UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended March 31, 2008

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from _______________ to ___________________


                        Commission file number 001-14910

                            GOUVERNEUR BANCORP, INC.
        (Exact name of small business issuer as specified in its charter)


          United States                                       04-3429966
 (State or other jurisdiction of                           (I.R.S. Employer
  incorporation or organization)                          Identification No.)


                  42 Church Street, Gouverneur, New York 13642
                    (Address of principal executive offices)


                    Issuer's telephone number (315) 287-2600

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
                               Yes [X]  No [ ]

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

                                                          Outstanding at
          Class                                             May 5, 2008
-----------------------------                               -----------
Common Stock, par value $ .01                                2,299,384

Transitional Small Business Disclosure Format (check one):
                               Yes [ ]  No [X]
<PAGE>

                            GOUVERNEUR BANCORP, INC.
                                   FORM 10-QSB
                                TABLE OF CONTENTS


PART 1 - FINANCIAL INFORMATION                                              Page
--------------------------------------------------------------------------------
Item 1.  Financial Statements - Unaudited

         Consolidated Statements of Financial Condition at
         March 31, 2008 and September 30, 2007                                3

         Consolidated Statements of Income for the three and
         six months ended March 31, 2008 and 2007                             4

         Consolidated Statements of Shareholders' Equity for the
         six months ended March 31, 2008 and 2007                             5

         Consolidated Statements of Cash Flows for the six months ended
         March 31, 2008 and 2007                                              7

         Notes to Consolidated Financial Statements                           8

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.                                              14

Item 3.  Controls and Procedures                                             26

PART II - OTHER INFORMATION
---------------------------

Item 1.  Legal Proceedings                                                   26

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
         (c) Repurchases during the quarter                                  26

Item 4.  Submission of Matters to a Vote of Security Holders                 27

Item 6.  Exhibits                                                            27

SIGNATURES                                                                   28

EXHIBITS                                                                     29

                                       2
<PAGE>
<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
           (In thousands, except share and per share data) (Unaudited)

                                                                                          March  31,     September 30,
                                                                                             2008            2007
                                                                                         ------------    ------------
<S>                                                                                      <C>             <C>
Assets:
Cash and due from banks                                                                  $      1,783    $      2,381
Interest-bearing deposits in bank                                                               5,440           1,499
                                                                                         ------------    ------------
                     Total cash and cash equivalents                                            7,223           3,880

Securities available-for-sale                                                                   9,316           9,784
Securities held-to-maturity (fair value 2008: $78: 2007: $81)                                      77              81
Loans, held for sale                                                                               --           2,105
Loans receivable, net of allowance for loan losses 2008: $882: 2007: $911                     105,094         106,131
Investment in Federal Home Loan Bank stock, at cost                                             1,517           1,694
Investment in life insurance                                                                    3,855           3,778
Premises and equipment, net                                                                     3,212           3,059
Accrued interest receivable and other assets                                                    2,438           2,077
                                                                                         ------------    ------------
                     Total assets                                                        $    132,732    $    132,589
                                                                                         ============    ============

Liabilities:
Deposits: Non-interest-bearing demand                                                    $      5,604    $      5,708
          NOW and money market                                                                 13,748          13,162
          Savings                                                                              16,983          17,617
          Time                                                                                 43,136          39,742
                                                                                         ------------    ------------
                     Total deposits                                                            79,471          76,229

Advances from the Federal Home Loan Bank of New York                                           29,200          33,150
Other liabilities                                                                               3,353           2,780
                                                                                         ------------    ------------
                     Total liabilities                                                        112,024         112,159
                                                                                         ------------    ------------
Shareholders' Equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized; none issued                          --              --
Common stock, $.01 par value, 9,000,000 shares authorized; 2,384,040 shares issued                 24              24
Additional paid-in capital                                                                      4,951           4,910
Retained earnings                                                                              16,220          16,024
Treasury stock, at cost, 2008: 84,656 shares: 2007: 83,981 shares                                (439)           (425)
Accumulated other comprehensive income (loss)                                                       9             (18)
Unallocated common stock held by Employee Stock Ownership Plan                                    (57)            (85)
                                                                                         ------------    ------------
                     Total shareholders' equity                                                20,708          20,430
                                                                                         ------------    ------------
                     Total liabilities and shareholders' equity                          $    132,732    $    132,589
                                                                                         ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>

                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                (In thousands, except per share data) (Unaudited)

                                                                        Three Months Ended                Six Months Ended
                                                                              March 31,                       March 31,
                                                                     ----------------------------    ----------------------------
                                                                         2008            2007            2008            2007
                                                                     ------------    ------------    ------------    ------------
<S>                                                                  <C>             <C>             <C>             <C>
Interest income:
----------------
     Loans                                                           $      1,831    $      1,878    $      3,673    $      3,731
     Securities - taxable                                                     118             113             239             233
                  non-taxable                                                  27              13              52              25
     Other short-term investments                                              19              16              44              25
                                                                     ------------    ------------    ------------    ------------
           Total interest income                                            1,995           2,020           4,008           4,014
                                                                     ------------    ------------    ------------    ------------
Interest expense:
-----------------
     Deposits                                                                 570             532           1,138           1,050
     Borrowings - short term                                                   33             132             139             271
     Borrowings - long term                                                   315             297             614             587
                                                                     ------------    ------------    ------------    ------------
           Total interest expense                                             918             961           1,891           1,908
                                                                     ------------    ------------    ------------    ------------

           Net interest income                                              1,077           1,059           2,117           2,106
     Provision for loan losses                                                 --              --              --              15
                                                                     ------------    ------------    ------------    ------------
           Net interest income after provision for loan losses              1,077           1,059           2,117           2,091
                                                                     ------------    ------------    ------------    ------------
Non-interest income:
--------------------
     Service charges                                                           97              55             199             107
     Realized loss on sales of securities - AFS                                (1)             --              (1)             --
     Earnings on investment in life insurance                                  39              38              77              72
     Net realized gain on foreclosed assets                                    --              20              --              17
     Other                                                                     15              47              34             110
                                                                     ------------    ------------    ------------    ------------
           Total non-interest income                                          150             160             309             306
                                                                     ------------    ------------    ------------    ------------
Non-interest expenses:
----------------------
     Salaries and employee benefits                                           486             461             940             915
     Directors fees                                                             4              46              16              98
     Occupancy and equipment                                                  125             162             248             262
     Data processing                                                           34              31              69              62
     Postage and supplies                                                      45              44              77              79
     Professional fees                                                         61              62             126             121
     Other                                                                    123             137             240             254
                                                                     ------------    ------------    ------------    ------------
           Total non-interest expenses                                        878             943           1,716           1,791
                                                                     ------------    ------------    ------------    ------------

           Income before income tax expense                                   349             276             710             606

Income tax expense                                                            112              93             234             207
                                                                     ------------    ------------    ------------    ------------

     Net income                                                      $        237    $        183    $        476    $        399
                                                                     ============    ============    ============    ============

Earnings per common share - basic                                    $       0.10    $       0.08    $       0.21    $       0.18
Earnings per common share - diluted                                  $       0.10    $       0.08    $       0.21    $       0.17
</TABLE>

See accompanying notes to consolidated financial statements

                                       4
<PAGE>
<TABLE>
<CAPTION>

                                                GOUVERNEUR BANCORP, INC AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                   Six months ended March 31, 2008
                                            (In thousands, except share data) (Unaudited)

                                                                                                Accumulated
                                                                                                   Other     Unallocated
                                                              Additional                       Comprehensive   Common
                                                      Common    Paid-in    Retained    Treasury    Income     Stock held
                                                       Stock    Capital    Earnings     Stock      (Loss)      by ESOP       Total
                                                     -------   --------   ----------   ------    ----------   ---------    --------
<S>                                                  <C>       <C>        <C>          <C>       <C>          <C>          <C>
Balance at September 30, 2007                        $    24   $  4,910   $   16,024   $ (425)   $      (18)  $     (85)   $ 20,430

Comprehensive income:
   Net income                                                                    476                                            476
   Net pension and postretirement benefit
        costs, net of taxes                                                                              20                      20
   Change in net unrealized gain on
        Securities available for sale, net of taxes                                                       7                       7
                                                                                                                           --------

     Total comprehensive income                                                                                                 503
                                                                                                                           --------

Allocation of ESOP shares (5,556 shares)                             25                                              28          53

Cumulative effect of adoption of new accounting
principle on October 1, 2007 EITF Issue No. 06-4                                (121)                                          (121)
Amortization of MRP                                                  16                                                          16
Purchases of treasury stock (2,140 shares)                                                (20)                                  (20)
Exercise of stock options (1,125 shares)                                                    6                                     6
Cash dividends declared, $0.16 per share                                        (159)                                          (159)
                                                     -------   --------   ----------   ------    ----------   ---------    --------

Balance at March 31, 2008                            $    24   $  4,951   $   16,220   $ (439)   $        9   $     (57)   $ 20,708
                                                     =======   ========   ==========   ======    ==========   =========    ========
</TABLE>

See accompanying notes to consolidated financial statements

                                       5
<PAGE>
<TABLE>
<CAPTION>

                                                GOUVERNEUR BANCORP, INC AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                   Six months ended March 31, 2007
                                            (In thousands, except share data) (Unaudited)

                                                                                    Accumulated   Unallocated  Unallocated
                                                 Additional                            Other         Common      Common
                                        Common     Paid-in     Retained   Treasury  Comprehensive  Stock held  Stock held
                                        Stock      Capital     Earnings    Stock       Income        by MRP      By ESOP     Total
                                       -------   --------    ---------   -------    -----------   ----------   ---------    -------
<S>                                    <C>       <C>         <C>         <C>        <C>           <C>          <C>          <C>
Balance at September 30, 2006          $    24   $  4,847    $  15,398   $  (466)   $       234   $      (44)  $    (138)   $19,855

Comprehensive income:
   Net income                                                      399                                                          399
   Change in net unrealized gain
      on securities available
      for sale, net of
      reclassification
      adjustment and tax effects                                                            (17)                                (17)
                                                                                                                            -------

     Total comprehensive income                                                                                                 382
                                                                                                                            -------

Allocation of ESOP shares
 (5,155 shares)                                        38                                                             26         64
Adoption of SFAS 123(R)                               (44)                                                44                     --
Amortization of MRP shares                             19                                                                        19
Amortization of stock option grants                     3                                                                         3
Exercise of stock options
 (6,475 shares)                                        (2)                    33                                                 31
Cash dividends declared,
 $0.16 per share                                                  (158)                                                        (158)
                                       -------   --------    ---------   -------    -----------   ----------   ---------    -------

Balance at March 31, 2007              $    24   $  4,861    $  15,639   $  (433)   $       217   $       --   $    (112)   $20,196
                                       =======   ========    =========   =======    ===========   ==========   =========    =======
</TABLE>

See accompanying notes to consolidated financial statements

                                       6
<PAGE>
<TABLE>
<CAPTION>

                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands) (Unaudited)

                                                                                     Six Months Ended
                                                                                        March 31,
                                                                               ----------------------------
                                                                                   2008            2007
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
Cash flows from operating activities:
   Net Income                                                                  $        476    $        399
   Adjustments to reconcile net income to net cash provided by
    operating activities:
       Provision for loan losses                                                         --              15
       Net amortization of deferred costs on loans                                       72              69
       Depreciation                                                                      63              64
       Net amortization of securities premiums and discounts                              1              --
       Net realized gains on sales of securities - AFS                                   (1)             --
       Earnings on bank owned life insurance                                            (77)            (72)
       Allocated and earned shares of SOP, ESOP and MRP                                  69              86
       Net realized (gain) loss on sale of foreclosed assets                             --             (17)
       (Increase) decrease in accrued interest receivable and other assets             (396)            451
       Increase (decrease) in accrued interest payable and other liabilities            480            (269)
                                                                               ------------    ------------
                    Net cash provided by operating activities                           687             726
                                                                               ------------    ------------
Cash flows from investing activities:
   Net (increase) decrease in loans                                                     894          (1,568)
   Proceeds from sales of securities AFS                                                164              --
   Proceeds from maturities and principal reductions of securities AFS                  793           1,112
   Purchases of securities AFS                                                         (477)           (501)
   Proceeds from maturities and principal reductions of securities HTM                    4               6
   Proceeds from the sale of foreclosed assets                                          113             189
   Proceeds from sale of loan held for sale                                           2,085              --
   Additions to premises and equipment                                                 (216)           (944)
   (Purchases) redemptions of Federal Home Loan Bank stock                              177             (18)
                                                                               ------------    ------------
                    Net cash provided by (used in) investing activities               3,537          (1,724)
                                                                               ------------    ------------
Cash flows from financing activities:
   Net increase in deposits                                                           3,242           1,933
   Proceeds from (repayments of) FHLB advances                                       (3,950)            400
   Exercise of stock options                                                              6              31
   Cash dividends paid                                                                 (159)           (158)
   Purchase treasury stock                                                              (20)             --
                                                                               ------------    ------------
                     Net cash provided by (used in) financing activities               (881)          2,206
                                                                               ------------    ------------

   Net increase in cash and cash equivalents                                          3,343           1,208
   Cash and cash equivalents at beginning of period                                   3,880           2,470
                                                                               ------------    ------------
   Cash and cash equivalents at end of period                                  $      7,223    $      3,678
                                                                               ============    ============

Non-cash investing activities:
   Additions to foreclosed assets                                              $         91    $        199
Cash paid during the period for:
   Interest                                                                           1,942           1,884
   Income taxes                                                                         236             243
</TABLE>

See accompanying notes to consolidated financial statements.

                                       7
<PAGE>

                     GOUVERNEUR BANCORP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.       Basis of Presentation
         ---------------------

         The accompanying unaudited consolidated financial statements include
         the accounts of Gouverneur Bancorp, Inc. (the "Company") and Gouverneur
         Savings and Loan Association (the "Bank"), the wholly owned and only
         subsidiary of the Company, as of March 31, 2008 and September 30, 2007
         and for the three and six month periods ended March 31, 2008 and 2007.
         All material intercompany accounts and transactions have been
         eliminated in this consolidation. These statements were prepared in
         accordance with instructions for Form 10-QSB and, therefore, do not
         include all information or footnotes necessary for a complete
         presentation of financial condition, results of operations, and cash
         flows in conformity with generally accepted accounting principles in
         the United States of America.

         In the opinion of management, all adjustments, consisting of only
         normal recurring adjustments or accruals, which are necessary for a
         fair presentation of the consolidated financial statements have been
         made at and for the three month and the six month periods ended March
         31, 2008 and 2007. The results of operations for the three month and
         six month periods ended March 31, 2008 are not necessarily indicative
         of the results which may be expected for an entire fiscal year or other
         interim periods.

         The data in the consolidated statement of condition for September 30,
         2007 was derived from the Company's annual report on Form 10-KSB. That
         data, along with the interim financial information presented in the
         consolidated statements of financial condition, income, shareholders'
         equity and cash flows should be read in conjunction with the 2007
         consolidated financial statements, including the notes thereto included
         in the Company's Annual Report on Form 10-KSB.

2.       Earnings Per Common Share
         -------------------------

         Basic earnings per common share represents income available to common
         shareholders divided by the weighted average number of common shares
         outstanding during the period. Unallocated Employee Stock Ownership
         Plan ("ESOP") and unearned Management Recognition Plan ("MRP") shares
         are not included in the weighted average number of shares outstanding.
         Diluted earnings per share reflects additional common shares that would
         have been outstanding if dilutive potential common shares had been
         issued, as well as any adjustment to income that would result from the
         assumed issuance. Potential common shares that may be issued by the
         Company relate solely to unearned MRP shares and outstanding stock
         options and are determined using the treasury stock method.

                                       8
<PAGE>

         Basic and diluted earnings per share for the three-month and six month
         periods ending March 31, 2008 and 2007 were computed as follows:
<TABLE>
<CAPTION>

                                                                                (In thousands, except per share data)

                                                                         Three Months Ended                Six Months Ended
                                                                               March 31,                       March 31,
                                                                     ----------------------------    ----------------------------
                                                                         2008             2007           2008            2007
                                                                     ------------    ------------    ------------    ------------
<S>                                                                  <C>             <C>             <C>             <C>
         Basic earnings per share:
         Net income                                                  $        237    $        183    $        476    $        399
                                                                     ============    ============    ============    ============

         Weighted average common shares outstanding                         2,280           2,266           2,279           2,264
                                                                     ============    ============    ============    ============
         Basic earnings per share                                    $       0.10    $       0.08    $       0.21    $       0.18
                                                                     ============    ============    ============    ============
         Diluted earnings per share:
         Net income                                                  $        237    $        183    $        476    $        399
                                                                     ============    ============    ============    ============

         Weighted average common shares outstanding                         2,280           2,266           2,279           2,264
         Additional potentially dilutive securities
               (equivalent in common stock)
                   common stock options and unearned MRP shares                19              28              22              29
                                                                     ------------    ------------    ------------    ------------
         Diluted weighted average common shares outstanding                 2,299           2,294           2,301           2,293
                                                                     ============    ============    ============    ============
         Diluted earnings per share                                  $       0.10    $       0.08    $       0.21    $       0.17
                                                                     ============    ============    ============    ============
</TABLE>

3.       Comprehensive Income
         --------------------

         Comprehensive income, presented in the consolidated statements of
         shareholders' equity, consists of net income and the net change for the
         period in after-tax unrealized gains or losses on securities available
         for sale. For the six months ended March 31, 2008, it also includes the
         amortization of certain pension and postretirement costs previously
         recorded in accumulated other comprehensive income in accordance with
         Statement of Financial Accounting Standards ("SFAS") No. 158
         "Employers' Accounting for Defined Benefit Pension and Other
         Postretirement Plans". Accumulated other comprehensive income in the
         consolidated statements of financial condition represents the net
         unrealized gains or losses on securities available for sale and pension
         and postretirement benefit costs related to SFAS No. 158, as of the
         reporting dates, net of related tax effects.


                                       9
<PAGE>

         The components of other comprehensive income and related tax effects
         for the three and six month periods ended March 31, 2008 and 2007 are
         as follows:
<TABLE>
<CAPTION>

                                                                        Three Months Ended              Six Months Ended
                                                                              March 31,                      March 31,
                                                                     ----------------------------    ----------------------------
                                                                                            (In thousands)

                                                                         2008            2007            2008            2007
                                                                     ------------    ------------    ------------    ------------
<S>                                                                  <C>             <C>             <C>             <C>
         Unrealized holding gains (losses) arising
            during the period                                        $         87    $        (48)   $         12    $        (29)
         Reclassification adjustment for losses realized in
            net income during the period                                        1              --               1              --
         Net pension and postretirement benefit costs                          18              --              33              --
                                                                     ------------    ------------    ------------    ------------
                                                                              106             (48)             46             (29)
         Tax effect                                                           (43)             19             (19)             12
                                                                     ------------    ------------    ------------    ------------
         Other comprehensive gain (loss), net of tax                 $         63    $        (29)   $         27    $        (17)
                                                                     ============    ============    ============    ============
</TABLE>

         The following table shows the components of accumulated other
         comprehensive income at March 31, 2008 and September 30, 2007:
<TABLE>
<CAPTION>
                                                                                                       March 31,     September 30,
                                                                                                         2008            2007
                                                                                                     ------------    ------------
                                                                                                           (In thousands)
<S>                                                                                                 <C>             <C>
         Pension and postretirement benefit costs, net of taxes of $120 at
           March 31, 2008 and $133 at September 30, 2007                                             $       (179)   $       (199)

         Unrealized holding gains on available for sale securities, net of
          taxes of $126 at March 31, 2008 and $121 at September 30, 2007                                      188             181
                                                                                                     ------------    ------------
                                                                                                     $         (9)   $        (18)
                                                                                                     ============    ============
</TABLE>

4.       Stock Option and Management Recognition Plans
         ---------------------------------------------

         The Company has a Stock Option Plan ("SOP") and MRP for directors,
         officers and key employees. Both plans are described in Note 12 to the
         Company's Consolidated Financial Statements included in its Annual
         Report on Form 10-KSB, for the fiscal year ended September 30, 2007.
         The Company adopted SFAS No. 123R "Share Based Payment", using the
         modified-prospective transition method, beginning on October 1, 2006
         and, therefore, began to expense the fair value of all options over
         their remaining vesting periods to the extent the options were not
         fully vested as of the adoption date and began to expense the fair
         value of all stock options granted subsequent to September 30, 2006,
         over their vesting periods.

         SFAS 123R also requires the benefits of realized tax deductions in
         excess of previously recognized tax benefits on stock-based
         compensation expense to be reported as a financing cash flow (none for
         the six months ended March 31, 2008) rather than an operating cash
         flow, as previously required. In accordance with Staff Accounting
         Bulletin ("SAB") No. 107, the Company classified share-based
         compensation within non-interest expenses to correspond with the same
         line item as the cash compensation paid to employees and directors.

                                       10
<PAGE>

         Both employee and non-employee director options generally vest over a
         five-year service period. Compensation expense recognized for all
         option grants is net of estimated forfeitures and is recognized over
         the awards' respective requisite vesting periods. The fair values of
         all option grants were estimated using the Black-Scholes option pricing
         model. The Company recognizes compensation expense for the fair values
         of these awards, which have graded vesting, on a straight-line basis
         over the requisite vesting period of the awards. Stock option
         compensation expense was $0 and $3,000 for the six months ended March
         31, 2008 and 2007. No options were granted in the six-month periods
         ending March 31, 2008 or 2007, respectively.

         The Company awarded no shares of stock under the MRP during the six
         months ended March 31, 2008. During the six months ended March 31,
         2008, the Company recorded $16,000 of share-based compensation expense,
         which was for previously issued MRP shares. The Company estimates it
         will record share-based compensation expense of approximately $33,000
         in fiscal 2008.

         The following table illustrates the impact of share-based compensation
         on net income and earnings per share:
<TABLE>
<CAPTION>

                                                                          Three Months Ended
                                                           March 31, 2008                    March 31, 2007
                                                 ------------------------------      ------------------------------
                                                                     Impact of                           Impact of
                                                                    Share-Based                         Share-Based
                                                                   Compensation                        Compensation
         (In thousands, except per share data)    As Reported         Expense         As Reported         Expense
         -------------------------------------   ------------      ------------      ------------      ------------
<S>                                              <C>               <C>               <C>               <C>
         Net income                              $        237      $          5      $        183      $          7

         Earnings per share:
             Basic                               $       0.10      $       0.00      $       0.08      $       0.00
             Diluted                             $       0.10      $       0.00      $       0.08      $       0.00
<CAPTION>

                                                                           Six Months Ended
                                                           March 31, 2008                    March 31, 2007
                                                 ------------------------------      ------------------------------
                                                                     Impact of                           Impact of
                                                                    Share-Based                         Share-Based
                                                                   Compensation                        Compensation
         (In thousands, except per share data)     As Reported        Expense         As Reported         Expense
         -------------------------------------    ------------     ------------      ------------      ------------
<S>                                              <C>               <C>               <C>               <C>
         Net income                              $        476      $         10      $        399      $         13

         Earnings per share:
             Basic                               $       0.21      $       0.00      $       0.18      $       0.01
             Diluted                             $       0.21      $       0.00      $       0.17      $       0.01
</TABLE>

5.       Commitments and Contingencies
         -----------------------------

         Outstanding letters of credit written are conditional commitments
         issued by the Company to guarantee the performance of a customer to a
         third party. The Company's exposure to credit loss in the event of
         non-performance by the other party to the financial instrument for
         standby letters of credit is represented by the contractual amount of
         those instruments. The Bank uses the same credit policies in making
         conditional obligations as it does for on-balance sheet instruments.
         The Company had six standby letters of credit totaling $186,000 as of
         March 31, 2008.

         The credit risk involved in issuing letters of credit is essentially
         the same as that involved in extending other loan commitments. The
         Company requires collateral and personal guarantees supporting these

                                       11
<PAGE>

         letters of credit as deemed necessary. Management believes that the
         proceeds obtained through a liquidation of such collateral and the
         enforcement of personal guarantees would be sufficient to cover the
         maximum potential amount of future payments required under the
         corresponding guarantees.

6.       Dividend Restrictions
         ---------------------

         Cambray Mutual Holding Company ("Cambray MHC"), the Company's parent
         mutual holding company, held 1,311,222 shares, or 57.0%, of the
         Company's issued and outstanding common stock, and shareholders other
         than Cambray MHC held 988,162 shares, or 43.0%, of such stock at March
         31, 2008. Cambray MHC filed a notice with the Office of Thrift
         Supervision ("OTS") to waive its right to receive cash dividends during
         the 2008 calendar year. The Company announced a cash dividend to
         shareholders of record as of March 15, 2008 of $0.16 per share of
         common stock, which was paid on March 31, 2008 to all public
         shareholders.

         Cambray MHC waived receipt of the current and several past dividends
         paid by the Company. The dividends are considered as restrictions on
         the retained earnings of the Company. As of March 31, 2008 and
         September 30, 2007, the aggregate retained earnings restricted for cash
         dividends waived were $2.1 million and $1.9 million, respectively.

7.       Recently Issued Accounting Standards
         ------------------------------------

         In September 2006, the FASB Emerging Issues Task Force ("EITF") issued
         EITF Issue No. 06-4, "Accounting for Deferred Compensation and
         Postretirement Benefit Aspects of Endorsement Split-Dollar Life
         Insurance Arrangements", or EITF 06-4. EITF 06-4 requires that a
         liability be recorded during the service period when a split-dollar
         life insurance arrangement continues after participants' employment or
         retirement. The required accrued liability is based on either the
         post-employment benefit cost for the continuing life insurance or based
         on the future death benefit, depending on the contractual terms of the
         underlying agreement. We adopted EITF 06-4 on October 1, 2007 and
         recorded a cumulative effect adjustment of $121,000 as a reduction of
         retained earnings effective October 1, 2007. Compensation expense for
         the six months ended March 31, 2008 was $17,000 and is expected to be
         $34,000 for the year ended September 30, 2008 related to the adoption
         of EITF 06-4.

         In July 2006, the Financial Accounting Standards Board ("FASB") issued
         FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes
         - an interpretation of FASB Statement No. 109" (FIN 48), which
         clarifies the accounting for uncertainty in tax positions. This
         Interpretation requires that companies recognize in their financial
         statements the impact of a tax position, if that position is more
         likely than not of being sustained on audit, based on the technical
         merits of the position. The provisions of FIN 48 are effective for
         fiscal years beginning after December 15, 2006, with the cumulative
         effect of the change in accounting principle recorded as an adjustment
         to opening retained earnings. The Company adopted FIN 48 on October 1,
         2007. The impact of adopting FIN 48 did not have a material effect on
         our financial statements.

         FASB statement No. 141 (R) "Business Combinations" was issued in
         December of 2007. This Statement establishes principles and
         requirements for how the acquirer of a business recognizes and measures
         in its financial statements the identifiable assets acquired, the
         liabilities assumed, and any noncontrolling interest in the acquiree.
         The Statement also provides guidance for recognizing and measuring the
         goodwill acquired in the business combination and determines what
         information to disclose to enable users of the financial statements to
         evaluate the nature and financial effects of the business combination.
         The guidance will become effective as of the beginning of a company's
         fiscal year beginning after December 15, 2008. This new pronouncement
         will impact the Company's accounting for business combinations
         completed beginning October 1, 2009.

         In September 2006, the FASB issued Statement of Financial Accounting
         Standards ("SFAS") No. 157, "Fair Value Measurements," which defines
         fair value, establishes a framework for measuring fair value under U.S.
         Generally Accepted Accounting Principles, and expands disclosures about
         fair value measurements. SFAS No. 157 applies to other accounting

                                       12
<PAGE>

         pronouncements that require or permit fair value measurements. The new
         guidance is effective for financial statements issued for fiscal years
         beginning after November 15, 2007, and for interim periods within those
         fiscal years. We are currently evaluating the potential impact, if any,
         of the adoption of FASB Statement No. 157 on our financial position,
         results of operations and cash flows.

         In February 2008, the FASB issued FASB Staff Position (FSP) 157-2,
         "Effective Date of FASB Statement No. 157," that permits a one-year
         deferral in applying the measurement provisions of Statement No. 157 to
         non-financial assets and non-financial liabilities (non-financial
         items) that are not recognized or disclosed at fair value in an
         entity's financial statements on a recurring basis (at least annually).
         Therefore, if the change in fair value of a non-financial item is not
         required to be recognized or disclosed in the financial statements on
         an annual basis or more frequently, the effective date of application
         of Statement 157 to that item is deferred until fiscal years beginning
         after November 15, 2008 and interim periods within those fiscal years.
         This deferral does not apply, however, to an entity that applied
         Statement 157 in interim or annual financial statements prior to the
         issuance of FSP 157-2.The Company is currently evaluating the impact,
         if any, that the adoption of FSP 157-2 will have on the Company's
         operating income or net earnings.

         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
         for Financial Assets and Financial Liabilities." This statement permits
         entities to choose to measure many financial instruments and certain
         other items at fair value. An entity shall report unrealized gains and
         losses on items for which the fair value option has been elected in
         earnings at each subsequent reporting date. This statement is effective
         as of the beginning of an entity's first fiscal year that begins on or
         before November 15, 2007, provided the entity also elects to apply the
         provisions of SFAS No. 157. The Company is continuing to evaluate the
         impact of this statement.

         FASB statement No. 160 "Noncontrolling Interests in Consolidated
         Financial Statements--an amendment of ARB No. 51" was issued in
         December of 2007. This Statement establishes accounting and reporting
         standards for the noncontrolling interest in a subsidiary and for the
         deconsolidation of a subsidiary. The guidance will become effective as
         of the beginning of a company's fiscal year beginning after December
         15, 2008. The Company believes that this new pronouncement will have an
         immaterial impact on the Company's financial statements in future
         periods.

         Staff Accounting Bulletin No. 110 ("SAB 110") amends and replaces
         Question 6 of Section D.2 of Topic 14, "Share-Based Payment," of the
         Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14
         expresses the views of the staff regarding the use of the "simplified"
         method in developing an estimate of expected term of "plain vanilla"
         share options and allows usage of the "simplified" method for share
         option grants prior to December 31, 2007. SAB 110 allows public
         companies which do not have historically sufficient experience to
         provide a reasonable estimate to continue use of the "simplified"
         method for estimating the expected term of "plain vanilla" share option
         grants after December 31, 2007. SAB 110 is effective January 1, 2008.
         The Company believes that this new pronouncement will have no impact on
         the Company's financial statements in future periods.

         Staff Accounting Bulletin No. 109 ("SAB 109"), "Written Loan
         Commitments Recorded at Fair Value Through Earnings" expresses the
         views of the staff regarding written loan commitments that are
         accounted for at fair value through earnings under generally accepted
         accounting principles. To make the staff's views consistent with
         current authoritative accounting guidance, the SAB revises and rescinds
         portions of SAB No. 105, "Application of Accounting Principles to Loan
         Commitments." Specifically, the SAB revises the staff's views on
         incorporating expected net future cash flows related to loan servicing
         activities in the fair value measurement of a written loan commitment.
         The SAB retains the staff's views on incorporating expected net future
         cash flows related to internally-developed intangible assets in the
         fair value measurement of a written loan commitment. The staff expects
         registrants to apply the views in Question 1 of SAB 109 on a
         prospective basis to derivative loan commitments issued or modified in

                                       13
<PAGE>

         fiscal quarters beginning after December 15, 2007. The Company does not
         expect SAB 109 to have a material impact on its financial statements.

         In June 2007, the EITF reached a consensus on Issue No. 06-11,
         "Accounting for Income Tax Benefits of Dividends on Share-Based Payment
         Awards" ("EITF 06-11"). EITF 06-11 states that an entity should
         recognize a realized tax benefit associated with dividends on nonvested
         equity shares, nonvested equity share units and outstanding equity
         share options charged to retained earnings as an increase in additional
         paid in capital. The amount recognized in additional paid in capital
         should be included in the pool of excess tax benefits available to
         absorb potential future tax deficiencies on share-based payment awards.
         EITF 06-11 should be applied prospectively to income tax benefits of
         dividends on equity-classified share-based payment awards that are
         declared in fiscal years beginning after December 15, 2007. The Company
         expects that EITF 06-11 will not have an impact on its financial
         statements.

         In March 2008, the FASB issued Statement No. 161, "Disclosures about
         Derivative Instruments and Hedging Activities--an amendment of FASB
         Statement No. 133" ("Statement 161"). Statement 161 requires entities
         that utilize derivative instruments to provide qualitative disclosures
         about their objectives and strategies for using such instruments, as
         well as any details of credit-risk-related contingent features
         contained within derivatives. Statement 161 also requires entities to
         disclose additional information about the amounts and location of
         derivatives located within the financial statements, how the provisions
         of SFAS 133 has been applied, and the impact that hedges have on an
         entity's financial position, financial performance, and cash flows.
         Statement 161 is effective for fiscal years and interim periods
         beginning after November 15, 2008, with early application encouraged.
         The Company is currently evaluating the potential impact the new
         pronouncement will have on its financial statements.

         In February 2008, the FASB issued a FASB Staff Position ("FSP") FAS
         140-3, "Accounting for Transfers of Financial Assets and Repurchase
         Financing Transactions." This FSP addresses the issue of whether or not
         these transactions should be viewed as two separate transactions or as
         one "linked" transaction. The FSP includes a "rebuttable presumption"
         that presumes linkage of the two transactions unless the presumption
         can be overcome by meeting certain criteria. The FSP will be effective
         for fiscal years beginning after November 15, 2008 and will apply only
         to original transfers made after that date; early adoption will not be
         allowed. The Company is currently evaluating the potential impact the
         new pronouncement will have on its financial statements.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

Forward-Looking Statements

         When we use words or phrases like "will probably result," "we expect,"
"will continue," "we anticipate," "estimate," "project," "should cause" or
similar expressions in this Form 10-QSB or in any press releases, public
announcements, filings with the Securities and Exchange Commission or other
disclosures, we are making "forward-looking statements" as described in the
Private Securities Litigation Reform Act of 1995. In addition, certain
information we will provide in the future on a regular basis, such as analysis
of the adequacy of our allowance for loan losses or an analysis of interest rate
sensitivity of our assets and liabilities, is always based on predictions of the
future. From time to time, we may also publish other forward-looking statements
regarding anticipated financial performance, business prospects, and similar
matters.

         The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. We want you to know that a variety of
future events could cause our actual results and experience to differ materially
from what was anticipated in our forward-looking statements. Some of the risks
and uncertainties that may affect our operations, performance, development and
results, the interest rate sensitivity of our assets and liabilities, our asset
quality and the adequacy of our allowance for loan losses, include:

                                       14
<PAGE>

o        Local, regional, national or global economic conditions which could
         cause an increase in loan delinquencies, a decrease in property values,
         or a change in the housing turnover rate;

o        Changes in market interest rates or changes in the speed at which
         market interest rates change;

o        Changes in laws and regulations affecting us;

o        Changes in competition; and

o        Changes in consumer preferences.

         Please do not rely unduly on any forward-looking statements, which are
valid only as of the date made. Many factors, including those described above,
could affect our financial performance and could cause our actual results or
circumstances for future periods to differ materially from what we anticipate or
project. We have no obligation to update any forward-looking statements to
reflect future events which occur after the statements are made.

General

         The Company conducts no income generating activities other than holding
the stock of the Bank and a loan to the ESOP used to purchase shares of Company
common stock for the participants. Consequently, the net income of the Company
is derived primarily from its investment in the Bank. The Bank's net income
depends, to a large extent, on its net interest income, which is the difference
between interest earned on its interest earning assets, such as loans and
investments, and the cost of funds, consisting of interest paid on
interest-bearing liabilities, such as deposits and borrowings. The Bank's net
income is also affected by the provision for loan losses, as well as by the
amount of other income, including income from fees and service charges, net
gains and losses on sales of investments and operating expenses such as salaries
and employee benefits costs, net expenses on foreclosed assets and various
categories of operational expenses. External factors, such as general economic
and competitive conditions, particularly changes in interest rates, government
policies and actions of regulatory authorities, can have a substantial effect on
profitability.

         The Bank has been, and continues to be, a community oriented financial
institution offering a variety of financial services. The Bank attracts deposits
from the general public and uses those deposits together with funds purchased
from deposit brokers and funds borrowed from the Federal Home Loan Bank
("FHLB"), to make loans and other investments. Most of the loans are one to four
family residential mortgages made to residents in the Bank's primary market
area, southern St. Lawrence and northern Jefferson and Lewis counties in New
York State. The Bank's deposit accounts are insured by the Deposit Insurance
Fund of the Federal Deposit Insurance Corporation ("FDIC"), and the Bank is
subject to regulation by the FDIC and the OTS.

Recent Developments

         Due primarily to the ongoing cost of complying with SEC regulations as
well as the anticipated cost of complying with SEC regulations that implement
the Sarbanes-Oxley Act of 2002, the Company is currently considering ways to
deregister its common stock with the SEC. No decision has been made as to the
method by which the Company would deregister or whether the Company will
ultimately decide to deregister. Deregistration with the SEC would eliminate the
requirement to file annual and quarterly reports with the SEC and eliminate the
requirement to comply with SEC regulations relating to management's assessment
of internal control over financial reporting, which are effective for the
Company for the first time in the Company's 2008 fiscal year.

Critical Accounting Policies

         Note 2 to the consolidated financial statements of the Company
(included in Item 7 of the Annual Report on Form 10-KSB of the Company for the
year ended September 30, 2007) lists significant accounting policies used in the
development and presentation of its financial statements. This discussion and
analysis, the significant accounting policies, and other financial statement

                                       15
<PAGE>

disclosures identify and address key variables and other qualitative and
quantitative factors that are necessary for an understanding and evaluation of
the Company's results of operations. The following accounting policy is the one
identified by management to be critical to the results of operations:

         Allowance for loan losses. The allowance for loan losses is the
estimated amount considered adequate to cover credit losses inherent in the
outstanding loan portfolio at the balance sheet date. The allowance is
established through the provision for loan losses charged against income. In
determining the allowance for loan losses, management makes significant
estimates and, accordingly, has identified this policy as the most critical for
the Company.

         Management performs a monthly evaluation of the adequacy of the
allowance for loan losses. Consideration is given to a variety of factors in
establishing this estimate, including, but not limited to, current economic
conditions, diversification of the loan portfolio, delinquency statistics,
results of internal loan reviews, borrowers' actual or perceived financial and
managerial strengths, the adequacy of the underlying collateral (if collateral
dependent), the present value of future cash flows and other relevant factors.
This evaluation is inherently subjective, as it requires material estimates that
may be susceptible to significant change, including the amounts and timing of
future cash flows expected to be received on impaired loans.

         The allowance consists of specific, general and unallocated components.
Collateral values discounted for market conditions and selling costs are used to
establish specific allocations. The Bank's historical loan loss experience,
delinquency rates and general economic conditions are used to establish general
allocations. The unallocated component reflects the inherent imprecision in
calculating the allowance.

         Management monitors the adequacy of the allowance for loan losses on an
ongoing basis and reports its adequacy assessment quarterly to the Board of
Directors and the Audit Committee.

                                       16
<PAGE>

Average Balances, Interest Rates and Yields

         The following tables present, for the periods indicated, the average
interest-earning assets and average interest-bearing liabilities by principal
categories, the interest income or expense for each category, and the resultant
average yields earned or rates paid. No tax equivalent adjustments were made.
All average balances are daily average balances. Non-interest-bearing checking
accounts are included in the tables as a component of non-interest-bearing
liabilities.
<TABLE>
<CAPTION>

                                                                         For the three months Ended March 31,
                                                                      2008                                  2007
                                                      ------------------------------------   ------------------------------------
                                                                                  (Dollars in thousands)

                                                        Average                  Yield/        Average                  Yield/
                                                        Balance     Interest     Cost (6)      Balance     Interest     Cost (6)
                                                      ----------   ----------   ----------   ----------   ----------   ----------
<S>                                                   <C>          <C>                <C>    <C>          <C>                <C>
Loans, net (1)                                        $  106,213   $    1,831         6.99%  $  109,269   $    1,878         6.97%
Securities (2)                                            10,987          145         5.35%      10,850          126         4.71%
Other short-term investments                               2,877           19         2.68%       1,278           16         5.08%
                                                      ----------   ----------                ----------   ----------
   Total interest-earning assets                         120,077        1,995         6.74%     121,397        2,020         6.75%
                                                                   ----------                             ----------
Non-interest-earning assets                               10,514                                 10,515
                                                      ----------                             ----------
   Total assets                                       $  130,591                             $  131,912
                                                      ==========                             ==========

Savings and club accounts (3)                         $   17,295           43         1.01%  $   18,759           47         1.02%
Time certificates                                         41,495          487         4.76%      39,090          448         4.65%
NOW and money market accounts                             12,854           40         1.26%      12,085           37         1.24%
Borrowings                                                30,789          348         4.58%      35,868          429         4.85%
                                                      ----------   ----------                ----------   ----------
   Total interest-bearing liabilities                    102,433          918         3.63%     105,802          961         3.68%
                                                                   ----------                             ----------
Non-interest-bearing liabilities                           7,503                                  5,889
                                                      ----------                             ----------
   Total liabilities                                     109,936                                111,691
Shareholders' equity                                      20,655                                 20,221
                                                      ----------                             ----------
   Total liabilities and
      shareholders' equity                            $  130,591                             $  131,912
                                                      ==========                             ==========
Net interest income/spread (4)                                     $    1,077         3.11%               $    1,059         3.07%
                                                                   ==========   ==========                ==========   ==========
Net earning assets/net interest margin (5)            $   17,644                      3.64%  $   15,595                      3.54%
                                                      ==========                ==========   ==========                ==========
Ratio of average interest-earning
   Assets to average interest-bearing liabilities           1.17x                                  1.15x
                                                      ==========                             ==========
</TABLE>

Notes appear on following page

                                       17
<PAGE>
<TABLE>
<CAPTION>

Average Balances, Interest Rates and Yields (continued)

                                                                          For the six months Ended March 31,
                                                                      2008                                  2007
                                                      ------------------------------------   ------------------------------------
                                                                                  (Dollars in thousands)

                                                        Average                  Yield/        Average                  Yield/
                                                        Balance     Interest     Cost (6)      Balance     Interest     Cost (6)
                                                      ----------   ----------   ----------   ----------   ----------   ----------
<S>                                                   <C>          <C>                <C>    <C>          <C>                <C>
Loans, net (1)                                        $  107,359   $    3,673         6.86%  $  108,975   $    3,731         6.87%
Securities (2)                                            11,110          291         5.25%      10,985          258         4.71%
Other short-term investments                               2,604           44         3.39%         991           25         5.06%
                                                      ----------   ----------                ----------   ----------
   Total interest-earning assets                         121,073        4,008         6.64%     120,951        4,014         6.66%
                                                                   ----------                             ----------
Non-interest-earning assets                               10,487                                 10,335
                                                      ----------                             ----------
   Total assets                                       $  131,560                             $  131,286
                                                      ==========                             ==========

Savings and club accounts (3)                         $   17,790           90         1.01%  $   19,009           97         1.02%
Time certificates                                         40,572          967         4.78%      38,725          878         4.55%
NOW and money market accounts                             12,914           81         1.26%      12,081           75         1.25%
Borrowings                                                32,354          753         4.67%      35,642          858         4.83%
                                                      ----------   ----------                ----------   ----------
   Total interest-bearing liabilities                    103,630        1,891         3.66%     105,457        1,908         3.63%
                                                                   ----------                             ----------
Non-interest-bearing liabilities                           7,380                                  5,717
                                                      ----------                             ----------
   Total liabilities                                     111,010                                111,174
Shareholders' equity                                      20,550                                 20,112
                                                      ----------                             ----------
   Total liabilities and
      shareholders' equity                            $  131,560                             $  131,286
                                                      ==========                             ==========
Net interest income/spread (4)                                     $    2,117         2.98%               $    2,106         3.03%
                                                                   ==========   ==========                ==========   ==========
Net earning assets/net interest margin (5)            $   17,443                      3.51%  $   15,494                      3.49%
                                                      ==========                ==========   ==========                ==========
Ratio of average interest-earning
   assets to average interest-bearing liabilities           1.17x                                  1.15x
                                                      ==========                             ==========
</TABLE>

(1)  Shown net of the allowance for loan losses. Average loan balances include
     non-accrual loans and loan held for sale. Interest is recognized on
     non-accrual loans only as and when received.
(2)  Securities are included at amortized cost, with net unrealized gains or
     losses on securities available for sale included as a component of
     non-earning assets. Securities include FHLB stock.
(3)  Include advance payments by borrowers for taxes and insurance (mortgage
     escrow deposits).
(4)  The spread represents the difference between the weighted average yield on
     interest-earning assets and the weighted average cost of interest-bearing
     liabilities.
(5)  The net interest margin, also known as the net yield on average
     interest-earning assets, represents net interest income as a percentage of
     average interest-earning assets.
(6)  Yields are not computed on a tax equivalent basis. Yields and costs are
     computed based upon the actual number of days in the period annualized to a
     365-day year.

                                       18
<PAGE>

Rate Volume Analysis of Net Interest Income

         One method of analyzing net interest income is to consider how changes
in average balances and average rates from one period to the next affect net
interest income. The following table shows changes in the dollar amount of
interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities. It shows the amount of the change in
interest income or expense caused by either changes in outstanding balances
("volume") or changes in interest rates ("rate"). The effect of a change in
volume is measured by multiplying the average rate during the first period by
the volume change between the two periods. The effect of a change in interest
rates is calculated by multiplying the change in rate between the two periods by
the average volume during the first period. Changes attributable to both rate
and volume, which cannot be segregated, have been allocated proportionately to
the change due to volume and the change due to rate.
<TABLE>
<CAPTION>

                                                 Three months ended March 31,              Six months ended March 31,
                                                        2008 vs. 2007                           2008 vs. 2007
                                                  Increase (Decrease) Due To:             Increase (Decrease) Due To:
                                            --------------------------------------    --------------------------------------
                                              Volume        Rate          Total        Volume         Rate          Total
                                            ----------    ----------    ----------    ----------    ----------    ----------
                                                                         (Dollars in thousands)
<S>                                         <C>           <C>           <C>           <C>           <C>           <C>
Interest-earning assets:

Loans                                       $      (52)   $        5    $      (47)   $      (53)   $       (5)   $      (58)
 Securities                                          2            17            19             3            30            33
 Other short-term investments                       13           (10)            3            30           (11)           19
                                            ----------    ----------    ----------    ----------    ----------    ----------
   Total interest-earning assets                   (37)           12           (25)          (20)           14            (6)
                                            ----------    ----------    ----------    ----------    ----------    ----------

Interest-bearing liabilities:

 Savings and club accounts                          (4)           --            (4)           (6)           (1)           (7)
 Time certificates                                  28            11            39            43            46            89
 NOW and money market accounts                       2             1             3             5             1             6
 Borrowings                                        (58)          (23)          (81)          (77)          (28)         (105)
                                            ----------    ----------    ----------    ----------    ----------    ----------
  Total interest-bearing liabilities               (32)          (11)          (43)          (35)           18           (17)
                                            ----------    ----------    ----------    ----------    ----------    ----------

Net change in net interest income           $       (5)   $       23    $       18    $       15    $       (4)   $       11
                                            ==========    ==========    ==========    ==========    ==========    ==========
</TABLE>

Comparison of Financial Condition at March 31, 2008 and September 30, 2007.

         Total assets at March 31, 2008 were $132.7 million, an increase of $0.1
million, or 0.1%, from $132.6 million at September 30, 2007. Net loans decreased
by $1.0 million, or 0.9%, from $106.1 million to $105.1 million. The decrease in
loans resulted from decreases of $1.4 million in residential real estate loans
and $0.4 million in other consumer loans, offset with increases of $0.5 million
in commercial real estate loans and $0.3 million in other commercial loans. The
decrease in residential mortgage loans was mainly caused by a decrease in
construction loans.

         In January, the sale of a loan in the amount of $2.1 million,
previously held for sale, closed as final USDA approval was received.

         Borrowed funds from FHLB, consisting of advances and security
repurchase obligations, were $29.2 million on March 31, 2008, down $4.0 million
from $33.2 million at September 30, 2007. Brokered deposits totaled $3.7 million
at March 31, 2008, down $0.3 million from $4.0 million on September 30, 2007.
Total deposits increased $3.3 million, or 4.3%, during the six months from $76.2

                                       19
<PAGE>

million to $79.5 million. Increases in NOW and money market accounts and time
deposits, including brokered deposits, of $0.6 million, and $3.4 million,
respectively, more than offset decreases of $0.1 million and $0.6 million in
demand deposits and savings accounts, respectively.

         Shareholders' equity increased $278,000 for the six months ended March
31, 2008. The increase resulted from net income of $476,000 combining with an
increase of $53,000 on ESOP shares earned, amortization of $16,000 on MRP
shares, a $20,000 recognition of pension and postretirement benefit costs, a
$7,000, net of taxes, increase in unrealized gains on securities
available-for-sale, a $6,000 increase as 1,125 treasury shares were issued when
one director exercised some of his vested stock options, a decrease of $159,000
for a cash dividend paid to public shareholders on March 31, 2008, a decrease of
$20,000 for the purchase of treasury shares and a cumulative effect adjustment
to retained earnings of $121,000 related to the adoption of EITF No. 06-4 which
decreased shareholders' equity.

         At March 31, 2008, non-performing assets totaled $776,000, or 0.58% of
total assets, as compared to $762,000, or 0.57% of total assets at September 30,
2007. Non-performing loans increased by $37,000, from $674,000, or 0.63% of
total loans, to $711,000, or 0.68% of total loans, over the same period. A
summary of the Company's non-performing assets and related ratios follows:

                                                      March 31,   September 30,
            Non-performing assets                       2008          2007
            ---------------------                   ------------  ------------

            Non-accrual loans
            -----------------
            Residential mortgages
                and home equity loans               $        244  $        127
            Commercial mortgages                             444           249
            Consumer other                                    23             1
            Commercial other                                  --            --
                                                    ------------  ------------
                Total non-accrual loans                      711           377

            Residential mortgage loans over 90
              Days delinquent and still accruing              --           297
                                                    ------------  ------------
                Total non-performing loans                   711           674

            Foreclosed real estate                            50            85
            Other repossessed assets                          15             3
                                                    ------------  ------------
              Total non-performing assets           $        776  $        762
                                                    ============  ============

            Non-performing loans to total loans             0.68%         0.63%

            Non-performing assets to total assets           0.58%         0.57%

         The Company had no loans more than 90 days delinquent and still
accruing at March 31, 2008 and $297,000 of such loans at September 30, 2007.

         Of the five non-accrual residential mortgages at March 31, 2008, two
loans totaling $97,000 are currently in foreclosure proceedings.

         The non-accrual balance in commercial mortgages consists of three
loans, with two loans totaling $442,000 in foreclosure.

                                       20
<PAGE>

         Management believes that each of these non-performing loans is
adequately secured by collateral. Further, management is not aware of any
factors common to these loans, which caused their non-performance or any
developments that suggest an upward trend in delinquencies. Accordingly, while
we will continue to monitor asset quality, management has determined that the
$29,000 decrease in the loan loss allowance is appropriate at this time based on
the history of losses in the loan portfolio over the past six years.

Comparison of Results of Operations for the Three Months Ended March 31, 2008
and 2007.

         General. Our net income for the three months ended March 31, 2008 was
$237,000, an increase of $54,000, or 29.5%, over net income of $183,000 for the
same period last year. The increase in net income resulted from the combination
of the following factors:

         1.       net interest income increased by $18,000, as interest income
                  decreased $25,000 and interest expense decreased by $43,000,

         2.       non-interest income decreased by $10,000 over last year's
                  period,

         3.       non-interest expense decreased $65,000 in the three month
                  period this year compared to last year's period, and

         4.       income tax expense increased $19,000.

         Basic and diluted earnings per share were both $0.10 for this year's
quarter versus $0.08 for both measures in last year's quarter.

         An analysis of the information shown previously in the Average
Balances, Interest Rates and Yields table for three months and in the related
Rate Volume Analysis of Net Interest Income table follows:

         Interest Income. Interest income decreased only $25,000 for the three
months ended March 31, 2008 and was $2.0 million for the three months ended
March 31, 2008 and March 31, 2007. Interest income decreased $37,000 due to a
decrease in the average balance of interest-earning assets, primarily loans,
from $121.4 million to $120.1 million, while interest income increased $12,000
as the increase in the average rate earned on loans and securities more than
offset the decrease in other short-term investments.

         Interest income on loans decreased $47,000, or 2.5%, for the second
quarter of fiscal 2008 compared to the second quarter of fiscal 2007. The
decrease in the average balance of loans resulted in a reduction of $52,000 in
interest income, while an increase of 0.02% in the average interest rate on
loans, increased interest income by $5,000.

         Interest income on securities and other short-term investments was
$164,000 for the three months ended March 31, 2008 and $142,000 for the three
months ended March 31, 2007. Of the $22,000 increase, $15,000 resulted from an
increase in the average balance of securities and other short-term investments
and $7,000 resulted from an increase in rates on our securities.

         Interest Expense. Interest expense decreased by $43,000, or 4.5%, from
$961,000 for the three months ended March 31, 2007 to $918,000 for the three
months ended March 31, 2008. Interest expense decreased $32,000 due to a
decrease in the average balance of interest-bearing liabilities from $105.8
million last year to $102.4 million this year and interest expense decreased
$11,000 due to the decrease in the average rate earned on interest-bearing
liabilities from 3.68% to 3.63% over the same time frame. Average
interest-bearing liabilities decreased due to a decrease in borrowings.

                                       21
<PAGE>

         For the second quarter of the 2008 fiscal year, the average balances
increased for time certificates and NOW and money market accounts by $2.4
million and $0.8 million, respectively, over the average balances for the second
quarter of the 2007 fiscal year and increased interest expense by $28,000 and
$2,000, respectively. Over the same period, decreases in the balances of savings
and club accounts and borrowings by $1.5 million and $5.1 million, respectively,
reduced interest expense by $4,000 and $58,000, respectively. Increases in the
average rate paid on time certificates by 0.11% and on NOW and money market
accounts by 0.02%, increased interest expense by $11,000 and $1,000,
respectively. A decrease in borrowing rates of 0.27%, 27 basis points, from
4.85% to 4.58% reduced interest expense by $23,000.

         Net Interest Income. The net result of the decreases in interest income
and interest expense was a $18,000 increase in net interest income. Our interest
rate spread (the difference between the average rate we earn on interest-earning
assets and the average rate we pay on interest-bearing deposits and borrowings)
increased by 4 basis points (0.04%) from 3.07% for the three months ended March
31, 2007 to 3.11% for the three months ended March 31, 2008, while our net
interest margin (net interest income divided by average earning assets)
increased by 10 basis points (0.10%) from 3.54% to 3.64% for the same time
frame.

         Interest rate spread has improved since the Federal Reserve lowered
interest rates 3.00% starting in September 2007, resulting in a positively
sloped yield curve.

         The ratio of average interest-earning assets to average
interest-bearing liabilities was 1.17 times for the quarter ended March 31, 2008
and 1.15 times for the period ended March 31, 2007.

         Provision for Loan Losses. The provision for loan losses results from
our analysis of the adequacy of the allowance for loan losses. If we believe
that the allowance should be higher, then we increase it, with a charge to
provision for loan losses, which is an expense on our income statement. In
determining the appropriate provision for loan losses, management considers the
level of and trend in non-performing loans, the level of and trend in net loan
charge-offs, the dollar amount and mix of the loan portfolio, as well as general
economic conditions and real estate trends in the Company's market area, which
can impact the inherent risk of loss in the Company's portfolio. The OTS may
disagree with our judgments regarding the risks in our loan portfolio and could
require us to increase the allowance in the future.

         For the three months ended March 31, 2008 and 2007, we provided no
accruals for loan losses. At March 31, 2008 and 2007, the ratio of our loan
allowance to total loans was 0.84% and 0.86%, respectively. On December 31, 2007
the allowance was $894,000, or 0.84% of total loans, and we determined at the
end of the second quarter that the appropriate level for the allowance was
$882,000. We had charge-offs during the quarter of $20,000 and recoveries of
$8,000, so no provision was necessary to reach the desired level for the
allowance. Our level of non-accruing loans, loans 90 days past due and still
accruing and restructured loans was $711,000, or 0.68% of total loans at March
31, 2008 compared to $1,122,000, or 1.06% of total loans at December 31, 2007.
Management feels that these loans are adequately secured and do not require any
adjustment to the allowance for loan losses at this time.

         Non-interest Income. Our non-interest income decreased by $10,000, or
6.3%, from $160,000 in the second quarter of fiscal 2007 to $150,000 in the
second quarter of fiscal 2008, due to a $20,000 realized gain on foreclosed
assets, net in last year's quarter as compared to none in this year's quarter.

         Non-interest Expenses. Non-interest expense decreased by $65,000 from
the quarter ended March 31, 2007 to the quarter ended March 31, 2008. Over that
period, occupancy and equipment expense decreased by $37,000 and directors' fees
decreased by $42,000, accounting for most of the change. Occupancy and equipment
costs decreased due in part to the closing of the Clayton loan production office
last year as well as the demolition of the old administration building in
December 2007. Light and heat costs were reduced by $6,000, office lease costs
by $3,000, depreciation expense by $7,000 and insurance and surety bond expense
was $5,000 less than last year. Additionally $12,000 of heat and light expense

                                       22
<PAGE>

was moved from other expense in last years' quarter to occupancy and equipment
expense, which is more appropriate. Directors' fees were decreased $48,000 due
to the decrease in the market value of the underlying plan assets in the
deferred directors fees plan for the quarter ended March 31, 2008 as compared to
the quarter ending March 31, 2007.

         At March 31, 2008, we had thirty-one full-time and five part-time
employees, compared to thirty-one full-time and four part-time employee at March
31, 2007.

         Income tax expense. Our income tax expense increased by $19,000, to
$112,000 from $93,000, or 20.4%, comparing the second quarter of fiscal 2008 to
the same quarter of fiscal 2007. The increased expense was the result of income
before income tax increasing by $73,000, or 26.4%, from last year's $276,000 to
this year's $349,000.

Comparison of Results of Operations for the Six Months Ended March 31, 2008 and
2007.

         General. Our net income for the six months ended March 31, 2008 was
$476,000, an increase of $77,000, or 19.3%, from last year's net income of
$399,000. The following operating results combined to produce the decrease:

         1.       net interest income increased $11,000 as interest income
                  decreased $6,000 and interest expense decreased $17,000,

         2.       non-interest income increased by $3,000,

         3.       the provision for loan losses decreased by $15,000,

         4.       non-interest expense decreased by $75,000 and

         5.       income taxes increased by $27,000.

         Basic and diluted earnings per share were both $0.21 for the first six
months of this fiscal year versus $0.18 and $0.17, respectively for the same
period last year.

         An analysis of the information shown previously in the Average
Balances, Interest Rates and Yields table for six months and in the related Rate
Volume Analysis of Net Interest Income table follows:

         Interest Income. Interest income decreased by $6,000 for the six months
ended March 31, 2008 as compared to the six months ended March 31, 2007. Average
interest-earning assets increased $0.1 million, from $121.0 million to $121.1
million, or 0.1%, resulting in a $20,000 decrease in interest income, while a
decrease of 2 basis points (0.02%) in the average rate earned on interest
earning assets increased interest income by $14,000 for the first six months of
fiscal year 2008 as compared to the same period last year.

         Interest income on loans decreased $58,000. A decrease in the average
balance of loans of $1.6 million, or 1.5%, from $109.0 million last year to
$107.4 million this year resulted in a decrease of $53,000 in interest income,
while a decrease of 1 basis point (0.01%) in the average rate earned on loans
increased interest income by $5,000.

         Interest income on securities and other short-term investments
increased by $52,000.

         Interest Expense. Interest expense decreased $17,000 from the first
half of 2007 to the first half of 2008. The decrease in the average balance of
interest-bearing liabilities by $1.9 million, or 1.8%, from $105.5 million last
year to $103.6 million this year, resulted in a decrease of $35,000 in interest
expense, while an increase in the average rate we paid on interest-bearing

                                       23
<PAGE>

liabilities by 3 basis points (0.03%), from 3.63% in 2007 to 3.66% in 2008,
increased interest expense by $18,000.

         Interest expense decreased by $105,000 on borrowings from FHLB from
fiscal 2007 to fiscal 2008. A decrease in the average balance of borrowings of
$3.3 million, or 9.2%, from $35.7 million at March 31, 2007 to $32.4 million at
March 31, 2008 decreased interest expense $77,000, while a decrease in the
average interest rate on borrowings by 16 basis points (0.16%) from 4.83% in the
first half of last fiscal year to 4.67% for the first half of this fiscal year
decreased interest expense by $28,000.

         Interest expense increased by $89,000 on time certificates from the
first half of 2007 to the first half of 2008. An increase in the average balance
of time certificates by $1.9 million, or 4.9%, from $38.7 million at March 31,
2007 to $40.6 million at March 31, 2008 increased interest expense $43,000,
while an increase in the average interest rate on time certificates by 23 basis
points (0.23%) from 4.55% in the first half of last fiscal year to 4.78% for the
first half of this fiscal year increased interest expense by $46,000. The
average balance of brokered deposits decreased by $1.9 million from $5.2 million
during the six months ended March 31, 2007 to $3.3 million during the six months
ended March 31, 2008. Brokered deposits are reported in time certificates.

         Net Interest Income. Overall, the net effect of the decreases in
interest income and interest expense was an $11,000 increase in net interest
income. Our interest rate spread (the difference between the average rate we
earn and the average rate we pay) decreased by 5 basis points (0.05%) from 3.03%
last year to 2.98% this year. Our net interest margin was 3.51% in the first
half of fiscal 2008, up from 3.49% in the first half of fiscal 2007.

         The ratio of average interest-earning assets to average
interest-bearing liabilities was 1.17 times for the first six months of fiscal
2008 and 1.15 times for the first half of fiscal 2007.

         Provision for Loan Losses. For the six-month period ended March 31,
2008, we recorded no provision for loan losses as compared to $15,000 for the
six months ended March 31, 2007. We had charge-offs for the six-month period
ended March 31, 2008 of $41,000 and recoveries of $12,000, resulting in an
allowance for loan losses of $882,000. At March 31, 2008 and 2007 the ratio of
our loan loss allowance to total gross loans was 0.84% and 0.86%, respectively.
As disclosed in the comparative discussion of result of operations for three
months, our level of non accruing loans, loans 90 days past due and still
accruing and restructured loans was $711,000, or 0.68% of total gross loans at
March 31, 2008 compared to $674,000, or 0.63% of total gross loans on September
30, 2007. Management feels that these loans are adequately secured and do not
require any adjustment to the allowance for loan losses.

         Non-interest Income. Our non-interest income was $3,000 greater this
year, increasing to $309,000 for the first six months versus $306,000 for the
same period in 2007. Service charge income has increased by $92,000 as the
result of an overdraft privilege program implemented last year, but it was
mostly offset by the $89,000 decrease in the market value of the underlying plan
assets in the deferred directors' fees plan.

         Non-interest Expense. Non-interest expenses decreased by $75,000 to
$1,716,000 for the first six months of fiscal 2008 compared to $1,791,000 for
the first six months of fiscal 2007. An increase of $25,000 in salaries and
employee benefits was more than offset by decreases of $82,000 in directors'
fees, $14,000 in occupancy and equipment and $14,000 in other non-interest
expense were primarily responsible for the increase in non-interest expenses.
The decrease in directors' fees was the result of a $89,000 decrease in the
market value of the underlying plan assets in the deferred directors fees plan.

         Income tax expense. Our income tax expense increased $27,000, or 13.0%,
from $207,000 last year to $234,000 this year. The increased expense was the
result of greater income before income tax, which increased $104,000, or 17.2%,
from $606,000 for the first half of last year to $710,000 for the first half of
this year.

                                       24
<PAGE>

Liquidity

         Our primary sources of funds are deposits, borrowings from the FHLB,
brokered deposits and proceeds from the principal and interest payments on loans
and securities. Scheduled maturities and principal payments on loans and
securities are predictable sources of funds. We can also control the funds
available from borrowings and brokered deposits. However, general economic
conditions and interest rate conditions can cause increases or decreases in
deposit outflows and loan pre-payments, which can also affect the level of funds
we have available for investment.

         During the six months ended March 31, 2008, we increased our cash and
cash equivalents by $3.3 million. We originated $15.7 million of new loans
during the six months ended March 31, 2008. Including the sale of a $2.1 million
loan, net loans, after payments, charge-offs and transfers to foreclosed real
estate, decreased by $0.9 million during the period.

         Total deposits increased by $3.3 million during the six months ended
March 31, 2008, while brokered deposits totaled $3.7 million on September 30,
2007 and March 31, 2008. In addition to factors within our control, such as our
deposit pricing strategies and our marketing efforts, deposit flows are affected
by the level of general market interest rates, the availability of alternate
investment opportunities, general economic conditions, and other factors outside
our control. We decreased borrowings from FHLB by $4.0 million, from $33.2
million on September 30, 2007 to $29.2 million on March 31, 2008.

         We monitor our liquidity regularly. Excess liquidity is invested in
overnight federal funds sold and other short-term investments. If we need
additional funds, we can borrow those funds or purchase brokered deposits,
although the cost of borrowing money or purchasing brokered deposits is normally
higher than the average cost of deposits. As a member of the FHLB, the Bank can
arrange to borrow an additional $21.7 million against our one-to four-family
mortgages. We have used borrowed funds and brokered deposits to help us leverage
capital we received from our stock sale, but have not needed borrowings to cover
liquidity shortfalls. In addition to borrowings, we believe that, if we need to
do so, we can attract additional deposits by increasing the rates we offer.

         We measure liquidity on a monthly basis and seek to maintain a
liquidity ratio of between 5% and 15%. At March 31, 2008, the ratio was 9.4%.

Off Balance Sheet Arrangements

         We had $1.6 million in outstanding commitments to make loans at March
31, 2008, along with $6.2 million of unused home equity, commercial and
overdraft lines of credit. We anticipate that we will have enough funds to meet
our current loan commitments and to fund draws on the lines of credit through
the normal turnover of our loan and securities portfolios. At March 31, 2008, we
had $32.1 million of time certificates scheduled to mature within one year,
including $2.7 million of purchased brokered deposits. We anticipate that we can
retain substantially all of those deposits if we need to do so to fund loans and
other investments as part of our efforts to grow and leverage our capital.

Capital Resources

         The OTS has minimum capital ratio requirements applying to the Bank,
but there are no comparable minimum capital requirements that apply to us as a
savings and loan holding company. At March 31, 2008, the Bank exceeded all
regulatory capital requirements of the OTS applicable to it, with Tier I capital
of $20.3 million, or 15.3% of adjusted total assets and with risk-based capital
of $21.2 million, or 28.1% of risk-weighted assets. The Bank also had tangible
capital of $20.3 million, or 15.3% of tangible assets. The Bank was classified
as "well capitalized" at March 31, 2008 under OTS regulations.

                                       25
<PAGE>

Item 3.  Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. The term "disclosure
controls and procedures" is defined in Rule 13a-14(c) of the Securities Exchange
Act of 1934, or (the "Exchange Act"). This term refers to the controls and
procedures of a company that are designed to ensure that information required to
be disclosed by a company in the reports that it files under the Exchange Act is
recorded, processed, summarized and reported within required time periods. Our
Chief Executive Officer and our Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures as of March 31, 2008,
and they have concluded that as of that date, our disclosure controls and
procedures were effective at ensuring that required information will be
disclosed on a timely basis in our reports filed under the Exchange Act.

(b) Changes in Internal Controls. There were no significant changes to our
internal controls or in other factors that could significantly affect our
internal controls during the quarter ended March 31, 2008, including any
corrective actions with regard to significant deficiencies and material
weakness.

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

In the ordinary course of business, the Company and the Bank are subject to
legal actions, which involve claims for monetary relief. Management, based on
the advice of counsel, does not believe that any currently known legal actions,
individually or in the aggregate, will have a material effect on its
consolidated financial condition or results of operations.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c) SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
<TABLE>
<CAPTION>

      ------------------------------------------------  ----------------  -----------------  ----------------  --------------
                                                                                                                 (d) Maximum
                                                                                                (c) Total         Number (or
                                                                                                Number of        Approximate
                                                                                                Shares (or      Dollar Value)
                                                                                                  Units)        Of Shares (or
                                                                                               Purchased as      Units) that
                                                           (a) Total                             Part of          May Yet Be
                                                            Number of        (b) Average         Publicly         Purchased
                                                           Shares (or       Price Paid per      Announced         Under the
                                                             Units)           Share (or          Plans or          Plans or
      Period                                               Purchased            Unit)            Programs          Programs
      ------------------------------------------------  ----------------  -----------------  ----------------  --------------
<S>                                                    <C>                      <C>                <C>                 <C>
      January 1, 2008 thru January 31, 2008                        --                 N/A              --                --
      ------------------------------------------------  ----------------  -----------------  ----------------  --------------
      February 1, 2008 thru February 29, 2008                   2,140(1)            $9.17              --                --
      ------------------------------------------------  ----------------  -----------------  ----------------  --------------
      March 1, 2008 thru March 31, 2008                            --                 N/A              --                --
      ------------------------------------------------  ----------------  -----------------  ----------------  --------------
      Total                                                      2,140              $9.17              --                --
      ------------------------------------------------  ----------------  -----------------  ----------------  --------------
</TABLE>

(1)  Shares purchased in satisfaction of the Company's obligations upon exercise
     of outstanding put options issued by the Company for the ESOP.

-------------------------

                                       26
<PAGE>


Item 4.  Submission of Matters to a Vote of Security Holders

At the annual meeting of stockholders held on February 11, 2008, the Company's
stockholders (i) elected one director, Robert J. Leader, to serve for a
three-year term to expire at the annual meeting of stockholders to be held in
2011 and (ii) ratified the appointment of Beard Miller Company LLP as the
independent registered public accountants for the fiscal year ending September
30, 2008. The terms of office of directors Richard F. Bennett, Richard Jones,
Frank Langevin, Timothy J. Monroe, F. Toby Morrow and Joseph C. Pistolesi all
continued after the annual meeting.

Of the 2,300,399 shares entitled to vote on proposition (i) at the meeting, a
total of 2,197,153 shares (95.5%) voted as follows:

         (i) ELECTION OF DIRECTORS:

                                        For         %       Withheld      %
                                     ---------   ------     --------    -----
             Robert J. Leader        2,125,489    96.7       71,664      3.3

Of the 2,300,153 shares entitled to vote on proposition (ii) at the meeting, a
total of 2,197,153 shares (95.5%) voted as follows:

         (ii) RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS:

                 For          %      Against      %      Abstain       %
              ---------    ------    -------    -----    -------     -----
              2,180,426     99.2     16,185      0.8       542        0.0

Item 6.  Exhibits

         31.1     Certification of Principal Executive Officer pursuant to Rule
                  13a - 14(a) / 15d - 14(a)

         31.2     Certification of Principal Financial Officer pursuant to Rule
                  13a - 14(a) / 15d - 14(a)

         32.1     Certification of Principal Executive Officer Pursuant to
                  Section 1350

         32.2     Certification of Principal Financial Officer Pursuant to
                  Section 1350


                                       27
<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

                                  Gouverneur Bancorp, Inc.

Date: May 8, 2008                 By: /s/ Richard F. Bennett
                                      ------------------------------------------
                                      Richard F. Bennett
                                      President and Chief Executive Officer
                                      (principal executive officer and officer
                                      duly authorized to sign on behalf of the
                                      registrant)

                                  By: /s/ Robert J. Twyman
                                      ------------------------------------------
                                      Robert J. Twyman
                                      Vice President and Chief Financial Officer
                                      (principal financial officer duly
                                      authorized to sign on behalf of the
                                      registrant)



                                       28