2006 SEVERANCE AGREEMENT


     THIS  AGREEMENT  entered into this 19th day of March,  2007, by and between
The Patapsco Bank (the "Bank"),  and Michael J. Dee (the "Employee"),  effective
on the date above (the "Effective Date").

     WHEREAS, the Employee has heretofore been employed by the Bank as President
and Chief Executive Officer; and

     WHEREAS,  the Bank deems it to be in its best  interest  to enter into this
Agreement  as  additional  incentive to the Employee to continue as an executive
employee of the Bank; and

     WHEREAS,   the  parties   desire  by  this   writing  to  set  forth  their
understanding  as to their  respective  rights and  obligations  in the event of
termination of a Change in Control of Patapsco Bancorp,  Inc. (the "Company") or
the Bank as set forth in this Agreement.

     NOW, THEREFORE, it is AGREED as follows:

1.  Change in Control
    -----------------

     (a) Payment in the Event of Change in Control.
         ------------------------------------------

     (1)  Immediately  upon the occurrence of a Change in Control of the Company
or the Bank, the Employee shall be paid  $125,000.00.  Said sum shall be paid in
one lump sum.

     (2) "Change in Control" shall mean any one of the following events: (1) the
acquisition  of ownership,  holding or power to vote more than 25% of the Bank's
or the Company's voting stock, (2) the acquisition of the ability to control the
election  of a  majority  of the  Bank's  or the  Company's  directors,  (3) the
acquisition  of a controlling  influence  over the management or policies of the
Bank or the Company by any person or by persons acting as a "group"  (within the
meaning of Section 13(d) of the Securities  Exchange Act of 1934) (provided that
in the case of (1), (2) and (3) hereof,  ownership or control of the Bank by the
Company  itself shall not  constitute a "Change in Control"),  or (4) during any
period of two consecutive years, individuals (the "Continuing Directors") who at
the beginning of such period constitute the Board of Directors of the Company or
the Bank (the  "Existing  Board")  cease for any reason to  constitute  at least
two-thirds  thereof,  provided that any individual  whose election or nomination
for  election  as a member of the  Existing  Board was  approved by a vote of at
least two-thirds of the Continuing  Directors then in office shall be considered
a Continuing Director. For purposes of this subparagraph only, the term "person"
refers to an individual or a corporation, partnership, trust, association, joint
venture, pool, syndicate,  sole proprietorship,  unincorporated  organization or
any other form of entity not  specifically  listed  herein.  The decision of the
Bank's  non-employee  directors  as to whether a Change in Control has  occurred
shall be conclusive and binding.

     (b) Compliance with 12 U.S.C. Section 1828(k).
         ------------------------------------------

     Any payments made to the Employee pursuant to this Agreement, or otherwise,
are subject to and  conditioned  upon their  compliance  with 12 U.S.C.  Section

<PAGE>
1828(k) and any regulations promulgated thereunder.

2.  Term.
    -----

     This  Agreement  shall  remain in effect for the period  commencing  on the
Effective Date and ending on the earlier of (i) the date thirty-six months after
the Effective Date, or (ii) the date on which the Employee terminates employment
with the Bank;  provided that the  Employee's  rights  hereunder  shall continue
following  the  termination  of this  employment  with the Bank under any of the
circumstances  described in Section 1(a)  hereof.  Additionally,  on each annual
anniversary  date from the Effective  Date, the term of this Agreement  shall be
extended for an additional one-year period beyond the then effective  expiration
date  provided the Board of Directors of the Bank  determines  in a duly adopted
resolution that the performance of the Employee has met the Board's requirements
and standards, and that this Agreement shall be extended.

3.  Termination or Suspension Under Federal Law.
    --------------------------------------------

     (a) Termination for "Just Cause" shall mean termination  because of, in the
good  faith  determination  of the Bank's  Board of  Directors,  the  Employee's
personal  dishonesty,  willful  misconduct,  breach of fiduciary  duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law,  rule or  regulation  (other  than  traffic  violations  or  similar
offenses) or final  cease-and-desist  order, or material breach of any provision
of this Agreement.  The Employee shall have no right to receive  compensation or
other benefits under this  Agreement for any period after  termination  for Just
Cause.  No act, or failure to act, on the  Employee's  part shall be  considered
"willful"  unless he has acted,  or failed to act, with an absence of good faith
and  without a  reasonable  belief  that his action or failure to act was in the
best interest of the Bank.

     (b)  If  the  Employee  is  removed  and/or  permanently   prohibited  from
participating  in the  conduct of the Bank's  affairs by an order  issued  under
Sections  8(e)(3) or 8(g)(1) of the Federal  Deposit  Insurance Act ("FDIA") (12
U.S.C.  1818(e)(3) or (g)(1)),  all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.

     (c) If the Bank is in default (as defined in Section 3(x)(1) of FDIA),  all
obligations  under this  Agreement  shall  terminate  as of the date of default;
however, this Paragraph shall not affect the vested rights of the parties.

       (d) All obligations under this Agreement shall terminate, except to the
     extent that continuation of this Agreement is necessary for the continued
operation of the Company: (i) by the Commissioner of Financial Regulation of the
State of Maryland ("Commissioner") at the time that the Federal Deposit
Insurance Corporation ("FDIC") enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of FDIA;
or (ii) by the Commissioner at the time that the Commissioner approves a
supervisory merger to resolve problems related to operation of the Bank or when
the Bank is determined by the Commissioner to be in an unsafe or unsound
condition. Such action shall not affect any vested rights of the parties.

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<PAGE>

     (e) If a notice  served  under  Section  8(e)(3)  or (g)(1) of the FDIA (12
U.S.C. 1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits the Employee
from participating in the conduct of the Bank's affairs,  the Bank's obligations
under this Agreement  shall be suspended as of the date of such service,  unless
stayed by appropriate  proceedings.  If the charges in the notice are dismissed,
the Bank shall (i) pay the  Employee  all or part of the  compensation  withheld
while its contract  obligations were suspended,  and (ii) reinstate (in whole or
in part) any of its obligations which were suspended.

     (f) The terms of this Section 3 shall prevail over any other  provisions of
this Agreement.

4.  Expense Reimbursement.
    ----------------------

     In the event that any dispute  arises  between the Employee and the Bank as
to the terms or interpretation of this Agreement,  whether  instituted by formal
legal proceedings or otherwise,  including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company,  the Employee shall be reimbursed by the Bank for all costs
and expenses,  including reasonable  attorneys' fees, arising from such dispute,
proceedings  or actions,  provided  (other than as set forth in Section  1(d)(2)
above) that the Employee  shall obtain a final judgment in favor of the Employee
in a court of competent  jurisdiction or in binding  arbitration under the rules
of the American Arbitration Association. Such reimbursement shall be paid within
ten (10)  days of  Employee's  furnishing  to the Bank and the  Company  written
evidence,  which may be in the form, among other things,  of a canceled check or
receipt, of any costs or expenses incurred by the Employee.

5.  Successors and Assigns.
    -----------------------

     (a) This  Agreement  shall inure to the benefit of and be binding  upon any
corporate  or  other  successor  of the Bank or  Company  which  shall  acquire,
directly or indirectly, by merger, consolidation,  purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.

     (b) Since the Bank and the  Company  are  contracting  for the  unique  and
personal skills of the Employee,  the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Bank and the Company.

6.  Amendments.
    -----------

     No amendments or additions to this  Agreement  shall be binding unless made
in  writing  and  signed  by all of the  parties,  except  as  herein  otherwise
specifically provided.

7.  Applicable Law.
    ---------------

     Except to the extent  preempted  by Federal  law,  the laws of the State of
Maryland  shall  govern  this  Agreement  in  all  respects,  whether  as to its
validity, construction, capacity, performance or otherwise.

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<PAGE>


8.  Severability.
    -------------

     The  provisions  of  this  Agreement  shall  be  deemed  severable  and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

9.  Entire Agreement.
    -----------------

     This Agreement, together with any understanding or modifications thereof as
agreed to in writing  by the  parties,  shall  constitute  the entire  agreement
between the parties  hereto.  Notwithstanding  the foregoing,  the parties agree
that the existing Amended and Restated  Severance  Agreement,  dated October 30,
2003,  by and between  the Bank and the  Employee  shall  continue in effect and
shall not be affected by this Agreement.

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<PAGE>


     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.


ATTEST:                                THE PATAPSCO BANK


                                       By:
/s/ Douglas Ludwig                         /s/ Thomas O'Neill
------------------                         ------------------
Secretary                                  It's Chairman of the Board



WITNESS:



/s/ William Boyan                           /s/ Michael J. Dee
-----------------                           ------------------
                                            Michael J. Dee


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