  Value |
|  United States      Government and            |    |             |    |                   |    |              |   |   |
|          Federal agency obligations |  $ |  26,652,246 |  $ |  375,853          |  $ | -       |  $ | 27,028,099  |
|  Obligations of      states and               |    |             |    |                   |    |              |   |   |
|          political subdivisions     |    |  130,000    |    |  2,064            |    | -       |   | 132,064  |
|  Mutual      funds                            |    |  17,952     |    |  -           |    | -       |   | 17,952  |
|  Federal agency      residential              |    |             |    |                   |    |              |   |   |
|          mortgage-backed securities |    |  31,580,162 |    |  1,418,516        |    | (130,314)    |   | 32,868,364  |
|  Common and      preferred stocks             |    |  258,000    |    |  -           |    | -       |   | 258,000  |
|            Total          |  $ |  58,638,360 |  $ |  1,796,433        |  $ | (130,314)    |  $ | 60,304,479  |

|                                               |    |  Amortized     |    |  Gross Unrealized |    |  Fair        |
|----------------------------------------------------|---------|---------------------|---------|------------------------|---------|-------------------|
|                                               |    |  Cost          |    |  Gains            |    |  Losses      |   |  Value |
|  Obligations of      states and               |    |                |    |                   |    |              |   |   |
|          political subdivisions     |  $ | 1,442,742      |  $ | 34,961            |  $ |  (187)  |  $ | 1,477,516  |
|  Federal agency      residential              |    |                |    |                   |    |              |   |   |
|          mortgage-backed securities |    |  570,198  |    |  24,370      |    | -            |   | 594,568  |
|            Total          |  $ | 2,012,940      |  $ | 59,331            |  $ | (187)        |  $ | 2,072,084  |

----

|                                               |    | Available for      Sale  |
|----------------------------------------------------|---------|------------------------------------|
|                                               |    |  AmortizedCost                |   |  Fair Value |
|  Due in one      year or less                 |  $ | 20,000                        |  $ | 20,136  |
|  Due after one      year through five years   |    |  10,996,126                   |   | 11,207,850  |
|  Due after five      years through ten years  |    | 14,766,120                    |   | 14,928,737  |
|  Due after ten      years                     |    | 1,000,000                     |   | 1,003,440  |
|  Subtotal                                     |    | 26,782,246                    |   | 27,160,163  |
|  Mutual      funds                            |    | 17,952                        |   | 17,952  |
|  Federal agency      residential              |    |                               |   |   |
|          mortgage-backed securities |    | 31,580,162                    |   | 32,868,364  |
|  Common and      preferred stocks             |    | 258,000                       |   | 258,000  |
|            Total          |  $ | 58,638,360                    |  $ | 60,304,479  |
|                                               |    |                               |   |   |

|                                               |    | Held      to Maturity  |
|----------------------------------------------------|---------|-----------------------------|
|                                               |    |  AmortizedCost         |   |  Fair Value |
|  Due in one      year or less                 |  $ | 269,974                |  $ | 272,680  |
|  Due after one      year through five years   |    |  969,914               |   | 1,002,170  |
|  Due after five      years through ten years  |    | 202,854                |   | 202,666  |
|  Subtotal                                     |    | 1,442,742              |   | 1,477,516  |
|  Federal agency      residential              |    |                        |   |   |
|          mortgage-backed securities |    | 570,198                |   | 594,568  |
|            Total          |  $ | 2,012,940              |  $ | 2,072,084  |
|                                               |    |                        |   |   |

|                                               |    |  Amortized  |    |  Gross Unrealized |    |  Fair        |
|----------------------------------------------------|---------|------------------|---------|------------------------|---------|-------------------|
|                                               |    |  Cost       |    |  Gains            |    |  Losses      |   |  Value |
|  United States      Government and            |    |             |    |                   |    |              |   |   |
|          Federal agency obligations |  $ | 8,506,234        |  $ | 110,311                |  $ | (7,480)      |  $ | 8,609,065  |
|  Obligations of      states and               |    |             |    |                   |    |              |   |   |
|          political subdivisions     |    | 150,000          |    | 975                    |    | -       |   | 150,975  |
|  Mutual      funds                            |    |  19,904     |    |  -           |    | -       |   | 19,904  |
|  Federal agency      residential              |    |             |    |                   |    |              |   |   |
|          mortgage-backed securities |    |  35,204,373 |    |  1,126,185        |    | (51,698)     |   | 36,278,860  |
|  Common and      preferred stocks             |    |  258,000    |    |  -           |    | -       |   | 258,000  |
|            Total          |  $ |  58,638,360 |  $ |  1,237,471        |  $ | (59,178)     |  $ | 45,316,804  |

|                                               |    |  Amortized     |    |  Gross Unrealized |    |  Fair          |
|----------------------------------------------------|---------|---------------------|---------|------------------------|---------|---------------------|
|                                               |    |  Cost          |    |  Gains            |    |  Losses        |   |  Value |
|  Obligations of      states and               |    |                |    |                   |    |                |   |   |
|          political subdivisions     |  $ | 1,703,035      |  $ | 29,062            |  $ |  (1,208)  |  $ | 1,730,889  |
|  Federal agency      residential              |    |                |    |                   |    |                |   |   |
|          mortgage-backed securities |    |  888,475  |    |  13,326      |    | (6,584)        |   | 895,217  |
|            Total          |  $ | 2,591,510      |  $ | 42,388            |  $ | (7,792)        |  $ | 2,626,106  |

----

| (2) | SECURITIES      (CONTINUED) |
|-----|-----------------------------|

| Available      for Sale as of June 30, 2010 |
|---------------------------------------------|
|                                        | Less      Than 12 Months |   | 12      Months or More |   | Total |
|                                        |   | Gross |   |   | Gross |   |   | Gross |
|                                        |   | Unrealized |   |   | Unrealized |   |   | Unrealized |
|                                        | Fair      Value | (Losses) |   | Fair      Value | (Losses) |   | Fair      Value | (Losses) |
| Federal      agency                         |   |   |   |   |   |   |   |   |
|  residential      mortgaged            |   |   |   |   |   |   |   |   |
|  -backed      securities               | $3,092,027 | $(121,661) |   |    $324,307 |   $      (8,653) |   | $3,416,334 | $(130,314) |
|                                        |   |   |   |   |   |   |   |   |
| Total      temporarily                      |   |   |   |   |   |   |   |   |
|   impaired      securities        | $3,092,027 | $(121,661) |   |  $  324,307 |  $  (8,653) |   | $3,416,334 | $(130,314) |
|                                        |   |   |   |   |   |   |   |   |

|                                      |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                       |
|-------------------------------------------|----------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|------------------------|----------------------------|--------------------------------------------|--------|----------------------------|--------------------------------------------|
| Held      to Maturity as of June 30, 2010 |
|                                      | Less      Than 12 Months                                                               |                                                                                   | 12      Months or More |                       | Total                                      |
|                                      |                                                                                   | Gross                                                                                  |                   |                       | Gross                                      |   |                       | Gross                                      |
|                                      |                                                                                   | Unrealized                                                                             |                   |                       | Unrealized                                 |   |                       | Unrealized                                 |
|                                      | Fair      Value                                                                        | (Losses)                                                                               |                   | Fair      Value            | (Losses)                                   |   | Fair      Value            | (Losses)                                   |
| Obligations      of states                |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                       |
|   and      political            |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                       |
|   subdivisions                  |  $             - |  $             - |                   |   $      202,666 |  $     (187) |   |  $  202,666 |  $     (187) |
| Total      temporarily                    |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                       |
|   impaired      securities      |  $             - |  $             - |                   |  $      202,666       |  $     (187) |   |  $  202,666 |  $     (187) |

| Available      for Sale as of June 30, 2009 |
|---------------------------------------------|
|                                        | Less      Than 12 Months |   | 12      Months or More |   | Total |
|                                        |   | Gross |   |   | Gross |   |   | Gross |
|                                        |   | Unrealized |   |   | Unrealized |   |   | Unrealized |
|                                        | Fair      Value | (Losses) |   | Fair      Value | (Losses) |   | Fair      Value | (Losses) |
| United      States                          |   |   |   |   |   |   |   |   |
|   Government      and             |   |   |   |   |   |   |   |   |
|   Federal      Agency             |   |   |   |   |   |   |   |   |
|   Obligations                     | $3,002,500 | $(7,480) |   |    $           - | $           - |   | $3,002,500 | $(7,480) |
| Federal      agency                         |   |   |   |   |   |   |   |   |
|  residential      mortgaged            |   |   |   |   |   |   |   |   |
|  -backed      securities               | 1,580,242 | (14,501) |   |    512,235 |    (37,197) |   | 2,092,477 | (51,698) |
|                                        |   |   |   |   |   |   |   |   |
| Total      temporarily                      |   |   |   |   |   |   |   |   |
|   impaired      securities        | $4,582,742 | $(21,981) |   |  $512,235 | $(37,197) |   | $5,094,977 | $(59,178) |

----

| (2)   | SECURITIES      (CONTINUED) |
|-----------------|-----------------------------|

|                                      |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                        |
|-------------------------------------------|----------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|------------------------|----------------------------|--------------------------------------------|--------|----------------------------|---------------------------------------------|
| Held      to Maturity as of June 30, 2009 |
|                                      | Less      Than 12 Months                                                               |                                                                                   | 12      Months or More |                       | Total                                      |
|                                      |                                                                                   | Gross                                                                                  |                   |                       | Gross                                      |   |                       | Gross                                       |
|                                      |                                                                                   | Unrealized                                                                             |                   |                       | Unrealized                                 |   |                       | Unrealized                                  |
|                                      | Fair      Value                                                                        | (Losses)                                                                               |                   | Fair      Value            | (Losses)                                   |   | Fair      Value            | (Losses)                                    |
| Obligations      of states                |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                        |
|   and      political            |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                        |
|   Subdivisions                  |  $             - |  $             - |                   |   $      202,019 | $   (1,288)                 |   |  $  202,666 | $   (1,208)                  |
| Federal      agency                       |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                        |
|  residential      mortgaged          |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                        |
|  -backed      securities             | 173,519                                                                                | (5,028)                                                                                |                   |    134,470  |       (187)  |   |    307,989  |       (6,584) |
| Total      temporarily                    |                                                                                   |                                                                                   |                   |                       |                                       |   |                       |                                        |
|   impaired      securities      | $  173,519                                                                   | $    (5,028)                                                       |                   |  $      336,489       |  $     (187) |   |  $  510,008 | $    (7,792)            |

|                           |    |  June 30,      |
|--------------------------------|---------|---------------------|
|                           |    |  2010          |   |  2009 |
|  Proceeds from      sales |  $ | -         |  $ | 6,120,121  |
|                           |    |                |   |   |
|  Realized      gains      |  $ | -         |  $ | 142,783  |
|  Realized      (losses)   |    |  -   |   |  -  |
|  Net      realized        |  $ | -         |  $ | 142,783  |

----

|                                                              | 2010                      |   | 2009                                                                                 |
|-------------------------------------------------------------------|---------------------------|--------|--------------------------------------------------------------------------------------|
| Residential      real estate                                      | $      60,217,252         |   | $      71,140,655                                                                    |
| Commercial      real estate                                       | 34,572,677                |   | 39,816,588                                                                           |
| Land                                                              | 4,358,033                 |   | 7,395,477                                                                            |
| Loans      to depositors, secured by savings accounts             | 1,181,204                 |   | 1,164,602                                                                            |
| Consumer      and automobile loans                                |  1,670,353           |   |  2,800,247                                                                      |
| Second      mortgage loans                                        | 4,468,596                 |   | 4,899,841                                                                            |
| Commercial      business loans                                    |  4,489,728           |   | 9,816,666                                                                            |
| Overdrafts                                                        | 38,098                    |   |              79,078 |
|   Total      gross loans                                | 110,995,941               |   | 137,113,154                                                                          |
| Allowance      for loan losses                                    | (2,526,862)               |   | (4,185,326)                                                                          |
| Loans      in process                                             |     - |   | (1,195)                                                                              |
| Unamortized      deferred loan costs, net oforigination      fees |  214,302             |   |  235,473                                                                        |
|   Net      loans receivable                             | $108,683,381              |   | $133,162,106                                                                         |
|                                                              |                      |   |                                                                                 |

|                                            |   | 2010                                  |   | 2009                                                                                        |
|-------------------------------------------------|--------|---------------------------------------|--------|---------------------------------------------------------------------------------------------|
| Balance      at beginning of year               | $      |    4,185,326           | $      |    2,796,836                                                                 |
| Provision      charged to income                |   |     852,182       |   |  5,313,801                                                                             |
| Charge-offs                                     |   | (2,914,620)                           |   | (4,171,171)                                                                                 |
| Recoveries                                      |   |      253,974 |   |      245,860                                                       |
| Transfer      from reserve on Letters of Credit |   |      150,000 |   |                - |
| Balance      at end of year                     | $      |   2,526,862                 | $      | 4,185,326                                                                                   |

----

| (3) | LOANS RECEIVABLE      (CONTINUED) |
|-----|-----------------------------------|

|                                                      |   | June      30,                                                                                                             |
|-----------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|
|                                                      |   | 2010                                                                                                                      |   | 2009 |
| Past      due 90 days or more and still accruing interest | $      |                       -    | $ |              288,255 |
| Non-accrual                                               |   | 3,927,197                                                                                                                 |   | 3,023,647 |
|                                                      | $      |            3,927,197                                                                             | $ |              3,311,902 |

|                                               | June      30, |
|----------------------------------------------------|---------------|
|                                               |          | 2010 |   | 2009 |
| Total      impaired loans                          | $             |   9,155,119 | $ |   10,325,380 |
| Total      impaired loans without an allowance     | $             |   1,627,010 | $ |   1,455.333 |
| Total      impaired loans with an allowance        | $             |   7,528,109 | $ |   8,870,047 |
| Valuation      allowance related to impaired loans | $             |   1,236,518 | $ |   3,143,447 |

|                                              | Years      Ended June 30, |
|---------------------------------------------------|---------------------------|
|                                              |                      | 2010 |   | 2009 |
| Average      investment in impaired loans         | $                         | 7,039,932 | $ | 6,028,491 |
| Interest      income recognized on impaired loans | $                         |    318,894 | $ |      96,402 |
| Interest      income recognized on a cash basis   |                      |   |   |   |
| On      impaired loans                            | $                         | 299,447 | $ |      94,759 |

----

|                                      |    |  2010          |
|-------------------------------------------|---------|---------------------|
| Category                             |    |   Cost         |   |  AccumulatedDepreciation |   | Net |
|  Land                                |  $ |  643,704  |  $ | -       |  $ | 643,704  |
|  Buildings                           |    | 5,912,409      |   |  2,586,224  |   | 3,326,185 |
|  Office      furniture, fixtures     |    |                |   |   |   |   |
|          and equipment     |    | 4,422,335      |   | 3,485,481 |   | 936,854 |
|  Automobiles                         |    | 132,530        |   | 96,060 |   | 36,470 |
|  Investment      real estate         |    |                |   |   |   |   |
|            Total |  $ | 12,856,790     |  $ | 6,805,367 |  $ | 6,051,423 |

|                                      |    |  2009          |
|-------------------------------------------|---------|---------------------|
| Category                             |    |   Cost         |   |  AccumulatedDepreciation |   | Net |
|  Land                                |  $ |  643,704  |  $ | -       |  $ | 643,704  |
|  Buildings                           |    | 5,874,079      |   |  2,404,076  |   | 3,470,003 |
|  Office      furniture, fixtures     |    |                |   |   |   |   |
|          and equipment     |    | 4,231,316      |   | 3,200,682 |   | 1,030,634 |
|  Automobiles                         |    | 132,530        |   | 70,379 |   | 62,151 |
|  Investment      real estate         |    |                |   |   |   |   |
|            Total |  $ | 13,022,810     |  $ | 6,353,437 |  $ | 6,669,373 |

|                                                             |   |                                                                            |   | 2655      South                                                                                    |   |                                                                                         |   |   |
|------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|--------|
|                                                             |   |                                                                            |   | Campbell                                                                                           |   |                                                                                         |   |   |
|                                                             |   | ATMs                                                                            |   | Springfield,      MO                                                                               |   | Totals                                                                                       |
| 2011                                                             |   |  $      64,620                                                             |   |  $      90,528                                                                                |   |  $155,148                                                                               |
| 2012                                                             |   |     64,620                                                  |   |     90,528                                                                     |   |   155,148                                                                          |
| 2013                                                             |   |    43,080                                                        |   |    90,528                                                                           |   |   133,608                                                                          |
| 2014                                                             |   |              - |   |    90,528                                                                           |   |    90,528                                                                     |
| 2015                                                             |   |              - |   |    90,528                                                                           |   |     90,528                                                               |
|               Thereafter |   |              - |   |     3,772                                                                      |   |            3,772                                                    |
| Total                                                            |   | $172,320                                                                        |   |        $456,412         |   |         $628,732       |

----

|                                         |    |  2010            |    |  2009            |
|----------------------------------------------|---------|-----------------------|---------|-----------------------|
|  Premium      on branch acquisition     |  $ |  1,020,216  |  $ |  1,020,216  |
|  Accumulated      amortization          |    |   (884,975) |    |  (834,861)       |
|  Net premium on      branch acquisition |  $ |  135,241    |  $ |  185,355    |

|   | Amortization      expense relating to this premium was $50,114 for the year ended June 30,      2010 and $50,115 for the year ended June 30,  2009. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Estimated      future amortization expense is as follows for the years ending June      30: |
|--------|---------------------------------------------------------------------------------------------|

| 2011   |  $          50,115 |   |
|--------|---------------------------------------------------------------------------|--------|
| 2012   |  50,115                                                              |   |
| 2013   |  35,011                                                              |   |
|   | $              135,241                 |   |

| (6) | DEPOSITS |
|-----|----------|

|   | A      summary of deposit accounts at June 30 is as  follows: |
|--------|---------------------------------------------------------------|

|                               | 2010                                                              |   | 2009                                                        |
|------------------------------------|------------------------------------------------------------------------|--------|------------------------------------------------------------------|
|                               |                                                                   |   |                                                             |
| Non-interest-bearing      checking | $  11,773,833                                                |   | $  14,739,628                                          |
| Interest-bearing      checking     | 34,632,542                                                             |   | 32,484,889                                                       |
| Super      Saver money market      | 11,379,774                                                             |   | 11,778,495                                                       |
| Savings                            |  9,086,554                                                        |   |  9,315,558                                                  |
| Money      Market savings accounts |           36,031,680 |   |          34,711,303 |
| Certificates      of Deposit       |           77,171,042 |   |          86,188,005      |
| Total                              | $180,075,425                                                           |   | $189,217,878                                                     |

| Fiscal | 2011                   | $      55,853,279 |   |
|--------|------------------------|-------------------------------------------------|--------|
|   | 2012              | 10,558,851                                      |   |
|   | 2013              | 4,706,477                                       |   |
|   | 2014              |  3,464,573                                 |   |
|   | 2015              |  2,572,862                                 |   |
|   |  Thereafter  |  15,000                                    |   |
|   |                   |  $          77,171,042      |   |

----

| (7) | RETAIL REPURCHASE      AGREEMENTS |
|-----|-----------------------------------|

|   | The      Savings Bank offers retail repurchase agreements as an additional item in      its product mix. Retail repurchase agreements allow customers to have      excess checking account balances “swept” from the checking accounts into a      non-insured interest bearing account. The customers’ investment in these      non-insured accounts is collateralized by securities of the Savings Bank      pledged at FHLB for that purpose. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|   | The      advances listed below were obtained from the FHLB of Des      Moines.  The advances are secured by FHLB stock and a blanket      pledge of qualifying one-to-four family mortgage      loans.  Advances from the FHLB at June 30 are summarized as      follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |    |  2010        |   |  WeightedAverage Rate |    |    |  2009        |   | Weighted Average Rate |    |
|-------------------------------------------------|---------|-------------------|--------|---------------------------------|---------|---------|-------------------|--------|----------------------------|---------|
|  Term      Advances:                       |    |              |   |                            |    |    |              |   |                       |    |
|  Long-term;      fixed-rate;               |    |              |   |                            |    |    |              |   |                       |    |
|          callable quarterly      |  $ | -       |   | -                     |  % |  $ | -       |   | -                |  % |
|  Short-term,      fixed-rate,              |    |              |   |                            |    |    |              |   |                       |    |
|          Non-callable            |    | -       |   | -                     |    |    | 7,000,000    |   | 1.12                  |    |
|  Long-term;      fixed-rate;               |    |              |   |                            |    |    |              |   |                       |    |
|          non-callable            |    | 3,000,000    |   | 4.94                       |    |    | 3,000,000    |   | 4.94                  |    |
|             Total |  $ | 3,000,000    |   | 4.94                       |  % |  $ | 10,000,000   |   | 3.05                  |  % |

|   Year Ended June 30 |          |  AggregateAnnualMaturities |
|---------------------------|---------------|---------------------------------|
| 2011                 |  $  | -                |
| 2012                      |          | -                |
| 2013                      |          | -                |
| 2014                 |          | 3,000,000                  |
|                      |  $  | 3,000,000                  |

----

|                                      |          |  2010            |          |  2009        |
|-------------------------------------------|---------------|-----------------------|---------------|-------------------|
|  Current                             |  $  |  (631,992)  |  $  | (61,872)     |
|  Deferred                            |          | 1,672,923        |          | (1,469,879)  |
|            Total |  $  | 1,040,931        |  $  | (1,531,751)  |

|                                                      | 2010                                                                                    |   | 2009                                                                                 |
|-----------------------------------------------------------|-----------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|
| Tax      at statutory rate                                |    $   (150,671)                                          |   |    $(1,893,192)                                                       |
|  Increase      (decrease) in taxes resulting from:   |                                                                                    |   |                                                                                 |
|   State      taxes, net of federal benefit      |      (7,682)                                                   |   |      (34,725)                                               |
|   Tax-exempt      income                        |           (24,206)                    |   |           (32,873)                 |
|   Bank-owned      life insurance                |       46,671                                              |   |           355,451                  |
|   Dividends      received deduction             | (2,979)                                                                                 |   | (2,851)                                                                              |
|   Change      in valuation allowance            |              1,126,326 |   |              15,722 |
|   Stock      based compensation                 |             3,215           |   |             9,318        |
|   Net      effect of other book/tax differences |           50,257                      |   |             51,399       |
|    Provision      for income taxes         |    $1,040,931                                                            |   |    $(1,531,751)                                                       |

|                                                                                 |   |    |  2010            |    |  2009            |
|--------------------------------------------------------------------------------------|--------|---------|-----------------------|---------|-----------------------|
|  Deferred tax      assets:                                                      |   |    |                  |    |                  |
|         Allowance for loan losses                                          |   |  $ | 932,648          |  $ | 1,603,916        |
|    Book      amortization in excess of tax amortization                    |   |    | 17,873           |    | 19,882           |
|         Compensated employee absences                                      |   |    | 24,385           |    | 29,157           |
|    State      net operating loss carry-forwards                            |   |    | 89,788           |    | 89,500           |
|    Federal      net operating loss carry-forwards                          |   |    | 917,858          |    | 852,964          |
|    Capital      loss carry-forwards                                        |   |    | -      |    | 1,080            |
|         Charitable contributions                                           |   |    | 21,162      |    | 14,937           |
|         Other                                                              |   |    | 130,956     |    | 99,649           |
|              Total gross deferred tax assets      |   |    | 2,134,670   |    | 2,711,085        |
|         Valuation allowance                                                |   |    | (1,216,906)      |    | (90,580)         |
|                                                                                 |   |  $ | 917,764     |  $ | 2,620,505        |
|  Deferred tax      liabilities:                                                 |   |    |                  |    |                  |
|         Premises and equipment                                             |   |  $ | (86,747)         |  $ | (107,737)        |
|    FHLB      stock dividends                                               |   |    | (60,936)         |    | (60,936)         |
|    Prepaid      expenses                                                   |   |    | (124,308)        |    | (125,313)        |
|    Net      unrealized gain on available-for-sale securities               |   |    | (566,481)        |    | (400.619)        |
|         Unamortized deferred loan costs, net of fees                       |   |    | (79,292)         |    | (87,125)         |
|              Total gross deferred tax liabilities |   |  $ | (917,764)        |  $ | (781,720)        |
|               Total net deferred tax assets  |   |  $ | -           |  $ | 1,838,785        |

----

|   | The      Savings Bank had participated in a multiple-employer defined benefit      pension plan covering substantially all employees.  In fiscal      2006, the Savings Bank opted to freeze the plan. Participants in the plan      became entitled to their vested benefits at the date it was frozen. The      Savings Bank limited its future obligations to the funding amount required      by the annual actuarial evaluation of the plan and administrative costs.      No participants will be added to the plan. Pension expense for the years      ended June 30, 2010 and 2009 was approximately $72,000 and $47,000,      respectively.  This plan is not subject to the requirements of      FASB ASC Topics 715 and 958. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Effective      July 1, 2006, the Company adopted  FASB ASC Topics 718 and 505,      Share-based Payments, using the modified prospective transition method.      Prior to that date the Company accounted for stock option awards under APB      Opinion No. 25, Accounting for Stock Issued to Employees. In      accordance with      FASB ASC Topics 718 and 505, compensation expense for stock-based awards      is recorded over the vesting period at the fair values of the award at the      time of the grant. The recording of such compensation      began on July 1, 2006 for shares not yet vested as of that date and for      all new grants subsequent to that date. The exercise price of options      granted under the Company’s incentive plans is equal to the fair market      value of the underlying stock at the grant date. The Company assumes no      projected forfeiture rates on its stock-based      compensation. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (10)   | EMPLOYEE BENEFIT PLANS      (CONTINUED) |
|------------------|-----------------------------------------|

|   | The      Company’s 2004 Management Recognition Plan has authorized the award of      shares to certain officers, employees and directors for up to 50,000      shares of the Company’s common stock.  All shares awarded will      have a restricted period to be determined by the Corporation’s      Compensation Committee.  The restricted period shall not be less      than three years if the award is time based, or not less than one year if      performance based.  The plan was approved by shareholders in      October 2004. No shares have been issued from this  plan. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company uses historical data to estimate the expected term of the options      granted, volatilities, and other factors.  Expected volatilities      are based on the historical volatility of the Company’s common stock over      a period of time equal to the expected life of the option. The risk-free      rate for periods corresponding with the expected life of the option is      based on the U.S. Treasury yield curve in effect at the time of      grant.  The dividend rate is equal to the dividend rate in      effect on the date of grant.  The Company used the following      assumptions for the most recent grants made, which were in fiscal 2007,      respectively:  dividend rates of .00% to .99%, price volatility      of 18.36% to 20.29%, risk-free interest rates of 4.58% to 5.02%, and an      expected life of 7.5 to 10 years. The weighted average grant date fair      value for options granted in fiscal 2007, the last year options were      granted, was $5.92 per share. No options were granted during either fiscal      2010 or fiscal 2009. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A      summary of the Company’s stock option activity, and related information      for the years ended June 30follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | 2010                                                                      |   | 2009                                                          |
|---------------------------------------|--------|---------------------------------------------------------------------------|--------|---------------------------------------------------------------|
|                                  |   |                                                                      |   | Weighted                                                      |   |   |   | Weighted |
|                                  |   |                                                                      |   | Average                                                       |   |   |   | Average |
|                                  |   |                                                                      |   | Exercise                                                      |   |   |   | Exercise |
|                                  |   | Options                                                                   |   | Price                                                         |   | Options |   | Price |
| Outstanding      at beginning of year |   |    22,000                                                  |   |  $  16.85                                      |   |     60,500 |   |  $   16.72 |
| Granted                               |   |             - |   |           - |   |          - |   |          - |
| Exercised                             |   |             - |   |           - |   |             - |   |           - |
| Forfeited                             |   |       -                                     |   |      -                               |   |     (38,500) |   |      16.64 |
| Outstanding      at end of year       |   | 22,000                                                                    |   |      16.85                           |   |      22,000 |   |      16.85 |
| Exercisable      at end of year       |   |    15,600                                                  |   |  $  16.83                                      |   |      11,200 |   |  $   16.83 |

----

|   |    |  Exercise      Price |   |  Number      Outstanding at      June      30 |   |  Number      Exercisable at      June      30 |   |  Remaining      Contractual      Life      (Months) |
|--------|---------|---------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------------|
|   |  $ |  17.50          |   | 2,000                                         |   | 1,600                                         |   | 68                                                  |
|   |    | 17.00                |   | 10,000                                        |   | 6,000                                         |   | 81                                                  |
|   |    | 16.78                |   | 10,000                                        |   | 8,000                                         |   | 72                                                  |

|   | There      is no intrinsic value of vested options on Company stock as of June 30,      2010. |
|--------|-----------------------------------------------------------------------------------------------|

| (11) | EARNINGS PER      SHARE |
|------|-------------------------|

|                                | Years      Ended June 30,                                                                         |
|-------------------------------------|---------------------------------------------------------------------------------------------------|
|                                | 2010                                                                                              |   | 2009 |
|                                |                                                                                              |   |   |   | Per |   |   |   |   |   | Per |
|                                |                                                                                              |   |   |   | Share |   |   |   |   |   | Share |
|                                | Income                                                                                            |   | Shares |   | Amount |   | Income |   | Shares |   | Amount |
| Basic      EPS:                     |                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) available        |                                                                                              |   |   |   |   |   |   |   |   |   |
|   to      common          |                                                                                              |   |   |   |   |   |   |   |   |   |   |
|   Stockholders            |      $(1,484,082)                                                        |   | 1,550,815 |   |    $(      0.96) |   |  $(4,036,463) |   | 1,550,815 |   |  $(      2.60) |
| Effect      of dilutive             |                                                                                              |   |   |   |   |   |   |   |   |   |   |
|   securities:             |                -  |   |             -  |   |          -  |   |             -  |   |              -  |   |         -  |
| Diluted      EPS:                   |                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) available        |                                                                                              |   |   |   |   |   |   |   |   |   |
|   to      stockholders    |                                                                                              |   |   |   |   |   |   |   |   |   |   |
|   plus      stock options | $(1,484,082)                                                                                      |   | 1,550,815 |   |    $(      0.96) |   |  $(4,036,463) |   | 1,550,815 |   |  $      (2.60) |

| (12) | RELATED PARTY      TRANSACTIONS |
|------|---------------------------------|

----

| (12) | RELATED PARTY      TRANSACTIONS (CONTINUED) |
|------|---------------------------------------------|

|                                 |    |  2010        |    |  2009        |
|--------------------------------------|---------|-------------------|---------|-------------------|
|  Beginning      balances        |  $ | 104,792      |  $ | 222,608      |
|  Originations      and advances |    | 92,000       |    | -       |
|  Principal      repayments      |    | (70,810)     |    | (117,816)    |
|  Ending      balances           |  $ | 125,982      |  $ | 104,792      |
|                                 |    |              |    |              |

|   | In      the ordinary course of business, the Savings Bank has various outstanding      commitments that are not reflected in the accompanying consolidated      financial statements.  The principal commitments of the Savings      Bank are as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Letters      of Credit – Outstanding standby letters of credit were approximately      $132,000 and $437,000 at June 30, 2010 and 2009,    respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loan      Commitments – The Savings Bank had outstanding firm commitments to      originate loans of $594,000 and $121,000 at June 30, 2010 and 2009,      respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Lines      of Credit – The unused portion of lines of credit was approximately $3.4      million and $6.5 million at June 30, 2010 and 2009,      respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The      Savings Bank is subject to various regulatory capital requirements      administered by its primary federal regulator, the Office of Thrift      Supervision (“OTS”).  Failure to meet the minimum regulatory      capital requirements can initiate certain mandatory and possible      additional discretionary, actions by regulators that if undertaken, could      have a direct material affect on the Savings Bank and the consolidated      financial statements.  Under the regulatory capital adequacy      guidelines and the regulatory framework for prompt corrective action, the      Savings Bank must meet specific capital guidelines involving quantitative      measures of the Savings Bank’s assets, liabilities, and certain      off-balance-sheet items as calculated under regulatory accounting      practices.  The Savings Bank’s capital amounts and      classification under the prompt corrective action guidelines are also      subject to qualitative judgments by the regulators about components, risk      weightings, and other factors. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  (15) |  REGULATORY      MATTERS (CONTINUED) |
|------------|-------------------------------------------|

|                                                   |    |  Actual |   |        | Minimum For      Capital      Adequacy Purposes  |    |                              | Minimum      to Be Well-Capitalized      Under Prompt      Corrective Action Provisions  |        |
|--------------------------------------------------------|---------|--------------|--------|-------------|------------------------------------------------------------|---------|-----------------------------------|-----------------------------------------------------------------------------------------------|-------------|
|                                                   |    |  Amount |   |  Ratio |                                                       |    |  Amount                      |                                                                                          |  Ratio |   |   |  Amount |   |  Ratio |   |
|                                                   |    |         |   |        |                                                       |    |  (Dollars in      thousands) |                                                                                          |        |   |   |   |   |
|  As of June 30,      2010:                        |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|  Total      Risk-Based Capital                    |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|     (to      Risk-Weighted Assets) |  $ | 21,419  |   | 19.99  | %                                                     |  $ | 8,572                        |                                                                                          | 8.0    | %  |  $ | 10,715  |   | 10.0  |  % |
|  Core      Capital                                |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|          (to Adjusted Tangible Assets)  |    | 20,153  |   | 9.65   | %                                                          |    |  8,354                  |                                                                                          |  4.0   | % |   |  10,443 |   |  5.0 |  % |
|  Tangible      Capital                            |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|          (to Adjusted Tangible Assets)  |    | 20,153  |   | 9.65   | %                                                          |    | 3,133                        |                                                                                          | 1.5    | % |   | N/A  |   |   |   |
|  Tier 1      Capital                              |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|          (to Risk-Weighted Assets)      |    | 20,153  |   | 18.81  | %                                                     |    |  4,286                  |                                                                                          | 4.0    | % |   | 6,429  |   | 6.0  |  % |
|                                                   |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|  As of June 30,      2009:                        |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|  Total      Risk-Based Capital                    |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|          (to Risk-Weighted Assets)      | $       | 22,737  |   | 17.57  | %                                                          |  $ |  10,351                 |                                                                                          | 8.0    | % | $  | 12,939  |   | 10.0  | % |
|  Core      Capital                                |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|          (to Adjusted Tangible Assets)  |    | 21,140  |   | 9.32   | %                                                          |    | 9,071                        |                                                                                          | 4.0    | % |   | 11,339  |   | 5.0  | % |
|  Tangible      Capital                            |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|          (to Adjusted Tangible Assets)  |    | 21,140  |   | 9.32   | %                                                          |    | 3,402                        |                                                                                          | 1.5    | % |   | N/A   |   |   |   |
|  Tier 1      Capital                              |    |         |   |        |                                                       |    |                              |                                                                                          |        |   |   |   |   |   |   |
|          (to Risk-Weighted Assets)      |    | 21,140  |   | 16.34  | %                                                          |    | 5,176                        |                                                                                          | 4.0    | % |   | 7,763  |   | 6.0  | % |

Cease and 
Desist with the OTS.

| ·   | develop      a business plan for enhancing, measuring and maintaining profitability,      increasing earnings, improving liquidity, maintaining capital levels,      acceptable to the OTS; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | ensure      the Bank’s compliance with applicable laws, rules, regulations and agency      guidelines, including the terms of theorder; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

| (15) | REGULATORY MATTERS      (CONTINUED) |
|------|-------------------------------------|

| ·   | not      appoint any new director or senior executive officer or change the      responsibilities of any current senior executive officers without      notifying the OTS; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not      enter into, renew, extend or revise any compensation or benefit agreements      for directors or senior executiveofficers; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not      make any indemnification, severance or golden parachute      payments; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | enhance      its asset classification policy; |
|--------------------|-----------------------------------------------|

| ·   | provide      progress reports to the OTS regarding certain classified      assets; |
|--------------------|------------------------------------------------------------------------------------|

| ·   | submit      a comprehensive plan for reducing classified  assets; |
|--------------------|-------------------------------------------------------------------|

| ·   | develop      a plan to reduce its concentration in certain loans contained in the loan      portfolio and that addresses the assessment, monitoring and control of the      risks association with the commercial real estate    portfolio; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | not      enter into any arrangement or contract with a third party service provider      that is significant to the overall operation or financial of the Bank, or      that is outside the normal course of business;  and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | prepare      and submit progress reports to the OTS. The OTS orders will remain in      effect until modified or terminated by theOTS. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| (17) | FAIR VALUE      MEASUREMENTS |
|------|------------------------------|

----

| (17) | FAIR VALUE      MEASUREMENTS (CONTINUED) |
|------|------------------------------------------|

----

| (17) | FAIR VALUE      MEASUREMENTS (CONTINUED) |
|------|------------------------------------------|

----

| (17) | FAIR VALUE      MEASUREMENTS (CONTINUED) |
|------|------------------------------------------|

|                             June 30, 2010 |   | Level      1Inputs          |   |   | Level      2Inputs |   |   |          Level 3        Inputs              |   |                    Total               Fair Value |
|---------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------------------|--------|--------|----------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                      |   | (dollars      in thousands) |
| Securities      available-for-sale:                                                                                       |   |                        |   |   |               |   |   |                                                                 |   |                                                                                                                              |
|   U.      S. Agency Securities                                                                                  |   | $5,100                      |   |        | $21,928            |   |   | $           - |        | $27,028                                                                                                                           |
|    Residential      mortgage-                                                                              |   |                        |   |   |               |   |   |                                                                 |   |                                                                                                                              |
|      backed      Securities                                                                      |   | -                           |   |   | 32,868             |   |   | -                                                                    |   | 32,868                                                                                                                            |
|   Municipal      Securities                                                                                     |   | -                           |   |   | 132                |   |   | -                                                                    |   | 132                                                                                                                               |
|   Other                                                                                                         |   | -                           |   |   | 276                |   |   | -                                                                    |   | 276                                                                                                                               |
| Total                                                                                                                     |   | $5,100                      |   |   | $55,204            |   |   | $           - |   | $60,304                                                                                                                           |

|                                                 |   |                                   |
|------------------------------------------------------|--------|----------------------------------------|
|        June      30, 2009                       |   |        Level      1Inputs         |   |   |        Level      2Inputs |   |   |            Level 3         Inputs |   |                  Total                Fair Value |
|                                                 |   | (dollars      in thousands)            |
| Securities      available-for-sale:                  |   |                                   |   |   |   |   |   |   |   |   |
|   U.      S. Agency Securities             |   | $      - |   |   | $  8,609 |   |   | $           - |   | $  8,609 |
|    Residential      mortgage-         |   |                                   |   |   |   |   |   |   |   |   |
|      backed      Securities |   | -                                      |   |   | 36,279 |   |   | - |   | 36,279 |
|   Municipal      Securities                |   | -                                      |   |   | 151 |   |   | - |   | 151 |
|   Other                                    |   | -                                      |   |   | 278 |   |   | - |   | 278 |
| Total                                                |   | $      - |   |   | $45,317 |   |   | $           - |   | $45,317 |

| June      30, 2010            |                 Level 1 |                                                           |               Level 2      |   |                Level 3 |   |                 Total                  |
|-------------------------------|---------------------------------------------------------------------------|----------------------------------------------------------------|--------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|
|                          |                 Inputs  |                                                           |                Inputs |   |                Inputs  |   |                   Fair Value |
|                          | (dollars      in thousands)                                               |
|                          |                                                                      |                                                           |                                                               |   |                                                                |   |                                                                                     |   |   |   |
| Impaired      Loans           |                                                                      | $          - |                                                               |   | $          -      |   |                                                                                     | $8,360 |   |        $8,360 |
| Real      estate owned        |                                                                      | -                                                              |                                                               |   | -                                                                   |   |                                                                                     | 3,885 |   | 3,885 |
| Other      repossessed assets |                                                                      |                                                           |                                                               |   |                                                                |   |                                                                                     | 61 |   | 61 |
| Total                         |                                                                      | $          - |                                                               |   | $          -      |   |                                                                                     | $7,282 |   | $7,282 |

----

| (17) | FAIR VALUE      MEASUREMENTS (CONTINUED) |
|------|------------------------------------------|

| June      30, 2009            |             Level 1 |                                                           |            Level 2 |   |           Level 3                          |   |                  Total                  |
|-------------------------------|---------------------------------------------------|----------------------------------------------------------------|---------------------------------------------|--------|----------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|
|                          |            Inputs        |                                                           |            Inputs  |   |          Inputs                                 |   |                    Fair Value |
|                          | (dollars      in thousands)                       |
|                          |                                              |                                                           |                                        |   |                                                           |   |                                                                                           |   |   |   |
| Impaired      Loans           |                                              | $          - |                                        |   | $          - |   |                                                                                                | $   611 |   | $   611 |
| Real      estate owned        |                                              | -                                                              |                                        |   | -                                                              |   |                                                                                           | 1,549 |   | 1,549 |
| Other      repossessed assets |                                              |                                                           |                                        |   |                                                           |   |                                                                                           | 158 |   | 158 |
| Total                         |                                              | $          - |                                        |   | $          - |   |                                                                                           | $2,318 |   | $2,318 |

|                                                           |   | June      30, 2010                                   |
|----------------------------------------------------------------|--------|------------------------------------------------------|
|                                                           |   | Approximate      Carrying                            |   |  Approximate |
|                                                           |   | Amount                                               |   | Fair      Value |
| Financial      assets:                                         |   |                                                 |   |   |
|    Cash      and cash equivalents               | $      | 20,183,000                                           | $ | 20,183,000 |
|    Certificates      of deposit purchased       |   | 7,222,000                                            |   | 7,222,000 |
|    Available-for-sale      securities           |   |        60,304,000 |   | 60,304,000 |
|    Held-to-maturity      securities             |   |  2,013,000                                      |   |  2,072,000 |
|    Investment      in FHLB stock                |   | 434,000                                              |   | 434,000 |
|    Loans,      net of allowance for loan losses |   | 108,683,000                                          |   | 109,417,000 |
|    Accrued      interest receivable             |   | 820,000                                              |   | 820,000 |
|                                                           |   |                                                 |   |   |
| Financial      liabilities:                                    |   |                                                 |   |   |
|    Deposits                                     |   | 180,075,000                                          |   | 180,946,000 |
|    Retail      repurchase agreements            |   | 5,352,000                                            |   | 5,352,000 |
|    FHLB      advances                           |   | 3,000,000                                            |   | 3,402,000 |
|    Accrued      interest payable                |   | 203,000                                              |   | 203,000 |

----

| (17) | FAIR VALUE      MEASUREMENTS (CONTINUED) |
|------|------------------------------------------|

|                                                           |   | June      30, 2009                                   |
|----------------------------------------------------------------|--------|------------------------------------------------------|
|                                                           |   | Approximate      Carrying                            |   |  Approximate |
|                                                           |   | Amount                                               |   | Fair      Value |
| Financial      assets:                                         |   |                                                 |   |   |
|    Cash      and cash equivalents               | $      | 26,218,000                                           | $ | 26,218,000 |
|    Certificates      of deposit purchased       |   | 5,628,000                                            |   | 5,628,000 |
|    Available-for-sale      securities           |   |        45,317,000 |   | 45,317,000 |
|    Held-to-maturity      securities             |   |  2,592,000                                      |   |  2,626,000 |
|    Investment      in FHLB stock                |   | 1,581,000                                            |   | 1,581,000 |
|    Loans,      net of allowance for loan losses |   | 133,162,000                                          |   | 134,947,000 |
|    Loans      held for sale                     |   | 820,000                                              |   | 820,000 |
|    Accrued      interest receivable             |   | 955,000                                              |   | 955,000 |
|                                                           |   |                                                 |   |   |
| Financial      liabilities:                                    |   |                                                 |   |   |
|    Deposits                                     |   | 189,218,000                                          |   | 190,096,000 |
|    Retail      repurchase agreements            |   | 5,713,000                                            |   | 5,713,000 |
|    FHLB      advances                           |   | 10,000,000                                           |   | 10,450,000 |
|    Accrued      interest payable                |   | 385,000                                              |   |           385,000   |
|                                                           |   |                                                 |   |   |

|   |   |
|--------|--------|

|   |   |
|--------|--------|

|        Loans r | eceivable      – The fair value of loans is estimated by discounting the future cash      flows using the current rates at which similar loans would be made to      borrowers with similar credit ratings and for the same remaining      maturities. Loans with similar characteristics are aggregated for purposes      of the calculations. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|        Loans h | eld      for sale – The carrying amounts of loans held for sale approximate the      fair value due to the short term nature of these  loans. |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|        Investm | ent      in FHLB stock – Fair value of the Savings Bank’s investment in FHLB stock      approximates the carrying value as no ready market exists for this      investment and the stock could only be sold back to the FHLB at      par. |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Deposits |  –      The fair value of demand deposits, savings accounts and interest-bearing      demand deposits is the amount payable on demand at the reporting date      (i.e., their carrying amount).  The fair value of fixed-maturity      time deposits is estimated using a discounted cash flow calculation that      applies the market rates currently offered for deposits of similar      remaining maturities. |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        Retail re | purchase      agreements – The fair value of retail repurchase agreements is the amount      payable at the reporting date. |
|-----------------------|-----------------------------------------------------------------------------------------------------------------------------------|

|        FHLB a | dvances      – Rates currently available to the Savings Bank for advances with similar      terms and remaining maturities are used to estimate fair value of existing      advances by discounting the future cashflows. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (17) | FAIR VALUE      MEASUREMENTS(CONTINUED) |
|------|-----------------------------------------|

|        Commit | ments      to extend credit, letters of credit and lines of credit – The fair value      of commitments is estimated using the fees currently charged to enter into      similar agreements, taking into account the remaining terms of the      agreements and the present credit worthiness of the      counterparties.  For fixed-rate loan commitments, fair value      also considers the difference between current levels of interest rates and      the committed rates.  The fair value of letters of credit and      lines of credit is based on fees currently charged for similar agreements      or on the estimated cost to terminate or otherwise settle the obligations      with the counterparties at the reporting date and are      insignificant. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| (18) | PARENT COMPANY ONLY      FINANCIAL INFORMATION |
|------|------------------------------------------------|

|   | The      following condensed statements of financial condition and condensed      statements of operations and cash flows for First Bancshares, Inc. are as      follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Condensed      Statements of Financial Condition |
|--------------------------------------------------|
|                                             |   | June      30, |
| ASSETS                                           |   | 2010 |   | 2009 |

| Cash      and cash equivalents                              | $    233,958 |                                   | $    102,882 |
|-------------------------------------------------------------|----------------------------------|----------------------------------------|----------------------------------|
| Certificates      of deposit                                |  10,000                     |                                   |  10,000                     |
| Securities      available-for-sale                          | 248,000                          |                                   |  248,000                    |
| Investment      in subsidiaries                             |  21,402,171                 |                                   | 22,224,633                       |
| Property      and equipment, net                            | 1,108,209                        |                                   | 1,462,881                        |
| Real      estate owned                                      |  75,600                     |                                   | -                                |
| Deferred      tax asset, net                                |  -                          |                                   |  183,163                    |
| Other      assets                                           | 51,490                           |                                   | 169,611                          |
|        Total assets                                    |  $23,129,428                |                                   | $24,401,170                      |
| LIABILITIES AND STOCKHOLDERS'      EQUITY                   |                             |                                   |                             |
| Notes      payable, subsidiaries                            |                             | $     501,588 |                             | $     623,717 |
| Accrued      expenses                                       |                             |  16,609                           |                             |  13,562 |
| Total      Liabilities                                      |                             | 518,197                                |                             | 637,279 |
| Stockholders'      equity                                   |                             | 22,611,231                             |                             | 23,763,891 |
|   Total      liabilities and stockholders' equity |                                  | $23,129,428                            |                             | $24,401,170 |

----

| (18) | PARENT COMPANY ONLY      FINANCIAL INFORMATION(CONTINUED) |
|------|-----------------------------------------------------------|

| Condensed      Statements of Operations                                                                  |
|----------------------------------------------------------------------------------------------------------|
|                                                                                                     |   | Year      ended June 30, |   |   |
|                                                                                                     |   | 2010 |   | 2009 |   |   |
| Income:                                                                                                  |   |   |   |   |   |   |
|   Equity      in loss of subsidiaries                                                          |   | $  (1,108,365) |   | $(3,852,354) |   |   |
|   Interest      and dividend income                                                            |   | 12,665 |   | 8,642 |   |   |
|   Gain/(loss)      on sale or write-down    of      property and equipment |   | - |   | (3,044) |   |   |
|   Other                                                                                        |   | 31,209 |   | 56,358 |   |   |
|     Total      income (loss)                                                         |   | (1,064,491) |   | (3,790,398) |   |   |
|                                                                                                     |   |   |   |   |   |   |
| Expenses:                                                                                                |   |   |   |   |   |   |
|   Professional      fees                                                                       |   | 106,294 |   | 193,474 |   |   |
|   Printing      and office supplies                                                            |   | 7,504 |   | 15,429 |   |   |
|   Interest                                                                                     |   | 40,634 |   | 53,616 |   |   |
|   Other                                                                                        |   | 84,218 |   | 66,279 |   |   |
|   Income      tax benefit                                                                      |   | 180,941 |   | (82,736) |   |   |
|     Total      expenses                                                              |   | 419,591 |   | 246,062 |   |   |
|       Net      income (loss)                                               |   | $  (1,484,082) |   | $(4,036,460) |   |   |

----

| (18) | PARENT COMPANY ONLY      FINANCIAL INFORMATION(CONTINUED) |
|------|-----------------------------------------------------------|

| Condensed      Statements of Cash Flows                                                                                                                                                                                                                                                                                    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                       |   | Year      ended June 30. |   |   |
|                                                                                                                                                                                                                                                                                                                       |   | 2010 |   | 2009 |   |   |
| Cash      flows from operating activities:                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |
|   Net      income (loss)                                                                                                                                                                                                                                                                                         |   | $    (1,484,082) |   | $(4,036,460) |   |   |
|   Adjustments      to reconcile net income to                                                                                                                                                                                                                                                                    |   |   |   |   |   |
|     net      cash provided from operating activities:                                                                                                                                                                                                                                                  |   |   |   |   |   |   |
|       Equity      in earnings of subsidiaries                                                                                                                                                                                                                                                |   | 1,153,884 |   | 4,552,354 |   |   |
|       Depreciation      expense                                                                                                                                                                                                                                                              | 56,476 |   | 60,676 |   |   |
|       (Gain)/loss      on sale or write down      of                                        property and equipment |   | - |   |  3,044 |   |   |
|    Net      change in operating accounts:                                                                                                                                                                                                                                                                   |   |   |   |   |   |   |
|    Deferred      tax asset, net                                                                                                                                                                                                                                                                             |   | 183,163 |   | (93,025) |   |   |
|    Other      assets and liabilities                                                                                                                                                                                                                                                                        |   | 121,169 |   | (323,635) |   |   |
|           Net      cash used in operating activities                                                                                                                                                                                                                     | 30,610 |   | 162,954 |   |   |
|                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                                                                                                                                                                                                                                                 |   |   |   |   |   |   |
|   Purchase      of property and equipment                                                                                                                                                                                                                                                                        |   | (15,276) |   | (63,003) |   |   |
|   Proceeds      from sales of property and equipment                                                                                                                                                                                                                                                             |   | 313,471 |   | 84,257 |   |   |
|   Purchase      of real estate owned                                                                                                                                                                                                                                                                             |   | (75,600) |   | - |   |   |
|     Net      cash provided by investing activities                                                                                                                                                                                                                                                     |   | 222,595 |   | 21,254 |   |   |

| Cash      flows from financing activities:                         |          |                       |     |           |   |   |
|--------------------------------------------------------------------|---------------|----------------------------|----------|----------------|--------|--------|
|   Payments      on notes payable                         | (122,129)     |                       | (12,764) |           |   |
|   Cash      dividends paid                               |          | -                          |     | (155,086)      |   |   |
|     Net      cash used in financing activities |          | (122,129)                  |     | (167,850)      |   |   |
|                                                               |          |                       |     |           |   |   |
| Net      increase in cash and cash equivalents                     |          | 131,076                    |     | 16,358         |   |   |
|                                                               |          |                       |     |           |   |
| Cash      and cash equivalents-beginning of period                 |  102,882 |                       | 86,524   |           |   |
|                                                               |          |                       |     |           |   |   |
| Cash      and cash equivalents-end of period                       |          | $   233,958 |     | $      102,882 |   |   |

----

| Fiscal      2010                      |   High                 | Low                                   |  Dividend  |
|---------------------------------------|-------------------------------------------------|-------------------------------------------------|-----------------|
| First      Quarter               |    $12.48              |    $7      .33    |  N/A       |
| Second      Quarter         |    $  8.97   |   $      7.28               |  N/A       |
| Third      Quarter          |  $10.95                               |  $      6.80                          |  N/A       |
| Fourth      Quarter    |   $  9.70         |  $      8.30                     |  N/A       |
|                                  |                                            |                                            |            |
|                                  |                                            |                                            |            |
| Fiscal      2009            |  High                                      |  Low                                       |  Dividend  |
| First      Quarter               |  $16.99                                    |  $11.33                               |  $0.10     |
| Second      Quarter              |  $15.95                               |  $10.26                               |   N/A |
| Third      Quarter          |  $15.64                                    |  $       8.08                    |   N/A |
| Fourth      Quarter         |    $14.90              |  $       6.12                    |   N/A |
|                                  |                                            |                                            |            |

----

| FIRST BANCSHARES,      INC.                                                                                                         | FIRST HOME SAVINGS      BANK                                                                                                         |
|-------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                |                                                                                                                                 |
| DIRECTORS:Thomas M. Sutherland, ChairmanOne of the owners and operators of      SutherlandsHome Improvement Centers group of stores | DIRECTORS:Thomas M. Sutherland, ChairmanOne of the owners and operators of      SutherlandsHome Improvement Centers group of  stores |
|                                                                                                                                |                                                                                                                                 |
| D. Mitch      AshlockDirector, President and Chief Executive      OfficerFirst Federal Savings Bank of Olathe                       | D. Mitch AshlockDirector, President and Chief Executive      OfficerFirst Federal Savings Bank of Olathe                             |
|                                                                                                                                |                                                                                                                                 |
| Harold F.      GlassPartnerMillington, Glass & Love, Attorneys at      Law                                                      | Harold F.      GlassPartnerMillington, Glass & Love, Attorneys at      Law                                                       |
|                                                                                                                                |                                                                                                                                 |
| Billy E.      HixonRetired partner from regional CPA firmof BKD, LLP                                                           | Billy E.      HixonRetired partner from regional CPA firmof BKD, LLP                                                                 |
|                                                                                                                                |                                                                                                                                 |
| Robert J.      BreidenthalDirectorSecurity Bank of Kansas City                                                                      | Robert J.      BreidenthalDirectorSecurity Bank of Kansas City                                                                       |
|                                                                                                                                |                                                                                                                                 |
| John G.      MoodyElected Official                                                                                                  | John G.      MoodyElected Official                                                                                                   |
|                                                                                                                                |                                                                                                                                 |
| OFFICERS:                                                                                                                           | OFFICERS:                                                                                                                            |
|                                                                                                                                |                                                                                                                                 |
| Thomas M.      Sutherland,Chief Executive Officer                                                                                   | Thomas M.      SutherlandChief Executive Officer                                                                                     |
|                                                                                                                                |                                                                                                                                 |
| Lannie E.      CrawfordPresident                                                                                                    | Lannie E.      CrawfordPresident                                                                                                     |
|                                                                                                                                |                                                                                                                                 |
| Ronald J.      Walters, CPASenior Vice President, Treasurer and Chief Financial Officer                                        | Ronald J.      Walters, CPASenior Vice President, Treasurerand Chief Financial Officer                                               |
|                                                                                                                                |                                                                                                                                 |
|                                                                                                                                |                                                                                                                                 |
| Dale W.      KeenanExecutive Vice President                                                                                         | Dale W.      KeenanExecutive Vice President andSenior Lending Officer                                                                |
|                                                                                                                                |                                                                                                                                 |
| Shannon      Peterson Secretary                                                                                           | Shannon      PetersonSecretary                                                                                                       |

----

| CORPORATE      HEADQUARTERS                                                      | TRANSFER      AGENT                                                                                |
|--------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                                                                       |                                                                                                    |
| 142 East      First StreetP.O. Box 777  Mountain Grove,Missouri  65711 | Registrar      and Transfer Company10 Commerce DriveCranford, New Jersey  07016(800) 866-1340 |
| INDEPENDENT      AUDITORS                                                             |                                                                                                    |
|                                                                                       |                                                                                                    |
| McGladrey      & Pullen, LLPKansas City, Missouri                                      | COMMON      STOCK                                                                                  |
|                                                                                       |                                                                                                    |
| GENERAL      COUNSEL                                                             | Traded on      The Nasdaq Stock Market LLCNasdaq Symbol: FBSI                                           |
|                                                                                       |                                                                                                    |
| Harold F.      GlassSpringfield, Missouri                                                  |                                                                                                    |
|                                                                                       |                                                                                                    |
| SPECIAL      COUNSEL                                                                       |                                                                                                    |
|                                                                                       |                                                                                                    |
| Breyer      & Associates PCMcLean, Virginia                                            |                                                                                                    |
|                                                                                       |                                                                                                    |

----

----

----