----

| TABLE OF CONTENTS                                                                     |         |
|---------------------------------------------------------------------------------------|-------------------|
|                                                                                  |              |
| Patapsco Bancorp, Inc.                                                                | (i)               |
| Market Information                                                                    | (i)               |
| Letter to Stockholders                                                                | 1                 |
| Selected Consolidated Financial and Other Data                                        | 2                 |
| Management's Discussion and Analysis of Financial Condition and Results of Operations | 4                 |
| Consolidated Financial Statements                                                     | 23                |
| Corporate Information                                                                 | Inside Back Cover |

| PATAPSCO BANCORP, INC. |
|------------------------|

| MARKET INFORMATION |
|--------------------|

|           |   | High   |   |   | Low    |   |   | Dividends Per Share |   |
|----------------|--------|--------|--------|--------|--------|--------|--------|---------------------|--------|
| Fiscal 2011:   |   |   |   |   |   |   |   |                |   |
| First Quarter  |   | $      | 2.25   |   |   | $      | 1.75   |                |   | $ | .00 |   |
| Second Quarter |   |   | 2.25   |   |   |   | 1.55   |                |   |   | .00 |   |
| Third Quarter  |   |   | 1.90   |   |   |   | 1.55   |                |   |   | .00 |   |
| Fourth Quarter |   |   | 1.60   |   |   |   | 0.55   |                |   |   | .00 |   |
| Fiscal 2010:   |   |   |   |   |   |   |   |                |   |   |   |   |
| First Quarter  |   | $      | 3.40   |   |   | $      | 2.50   |                |   | $ | .00 |   |
| Second Quarter |   |   | 3.50   |   |   |   | 2.15   |                |   |   | .00 |   |
| Third Quarter  |   |   | 3.15   |   |   |   | 2.50   |                |   |   | .00 |   |
| Fourth Quarter |   |   | 3.00   |   |   |   | 1.80   |                |   |   | .00 |   |

----

| /s/ Thomas P. O’Neill |   | /s/ Michael J. Dee      |
|-----------------------------|--------|-------------------------|
| Thomas P. O’Neill     |   | Michael J. Dee          |
| Chairman of the             |   | President and           |
| Board of Directors          |   | Chief Executive Officer |

----

| SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA |
|------------------------------------------------|

|                          |   | At June 30,    |    |
|-------------------------------|--------|----------------|---------|
|                          |   |           |    |
|                          |   | 2011           |    |   | 2010 |   |
|                          |   | (In thousands) |    |
| Total assets                  |   | $              | 264,630 |   |   | $ | 269,723 |   |
| Loans receivable, net         |   |           | 182,570 |   |   |   | 197,169 |   |
| Cash and cash equivalents     |   |           | 28,469  |   |   |   | 28,043 |   |
| Securities available for sale |   |           | 39,814  |   |   |   | 25,482 |   |
| Deposits                      |   |           | 231,306 |   |   |   | 228,789 |   |
| Borrowings                    |   |           | 17,000  |   |   |   | 22,100 |   |
| Stockholders' equity          |   |           | 14,353  |   |   |   | 17,370 |   |

|                                                                         |   | Year Ended June 30,       |   |
|------------------------------------------------------------------------------|--------|---------------------------|--------|
|                                                                         |   | 2011                      |   |   | 2010 |   |
|                                                                         |   | (In thousands, except for |   |
|                                                                         |   | per share amounts)        |   |
| Interest income                                                              |   | $                         | 12,655 |   |   | $ | 13,840 |   |
| Interest expense                                                             |   |                      | 4,204  |   |   |   | 5,382 |   |
| Net interest income before provision for loan losses                         |   |                      | 8,451  |   |   |   | 8,458 |   |
| Provision for loan losses                                                    |   |                      | 2,718  |   |   |   | 3,701 |   |
| Net interest income after provision for loan losses                          |   |                      | 5,733  |   |   |   | 4,757 |   |
| Non-interest income                                                          |   |                      | 889    |   |   |   | 838 |   |
| Non-interest expense:                                                        |   |                      |   |   |   |   |   |   |
| Compensation and employee benefits                                           |   |                      | 3,938  |   |   |   | 4,390 |   |
| Professional fees                                                            |   |                      | 653    |   |   |   | 727 |   |
| Federal deposit insurance assessments                                        |   |                      | 502    |   |   |   | 509 |   |
| Equipment expenses                                                           |   |                      | 224    |   |   |   | 210 |   |
| Net occupancy costs                                                          |   |                      | 555    |   |   |   | 580 |   |
| Advertising                                                                  |   |                      | 38     |   |   |   | 42 |   |
| Data processing                                                              |   |                      | 392    |   |   |   | 428 |   |
| Amortization of core deposit intangible                                      |   |                      | 51     |   |   |   | 52 |   |
| Telephone, postage and delivery                                              |   |                      | 273    |   |   |   | 289 |   |
| Provision for losses on and cost of real estate acquired through foreclosure |   |                      | 360    |   |   |   | 1,425 |   |
| Other                                                                        |   |                      | 806    |   |   |   | 802 |   |
| Total noninterest expense                                                    |   |                      | 7,792  |   |   |   | 9,454 |   |
| Loss Before Provision for (Benefit from) income taxes                        |   |                      | (1,170 | ) |   |   | (3,859 | ) |
| Income tax provision (benefit)                                               |   |                      | 1,715  |   |   |   | (1,510 | ) |
| Net loss                                                                     |   |                      | (2,885 | ) |   |   | (2,349 | ) |
| Preferred stock dividends and accretion                                      |   |                      | 387    |   |   |   | 327 |   |
| Net loss available for common stockholders                                   |   | $                         | (3,272 | ) |   | $ | (2,676 | ) |
| Net loss per share of common stock                                           |   |                      |   |   |   |   |   |   |
| Basic                                                                        |   | $                         | (1.68  | ) |   | $ | (1.39 | ) |
| Diluted                                                                      |   | $                         | (1.68  | ) |   | $ | (1.39 | ) |

----

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

|                                                                                                  |   | At or For the Year Ended June 30, |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                  |   | 2011                              |   |   | 2010 |   |   | 2009 |   |
|                                                                                                  |   |                              |   |   |   |   |   |   |   |
| Performance Ratios:                                                                                   |   |                              |   |   |   |   |   |   |   |
| Return on average assets (net loss divided by average total assets)                                   |   |                              | (1.07  | )% |   |   | (0.89 | )% |   |   | (2.05 | )% |
| Return on average stockholders’ equity (net loss divided by average stockholders’ equity) |   |                              | (16.46 | ) |   |   | (11.98 | ) |   |   | (24.45 | ) |
| Interest rate spread (weighted average interest rate earned less weighted average interest rate cost) |   |                              | 3.24   |   |   |   | 3.26 |   |   |   | 3.20 |   |
| Net interest margin (net interest income divided by average interest-earning assets)                  |   |                              | 3.32   |   |   |   | 3.40 |   |   |   | 3.44 |   |
| Ratio of average interest-earning assets to average interest-bearing liabilities                      |   |                              | 105.03 |   |   |   | 106.27 |   |   |   | 108.61 |   |
| Ratio of noninterest expense to average total assets                                                  |   |                              | 2.88   |   |   |   | 3.54 |   |   |   | 4.00 |   |
|                                                                                                  |   |                              |   |   |   |   |   |   |   |   |   |   |
| Asset Quality Ratios:                                                                                 |   |                              |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |                              |   |   |   |   |   |   |   |   |   |   |
| Non-accrual loans to loans receivable                                                                 |   |                              | 5.33   | % |   |   | 4.85 | % |   |   | 5.11 | % |
| Non-performing assets to total assets                                                                 |   |                              | 4.40   |   |   |   | 4.67 |   |   |   | 4.66 |   |
| Allowance for loan losses to total loans                                                              |   |                              | 2.25   |   |   |   | 1.76 |   |   |   | 1.37 |   |
| Allowance for loan losses to nonperforming loans                                                      |   |                              | 42.17  |   |   |   | 36.26 |   |   |   | 26.89 |   |
| Net charge-offs to average loans outstanding                                                          |   |                              | 1.05   |   |   |   | 1.49 |   |   |   | 2.03 |   |
|                                                                                                  |   |                              |   |   |   |   |   |   |   |   |   |   |
| Capital Ratios:                                                                                       |   |                              |   |   |   |   |   |   |   |   |   |   |
| Stockholders’ equity to total assets at end of period                                           |   |                              | 5.42   | % |   |   | 6.44 | % |   |   | 7.34 | % |
| Average stockholders’ equity to average assets                                                  |   |                              | 6.48   |   |   |   | 7.39 |   |   |   | 8.37 |   |
| Tier one leverage ratio (1)                                                                           |   |                              | 7.26   |   |   |   | 7.76 |   |   |   | 7.98 |   |
| Tier one capital to risk-weighted assets (1)                                                          |   |                              | 11.67  |   |   |   | 11.09 |   |   |   | 10.33 |   |
| Total regulatory capital to risk-weighted assets (1)                                                  |   |                              | 12.94  |   |   |   | 12.35 |   |   |   | 11.58 |   |

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

|   | (1) | Bank level ratios. |
|--------|-----|--------------------|

----

----

----

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|                                                                       |   | Year Ended June 30, |    |
|---------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                            |   | 2011                |    |   | 2010 |   |   | 2009 |   |
|                                                                            |   |                |    |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |
|                                                                            |   | Average             |    |   |   |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |
|                                                                            |   | Balance             |    |   | Interest |   |   | Cost |   |   | Balance |   |   | Interest |   |   | Cost |   |   | Balance |   |   | Interest |   |   | Cost |   |
|                                                                            |   |                |    |   |   |   |   | (Dollars in thousands) |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                        |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable, including fees (1)                                            |   | $                   | 195,871 |   |   | $ | 11,703 |   |   |   | 5.97 | % |   | $ | 214,081 |   |   | $ | 13,162 |   |   |   | 6.15 | % |   | $ | 231,910 |   |   | $ | 15,104 |   |   |   | 6.51 | % |
| Investment securities (2)                                                       |   |                | 34,945  |   |   |   | 889 |   |   |   | 2.54 |   |   |   | 19,790 |   |   |   | 645 |   |   |   | 3.26 |   |   |   | 13,490 |   |   |   | 554 |   |   |   | 4.11 |   |
| Short-term investments and other interest-earning assets                        |   |                | 23,425  |   |   |   | 63 |   |   |   | 0.27 |   |   |   | 14,838 |   |   |   | 33 |   |   |   | 0.22 |   |   |   | 5,834 |   |   |   | 39 |   |   |   | 0.67 |   |
| Total interest-earning assets                                                   |   |                | 254,241 |   |   |   | 12,655 |   |   |   | 4.98 |   |   |   | 248,709 |   |   |   | 13,840 |   |   |   | 5.56 |   |   |   | 251,234 |   |   |   | 15,697 |   |   |   | 6.25 |   |
| Noninterest-earning assets                                                      |   |                | 16,104  |   |   |   |   |   |   |   |   |   |   |   | 16,644 |   |   |   |   |   |   |   |   |   |   |   | 15,925 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                    |   | $                   | 270,345 |   |   |   |   |   |   |   |   |   |   | $ | 265,353 |   |   |   |   |   |   |   |   |   |   | $ | 267,159 |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                   |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits (3)                                                                    |   | $                   | 223,107 |   |   |   | 3,344 |   |   |   | 1.50 |   |   | $ | 206,197 |   |   |   | 4,192 |   |   |   | 2.03 |   |   | $ | 186,948 |   |   |   | 5,277 |   |   |   | 2.82 |   |
| Short-term borrowings                                                           |   |                | -       |   |   |   | - |   |   |   | - |   |   |   | 1,480 |   |   |   | 6 |   |   |   | 0.41 |   |   |   | 3,693 |   |   |   | 95 |   |   |   | 2.57 |   |
| Long-term borrowings                                                            |   |                | 18,963  |   |   |   | 860 |   |   |   | 4.54 |   |   |   | 26,363 |   |   |   | 1,184 |   |   |   | 4.49 |   |   |   | 40,670 |   |   |   | 1,687 |   |   |   | 4.15 |   |
| Total interest-bearing liabilities                                              |   |                | 242,070 |   |   |   | 4,204 |   |   |   | 1.74 |   |   |   | 234,040 |   |   |   | 5,382 |   |   |   | 2.30 |   |   |   | 231,311 |   |   |   | 7,059 |   |   |   | 3.05 |   |
| Noninterest-bearing liabilities                                                 |   |                | 10,745  |   |   |   |   |   |   |   |   |   |   |   | 11,707 |   |   |   |   |   |   |   |   |   |   |   | 13,490 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                               |   |                | 252,815 |   |   |   |   |   |   |   |   |   |   |   | 245,747 |   |   |   |   |   |   |   |   |   |   |   | 244,801 |   |   |   |   |   |   |   |   |   |
| Total equity                                                                    |   |                | 17,530  |   |   |   |   |   |   |   |   |   |   |   | 19,606 |   |   |   |   |   |   |   |   |   |   |   | 22,358 |   |   |   |   |   |   |   |   |   |
| Total liabilities and equity                                                    |   | $                   | 270,345 |   |   |   |   |   |   |   |   |   |   | $ | 265,353 |   |   |   |   |   |   |   |   |   |   | $ | 267,159 |   |   |   |   |   |   |   |   |   |
| Net interest income                                                             |   |                |    |   |   | $ | 8,451 |   |   |   |   |   |   |   |   |   |   | $ | 8,458 |   |   |   |   |   |   |   |   |   |   | $ | 8,638 |   |   |   |   |   |
| Interest rate margin                                                            |   |                |    |   |   |   |   |   |   |   | 3.32 | % |   |   |   |   |   |   |   |   |   |   | 3.40 | % |   |   |   |   |   |   |   |   |   |   | 3.44 | % |
| Net interest spread                                                             |   |                |    |   |   |   |   |   |   |   | 3.24 | % |   |   |   |   |   |   |   |   |   |   | 3.26 | % |   |   |   |   |   |   |   |   |   |   | 3.20 | % |
| Ratio of average interest-earning assets to averageinterest-bearing liabilities |   |                |    |   |   |   |   |   |   |   | 105.03 | % |   |   |   |   |   |   |   |   |   |   | 106.27 | % |   |   |   |   |   |   |   |   |   |   | 108.6 | % |

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

| (1) | Includes nonaccrual loans. |
|-----|----------------------------|

| (2) | Includes investments required by law. |
|-----|---------------------------------------|

| (3) | Includes escrow accounts. |
|-----|---------------------------|

----

|                                                     |   | Year Ended June 30,        |   |   | Year Ended June 30,        |   |
|----------------------------------------------------------|--------|----------------------------|--------|--------|----------------------------|--------|
|                                                     |   | 2011                       |   |   | vs.                        |   |   | 2010 |   |   | 2010 |   |   | vs. |   |   | 2009 |   |
|                                                     |   | Increase (Decrease) Due to |   |   | Increase (Decrease) Due to |   |
|                                                     |   | Volume                     |   |   | Rate                       |   |   | Total |   |   | Volume |   |   | Rate |   |   | Total |   |
|                                                     |   | (In thousands)             |   |   | (In thousands)             |   |
| Interest income:                                         |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable, including fees (1)                     |   | $                          | (1,089 | )      |                       | $      | ( 370 | ) |   | $ | (1,459 | ) |   | $ | (1,124 | ) |   | $ | ( 818 | ) |   | $ | (1,942 | ) |
| Investment securities                                    |   |                       | 343    |   |                       |   | (99 | ) |   |   | 244 |   |   |   | 163 |   |   |   | (72 | ) |   |   | 91 |   |
| Short-term investments and other interest-earning assets |   |                       | 22     |   |                       |   | 8 |   |   |   | 30 |   |   |   | (11 | ) |   |   | 5 |   |   |   | (6 | ) |
| Total change in interest income (3)                      |   |                       | 318    |   |                       |   | (1,503 | ) |   |   | (1,185 | ) |   |   | (156 | ) |   |   | (1,701 | ) |   |   | (1,857 | ) |
|                                                     |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                                        |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits (2)                                             |   |                       | 386    |   |                       |   | (1,234 | ) |   |   | (848 | ) |   |   | 632 |   |   |   | (1,717 | ) |   |   | (1,085 | ) |
| Short-term borrowings                                    |   |                       | (4     | )      |                       |   | (2 | ) |   |   | (6 | ) |   |   | (37 | ) |   |   | (52 | ) |   |   | (89 | ) |
| Long-term borrowings                                     |   |                       | (337   | )      |                       |   | 13 |   |   |   | (324 | ) |   |   | (657 | ) |   |   | 154 |   |   |   | (503 | ) |
| Total change in interest expense (3)                     |   |                       | 193    |   |                       |   | (1,371 | ) |   |   | (1,178 | ) |   |   | 84 |   |   |   | (1,761 | ) |   |   | (1,677 | ) |
|                                                     |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in net interest income                            |   | $                          | 125    |   |                       | $      | (132 | ) |   | $ | (7 | ) |   | $ | (240 | ) |   | $ | 60 |   |   | $ | (180 | ) |

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

| (1) | Includes impact of non-accrual loans. |
|-----|---------------------------------------|

| (2) | Includes interest-bearing escrow accounts. |
|-----|--------------------------------------------|

| (3) | The subtotals of the volume and rate columns do not foot due to the change in mix of the respective components. |
|-----|-----------------------------------------------------------------------------------------------------------------|

----

|                                    |   | At June 30, |    |
|-----------------------------------------|--------|-------------|---------|
|                                    |   | 2011        |    |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
| (Dollars in thousands)                  |   | Amount      |    |   | % Total |   |   | Amount |   |   | % Total |   |   | Amount |   |   | % Total |   |   | Amount |   |   | % Total |   |   | Amount |   |   | % Total |   |
|                                    |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real Estate Loans:                      |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                             |   | $           | 56,137  |   |   |   | 29.93 | % |   | $ | 65,106 |   |   |   | 32.23 | % |   | $ | 63,788 |   |   |   | 28.69 | % |   | $ | 69,953 |   |   |   | 30.00 | % |   | $ | 74,332 |   |   |   | 33.03 | % |
| Commercial                              |   |        | 56,388  |   |   |   | 30.07 |   |   |   | 46,940 |   |   |   | 23.23 |   |   |   | 49,188 |   |   |   | 22.13 |   |   |   | 41,316 |   |   |   | 17.71 |   |   |   | 36,302 |   |   |   | 16.13 |   |
| Construction                            |   |        | 12,300  |   |   |   | 6.56 |   |   |   | 17,216 |   |   |   | 8.52 |   |   |   | 24,223 |   |   |   | 10.90 |   |   |   | 29,878 |   |   |   | 12.81 |   |   |   | 23,907 |   |   |   | 10.62 |   |
| Consumer Loans:                         |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Home Improvement                        |   |        | 7,111   |   |   |   | 3.79 |   |   |   | 9,616 |   |   |   | 4.76 |   |   |   | 10,138 |   |   |   | 4.56 |   |   |   | 12,688 |   |   |   | 5.44 |   |   |   | 12,481 |   |   |   | 5.55 |   |
| Home Equity                             |   |        | 5,663   |   |   |   | 3.02 |   |   |   | 5,767 |   |   |   | 2.85 |   |   |   | 5,795 |   |   |   | 2.61 |   |   |   | 5,341 |   |   |   | 2.29 |   |   |   | 4,964 |   |   |   | 2.21 |   |
| Other Consumer                          |   |        | 198     |   |   |   | 0.11 |   |   |   | 274 |   |   |   | 0.14 |   |   |   | 2,445 |   |   |   | 1.10 |   |   |   | 2,893 |   |   |   | 1.24 |   |   |   | 2,955 |   |   |   | 1.31 |   |
| Commercial Loans:                       |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial Loans                        |   |        | 47,544  |   |   |   | 25.35 |   |   |   | 51,311 |   |   |   | 25.40 |   |   |   | 54,170 |   |   |   | 24.36 |   |   |   | 53,453 |   |   |   | 22.92 |   |   |   | 52,711 |   |   |   | 23.43 |   |
| Commercial Leases                       |   |        | 2,199   |   |   |   | 1.17 |   |   |   | 5,794 |   |   |   | 2.87 |   |   |   | 12,554 |   |   |   | 5.65 |   |   |   | 17,714 |   |   |   | 7.59 |   |   |   | 17,366 |   |   |   | 7.72 |   |
| Gross Loans                             |   |        | 187,540 |   |   |   | 100.00 | % |   |   | 202,024 |   |   |   | 100.00 | % |   |   | 222,301 |   |   |   | 100.00 | % |   |   | 233,236 |   |   |   | 100.00 | % |   |   | 225,018 |   |   |   | 100.00 | % |
| Less:                                   |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred Origination Fees, net of costs |   |        | 392     |   |   |   |   |   |   |   | 266 |   |   |   |   |   |   |   | 191 |   |   |   |   |   |   |   | 201 |   |   |   |   |   |   |   | 240 |   |   |   |   |   |
| Unearned Interest Consumer Loans        |   |        | 330     |   |   |   |   |   |   |   | 567 |   |   |   |   |   |   |   | 761 |   |   |   |   |   |   |   | 1,068 |   |   |   |   |   |   |   | 1,147 |   |   |   |   |   |
| Unearned Interest Commercial Leases     |   |        | 198     |   |   |   |   |   |   |   | 667 |   |   |   |   |   |   |   | 1,530 |   |   |   |   |   |   |   | 2,779 |   |   |   |   |   |   |   | 2,480 |   |   |   |   |   |
| Purchase Accounting Premium             |   |        | (144    | ) |   |   |   |   |   |   | (172 | ) |   |   |   |   |   |   | (131 | ) |   |   |   |   |   |   | (160 | ) |   |   |   |   |   |   | (198 | ) |   |   |   |   |
| Allowance for Loan Losses               |   |        | 4,194   |   |   |   |   |   |   |   | 3,527 |   |   |   |   |   |   |   | 3,023 |   |   |   |   |   |   |   | 1,834 |   |   |   |   |   |   |   | 1,110 |   |   |   |   |   |
| Net Loans                               |   | $           | 182,570 |   |   |   |   |   |   | $ | 197,169 |   |   |   |   |   |   | $ | 216,927 |   |   |   |   |   |   | $ | 227,514 |   |   |   |   |   |   | $ | 220,239 |   |   |   |   |   |

----

|               |   |         |   |   | Due after |   |   |      |   |   |   |   |
|--------------------|--------|--------------|--------|--------|-----------|--------|--------|-----------|--------|--------|--------|--------|
|               |   | Due in one   |   |   | 1 through |   |   | Due after |   |   |   |   |
| (In thousands)     |   | year or less |   |   | 5 years   |   |   | 5 years   |   |   | Total  |   |
|               |   |         |   |   |      |   |   |      |   |   |   |   |
| Construction loans |   | $            | 6,545  |   |      | $      | 2,047  |      |   | $      | 3,708  |   |   | $ | 12,300 |   |
| Commercial loans   |   |         | 4,688  |   |      |   | 6,913  |      |   |   | 35,943 |   |   |   | 47,544 |   |
| Total              |   | $            | 11,233 |   |      | $      | 8,960  |      |   | $      | 39.651 |   |   | $ | 59,844 |   |

|           |   | Predetermined |   |   | Floating or      |   |   |   |   |
|----------------|--------|---------------|--------|--------|------------------|--------|--------|--------|--------|
| (In thousands) |   | Rates         |   |   | Adjustable Rates |   |   | Total  |   |
|           |   |          |   |   |             |   |   |   |   |
| Construction   |   | $             | 364    |   |             | $      | 5,391  |   |   | $ | 5,755 |   |
| Commercial     |   |          | 20,747 |   |             |   | 22,109 |   |   |   | 42,856 |   |
| Total          |   | $             | 21,111 |   |             | $      | 27,500 |   |   | $ | 48,611 |   |

|                                          |   | At June 30, |   |
|-----------------------------------------------|--------|-------------|--------|
| (In thousands)                                |   | 2011        |   |   | 2010 |   |   | 2009 |   |
|                                          |   |        |   |   |   |   |   |   |   |
| Securities available for sale, at fair value: |   |        |   |   |   |   |   |   |   |
| Corporate bonds                               |   | $           | 2,955  |   |   | $ | 1,511 |   |   | $ | 2,818 |   |
| U.S. Government agencies                      |   |        | 12,520 |   |   |   | 13,637 |   |   |   | 6,576 |   |
| Mortgage-backed securities, residential       |   |        | 4,098  |   |   |   | 7,024 |   |   |   | 6,690 |   |
| Collateralized mortgage obligations, agencies |   |        | 20,241 |   |   |   | 3,310 |   |   |   | - |   |
| Total securities available for sale           |   |        | 39,814 |   |   |   | 25,482 |   |   |   | 16,084 |   |
|                                          |   |        |   |   |   |   |   |   |   |   |   |   |
| Investments required by law, at cost:         |   |        |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank of Atlanta stock       |   |        | 1,673  |   |   |   | 2,295 |   |   |   | 2,295 |   |
| Federal Reserve Bank of Richmond stock        |   |        | 613    |   |   |   | 553 |   |   |   | 522 |   |
| Total investments required by law, at cost    |   |        | 2,286  |   |   |   | 2,848 |   |   |   | 2,817 |   |
| Total investments                             |   | $           | 42,100 |   |   | $ | 28,330 |   |   | $ | 18,901 |   |

----

|                               |   | One Year or Less |   |   | One to Five Years |   |   | Five to Ten Years |   |   | More than Ten Years |   |   | Total Investment Portfolio |   |
|-----------------------------------------|--------|------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|---------------------|--------|--------|----------------------------|--------|
|                                    |   | Amortized        |   |   | Average           |   |   | Amortized         |   |   | Average             |   |   | Amortized                  |   |   | Average |   |   | Amortized |   |   | Average |   |   | Amortized |   |   | Fair |   |   | Average |   |
| (Dollars in thousands)                  |   | Cost             |   |   | Yield             |   |   | Cost              |   |   | Yield               |   |   | Cost                       |   |   | Yield |   |   | Cost |   |   | Yield |   |   | Cost |   |   | Value |   |   | Yield |   |
|                                    |   |             |   |   |              |   |   |              |   |   |                |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities available for sale:          |   |             |   |   |              |   |   |              |   |   |                |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                         |   | $                | -      |   |              |   | -      | %                 |   | $      | -                   |   |   |                       | -      | % |   | $ | 3,000 |   |   |   | 5.90 | % |   | $ | - |   |   |   | - | % |   | $ | 3,000 |   |   | $ | 2,955 |   |   |   | 5.90 | % |
| U.S. Government agencies                |   |             | -      |   |              |   | -      |              |   |   | 2,500               |   |   |                       | 0.95   |   |   |   | 1,506 |   |   |   | 1.14 |   |   |   | 8,524 |   |   |   | 1.70 |   |   |   | 12,530 |   |   |   | 12,520 |   |   |   | 1.48 |   |
| Mortgage-backed securities, residential |   |             | -      |   |              |   | -      |              |   |   | 342                 |   |   |                       | 1.73   |   |   |   | - |   |   |   | - |   |   | $ | 3,678 |   |   |   | 4.31 |   |   |   | 4,020 |   |   |   | 4,098 |   |   |   | 4.09 |   |
| Collateralized mortgage obligations     |   |             | -      |   |              |   | -      |              |   |   | -                   |   |   |                       | -      |   |   |   | 4,540 |   |   |   | 2.32 |   |   |   | 15,659 |   |   |   | 2.40 |   |   |   | 20,199 |   |   |   | 20,241 |   |   |   | 2.38 |   |
| Investments required by law             |   |             | -      |   |              |   | -      |              |   |   | -                   |   |   |                       | -      |   |   |   | - |   |   |   | - |   |   |   | 2,286 |   |   |   | 2.20 |   |   |   | 2,286 |   |   |   | 2,286 |   |   |   | 2.20 |   |
|                                    |   |             |   |   |              |   |   |              |   |   |                |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                   |   | $                | -      |   |              |   | -      | %                 |   | $      | 2,842               |   |   |                       | 1.04   | % |   | $ | 9,046 |   |   |   | 3.31 | % |   | $ | 30,147 |   |   |   | 2.42 | % |   | $ | 42,035 |   |   | $ | 42,100 |   |   |   | 2.52 | % |

----

|                         |   | At June 30,            |    |
|------------------------------|--------|----------------------------------|---------|
|                         |   | (Dollars in thousands) |    |
|                         |   | 2011                             |    |   | 2010 |   |   | 2009 |   |
|                         |   | Balance                          |    |   | % Total |   |   | Balance |   |   | % Total |   |   | Balance |   |   | % Total |   |
| Savings accounts             |   | $                                | 16,530  |   |   |   | 7.15 | % |   | $ | 16,828 |   |   |   | 7.36 | % |   | $ | 16,597 |   |   |   | 7.99 | % |
| NOW checking                 |   |                             | 16,105  |   |   |   | 6.95 |   |   |   | 18,094 |   |   |   | 7.91 |   |   |   | 16,036 |   |   |   | 7.71 |   |
| Money market                 |   |                             | 98,184  |   |   |   | 42.45 |   |   |   | 83,240 |   |   |   | 36.38 |   |   |   | 59,465 |   |   |   | 28.62 |   |
| Certificates of deposits.    |   |                             | 89,993  |   |   |   | 38.91 |   |   |   | 99,073 |   |   |   | 43.30 |   |   |   | 104,410 |   |   |   | 50.25 |   |
| Interest-bearing deposits    |   |                             | 220,812 |   |   |   | 95.46 |   |   |   | 217,235 |   |   |   | 94.95 |   |   |   | 196,508 |   |   |   | 94.57 |   |
| Noninterest-bearing checking |   |                             | 10,494  |   |   |   | 4.54 |   |   |   | 11,554 |   |   |   | 5.05 |   |   |   | 11,287 |   |   |   | 5.43 |   |
|   Total                 |   | $                                | 231,306 |   |   |   | 100.00 | % |   | $ | 228,789 |   |   |   | 100.00 | % |   | $ | 207,795 |   |   |   | 100.00 | % |

|                         |   | Year Ended June 30, |    |
|------------------------------|--------|------------------------------------|---------|
|                         |   | (Dollars in thousands)   |    |
|                         |   | 2011                               |    |   | 2010 |   |   | 2009 |   |
|                         |   | AverageBalance                     |    |   | Rate |   |   | AverageBalance |   |   | Rate |   |   | AverageBalance |   |   | Rate |   |
|                         |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings accounts             |   | $                                  | 16,023  |   |   |   | 0.48 | % |   | $ | 16,192 |   |   |   | 0.40 | % |   | $ | 16,070 |   |   |   | 0.39 | % |
| NOW checking                 |   |                               | 17,567  |   |   |   | 0.31 |   |   |   | 17,026 |   |   |   | 0.26 |   |   |   | 14,658 |   |   |   | 0.33 |   |
| Money market                 |   |                               | 93,963  |   |   |   | 1.17 |   |   |   | 71,648 |   |   |   | 1.64 |   |   |   | 40,381 |   |   |   | 1.99 |   |
| Certificates of deposits     |   |                               | 95,554  |   |   |   | 2.21 |   |   |   | 101,331 |   |   |   | 2.87 |   |   |   | 115,840 |   |   |   | 3.77 |   |
| Noninterest-bearing checking |   |                               | 9,199   |   |   |   | — |   |   |   | 10,370 |   |   |   | — |   |   |   | 11,755 |   |   |   | — |   |
|   Total                 |   | $                                  | 232,306 |   |   |   |   |   |   | $ | 216,567 |   |   |   |   |   |   | $ | 198,704 |   |   |   |   |   |

|                        |   | Certificates   |   |
|-----------------------------|--------|----------------|--------|
| Maturity Period             |   | of Deposit     |   |
|                        |   | (In thousands) |   |
|                        |   |           |   |
| Three months or less        |   | $              | 2,061  |   |
| Over three through 6 months |   |           | 2,645  |   |
| Over six through 12 months  |   |           | 2,165  |   |
| Over 12 months              |   |           | 19,610 |   |
| Total                       |   | $              | 26,481 |   |

----

| (Dollars in thousands)                                      |   | 2011   |    |   | 2010   |   |    | 2009   |   |
|-------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                        |   |   |    |   |   |   |    |   |   |
| Amounts outstanding at end of period:                       |   |   |    |   |   |   |    |   |   |
| Federal Home Loan Bank advances                             |   | $      | 12,000  |   |   | $      | 17,100  |   |   | $ | 34,300 |   |
| Other borrowings                                            |   |   | — |   |   |   | — |   |   |   | — |   |
|                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Weighted average rate paid on:                              |   |   |    |   |   |   |    |   |   |   |   |   |
| Federal Home Loan Bank advances                             |   |   | 3.62    | %      |   |   | 4.20    | %      |   |   | 3.56 | % |
| Other borrowings                                            |   |   | — |   |   |   | — |   |   |   | — |   |
|                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Maximum amount of borrowings outstanding at any month end:  |   |   |    |   |   |   |    |   |   |   |   |   |
| Federal Home Loan Bank advances                             |   | $      | 17,100  |   |   | $      | 34,300  |   |   | $ | 43,800 |   |
| Other borrowings                                            |   |   | — |   |   |   | — |   |   | $ | 1,958 |   |
|                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Approximate average borrowings outstanding with respect to: |   |   |    |   |   |   |    |   |   |   |   |   |
| Federal Home Loan Bank advances                             |   | $      | 13,953  |   |   | $      | 22,843  |   |   | $ | 39,230 |   |
| Other borrowings                                            |   |   | — |   |   |   | — |   |   | $ | 133 |   |
|                                                        |   |   |    |   |   |   |    |   |   |   |   |   |
| Weighted average rate for the year ended June 30, on:       |   |   |    |   |   |   |    |   |   |   |   |   |
| Federal Home Loan Bank advances                             |   |   | 3.85    | %      |   |   | 3.79    | %      |   |   | 3.71 | % |
| Other borrowings                                            |   |   | — |   |   |   | — |   |   |   | 2.56 | % |

----

----

----

|                                                                    |   | Year Ended June 30,    |   |
|-------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                    |   | 2011                   |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                    |   | (Dollars in thousands) |   |
|                                                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                                          |   | $                      | 3,527  |   |   | $ | 3,023 |   |   | $ | 1,834 |   |   | $ | 1,110 |   |   | $ | 1,000 |   |
| Loans charged off:                                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial Real Estate                                                  |   |                   | 1,074  |   |   |   | 1,725 |   |   |   | 3,585 |   |   |   | 740 |   |   |   | — |   |
| Commercial loans                                                        |   |                   | 307    |   |   |   | 195 |   |   |   | 171 |   |   |   | 37 |   |   |   | 9 |   |
| Commercial leases                                                       |   |                   | 288    |   |   |   | 859 |   |   |   | 561 |   |   |   | 250 |   |   |   | 265 |   |
| Consumer                                                                |   |                   | 690    |   |   |   | 583 |   |   |   | 587 |   |   |   | 262 |   |   |   | 202 |   |
| Total charge-offs                                                       |   |                   | 2,359  |   |   |   | 3,362 |   |   |   | 4,904 |   |   |   | 1,289 |   |   |   | 476 |   |
| Recoveries:                                                             |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial Real Estate                                                  |   |                   | 27     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Commercial loans                                                        |   |                   | 35     |   |   |   | 30 |   |   |   | 51 |   |   |   | 6 |   |   |   | 33 |   |
| Commercial leases                                                       |   |                   | 168    |   |   |   | 58 |   |   |   | 65 |   |   |   | 47 |   |   |   | 48 |   |
| Consumer                                                                |   |                   | 78     |   |   |   | 77 |   |   |   | 75 |   |   |   | 40 |   |   |   | 75 |   |
| Total recoveries                                                        |   |                   | 308    |   |   |   | 165 |   |   |   | 191 |   |   |   | 93 |   |   |   | 156 |   |
| Net loans charged off                                                   |   |                   | 2,051  |   |   |   | 3,197 |   |   |   | 4,713 |   |   |   | 1,196 |   |   |   | 320 |   |
| Provision for loan losses                                               |   |                   | 2,718  |   |   |   | 3,701 |   |   |   | 5,902 |   |   |   | 1,920 |   |   |   | 430 |   |
| Balance at end of period                                                |   | $                      | 4,194  |   |   | $ | 3,527 |   |   | $ | 3,023 |   |   | $ | 1,834 |   |   | $ | 1,110 |   |
|                                                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of net charge-offs to average loans outstanding during the period |   |                   | 1.05   | % |   |   | 1.49 | % |   |   | 2.03 | % |   |   | 0.53 | % |   |   | 0.15 | % |
|                                                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of allowance to non-performing loans                              |   |                   | 42.17  | % |   |   | 36.26 | % |   |   | 26.89 | % |   |   | 72.40 | % |   |   | 230.34 | % |

|                       |   | As of June 30, 2011 |   |   | As of June 30, 2010 |   |   | As of June 30, 2009 |   |   | As of June 30, 2008 |   |   | As of June 30, 2007 |   |
|---------------------------------|--------|-----------------------------------------|--------|--------|-----------------------------------------|--------|--------|-----------------------------------------|--------|--------|-----------------------------------------|--------|--------|-----------------------------------------|--------|
|                            |   | Amount                                  |   |   | % ofLoans toTotalLoans        |   |   | Amount                                  |   |   | % ofLoans toTotalLoans        |   |   | Amount                                  |   |   | % ofLoans toTotalLoans |   |   | Amount |   |   | % ofLoans toTotalLoans |   |   | Amount |   |   | % ofLoans toTotalLoans |   |
|                            |   | (Dollars in thousands)                  |   |
| Real estate mortgage:           |   |                                    |   |   |                                    |   |   |                                    |   |   |                                    |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                     |   | $                                       | 114    |   |                                    |   | 29.9   | %                                       |   | $      | 76                                      |   |   |                                    | 32.2   | % |   | $ | 64 |   |   |   | 28.7 | % |   | $ | 70 |   |   |   | 30.0 | % |   | $ | 45 |   |   |   | 33.1 | % |
| Commercial                      |   |                                    | 1,717  |   |                                    |   | 30.1   |                                    |   |   | 385                                     |   |   |                                    | 23.2   |   |   |   | 205 |   |   |   | 22.1 |   |   |   | 41 |   |   |   | 17.7 |   |   |   | 144 |   |   |   | 16.1 |   |
| Construction                    |   |                                    | 486    |   |                                    |   | 6.6    |                                    |   |   | 1,044                                   |   |   |                                    | 8.5    |   |   |   | 362 |   |   |   | 10.9 |   |   |   | 381 |   |   |   | 12.8 |   |   |   | 146 |   |   |   | 10.6 |   |
| Consumer                        |   |                                    | 365    |   |                                    |   | 6.9    |                                    |   |   | 550                                     |   |   |                                    | 7.8    |   |   |   | 526 |   |   |   | 8.3 |   |   |   | 191 |   |   |   | 9.0 |   |   |   | 137 |   |   |   | 9.1 |   |
| Commercial Business             |   |                                    | 1,286  |   |                                    |   | 25.3   |                                    |   |   | 794                                     |   |   |                                    | 25.4   |   |   |   | 549 |   |   |   | 24.4 |   |   |   | 94 |   |   |   | 22.9 |   |   |   | 413 |   |   |   | 23.4 |   |
| Commercial Leases               |   |                                    | 226    |   |                                    |   | 1.2    |                                    |   |   | 678                                     |   |   |                                    | 2.9    |   |   |   | 713 |   |   |   | 5.6 |   |   |   | 237 |   |   |   | 7.6 |   |   |   | 225 |   |   |   | 7.7 |   |
| Unallocated                     |   |                                    | -      |   |                                    |   | -      |                                    |   |   | -                                       |   |   |                                    | -      |   |   |   | 604 |   |   |   | - |   |   |   | 820 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total allowance for loan losses |   | $                                       | 4,194  |   |                                    |   | 100.00 | %                                       |   | $      | 3,527                                   |   |   |                                    | 100.00 | % |   | $ | 3,023 |   |   |   | 100.00 | % |   | $ | 1,834 |   |   |   | 100.00 | % |   | $ | 1,110 |   |   |   | 100.0 | % |

----

|                                                            |   | At June 30,  |    |
|-----------------------------------------------------------------|--------|------------------------|---------|
|                                                            |   | 2011                   |    |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                            |   | (Dollars in thousands) |    |
| Loans accounted for on a non-accrual basis: (1)                 |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate:                                                    |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                     |   | $                      | 615     |   |   | $ | 116 |   |   | $ | 134 |   |   | $ | 81 |   |   | $ | 168 |   |
| Commercial                                                      |   |                   | 3,786   |   |   |   | 2,737 |   |   |   | 2,302 |   |   |   | — |   |   |   | — |   |
| Construction                                                    |   |                   | 1,335   |   |   |   | 1,763 |   |   |   | 3,232 |   |   |   | 1,989 |   |   |   | — |   |
| Consumer                                                        |   |                   | 40      |   |   |   | 46 |   |   |   | 146 |   |   |   | 6 |   |   |   | 14 |   |
| Commercial Loan/Lease                                           |   |                   | 4,170   |   |   |   | 5,066 |   |   |   | 5,427 |   |   |   | 457 |   |   |   | 300 |   |
| Total                                                           |   |                   | 9,946   |   |   |   | 9,728 |   |   |   | 11,241 |   |   |   | 2,533 |   |   |   | 482 |   |
|                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing loans which are contractually past due 90 days or more |   |                   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total nonperforming loans                                       |   |                   | 9,946   |   |   |   | 9,728 |   |   |   | 11,241 |   |   |   | 2,533 |   |   |   | 482 |   |
|                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other nonperforming assets (2)                                  |   |                   | 1,689   |   |   |   | 2,875 |   |   |   | 1,265 |   |   |   | 7 |   |   |   | 5 |   |
| Total nonperforming assets                                      |   | $                      | 11,635  |   |   | $ | 12,603 |   |   | $ | 12,506 |   |   | $ | 2,540 |   |   | $ | 487 |   |
| Nonperforming loans to total loans                              |   |                   | 5.33    | % |   |   | 4.85 | % |   |   | 5.11 | % |   |   | 1.10 | % |   |   | 0.21 | % |
| Nonperforming assets to total assets                            |   |                   | 4.40    | % |   |   | 4.67 | % |   |   | 4.66 | % |   |   | 0.97 | % |   |   | 0.19 | % |
| Troubled debt restructurings (3)                                |   | $                      | 3,653   |   |   | $ | 2,171 |   |   | $ | 1,124 |   |   | $ | 1,550 |   |   |   | — |   |

| (1) | Nonaccrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely.  Payments received on a nonaccrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on management’s assessment of the collectability of the loan. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Other nonperforming assets represent property and equipment acquired by the Company through foreclosure or repossession. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

| (3) | Troubled debt restructurings accounted for on a non-accrual basis total $5.3 million, $4.3 million, $3.0 million $0 and $0 at June 30, 2011, 2010, 2009, 2008 and 2007, respectively and are included in total non-performing loans above and excluded here. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Balance June 30, 2010, in thousands                                                   |   | $      | 9,728  |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Added to non-accrual during the year                                                  |   |   | 7,214  |   |
| Paid off/down                                                                         |   |   | (2,820 | )      |
| Brought to accrual status                                                             |   |   | (1,433 | )      |
| Transferred to real estate acquired through foreclosure                               |   |   | (1,101 | )      |
| Charged-Off                                                                           |   |   | (2,359 | )      |
| Net change in non-accrual Leases, Consumer & Residential Mortgages, and all other |   |   | 717    |   |
| Balance June 30, 2011                                                                 |   | $      | 9,946  |   |

----

----

----

|                                                |   | Three                  |   |   | Over Three     |   |    | Over One   |   |   | Over Five |   |   | Over Ten     |         |   | Over   |   |    |   |   |
|----------------------------------------------------------|--------|------------------------|--------|--------|----------------|--------|---------|------------|--------|--------|-----------|--------|--------|--------------|--------------|--------|--------|--------|---------|--------|--------|
|                                                     |   | Months                 |   |   | Months Through |   |    | Through    |   |   | Through   |   |   | Through      |         |   | Twenty |   |    |   |   |
|                                                     |   | or Less                |   |   | One Year       |   |    | Five Years |   |   | Ten Years |   |   | Twenty Years |         |   | Years  |   |    | Total  |   |
|                                                     |   | (Dollars in thousands) |   |
| Rate sensitive assets:                                   |   |                   |   |   |           |   |    |       |   |   |      |   |   |         |         |   |   |   |    |   |   |
| Loans receivable                                         |   | $                      | 25,950 |   |           | $      | 42,206  |       |   | $      | 59,271    |   |   | $            | 38,477       |   |   | $      | 17,549  |   |   | $ | 3,311 |   |   | $ | 186,764 |   |
| Securities available for sale                            |   |                   | 4,844  |   |           |   | 16,730  |       |   |   | 14,421    |   |   |         | 3,629        |   |   |   | 2,476   |   |   |   | - |   |   |   | 42,100 |   |
| Short-term investments and other interest-earning assets |   |                   | 24,838 |   |           |   | — |       |   |   | —   |   |   |         | —      |   |   |   | — |   |   |   | - |   |   |   | 24,838 |   |
| Total                                                    |   |                   | 55,632 |   |           |   | 58,936  |       |   |   | 73,692    |   |   |         | 42,106       |   |   |   | 20,025  |   |   |   | 3,311 |   |   |   | 253,702 |   |
|                                                     |   |                   |   |   |           |   |    |       |   |   |      |   |   |         |         |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Rate sensitive liabilities:                              |   |                   |   |   |           |   |    |       |   |   |      |   |   |         |         |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Deposits                                                 |   |                   | 20,054 |   |           |   | 50,907  |       |   |   | 128,486   |   |   |         | 17,396       |   |   |   | 3,152   |   |   |   | 817 |   |   |   | 220,812 |   |
| Borrowings                                               |   |                   | 3,000  |   |           |   | -       |       |   |   | 6,000     |   |   |         | 8,000        |   |   |   | -       |   |   |   | - |   |   |   | 17,000 |   |
| Total                                                    |   |                   | 23,054 |   |           |   | 50,907  |       |   |   | 134,486   |   |   |         | 25,396       |   |   |   | 3,152   |   |   |   | 817 |   |   |   | 237,812 |   |
|                                                     |   |                   |   |   |           |   |    |       |   |   |      |   |   |         |         |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Interest sensitivity gap                                 |   | $                      | 32,578 |   |           | $      | 8,029   |       |   | $      | (60,794   | )      |   | $            | 16,710       |   |   | $      | 16,873  |   |   | $ | 2,494 |   |   | $ | 15,890 |   |
| Cumulative interest sensitivity gap                      |   | $                      | 32,578 |   |           | $      | 40,607  |       |   | $      | (20,187   | )      |   | $            | ( 3,477 | )      |   | $      | 13,396  |   |   | $ | 15,890 |   |   |   |   |   |
| Ratio of cumulative gap to total assets                  |   |                   | 12.21  | %      |           |   | 15.22   | %          |   |   | (7.57     | )%     |   |         | (1.30        | )%     |   |   | 5.02    | %      |   |   | 5.95 | % |   |   |   |   |

----

|                             |   | + 200 basis points |   |   | -200 basis points |   | Policy Limit |   |
|----------------------------------|--------|--------------------|--------|--------|-------------------|--------|--------------|--------|
|                             |   |               |   |   |              |   |         |   |
| % Change in Net Interest Income  |   |               | 3.1    | %      |              |   | -10.0        | %      | + or - 10.0 | %  |
| % Change in Fair Value of Equity |   |               | -23.1  | %      |              |   | n/a          |   | + or - 25.0 | %  |

----

|                                               |   |                   |   |   |              |   |   |              |   |   |              |   |   | To Be Well        |   |
|----------------------------------------------------|--------|------------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|-------------------|--------|
|                                               |   |                   |   |   |              |   |   |              |   |   |              |   |   | Capitalized Under |   |
|                                               |   |                   |   |   |              |   |   | For Capital       |   |   | Prompt Corrective |   |
|                                               |   | Actual                 |   |   | Adequacy Purposes |   |   | Action Provisions |   |
|                                               |   | Amount                 |   |   | Ratio             |   |   | Amount            |   |   | Ratio             |   |   | Amount            |   |   | Ratio |   |
|                                               |   | (Dollars in thousands) |   |
|                                               |   |                   |   |   |              |   |   |              |   |   |              |   |   |              |   |   |   |   |
| Total Regulatory Capital (to Risk Weighted Assets) |   | $                      | 21,432 |   |              |   | 12.94  | %                 |   | $      | 13,250            |   |   |              | 8.00   | % |   | $ | 16,563 |   |   |   | 10.00 | % |
| Tier 1 Capital (to Risk Weighted Assets)           |   |                   | 19,335 |   |              |   | 11.67  |              |   |   | 6,625             |   |   |              | 4.00   |   |   |   | 9,938 |   |   |   | 6.00 |   |
| Tier 1 Leverage Ratio                              |   |                   | 19,335 |   |              |   | 7.26   |              |   |   | 10,659            |   |   |              | 4.00   |   |   |   | 13,323 |   |   |   | 5.00 |   |

| (In thousands)                      |   | 2011   |   |   | 2010   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|
|                                |   |   |   |   |   |   |   |   |
| Commitments to originate new loans  |   | $      | 8,645  |   |   | $      | 11,911 |   |
| Undisbursed lines of credit         |   |   | 10,230 |   |   |   | 10,132 |   |
| Financial standby letters of credit |   |   | 1,421  |   |   |   | 1,349 |   |

----

----

| (in thousands except for share and per share data)                                                                                                                                               |   | 2011   |    |   | 2010   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Assets                                                                                                                                                                                           |   |   |    |   |   |   |
| Cash on hand and due from banks                                                                                                                                                                  |   | $      | 3,631   |   |   | $      | 6,811 |   |
| Interest bearing deposits in other financial institutions                                                                                                                                        |   |   | 24,838  |   |   |   | 21,232 |   |
| Total Cash and Cash Equivalents                                                                                                                                                                  |   |   | 28,469  |   |   |   | 28,043 |   |
| Securities available for sale                                                                                                                                                                    |   |   | 39,814  |   |   |   | 25,482 |   |
| Loans receivable, net of allowance for loan losses of $4,194 and $3,527,                                                                                                                         |   |   |    |   |   |   |   |   |
| respectively                                                                                                                                                                                     |   |   | 182,570 |   |   |   | 197,169 |   |
| Securities required by law, at cost                                                                                                                                                              |   |   | 2,286   |   |   |   | 2,848 |   |
| Real estate acquired through foreclosure and other repossessed assets                                                                                                                            |   |   | 1,689   |   |   |   | 2,875 |   |
| Property and equipment, net                                                                                                                                                                      |   |   | 3,576   |   |   |   | 3,759 |   |
| Intangible assets                                                                                                                                                                                |   |   | 142     |   |   |   | 193 |   |
| Accrued interest receivable                                                                                                                                                                      |   |   | 857     |   |   |   | 843 |   |
| Bank owned life insurance                                                                                                                                                                        |   |   | 2,294   |   |   |   | 2,220 |   |
| Deferred income taxes                                                                                                                                                                            |   |   | -       |   |   |   | 1,623 |   |
| Other assets                                                                                                                                                                                     |   |   | 2,933   |   |   |   | 4,668 |   |
| Total Assets                                                                                                                                                                                     |   | $      | 264,630 |   |   | $      | 269,723 |   |
| Liabilities and Stockholders’ Equity                                                                                                                                                       |   |   |    |   |   |   |   |   |
| Deposits:                                                                                                                                                                                        |   |   |    |   |   |   |   |   |
| Non-interest bearing deposits                                                                                                                                                                    |   | $      | 10,494  |   |   | $      | 11,554 |   |
| Interest bearing deposits                                                                                                                                                                        |   |   | 220,812 |   |   |   | 217,235 |   |
| Total Deposits                                                                                                                                                                                   |   |   | 231,306 |   |   |   | 228,789 |   |
| Junior subordinated debentures                                                                                                                                                                   |   |   | 5,000   |   |   |   | 5,000 |   |
| Long-term debt                                                                                                                                                                                   |   |   | 12,000  |   |   |   | 17,100 |   |
| Accrued expenses and other liabilities                                                                                                                                                           |   |   | 1,971   |   |   |   | 1,464 |   |
| Total liabilities                                                                                                                                                                                |   |   | 250,277 |   |   |   | 252,353 |   |
|                                                                                                                                                                                             |   |   |    |   |   |   |   |   |
| Stockholders’ equity                                                                                                                                                                       |   |   |    |   |   |   |   |   |
| Preferred Stock - Series A Cumulative Perpetual; $0.01 par value; authorized 1,000,000 shares with a liquidation preference of $1,000 per share; 6,000 shares issued and outstanding             |   |   | 5,833   |   |   |   | 5,766 |   |
| Warrant preferred stock – Series B Cumulative Perpetual; $0.01 par value; authorized 1,000,000 shares with a liquidation preference of $1,000 per share; 300 shares issued and outstanding |   |   | 319     |   |   |   | 326 |   |
| Common stock; $0.01 par value; authorized 4,000,000 shares; issued and outstanding 1,939,593 shares and 1,930,317 shares, respectively                                                           |   |   | 19      |   |   |   | 19 |   |
| Additional paid-in capital                                                                                                                                                                       |   |   | 7,876   |   |   |   | 7,847 |   |
| Retained earnings, substantially restricted                                                                                                                                                      |   |   | 267     |   |   |   | 3,212 |   |
| Accumulated other comprehensive income, net of taxes                                                                                                                                             |   |   | 39      |   |   |   | 200 |   |
| Total Stockholders’ Equity                                                                                                                                                                 |   |   | 14,353  |   |   |   | 17,370 |   |
| Total Liabilities and Stockholders’ Equity                                                                                                                                                 |   | $      | 264,630 |   |   | $      | 269,723 |   |

----

| (in thousands except for per share data)                      |   | 2011   |   |   | 2010   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Interest Income:                                              |   |   |   |   |   |   |
| Loans receivable, including fees                              |   | $      | 11,703 |   |   | $      | 13,162 |   |
| Investment securities                                         |   |   | 889    |   |   |   | 645 |   |
| Federal funds sold and other investments                      |   |   | 63     |   |   |   | 33 |   |
| Total Interest Income                                         |   |   | 12,655 |   |   |   | 13,840 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Interest Expense:                                             |   |   |   |   |   |   |   |   |
| Deposits                                                      |   |   | 3,344  |   |   |   | 4,192 |   |
| Interest on short-term debt                                   |   |   | -      |   |   |   | 6 |   |
| Interest on junior subordinated debentures and long-term debt |   |   | 860    |   |   |   | 1,184 |   |
| Total Interest Expense                                        |   |   | 4,204  |   |   |   | 5,382 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Net interest income                                           |   |   | 8,451  |   |   |   | 8,458 |   |
| Provision for loan losses                                     |   |   | 2,718  |   |   |   | 3,701 |   |
| Net interest income after provision for loan losses           |   |   | 5,733  |   |   |   | 4,757 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Non-Interest Income:                                          |   |   |   |   |   |   |   |   |
| Fees and service charges                                      |   |   | 660    |   |   |   | 634 |   |
| Gain on sale of securities available for sale                 |   |   | 161    |   |   |   | 71 |   |
| Loss on sale of other assets                                  |   |   | (22    | )      |   |   | - |   |
| Other                                                         |   |   | 90     |   |   |   | 133 |   |
| Total Non-Interest Income                                     |   |   | 889    |   |   |   | 838 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Non-Interest Expense:                                         |   |   |   |   |   |   |   |   |
| Compensation and employee benefits                            |   |   | 3,938  |   |   |   | 4,390 |   |
| Professional fees                                             |   |   | 653    |   |   |   | 727 |   |
| Federal deposit insurance assessments                         |   |   | 502    |   |   |   | 509 |   |
| Equipment expenses                                            |   |   | 224    |   |   |   | 210 |   |
| Net occupancy costs                                           |   |   | 555    |   |   |   | 580 |   |
| Advertising                                                   |   |   | 38     |   |   |   | 42 |   |
| Data processing                                               |   |   | 392    |   |   |   | 428 |   |
| Amortization of core deposit intangible                       |   |   | 51     |   |   |   | 52 |   |
| Telephone, postage and delivery                               |   |   | 273    |   |   |   | 289 |   |
| Provision for losses on and cost of real estate               |   |   |   |   |   |   |   |   |
| acquired through foreclosure                                  |   |   | 360    |   |   |   | 1,425 |   |
| Other                                                         |   |   | 806    |   |   |   | 802 |   |
| Total Non-Interest Expense                                    |   |   | 7,792  |   |   |   | 9,454 |   |
|                                                          |   |   |   |   |   |   |   |   |
| Loss Before Provision for (Benefit from) Income Taxes         |   |   | (1,170 | )      |   |   | (3,859 | ) |
| Provision for (benefit from) income taxes                     |   |   | 1,715  |   |   |   | (1,510 | ) |
| Net Loss                                                      |   | $      | (2,885 | )      |   | $      | (2,349 | ) |
| Preferred stock dividends and accretion                       |   |   | 387    |   |   |   | 327 |   |
| Net Loss Available for Common Stockholders                    |   | $      | (3,272 | )      |   | $      | (2,676 | ) |
| Basic loss per common share                                   |   | $      | (1.68  | )      |   | $      | (1.39 | ) |
| Diluted loss per common share                                 |   | $      | (1.68  | )      |   | $      | (1.39 | ) |
| Cash dividends declared per common share                      |   | $      | -      |   |   | $      | - |   |

----

| (in thousands except for share data)                                                              |   |      |   |   |      |   |   |   |   |   |       |   |   |         |   |   |     |   |   |           |   |   |
|---------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|--------|--------|--------|------------|--------|--------|--------------|--------|--------|----------|--------|--------|----------------|--------|--------|
|                                                                                              |   |      |   |   |      |   |   |   |   |   |       |   |   |         |   |   |     |   |   | Accumulated    |   |   |   |   |
|                                                                                              |   |      |   |   |      |   |   |   |   |   |       |   |   | Obligation   |   |   |     |   |   | Other          |   |   |   |   |
|                                                                                              |   |      |   |   | Warrant   |   |   |   |   |   | Additional |   |   | Under        |   |   |     |   |   | Comprehensive  |   |   | Total |   |
|                                                                                              |   | Preferred |   |   | Preferred |   |   | Common |   |   | Paid-In    |   |   | Deferred     |   |   | Retained |   |   | (Loss) Income, |   |   | Stockholders’ |   |
|                                                                                              |   | Stock     |   |   | Stock     |   |   | Stock  |   |   | Capital    |   |   | Compensation |   |   | Earnings |   |   | Net of Taxes   |   |   | Equity |   |
| Balance at June 30, 2009                                                                          |   | $         | 5,698  |   |      | $      | 334    |   |   | $      | 19         |   |   | $            | 7,411  |   |     | $      | 376    |           |   | $      | 5,866 |   |   | $ | (12 | ) |   | $ | 19,692 |   |
| Comprehensive loss:                                                                               |   |      |   |   |      |   |   |   |   |   |       |   |   |         |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                          |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | (2,349 | ) |   |   | - |   |   |   | (2,349 | ) |
| Change in unrealized gains on securities vailable-for-sale portfolio, net of taxes of $138        |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | - |   |   |   | 212 |   |   |   | 212 |   |
| Comprehensive Loss                                                                                |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | - |   |   |   | - |   |   |   | (2,137 | ) |
| Common stock issued (65,343 shares)                                                               |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | 34     |   |     |   | -      |           |   |   | - |   |   |   | - |   |   |   | 34 |   |
| Dividends declared – preferred & warrant preferred stock                                |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | (245 | ) |   |   | - |   |   |   | (245 | ) |
| Accretion of net discount on preferred & warrant preferred stock                              |   |      | 68     |   |      |   | (8     | )      |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | (60 | ) |   |   | - |   |   |   | - |   |
| Amortization of deferred compensation- restricted stock awards                                    |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | 26     |   |     |   | -      |           |   |   | - |   |   |   | - |   |   |   | 26 |   |
| Termination of deferred compensation plan                                                         |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | 376    |   |     |   | (376   | )              |   |   | - |   |   |   | - |   |   |   | - |   |
| Balance at June 30, 2010                                                                          |   |      | 5,766  |   |      |   | 326    |   |   |   | 19         |   |   |         | 7,847  |   |     |   | -      |           |   |   | 3,212 |   |   |   | 200 |   |   |   | 17,370 |   |
| Comprehensive loss:                                                                               |   |      |   |   |      |   |   |   |   |   |       |   |   |         |   |   |     |   |   |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                          |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | (2,885 | ) |   |   | - |   |   |   | (2,885 | ) |
| Change in unrealized gains on securities available-for-sale portfolio, net of tax benefit of $105 |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | - |   |   |   | (161 | ) |   |   | (161 | ) |
| Comprehensive Loss                                                                                |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | - |   |   |   | - |   |   |   | (3,046 | ) |
| Common stock issued (9,276 shares)                                                                |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | 23     |   |     |   | -      |           |   |   | - |   |   |   | - |   |   |   | 23 |   |
| Accretion of net discount on preferred & warrant preferred stock                              |   |      | 67     |   |      |   | (7     | )      |   |   | -          |   |   |         | -      |   |     |   | -      |           |   |   | (60 | ) |   |   | - |   |   |   | - |   |
| Amortization of deferred compensation- restricted stock awards                                    |   |      | -      |   |      |   | -      |   |   |   | -          |   |   |         | 6      |   |     |   | -      |           |   |   | - |   |   |   | - |   |   |   | 6 |   |
| Balance at June 30, 2011                                                                          |   | $         | 5,833  |   |      | $      | 319    |   |   | $      | 19         |   |   | $            | 7,876  |   |     | $      | -      |           |   | $      | 267 |   |   | $ | 39 |   |   | $ | 14,353 |   |

----

| (in thousands)                                                                                                                          |   | 2011   |    |   | 2010   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Cash flows from operating activities:                                                                                                   |   |   |    |   |   |   |
| Net loss                                                                                                                                |   | $      | (2,885  | )      |   | $      | (2,349 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities:                                                         |   |   |    |   |   |   |   |   |
| Depreciation                                                                                                                            |   |   | 272     |   |   |   | 272 |   |
| Provision for loan losses                                                                                                               |   |   | 2,718   |   |   |   | 3,701 |   |
| Provision for loss on real estate acquired through foreclosure                                                                          |   |   | 159     |   |   |   | 1,080 |   |
| Non-cash compensation under stock-based benefit plans                                                                                   |   |   | 23      |   |   |   | 39 |   |
| (Gain) loss on sale of real estate acquired through foreclosure                                                                         |   |   | (107    | )      |   |   | 67 |   |
| Decrease in value of real estate acquired through foreclosure                                                                           |   |   | 167     |   |   |   | - |   |
| Amortization of core deposit intangible                                                                                                 |   |   | 51      |   |   |   | 52 |   |
| Amortization of premiums and discounts, net                                                                                             |   |   | 268     |   |   |   | 273 |   |
| Gain on sale of securities available for sale                                                                                           |   |   | (161    | )      |   |   | (71 | ) |
| Increase in cash value of bank-owned life insurance                                                                                     |   |   | (74     | )      |   |   | (92 | ) |
| Amortization of deferred loan origination fees, net of costs                                                                            |   |   | (3      | )      |   |   | 9 |   |
| Deferred income tax (benefit)                                                                                                           |   |   | (483    | )      |   |   | (465 | ) |
| Deferred tax valuation allowance                                                                                                        |   |   | 2,211   |   |   |   | - |   |
| Decrease (increase) in accrued interest and other assets                                                                                |   |   | 1,744   |   |   |   | (1,633 | ) |
| Increase (decrease) in accrued expenses and other liabilities                                                                           |   |   | 490     |   |   |   | (128 | ) |
| Net cash provided by operating activities                                                                                               |   |   | 4,390   |   |   |   | 755 |   |
| Cash flows from investing activities:                                                                                                   |   |   |    |   |   |   |   |   |
| Purchase of securities available for sale                                                                                               |   |   | (43,174 | )      |   |   | (20,560 | ) |
| Proceeds from maturing  securities available for sale and principal payments on mortgage-backed securities available for sale |   |   | 25,616  |   |   |   | 10,293 |   |
| Proceeds from sale of securities available for sale                                                                                     |   |   | 2,877   |   |   |   | 1,050 |   |
| Loan principal repayments, net of disbursements                                                                                         |   |   | 10,759  |   |   |   | 12,467 |   |
| Proceeds from sale of real estate owned                                                                                                 |   |   | 2,068   |   |   |   | 792 |   |
| Decrease (increase) in investment required by law                                                                                       |   |   | 562     |   |   |   | (31 | ) |
| Purchases of property and equipment                                                                                                     |   |   | (89     | )      |   |   | (66 | ) |
| Net cash (used in) provided by investing activities                                                                                     |   |   | (1,381  | )      |   |   | 3,945 |   |
| Cash flows from financing activities:                                                                                                   |   |   |    |   |   |   |   |   |
| Net increase in deposits                                                                                                                |   |   | 2,460   |   |   |   | 20,985 |   |
| Net increase in advance payments by borrowers                                                                                           |   |   | 57      |   |   |   | 9 |   |
| Repayments of long-term borrowings                                                                                                      |   |   | (5,100  | )      |   |   | (17,200 | ) |
| Dividends paid                                                                                                                          |   |   | -       |   |   |   | (245 | ) |
| Net cash (used in) provided by financing activities                                                                                     |   |   | (2,583  | )      |   |   | 3,549 |   |
| Net increase in cash and cash equivalents                                                                                               |   |   | 426     |   |   |   | 8,249 |   |
| Cash and cash equivalents at beginning of year                                                                                          |   |   | 28,043  |   |   |   | 19,794 |   |
| Cash and cash equivalents at end of year                                                                                                |   | $      | 28,469  |   |   | $      | 28,043 |   |
|                                                                                                                                    |   |   |    |   |   |   |   |   |
| Supplemental information:                                                                                                               |   |   |    |   |   |   |   |   |
|                                                                                                                                    |   |   |    |   |   |   |   |   |
| Interest paid                                                                                                                           |   | $      | 4,392   |   |   | $      | 5,440 |   |
| Income taxes paid                                                                                                                       |   |   | -       |   |   |   | 206 |   |
| Real estate acquired through foreclosure and other repossessed assets                                                                   |   |   | 1,101   |   |   |   | 3,549 |   |

----

| (1) | Basis of Presentation and Summary of Significant Accounting Policies |
|-----|----------------------------------------------------------------------|

----

----

----

----

----

----

|                                       |   | Year Ended    |   |
|--------------------------------------------|--------|---------------|--------|
|                                       |   | June 30, 2011 |   |   | June 30, 2010 |   |
| (in thousands, except per share data)      |   | Basic         |   |   | Diluted |   |   | Basic |   |   | Diluted |   |
| Net loss available for common stockholders |   | $             | (3,272 | ) |   | $ | (3,272 | ) |   | $ | (2,676 | ) |   | $ | (2,676 | ) |
| Weighted average common shares outstanding |   |          | 1,943  |   |   |   | 1,943 |   |   |   | 1,932 |   |   |   | 1,932 |   |
| Diluted securities:                        |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options                              |   |          | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Adjusted weighted average shares           |   |          | 1,943  |   |   |   | 1,943 |   |   |   | 1,932 |   |   |   | 1,932 |   |
| Per share amount                           |   | $             | (1.68  | ) |   | $ | (1.68 | ) |   | $ | (1.39 | ) |   | $ | (1.39 | ) |

| (In thousands)                                                 |   | June 30, 2011        |   |   | June 30, 2010           |   |
|----------------------------------------------------------------|--------|----------------------|--------|--------|-------------------------|--------|
|                                                           |   | Gross CarryingAmount |   |   | AccumulatedAmortization |   |   | Gross CarryingAmount |   |   | AccumulatedAmortization |   |
| Amortizable intangible assets, acquisition of deposit accounts |   | $                    | 516    |   |                    | $      | 374 |   |   | $ | 516 |   |   | $ | 323 |   |

----

----

----

| (2) | Securities Available for Sale |
|-----|-------------------------------|

|                                    |   | 2011      |   |
|-----------------------------------------|--------|-----------|--------|
|                                    |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
| (In thousands)                          |   | Cost      |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                    |   |      |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                         |   | $         | 3,000  |   |   | $ | - |   |   | $ | (45 | ) |   | $ | 2,955 |   |
| U.S. Government agencies                |   |      | 12,530 |   |   |   | 10 |   |   |   | (20 | ) |   |   | 12,520 |   |
| Mortgage-backed securities, residential |   |      | 4,020  |   |   |   | 78 |   |   |   | - |   |   |   | 4,098 |   |
| Collateralized mortgage obligations     |   |      | 20,199 |   |   |   | 107 |   |   |   | (65 | ) |   |   | 20,241 |   |
|                                    |   | $         | 39,749 |   |   | $ | 195 |   |   | $ | (130 | ) |   | $ | 39,814 |   |
|                                    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   | 2010      |   |
| Corporate bonds                         |   | $         | 1,500  |   |   | $ | 11 |   |   | $ | - |   |   | $ | 1,511 |   |
| U.S. Government agencies                |   |      | 13,600 |   |   |   | 40 |   |   |   | (3 | ) |   |   | 13,637 |   |
| Mortgage-backed securities, residential |   |      | 6,737  |   |   |   | 291 |   |   |   | (4 | ) |   |   | 7,024 |   |
| Collateralized mortgage obligations     |   |      | 3,314  |   |   |   | - |   |   |   | (4 | ) |   |   | 3,310 |   |
|                                    |   | $         | 25,151 |   |   | $ | 342 |   |   | $ | (11 | ) |   | $ | 25,482 |   |

----

|                                    |   | 2011          |   |
|-----------------------------------------|--------|---------------|--------|
| (In thousands)                          |   | AmortizedCost |   |   | FairValue |   |
| Due  in less than one year    |   | $             | -      |   |   | $ | - |   |
| Due in one to five years                |   |          | 2,500  |   |   |   | 2,497 |   |
| Due after five through ten years        |   |          | 4,506  |   |   |   | 4,462 |   |
| Due after ten years                     |   |          | 8,524  |   |   |   | 8,516 |   |
| Mortgage-backed securities, residential |   |          | 4,020  |   |   |   | 4,098 |   |
| Collateralized mortgage obligations     |   |          | 20,199 |   |   |   | 20,241 |   |
|                                    |   | $             | 39,749 |   |   | $ | 39,814 |   |

|                                  |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total     |
|---------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|-----------|
|                                  |   | FairValue                          |   |   | UnrealizedLosses                 |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |
|                                  |   | (In Thousands)                     |
| Corporate bonds                       |   | $                                  | 1,954  |   |                             | $      | (45    | )         |   | $ | - |   |   | $ | - |   |   | $ | 1,954 |   |   | $ | (45 | ) |
| U.S. Government agencies              |   |                               | 4,480  |   |                             |   | (20    | )         |   |   | - |   |   |   | - |   |   |   | 4,480 |   |   |   | (20 | ) |
| Collateralized mortgage obligations   |   |                               | 5,956  |   |                             |   | (65    | )         |   |   | - |   |   |   | - |   |   |   | 5,956 |   |   |   | (65 | ) |
| Total Temporarily Impaired Securities |   | $                                  | 12,390 |   |                             | $      | (130   | )         |   | $ | - |   |   | $ | - |   |   | $ | 12,390 |   |   | $ | (130 | ) |

----

|                                    |   | Less than 12 Months |   |   | 12 Months or More |   |   | Total     |
|-----------------------------------------|--------|------------------------------------|--------|--------|----------------------------------|--------|--------|-----------|
|                                    |   | FairValue                          |   |   | UnrealizedLosses                 |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |
|                                    |   | (In Thousands)                     |
| U.S. Government agencies                |   | $                                  | 1,586  |   |                             | $      | (3     | )         |   | $ | - |   |   | $ | - |   |   | $ | 1,586 |   |   | $ | (3 | ) |
| Mortgage-backed securities, residential |   |                               | 662    |   |                             |   | (4     | )         |   |   | - |   |   |   | - |   |   |   | 662 |   |   |   | (4 | ) |
| Collateralized mortgage obligations     |   |                               | 3,310  |   |                             |   | (4     | )         |   |   | - |   |   |   | - |   |   |   | 3,310 |   |   |   | (4 | ) |
| Total Temporarily Impaired Securities   |   | $                                  | 5,558  |   |                             | $      | (11    | )         |   | $ | - |   |   | $ | - |   |   | $ | 5,558 |   |   | $ | (11 | ) |

| (3) | Loans Receivable |
|-----|------------------|

| (In thousands)            |   | 2011   |    |   | 2010   |   |
|---------------------------|--------|--------|---------|--------|--------|--------|
| Real estate:              |   |   |    |   |   |   |
| Residential               |   | $      | 56,068  |   |   | $      | 62,006 |   |
| Commercial                |   |   | 52,367  |   |   |   | 45,694 |   |
| Construction              |   |   | 12,281  |   |   |   | 17,192 |   |
|                      |   |   | 120,716 |   |   |   | 124,892 |   |
|                      |   |   |    |   |   |   |   |   |
| Consumer loans            |   |   | 12,626  |   |   |   | 15,070 |   |
| Commercial loans          |   |   | 51,416  |   |   |   | 55,592 |   |
| Commercial leases         |   |   | 2,006   |   |   |   | 5,142 |   |
|                      |   |   | 186,764 |   |   |   | 200,696 |   |
| Less:                     |   |   |    |   |   |   |   |   |
| Allowance for loan losses |   |   | 4,194   |   |   |   | 3,527 |   |
| Loans receivable, net     |   | $      | 182,570 |   |   | $      | 197,169 |   |

----

|                         |   | June 30,2011 |   |
|------------------------------|--------|--------------|--------|
| (In thousands)               |   | Fixed rate   |   |   | Floating rate |   |
| Commercial business loans    |   | $            | 1,250  |   |   | $ | - |   |
| Real estate  loans |   |         | 3,326  |   |   |   | 4,069 |   |
| Undisbursed lines of credit  |   |         | 6,113  |   |   |   | 4,117 |   |
|                         |   | $            | 10,689 |   |   | $ | 8,186 |   |

|                         |   | June 30, 2010 |   |
|------------------------------|--------|---------------|--------|
| Commercial business loans    |   | $             | 140    |   |   | $ | - |   |
| Real estate  loans |   |          | 3,714  |   |   |   | 8,057 |   |
| Undisbursed lines of credit  |   |          | 5,881  |   |   |   | 4,251 |   |
|                         |   | $             | 9,735  |   |   | $ | 12,308 |   |

| (in thousands)                         |   | At June 30, |   |
|----------------------------------------|--------|-------------|--------|
|                                   |   | 2011        |   |   | 2010 |   |
| Beginning balance                      |   | $           | 262    |   |   | $ | 509 |   |
| New loans or draws on existing loans   |   |        | 19     |   |   |   | 37 |   |
| Loan repayments                        |   |        | (12    | ) |   |   | (258 | ) |
| Change in related party classification |   |        | -      |   |   |   | (26 | ) |
| Ending balance                         |   | $           | 269    |   |   | $ | 262 |   |

| (4) | Credit Quality |
|-----|----------------|

| (in thousands)                                        |   |       |   |   | Commercial  |   |   |         |   |   |     |   |   |        |   |   |   |   |
|-------------------------------------------------------|--------|------------|--------|--------|-------------|--------|--------|--------------|--------|--------|----------|--------|--------|-------------|--------|--------|--------|--------|
|                                                  |   | Commercial |   |   | Real Estate |   |   | Construction |   |   | Consumer |   |   | Residential |   |   | Total  |   |
| Loan receivables:                                     |   |       |   |   |        |   |   |         |   |   |     |   |   |        |   |   |   |   |
| Ending balance                                        |   | $          | 53,422 |   |        | $      | 52,367 |         |   | $      | 12,281   |   |   | $           | 12,626 |   |   | $      | 56,068 |   |   | $ | 186,764 |   |
| Ending balance: individually evaluated for impairment |   | $          | 4,064  |   |        | $      | 3,786  |         |   | $      | 1,335    |   |   | $           | -      |   |   | $      | 615 |   |   | $ | 9,800 |   |
| Ending balance: collectively evaluated for impairment |   | $          | 49,358 |   |        | $      | 48,581 |         |   | $      | 10,946   |   |   | $           | 12,626 |   |   | $      | 55,453 |   |   | $ | 176,964 |   |

----

| (in thousands)                                        |   |       |   |   | Commercial  |   |   |         |   |   |     |   |   |        |   |   |   |   |
|-------------------------------------------------------|--------|------------|--------|--------|-------------|--------|--------|--------------|--------|--------|----------|--------|--------|-------------|--------|--------|--------|--------|
|                                                  |   | Commercial |   |   | Real Estate |   |   | Construction |   |   | Consumer |   |   | Residential |   |   | Total  |   |
| Allowance for credit losses:                          |   |       |   |   |        |   |   |         |   |   |     |   |   |        |   |   |   |   |
| Beginning Balance:                                    |   | $          | 1,472  |   |        | $      | 386    |         |   | $      | 1,043    |   |   | $           | 550    |   |   | $      | 76 |   |   | $ | 3,527 |   |
| Charge-offs                                           |   |       | (595   | )      |        |   | (863   | )            |   |   | (206     | )      |   |        | (690   | )      |   |   | (5 | ) |   |   | (2,359 | ) |
| Recoveries                                            |   |       | 203    |   |        |   | -      |         |   |   | 27       |   |   |        | 78     |   |   |   | - |   |   |   | 308 |   |
| Provisions                                            |   |       | 432    |   |        |   | 2,312  |         |   |   | (496     | )      |   |        | 427    |   |   |   | (43 | ) |   |   | 2,718 |   |
| Ending balance                                        |   | $          | 1,512  |   |        | $      | 1,835  |         |   | $      | 368      |   |   | $           | 365    |   |   | $      | 114 |   |   | $ | 4,194 |   |
|                                                  |   |       |   |   |        |   |   |         |   |   |     |   |   |        |   |   |   |   |   |   |   |   |   |   |
| Ending balance: individually evaluated for impairment |   | $          | 924    |   |        | $      | 271    |         |   | $      | -        |   |   | $           | -      |   |   | $      | - |   |   | $ | 1,195 |   |
| Ending balance: collectively evaluated for impairment |   | $          | 588    |   |        | $      | 1,564  |         |   | $      | 368      |   |   | $           | 365    |   |   | $      | 114 |   |   | $ | 2,999 |   |

| (In thousands)                |   | 2011   |   |   | 2010   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|
| Balance at beginning of year  |   | $      | 3,527  |   |   | $      | 3,023 |   |
| Provision for losses on loans |   |   | 2,718  |   |   |   | 3,701 |   |
| Charge-offs                   |   |   | (2,359 | )      |   |   | (3,362 | ) |
| Recoveries                    |   |   | 308    |   |   |   | 165 |   |
| Balance at end of year        |   | $      | 4,194  |   |   | $      | 3,527 |   |

| (in thousands)                                     |   | Recorded   |   |   | UnpaidPrincipal |   |   | Related   |   |   | AverageRecorded |   |   | InterestIncome |   |
|----------------------------------------------------|--------|------------|--------|--------|-----------------|--------|--------|-----------|--------|--------|-----------------|--------|--------|----------------|--------|
|                                               |   | Investment |   |   | Balance.        |   |   | Allowance |   |   | Investment      |   |   | Recorded       |   |
| Impaired loans with no related allowance recorded: |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |
|                                               |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |
| Commercial real estate-construction                |   | $          | 1,335  |   |            | $      | 1,681  |      |   | $      | -               |   |   | $              | 1,332  |   |   | $ | - |   |
| Commercial real estate                             |   |       | 2,239  |   |            |   | 2,702  |      |   |   | -               |   |   |           | 4,829  |   |   |   | 25 |   |
| Commercial                                         |   |       | 433    |   |            |   | 440    |      |   |   | -               |   |   |           | 701    |   |   |   | 10 |   |
| Residential                                        |   |       | 615    |   |            |   | 615    |      |   |   | -               |   |   |           | 490    |   |   |   | - |   |
|                                               |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |   |   |   |   |   |
| Impaired loans with an allowance recorded:         |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |   |   |   |   |   |
|                                               |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |   |   |   |   |   |
| Commercial real estate-Construction                |   | $          | -      |   |            | $      | -      |      |   | $      | -               |   |   | $              | 202    |   |   | $ | - |   |
| Commercial real estate                             |   |       | 1,547  |   |            |   | 1,547  |      |   |   | 271             |   |   |           | 1,553  |   |   |   | - |   |
| Commercial                                         |   |       | 3,631  |   |            |   | 3,731  |      |   |   | 924             |   |   |           | 3,681  |   |   |   | - |   |
|                                               |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |   |   |   |   |   |
| Total impaired loans:                              |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |   |   |   |   |   |
|                                               |   |       |   |   |            |   |   |      |   |   |            |   |   |           |   |   |   |   |   |   |
| Commercial real estate-construction                |   | $          | 1,335  |   |            | $      | 1,681  |      |   | $      | -               |   |   | $              | 1,534  |   |   | $ | - |   |
| Commercial real estate                             |   |       | 3,786  |   |            |   | 4,249  |      |   |   | 271             |   |   |           | 6,382  |   |   |   | 25 |   |
| Commercial                                         |   |       | 4,064  |   |            |   | 4,171  |      |   |   | 924             |   |   |           | 4,382  |   |   |   | 10 |   |
| Residential                                        |   |       | 615    |   |            |   | 615    |      |   |   | -               |   |   |           | 490    |   |   |   | - |   |

----

|                                                              |   | 2011   |        |   | 2010   |   |
|-------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Impaired loans without a valuation allowance                      |   | $      | 4,622       |   |   | $      | 7,622 |   |
| Impaired loans with a valuation allowance                         |   |   |  5,178 |   |   |   |  4,021 |   |
| Total impaired loans                                              |   | $      | 9,800       |   |   | $      | 11,643 |   |
|                                                              |   |   |        |   |   |   |   |   |
| Allowance for loan losses related to impaired loans               |   | $      | 1,195       |   |   | $      | 668 |   |
| Allowance for loan losses related to loans collectively evaluated |   |   | 2,999       |   |   |   |  2,859 |   |
| Total allowance for loan losses                                   |   | $      | 4,194       |   |   | $      | 3,527 |   |
|                                                              |   |   |        |   |   |   |   |   |
| Average impaired loans for the year                               |   | $      | 12,788      |   |   | $      | 11,236 |   |
| Interest income on impaired recognized on a cash basis            |   | $      | 35          |   |   | $      | 106 |   |
| Interest income on impaired recognized on an accrual basis        |   | $      | -           |   |   | $      | - |   |

----

|                              |   |        |        |   |              |   |      | Commercial Real Estate- |   |   |                   |   |
|-----------------------------------|--------|-------------|-------------|--------|-------------------|--------|-----------|-------------------------|--------|--------|------------------------|--------|
|                              |   | Commercial  |        |   | Commercial Leases |   |      | Construction            |   |   | Commercial Real Estate |   |
|                              |   | 2011        |        |   | 2010              |   |      | 2011                    |   |   | 2010                   |   |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Pass                              |   | $           | 42,002      |   |              | $      | 43,118    |                    |   | $      | 1,885                  |   |   | $ | 5,076 |   |   | $ | 7,556 |   |   | $ | 11,446 |   |   | $ | 40,960 |   |   | $ | 36,502 |   |
| Special Mention                   |   |        | 1,436       |   |              |   | 3,319     |                    |   |   | 23                     |   |   |   | 8 |   |   |   | 2,826 |   |   |   | 1,673 |   |   |   | 1,212 |   |   |   | - |   |
| Substandard                       |   |        | 6,943       |   |              |   | 8,609     |                    |   |   | 88                     |   |   |   | 58 |   |   |   | 1,899 |   |   |   | 3,942 |   |   |   | 9,067 |   |   |   | 9,114 |   |
| Doubtful                          |   |        |  1,035 |   |              |   |  546 |                    |   |   |  10               |   |   |   |  - |   |   |   |  - |   |   |   |  131 |   |   |   |  1,128 |   |   |   |  78 |   |
| Total                             |   | $           | 51,416      |   |              | $      | 55,592    |                    |   | $      | 2,006                  |   |   | $ | 5,142 |   |   | $ | 12,281 |   |   | $ | 17,192 |   |   | $ | 52,367 |   |   | $ | 45,694 |   |
|                              |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer Credit Exposure          |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Credit Risk Profile by Internally |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assigned Grade                    |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | Residential |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | 2011        |        |   | 2010              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pass                              |   | $           | 55,297      |   |              | $      | 61,831    |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Special Mention                   |   |        | 56          |   |              |   | 58        |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Substandard                       |   |        | 715         |   |              |   | 117       |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Doubtful                          |   |        |  -     |   |              |   |  -   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                             |   | $           | 56,068      |   |              | $      | 62,006    |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer Credit Exposure          |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Credit Risk Profile by Internally |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assigned Grade                    |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |        |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | Consumer    |        |   |              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | 2011        |        |   | 2010              |   |      |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Performing                        |   | $           | 12,586      |   |              | $      | 15,024    |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming                     |   |        |  40    |   |              |   |  46  |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                             |   | $           | 12,626      |   |              | $      | 15,070    |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| (in thousands)                       |   |     |   |   |     |   |   | GreaterThan |   |   |    |   |   |    |   |   |    |   |    |   |   |
|--------------------------------------|--------|----------|--------|--------|----------|--------|--------|-------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|---------|--------|--------|
|                                 |   | 30-59    |   |   | 60-89    |   |   | 90 Days     |   |   | Total   |   |   |    |   |   | Non-    |   |    |   |   |
|                                 |   | Days     |   |   | Days     |   |   | and Still   |   |   | Past    |   |   |    |   |   | Accrual |   |    | Total  |   |
|                                 |   | Past Due |   |   | Past Due |   |   | Accruing    |   |   | Due     |   |   | Current |   |   | Loans   |   |    | Loans  |   |
| Residential                          |   | $        | 363    |   |     | $      | 56     |        |   | $      | -       |   |   | $       | 419    |   |    | $      | 55,034  |   |   | $ | 615 |   |   | $ | 56,068 |   |
| Commercial real estate- construction |   |     | -      |   |     |   | -      |        |   |   | -       |   |   |    | -      |   |    |   | 10,946  |   |   |   | 1,335 |   |   |   | 12,281 |   |
| Commercial real estate               |   |     | 337    |   |     |   | -      |        |   |   | -       |   |   |    | 337    |   |    |   | 48,244  |   |   |   | 3,786 |   |   |   | 52,367 |   |
| Commercial                           |   |     | 597    |   |     |   | 2,038  |        |   |   | -       |   |   |    | 2,635  |   |    |   | 44,717  |   |   |   | 4,064 |   |   |   | 51,416 |   |
| Commercial leases                    |   |     | 51     |   |     |   | 10     |        |   |   | -       |   |   |    | 61     |   |    |   | 1,839   |   |   |   | 106 |   |   |   | 2,006 |   |
| Consumer                             |   |     | 165    |   |     |   | 41     |        |   |   |  - |   |   |    | 206    |   |    |   | 12,380  |   |   |   | 40 |   |   |   | 12,626 |   |
| Total                                |   | $        | 1,513  |   |     | $      | 2,145  |        |   | $      | -       |   |   | $       | 3,658  |   |    | $      | 173,160 |   |   | $ | 9,946 |   |   | $ | 186,764 |   |

|                                                           |   | June 30, |   |   | June 30, |   |
|----------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
| (in thousands)                                                 |   | 2011     |   |   | 2010     |   |
| Loans accounted for on a non-accrual basis (1)                 |   | $        | 9,946  |   |     | $      | 9,728 |   |
|                                                           |   |     |   |   |     |   |   |   |
| Accruing loans that are contractually past due 90 days or more |   |     | -      |   |     |   | - |   |
| Total non-performing loans                                     |   |     | 9,946  |   |     |   | 9,728 |   |
|                                                           |   |     |   |   |     |   |   |   |
| Other non-performing assets (2)                                |   |     | 1,689  |   |     |   | 2,875 |   |
| Total non-performing assets                                    |   | $        | 11,635 |   |     | $      | 12,603 |   |

|   | (1) | Nonaccrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely.  Payments received on a nonaccrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on management’s assessment of the collectability of the loan.  Of the $9,946 and $9,728 of non-accrual loans, $5,324 and $4,327 were considered troubled debt restructurings as of June 30, 2011 and 2010, respectively. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Other nonperforming assets represent property acquired through foreclosure or repossession. |
|--------|-----|---------------------------------------------------------------------------------------------|

| (5) | Real Estate Acquired Through Foreclosure and Other Repossessed Assets |
|-----|-----------------------------------------------------------------------|

|                         |   | Years Ended June 30, |   |
|------------------------------|--------|----------------------|--------|
| (in thousands)               |   | 2011                 |   |   | 2010 |   |
| Balance at beginning of year |   | $                    | 19     |   |   | $ | - |   |
| Provision for losses         |   |                 | 159    |   |   |   | 1,098 |   |
| Charge-offs                  |   |                 | (19    | ) |   |   | (1,079 | ) |
| Balance at end of year       |   | $                    | 159    |   |   | $ | 19 |   |

----

|                                                            |   | Years Ended June 30, |   |
|-----------------------------------------------------------------|--------|----------------------|--------|
| (in thousands)                                                  |   | 2011                 |   |   | 2010 |   |
| Provision for losses                                            |   | $                    | 159    |   |   | $ | 1,098 |   |
| (Gain)/loss on sale of real estate acquired through foreclosure |   |                 | (107   | ) |   |   | 67 |   |
| Operating expenses, net of rental income                        |   |                 | 308    |   |   |   | 260 |   |
| Total                                                           |   | $                    | 360    |   |   | $ | 1,425 |   |

| (6) | Property and Equipment |
|-----|------------------------|

| (In thousands)                    |   | 2011   |   |   | 2010   |   |   | EstimatedUseful lives |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|-----------------------|--------|
| Land                              |   | $      | 152    |   |   | $      | 152    |                  |   | - |   |
| Building and improvements         |   |   | 4,508  |   |   |   | 4,508  |                  |   | 30 - 40 years |   |
| Leasehold improvements            |   |   | 238    |   |   |   | 238    |                  |   | 3 - 10 years |   |
| Furniture, fixtures and equipment |   |   | 3,308  |   |   |   | 3,219  |                  |   | 3 - 10 years |   |
| Total, at cost                    |   |   | 8,206  |   |   |   | 8,117  |                  |   |   |   |   |
| Less accumulated depreciation     |   |   | 4,630  |   |   |   | 4,358  |                  |   |   |   |   |
| Property and equipment, net       |   | $      | 3,576  |   |   | $      | 3,759  |                  |   |   |   |   |

| Year ending June 30, |   |   |      |
|----------------------|--------|--------|-----------|
| 2012                 |   | $      | 176,830   |   |
| 2013                 |   |   | 168,844   |   |
| 2014                 |   |   | 155,004   |   |
| 2015                 |   |   | 155,004   |   |
| 2016                 |   |   | 155,004   |   |
| Thereafter           |   |   | 1,395,036 |   |
|                 |   | $      | 2,205,722 |   |

| (7) | Deposits |
|-----|----------|

| Year ending June 30, |   |   |   |
|----------------------|--------|--------|--------|
| 2012                 |   | $      | 35,465 |   |
| 2013                 |   |   | 23,692 |   |
| 2014                 |   |   | 3,435  |   |
| 2015                 |   |   | 19,024 |   |
| 2016                 |   |   | 7,433  |   |
| Thereafter           |   |   | 944    |   |
|                 |   | $      | 89,993 |   |

----

| (8) | Junior Subordinated Debentures |
|-----|--------------------------------|

| (9) | Borrowings |
|-----|------------|

|                    |   | 2011    |    |   | 2010                 |   |
|-------------------------|--------|---------|---------|--------|----------------------|--------|
| (In thousands)          |   | Balance |    |   | WeightedAverage Rate |   |   | Balance |   |   | WeightedAverage Rate |   |
| Under 12 months         |   | $       | 3,000   |   |                 |   | 3.41 | % |   | $ | 5,100 |   |   |   | 5.57 | % |
| 12 months to 24 months  |   |    | — |   |                 |   | — |   |   |   | 3,000 |   |   |   | 3.41 |   |
| 24 months to 36 months  |   |    | — |   |                 |   | — |   |   |   | — |   |   |   | — |   |
| 36 months to 48 months  |   |    | — |   |                 |   | — |   |   |   | — |   |   |   | — |   |
| 48 months to 60 months  |   |    | 6,000   |   |                 |   | 4.24 |   |   |   | — |   |   |   | — |   |
| 60 months to 120 months |   |    | 3,000   |   |                 |   | 2.59 |   |   |   | 9,000 |   |   |   | 3.69 |   |
|                    |   | $       | 12,000  |   |                 |   | 3.62 | % |   | $ | 17,100 |   |   |   | 4.20 | % |

| Balance |      |   | Rate   |   |   | Maturity |   | Call\Conversion feature |
|---------|-----------|--------|--------|--------|--------|----------|--------|-------------------------|
|    |      |   |   |   |   |     |   |                    |   |   |
| $       | 3,000,000 |   |   |   | 2.59   | %        |   | 10/09/2018              |   | Callable on 10/12/2010 and every three months thereafter |

| (10) | Income Taxes |
|------|--------------|

| (In thousands)                              |   | 2011   |   |   | 2010   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|--------|
| Current:                                    |   |   |   |   |   |   |
| Federal                                     |   | $      | -      |   |   | $      | ( 919 | ) |
| State                                       |   |   | (13    | )      |   |   | (126 | ) |
| Total Current Income Tax Benefit            |   |   | (13    | )      |   |   | (1,045 | ) |
| Deferred:                                   |   |   |   |   |   |   |   |   |
| Federal                                     |   |   | (382   | )      |   |   | (274 | ) |
| State                                       |   |   | (101   | )      |   |   | (191 | ) |
| Deferred tax valuation allowance            |   |   | 2,211  |   |   |   | - |   |
| Total Deferred Income Tax Expense (Benefit) |   |   | 1,728  |   |   |   | (465 | ) |
| Total Income Tax Expense (Benefit)          |   | $      | 1,715  |   |   | $      | (1,510 | ) |

----

| (In thousands)                                     |   | 2011   |   |   | 2010   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Allowance for losses on loans and leases           |   | $      | 1,654  |   |   | $      | 1,458 |   |
| Allowance for loss on sale of real estate owned    |   |   | 63     |   |   |   | - |   |
| Net operating loss carryforward                    |   |   | 677    |   |   |   | 481 |   |
| Reserve for uncollectable interest                 |   |   | 110    |   |   |   | 252 |   |
| Deferred compensation                              |   |   | 55     |   |   |   | 50 |   |
| Other                                              |   |   | 4      |   |   |   | 15 |   |
| Total deferred tax assets                          |   |   | 2,563  |   |   |   | 2,256 |   |
|                                               |   |   |   |   |   |   |   |   |
| Unrealized gains on securities available for sale  |   |   | (26    | )      |   |   | (130 | ) |
| Purchase accounting adjustment                     |   |   | (109   | )      |   |   | (139 | ) |
| Federal Home Loan Bank stock dividends             |   |   | (168   | )      |   |   | (168 | ) |
| Depreciation                                       |   |   | (49    | )      |   |   | (196 | ) |
| Total deferred tax liabilities                     |   |   | (352   | )      |   |   | (633 | ) |
| Net deferred tax asset, before valuation allowance |   | $      | 2,211  |   |   | $      | 1,623 |   |
| Valuation allowance                                |   |   | (2,211 | )      |   |   | - |   |
| Net deferred tax asset, after valuation allowance  |   | $      | -      |   |   | $      | 1,623 |   |

| (In thousands)                                              |   | 2011   |       |   | 2010   |   |
|-------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Tax at statutory rate                                       |   | $      | ( 398 | )      |   | $      | (1,312 | ) |
| State income tax benefit, net of Federal income tax benefit |   |   | (75        | )      |   |   | (209 | ) |
| Deferred tax asset valuation allowance                      |   |   | 2,211      |   |   |   | - |   |
| Other                                                       |   |   | (23        | )      |   |   | 11 |   |
| Income tax expense (benefit)                                |   | $      | 1,715      |   |   | $      | (1,510 | ) |
| Effective tax rate                                          |   |   | -146.6     | %      |   |   | 39.1 | % |

----

| (11) | Regulatory Matters |
|------|--------------------|

----

|                                     |   |   |   |   |              |   |   | To Be Well             |   |
|------------------------------------------|--------|--------|--------|--------|-------------------|--------|--------|------------------------|--------|
|                                     |   |   |   |   |              |   |   | Capitalized Under      |   |
|                                     |   |   |   |   | For Capital       |   |   | Prompt Corrective      |   |
|                                     |   | Actual |   |   | Adequacy Purposes |   |   | Action Provisions      |   |
|                                     |   | Amount |   |   | Ratio             |   |   | Amount                 |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                     |   |   |   |   |              |   |   | (Dollars in thousands) |   |   |   |   |   |   |   |
|                                     |   |   |   |   |              |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to Risk Weighted Assets)  |   | $      | 21,432 |   |              |   | 12.94  | %                      |   | $ | 13,250 |   |   |   | 8.00 | % |   | $ | 16,563 |   |   |   | 10.00 | % |
| Tier 1 Capital (to Risk Weighted Assets) |   |   | 19,335 |   |              |   | 11.67  | %                      |   |   | 6,625 |   |   |   | 4.00 | % |   |   | 9,938 |   |   |   | 6.00 | % |
| Tier 1 Leverage Ratio                    |   |   | 19,335 |   |              |   | 7.26   | %                      |   |   | 10,659 |   |   |   | 4.00 | % |   |   | 13,323 |   |   |   | 5.00 | % |

|                                     |   |   |   |   |              |   |   | To Be Well             |   |
|------------------------------------------|--------|--------|--------|--------|-------------------|--------|--------|------------------------|--------|
|                                     |   |   |   |   |              |   |   | Capitalized Under      |   |
|                                     |   |   |   |   | For Capital       |   |   | Prompt Corrective      |   |
|                                     |   | Actual |   |   | Adequacy Purposes |   |   | Action Provisions      |   |
|                                     |   | Amount |   |   | Ratio             |   |   | Amount                 |   |   | Ratio |   |   | Amount |   |   | Ratio |   |
|                                     |   |   |   |   |              |   |   | (Dollars in thousands) |   |   |   |   |   |   |   |
|                                     |   |   |   |   |              |   |   |                   |   |   |   |   |   |   |   |   |   |   |
| Total Capital (to Risk Weighted Assets)  |   | $      | 23,009 |   |              |   | 12.35  | %                      |   | $ | 15,000 |   |   |   | 8.00 | % |   | $ | 18,750 |   |   |   | 10.00 | % |
| Tier 1 Capital (to Risk Weighted Assets) |   |   | 20,663 |   |              |   | 11.09  | %                      |   |   | 7,500 |   |   |   | 4.00 | % |   |   | 11,250 |   |   |   | 6.00 | % |
| Tier 1 Leverage Ratio                    |   |   | 20,663 |   |              |   | 7.76   | %                      |   |   | 10,649 |   |   |   | 4.00 | % |   |   | 13,311 |   |   |   | 5.00 | % |

| (12) | Stockholders' Equity and Related Matters |
|------|------------------------------------------|

----

| (13) | Preferred Stock |
|------|-----------------|

| (14) | Benefit Plans |
|------|---------------|

|                           |   | CommonShares |   |   | Weighted Average Grant-DateFair Value |   |
|--------------------------------|--------|--------------|--------|--------|---------------------------------------|--------|
| Non-Vested as of June 30, 2010 |   |         | 2,250  |   |                                  | $      | 7.10 |   |
| Vested                         |   |         | -      |   |                                  |   | - |   |
| Issued                         |   |         | -      |   |                                  |   | - |   |
| Forfeited                      |   |         | -      |   |                                  |   | - |   |
| Non-vested at June 30, 2011    |   |         | 2,250  |   |                                  | $      | 7.10 |   |

----

|                       |   |    |   |   | Weighted |   |   |        |   |   | Weighted |   |   |        |   |
|----------------------------|--------|---------|--------|--------|----------|--------|--------|-------------|--------|--------|----------|--------|--------|-------------|--------|
|                       |   |    |   |   | Average  |   |   |        |   |   | Average  |   |   | Aggregate   |   |
|                       |   |    |   |   | Exercise |   |   | Options     |   |   | Exercise |   |   | Intrinsic   |   |
|                       |   | Options |   |   | Price    |   |   | Exercisable |   |   | Price    |   |   | Value(000s) |   |
| Outstanding, June 30, 2009 |   |    | 20,832 |   |     | $      | 6.29   |        |   |   | 20,832   |   |   | $           | 6.29   |   |   | $ | - |   |
| Granted                    |   |    | -      |   |     |   | -      |        |   |   |     |   |   |        |   |   |   |   |   |   |
| Exercised                  |   |    | -      |   |     |   | -      |        |   |   |     |   |   |        |   |   |   |   |   |   |
| Cancelled                  |   |    | -      |   |     |   | -      |        |   |   |     |   |   |        |   |   |   |   |   |   |
| Outstanding, June 30, 2010 |   |    | 20,832 |   |     | $      | 6.29   |        |   |   | 20,832   |   |   | $           | 6.29   |   |   | $ | - |   |
| Granted                    |   |    | -      |   |     |   | -      |        |   |   |     |   |   |        |   |   |   |   |   |   |
| Exercised                  |   |    | -      |   |     |   | -      |        |   |   |     |   |   |        |   |   |   |   |   |   |
| Cancelled                  |   |    | -      |   |     |   | -      |        |   |   |     |   |   |        |   |   |   |   |   |   |
| Outstanding, June 30, 2011 |   |    | 20,832 |   |     | $      | 6.29   |        |   |   | 20,832   |   |   | $           | 6.29   |   |   | $ | - |   |

| Exercise Priceof All Options |   |   | NumberOutstanding |   | RemainingContractual Life |   | NumberExercisable |   |
|---------------------------------------------|--------|--------|-------------------|--------|--------------------------------|--------|-------------------|--------|
| $                                           | 6.29   |   |              |   | 20,832                         |   | 1.13 months       |   |   | 20,832 |   |

----

| (15) | Comprehensive Loss |
|------|--------------------|

|                                                        |   | For the Year Ended |   |
|-------------------------------------------------------------|--------|--------------------|--------|
|                                                        |   | June 30            |   |
| (in thousands)                                              |   | 2011               |   |   | 2010 |   |
| Net loss                                                    |   | $                  | (2,885 | ) |   | $ | (2,349 | ) |
| Reclassification adjustment for gains realized in income    |   |               | (161   | ) |   |   | ( 71 | ) |
| Change in unrealized gains on securities available-for-sale |   |               | (105   | ) |   |   | 421 |   |
|                                                        |   |               |   |   |   |   |   |   |
| Tax effect                                                  |   |               | 105    |   |   |   | (138 | ) |
| Comprehensive loss                                          |   | $                  | (3,046 | ) |   | $ | (2,137 | ) |

| (16) | Fair Value of Financial Instruments and Fair Value Measurements |
|------|-----------------------------------------------------------------|

|                           |   | 2011     |    |   | 2010       |   |
|--------------------------------|--------|----------|---------|--------|------------|--------|
|                           |   | Carrying |    |   |       |   |   | Carrying |   |   |   |   |
| (In thousands)                 |   | Amount   |    |   | Fair value |   |   | Amount |   |   | Fair value |   |
| Assets:                        |   |     |    |   |       |   |   |   |   |   |   |   |
| Cash and cash equivalents      |   | $        | 28,469  |   |       | $      | 28,469 |   |   | $ | 28,043 |   |   | $ | 28,043 |   |
| Securities available for sale  |   |     | 39,814  |   |       |   | 39,814 |   |   |   | 25,482 |   |   |   | 25,482 |   |
| Loans receivable               |   |     | 182,570 |   |       |   | 191,181 |   |   |   | 197,169 |   |   |   | 205,092 |   |
| Securities required by law     |   |     | 2,286   |   |       |   | 2,286 |   |   |   | 2,848 |   |   |   | 2,848 |   |
| Accrued interest receivable    |   |     | 857     |   |       |   | 857 |   |   |   | 843 |   |   |   | 843 |   |
| Liabilities:                   |   |     |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                       |   |     | 231,306 |   |       |   | 231,358 |   |   |   | 228,789 |   |   |   | 228,846 |   |
| Long-term debt                 |   |     | 17,000  |   |       |   | 15,828 |   |   |   | 22,100 |   |   |   | 21,084 |   |
| Accrued interest payable       |   |     | 204     |   |       |   | 204 |   |   |   | 392 |   |   |   | 392 |   |
| Off balance sheet instruments: |   |     |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Commitments to extend credit   |   |     | -       |   |       |   | - |   |   |   | - |   |   |   | - |   |

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|   | · | Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices of identical or similar assets or liabilities in markets that are not active, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

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|                                                                  |   | At June 30, 2011 |   |
|-----------------------------------------------------------------------|--------|------------------|--------|
| (In thousands)                                                        |   | Total            |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Measured at fair value on a recurring basis:                          |   |             |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                                                       |   | $                | 2,955  |   |   | $ | - |   |   | $ | 2,955 |   |   | $ | - |   |
| U.S. Government agencies                                              |   |             | 12,520 |   |   |   | - |   |   |   | 12,520 |   |   |   | - |   |
| Mortgage-backed securities, residential                               |   |             | 4,098  |   |   |   | - |   |   |   | 4,098 |   |   |   | - |   |
| Collateralized mortgage obligations, agencies                         |   |             | 20,241 |   |   |   | - |   |   |   | 20,241 |   |   |   | - |   |
| Total securities available for sale                                   |   | $                | 39,814 |   |   | $ | - |   |   | $ | 39,814 |   |   | $ | - |   |
|                                                                  |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Measured at fair value on a nonrecurring basis:                       |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired Loans                                                        |   | $                | 3,983  |   |   | $ | - |   |   | $ | - |   |   | $ | 3,983 |   |
| Real estate acquired through foreclosure and other repossessed assets |   | $                | 24     |   |   | $ | - |   |   | $ | - |   |   | $ | 24 |   |
|                                                                  |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | At June 30, 2010 |   |
| (In thousands)                                                        |   | Total            |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
| Measured at fair value on a recurring basis:                          |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds                                                       |   | $                | 1,511  |   |   | $ | - |   |   | $ | 1,511 |   |   | $ | - |   |
| U.S. Government agencies                                              |   |             | 13,637 |   |   |   | - |   |   |   | 13,637 |   |   |   | - |   |
| Mortgage-backed securities, residential                               |   |             | 7,024  |   |   |   | - |   |   |   | 7,024 |   |   |   | - |   |
| Collateralized mortgage obligations, agencies                         |   |             | 3,310  |   |   |   | - |   |   |   | 3,310 |   |   |   | - |   |
| Total securities available for sale                                   |   | $                | 25,482 |   |   | $ | - |   |   | $ | 25,482 |   |   | $ | - |   |
|                                                                  |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Measured at fair value on a nonrecurring basis:                       |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired Loans                                                        |   | $                | 3,353  |   |   | $ | - |   |   | $ | - |   |   | $ | 3,353 |   |
| Real estate acquired through foreclosure and other repossessed assets |   | $                | 276    |   |   | $ | - |   |   | $ | - |   |   | $ | 276 |   |

| (17) | Condensed Financial Information (Parent Company Only) |
|------|-------------------------------------------------------|

| (In thousands)                                     |   |   |   |   |   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Statements of Financial Condition                  |   | 2011   |   |   | 2010   |   |
| Cash                                               |   | $      | 103    |   |   | $      | 1,585 |   |
| Equity in net assets of the bank                   |   |   | 19,515 |   |   |   | 21,056 |   |
| Other assets                                       |   |   | 308    |   |   |   | 379 |   |
| Total Assets                                       |   | $      | 19,926 |   |   | $      | 23,020 |   |
|                                               |   |   |   |   |   |   |   |   |
| Accrued expenses and other liabilities             |   | $      | 573    |   |   | $      | 650 |   |
| Subordinated Debentures                            |   |   | 5,000  |   |   |   | 5,000 |   |
| Stockholders' equity                               |   |   | 14,353 |   |   |   | 17,370 |   |
| Total Liabilities & Stockholders’ Equity |   | $      | 19,926 |   |   | $      | 23,020 |   |

----

| Statements of Operations                                            |   | 2011   |   |   | 2010   |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Total Interest Income                                               |   | $      | -      |   |   | $      | 24 |   |
| Total Interest Expense                                              |   |   | 323    |   |   |   | 323 |   |
| Non-interest Income                                                 |   |   | -      |   |   |   | 16 |   |
| Non-interest Expense                                                |   |   | 1      |   |   |   | 1 |   |
| Loss before equity in net loss of subsidiary and income tax benefit |   |   | (324   | )      |   |   | (284 | ) |
| Net loss of subsidiary                                              |   |   | (2,585 | )      |   |   | (2,175 | ) |
| Loss before income tax benefit                                      |   |   | (2,909 | )      |   |   | (2,459 | ) |
| Income tax benefit                                                  |   |   | (24    | )      |   |   | (110 | ) |
| Net loss                                                            |   | $      | (2,885 | )      |   | $      | (2,349 | ) |

| (In thousands)                                                                            |   |   |       |   |   |   |
|-------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Statements of Cash Flows                                                                  |   | 2011   |       |   | 2010   |   |
| Operating activities:                                                                     |   |   |       |   |   |   |
| Net loss                                                                                  |   | $      | ( 2,885    | )      |   | $      | (2,349 | ) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |   |   |       |   |   |   |   |   |
| Equity in net loss of subsidiary                                                          |   |   | 2,585      |   |   |   | 2,175 |   |
| Decrease in other assets                                                                  |   |   | 66         |   |   |   | 15 |   |
| (Decrease) increase in accrued expenses and other liabilities                             |   |   | (48        | )      |   |   | 484 |   |
| Net cash (used in) provided by operating activities                                       |   |   | ( 282 | )      |   |   | 325 |   |
| Investing activities:                                                                     |   |   |       |   |   |   |   |   |
| Additional investment in subsidiary stock                                                 |   |   | (1,200     | )      |   |   | (1,400 | ) |
| Net reduction in loan receivable                                                          |   |   | -          |   |   |   | 1,000 |   |
| Net cash used in investing activities                                                     |   |   | (1,200     | )      |   |   | (400 | ) |
| Financing activities:                                                                     |   |   |       |   |   |   |   |   |
| Cash dividends paid                                                                       |   |   | -          |   |   |   | (245 | ) |
| Net cash used in financing activities                                                     |   |   | -          |   |   |   | (245 | ) |
| Net decrease in cash and cash equivalents                                                 |   |   | (1,482     | )      |   |   | (320 | ) |
| Cash and cash equivalents, beginning of year                                              |   |   | 1,585      |   |   |   | 1,905 |   |
| Cash and cash equivalents, end of year                                                    |   | $      | 103        |   |   | $      | 1,585 |   |

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| Thomas P. O'Neill                                                 |   | Nicole N. Glaeser                                      |   | William R. Waters                                     |
|-------------------------------------------------------------------|--------|--------------------------------------------------------|--------|-------------------------------------------------------|
| Chairman of the Board                                             |   | Budget Director for Baltimore County Police Department |   | Retired Automobile DealerOwner Bel Air Medicine, Inc. |
|                                                              |   |                                                   |   |                                                  |
| Michael J. Dee                                                    |   | Gary R. Bozel                                          |   | J. Thomas Hoffman                                     |
| President and Chief Executive Officer of the Company and the Bank |   | Managing PrincipalGary R. Bozel & Associates, P.A. |   | Self-employed financial consultant                    |

| Michael J. Dee                                            |   | William C. Wiedel, Jr.                                   |   | Phil Phillips                                                 |
|-----------------------------------------------------------|--------|----------------------------------------------------------|--------|---------------------------------------------------------------|
| President and Chief Executive Officer                     |   | Senior Vice President - TreasurerChief Financial Officer |   | Senior Vice President – Lending and Loan Administration |
|                                                      |   |                                                     |   |                                                          |
| Laurence S. Mitchell                                      |   |                                                     |   |                                                          |
| Senior Vice President – Commercial Business Lending |   |                                                     |   |                                                          |

| Independent Registered Public Accounting FirmParenteBeard LLC100 West Road, Suite 404Towson, Maryland 21204-2368 General CounselNolan Plumhoff & WilliamsSuite 700, Nottingham Centre502 Washington AvenueTowson, Maryland 21204-4528 Transfer Agent and RegistrarRegistrar and Transfer Company10 Commerce DriveCranford, New Jersey 07016-35721-(800) 368-5948 |   | Special CounselKilpatrick Townsend & Stockton LLP607 14th Street, NW, Suite 900Washington, DC  20005 Annual MeetingThe 2011 Annual Meeting of Stockholders will be held on November 3, 2011 at 5:00 p.m. at the office of The Patapsco Bank located at 1301 Merritt Boulevard, Dundalk, Maryland 21222. |   | Annual Report on Form 10-KA copy of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2011 as filed with the Securities and Exchange Commission, will be furnished without charge to stockholders as of the record date for the 2011 Annual Meeting upon written request to: Secretary, Patapsco Bancorp, Inc., 1301 Merritt Boulevard, Dundalk,  Maryland  21222-2194. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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