----

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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| OCONEE FINANCIAL CORPORATION                           |
|--------------------------------------------------------|
| (Exact name of Registrant as specified in its Charter) |

| Georgia                                                        |   | 58-2442250                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                           |   |                                 |
|                                                           |   |                                 |
| 35 North Main StreetWatkinsville, Georgia                      |   |  30677                          |
| (Address of principal executive offices)                       |   | (Zip Code)                           |

| 706-769-6611                                               |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

|                                                                                                                       |                                               |
|----------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|
| Large accelerated filer:     o                                                | Accelerated filer: o      |
|                                                                                                                       |                                               |
| Non-accelerated filer:      o   (Do not check if a smaller reporting company) | Smaller reporting company: þ                  |

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|                           |
|--------------------------------|
|                           |   |   |
|                           |   | Page No. |
| PART I - FINANCIAL INFORMATION |   |
|                           |   |
|                           | Item 1. Financial Statements  |   |
|                           | Consolidated Balance Sheets at September 30, 2010 (unaudited) and December 31, 2009  | 1 |
|                           | Consolidated Statements of Operations (unaudited) for the Three Months and the Nine Months Ended September 30, 2010 and 2009  | 2 |
|                           | Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three Months and the Nine Months Ended September 30, 2010 and 2009  | 3 |
|                           | Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2010 and 2009  | 4 |
|                           | Notes to Consolidated Financial Statements (unaudited)  | 6 |
|                           | Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations  | 12 |
|                           | Item 3. Quantitative and Qualitative Disclosures about Market Risk  | 20 |
|                           | Item 4T. Controls and Procedures  | 20 |
| PART II - OTHER INFORMATION    |
|                           |   |   |
|                           | Item 1. Legal Proceedings | 21 |
|                           |   |   |
|                           | Item 1A. Risk Factors | 21 |
|                           |   |   |
|                           | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 21 |
|                           |   |   |
|                           | Item 3. Defaults Upon Senior Securities | 21 |
|                           |   |   |
|                           | Item 5. Other Information | 21 |
|                           |   |   |
|                           | Item 6. Exhibits | 21 |

----

|                                                                                           |   | September 30, 2010(unaudited) |        |   | December 31, 2009 |   |
|------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------|--------|-------------------|--------|
| Assets                                                                                         |   |
|                                                                                           |   |                          |        |   |              |   |
| Cash and due from banks, including reserve requirements of $25,000                             |   | $                             | 28,375,498  |   |              |   | 24,736,354 |   |
| Federal funds sold                                                                             |   |                          | -           |   |              |   | - |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Cash and cash equivalents                                                                      |   |                          | 28,375,498  |   |              |   | 24,736,354 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Investment securities available for sale                                                       |   |                          | 67,373,352  |   |              |   | 66,903,283 |   |
| Restricted equity securities                                                                   |   |                          | 556,300     |   |              |   | 556,300 |   |
| Mortgage loans held for sale                                                                   |   |                          | 296,500     |   |              |   | - |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Loans, net of allowance for loan losses of $3,570,034 and $3,497,292                           |   |                          | 164,397,349 |   |              |   | 176,340,490 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Premises and equipment, net                                                                    |   |                          | 6,032,050   |   |              |   | 6,312,968 |   |
| Other real estate owned                                                                        |   |                          | 5,981,684   |   |              |   | 6,915,161 |   |
| Accrued interest receivable and other assets                                                   |   |                          | 3,837,252   |   |              |   | 3,534,444 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Total assets                                                                                   |   | $                             | 276,849,985 |   |              |   | 285,299,000 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Liabilities and Stockholders’ Equity                                                     |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Liabilities:                                                                                   |   |                          |        |   |              |   |   |   |
| Deposits                                                                                       |   |                          |        |   |              |   |   |   |
| Noninterest-bearing                                                                            |   | $                             | 29,168,054  |   |              |   | 28,957,212 |   |
| Interest-bearing                                                                               |   |                          | 209,147,089 |   |              |   | 221,485,106 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Total deposits                                                                                 |   |                          | 238,315,143 |   |              |   | 250,442,318 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Securities sold under repurchase agreements                                                    |   |                          | 13,302,213  |   |              |   | 9,814,023 |   |
| Accrued interest payable and other liabilities                                                 |   |                          | 748,867     |   |              |   | 357,046 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Total liabilities                                                                              |   |                          | 252,366,223 |   |              |   | 260,613,387 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Stockholders’ equity:                                                                    |   |                          |        |   |              |   |   |   |
| Common stock, $2 par value; authorized 1,500,000 shares; issued and outstanding 899,815 shares |   |                          | 1,799,630   |   |              |   | 1,799,630 |   |
| Additional paid-in capital                                                                     |   |                          | 4,243,332   |   |              |   | 4,243,332 |   |
| Retained earnings                                                                              |   |                          | 17,475,973  |   |              |   | 18,301,063 |   |
| Accumulated other comprehensive income                                                         |   |                          | 964,827     |   |              |   | 341,588 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Total stockholders’ equity                                                               |   |                          | 24,483,762  |   |              |   | 24,685,613 |   |
|                                                                                           |   |                          |        |   |              |   |   |   |
| Total liabilities and stockholders’ equity                                               |   | $                             | 276,849,985 |   |              |   | 285,299,000 |   |

----

|                                                                                 |   | Three Months Ended |       |   | Nine Months Ended |   |
|--------------------------------------------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                                                                                 |   | 2010               |       |   | 2009              |   |   | 2010 |   |   | 2009 |   |
| Interest Income:                                                                     |   |               |       |   |              |   |   |   |   |   |   |   |
| Loans                                                                                |   | $                  | 2,285,556  |   |              |   | 2,383,214 |   |   | $ | 7,074,177 |   |   |   | 7,152,619 |   |
| Investment securities:                                                               |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Tax exempt                                                                           |   |               | 134,945    |   |              |   | 173,934 |   |   |   | 393,696 |   |   |   | 557,341 |   |
| Taxable                                                                              |   |               | 550,921    |   |              |   | 660,230 |   |   |   | 1,836,257 |   |   |   | 2,144,829 |   |
| Federal funds sold and other                                                         |   |               | 10,947     |   |              |   | 12,175 |   |   |   | 29,926 |   |   |   | 13,168 |   |
| Total interest income                                                                |   |               | 2,982,369  |   |              |   | 3,229,553 |   |   |   | 9,334,056 |   |   |   | 9,867,957 |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense:                                                                    |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                             |   |               | 797,277    |   |              |   | 1,380,413 |   |   |   | 2,604,160 |   |   |   | 4,339,981 |   |
| Other                                                                                |   |               | 86,930     |   |              |   | 99,099 |   |   |   | 236,031 |   |   |   | 288,950 |   |
| Total interest expense                                                               |   |               | 884,207    |   |              |   | 1,479,512 |   |   |   | 2,840,191 |   |   |   | 4,628,931 |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                                  |   |               | 2,098,162  |   |              |   | 1,750,041 |   |   |   | 6,493,865 |   |   |   | 5,239,026 |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                            |   |               | 1,350,000  |   |              |   | 240,000 |   |   |   | 2,770,000 |   |   |   | 1,340,000 |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income after provision for loan losses                                  |   |               | 748,162    |   |              |   | 1,510,041 |   |   |   | 3,723,865 |   |   |   | 3,899,026 |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other Income:                                                                        |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                                                  |   |               | 241,719    |   |              |   | 337,357 |   |   |   | 778,916 |   |   |   | 963,543 |   |
| Mortgage origination fees                                                            |   |               | 44,202     |   |              |   | 73,464 |   |   |   | 91,569 |   |   |   | 357,248 |   |
| Securities gains, net                                                                |   |               | -          |   |              |   | 44,343 |   |   |   | 250,461 |   |   |   | 250,720 |   |
| Impairment loss on restricted equity securities                                      |   |               | -          |   |              |   | - |   |   |   | - |   |   |   | (100,429 | ) |
| Income (loss) on other real estate owned                                             |   |               | (933       | )      |              |   | 171,637 |   |   |   | 223,174 |   |   |   | 439,552 |   |
| Other operating income                                                               |   |               | 256,928    |   |              |   | 221,795 |   |   |   | 804,690 |   |   |   | 644,310 |   |
| Total other income                                                                   |   |               | 541,916    |   |              |   | 848,596 |   |   |   | 2,148,810 |   |   |   | 2,554,944 |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other Expense:                                                                       |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and other personnel expense                                                 |   |               | 1,130,736  |   |              |   | 1,208,095 |   |   |   | 3,430,984 |   |   |   | 3,800,094 |   |
| Net occupancy and equipment expense                                                  |   |               | 294,663    |   |              |   | 340,000 |   |   |   | 897,084 |   |   |   | 1,042,153 |   |
| Loss/Write-downs on other real estate owned                                          |   |               | 647,974    |   |              |   | - |   |   |   | 687,612 |   |   |   | 36,206 |   |
| Other operating expense                                                              |   |               | 761,781    |   |              |   | 782,502 |   |   |   | 2,403,667 |   |   |   | 2,533,387 |   |
|  Total other expense                                                            |   |               | 2,835,154  |   |              |   | 2,330,597 |   |   |   | 7,419,347 |   |   |   | 7,411,840 |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) before income taxes                                                  |   |               | (1,545,076 | )      |              |   | 28,040 |   |   |   | (1,546,672 | ) |   |   | (957,870 | ) |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income taxes (benefit)                                                               |   |               | (596,253   | )      |              |   | 11,146 |   |   |   | (721,582 | ) |   |   | (342,140 | ) |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings (loss)                                                             |   | $                  | (948,823   | )      |              |   | 16,894 |   |   | $ | (825,090 | ) |   |   | (615,730 | ) |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per common share based on average outstanding shares of 899,815 |   | $                  | (1.05      | )      |              |   | 0.02 |   |   | $ | (0.92 | ) |   |   | (0.68 | ) |

----

|                                                                                                                                         |   | Three Months Ended |     |   | Nine Months Ended |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|----------|--------|-------------------|--------|
|                                                                                                                                         |   | 2010               |     |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                                         |   |               |     |   |              |   |   |   |   |   |   |   |
| Net earnings (loss)                                                                                                                     |   | $                  | (948,823 | )      |              |   | 16,894 |   |   | $ | (825,090 | ) |   |   | (615,730 | ) |
|                                                                                                                                         |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive gains (loss), net of tax:                                                                                                |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains on securities available for sale:                                                                                           |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Holding gains arising during period, net of tax of $69,421, $623,378, $476,412, and $346,179                                                 |   |               | 113,458  |   |              |   | 1,018,820 |   |   |   | 778,625 |   |   |   | 565,779 |   |
|                                                                                                                                         |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification adjustments for gains included in net Earnings  (Loss), net of tax of $0, $16,832, $95,075 and  $57,050 |   |               | -        |   |              |   | (27,511 | ) |   |   | (155,386 | ) |   |   | (93,241 | ) |
|                                                                                                                                         |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total other comprehensive income                                                                                                             |   |               | 113,458  |   |              |   | 991,309 |   |   |   | 623,239 |   |   |   | 472,538 |   |
|                                                                                                                                         |   |               |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                                                                                                  |   | $                  | (835,365 | )      |              |   | 1,008,203 |   |   | $ | (201,851 | ) |   |   | (143,192 | ) |

----

|                                                                                       |   | 2010   |        |   | 2009   |   |
|--------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash flows from operating activities:                                                      |   |   |        |   |   |   |
| Net earnings (loss)                                                                        |   | $      | (825,090    | )      |   | $      | (615,730 | ) |
| Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: |   |   |        |   |   |   |   |   |
| Provision for loan losses                                                                  |   |   | 2,770,000   |   |   |   | 1,340,000 |   |
| Depreciation, amortization and accretion                                                   |   |   | 393,127     |   |   |   | 441,840 |   |
| Impairment loss on restricted equity securities                                            |   |   | -           |   |   |   | 100,429 |   |
| Loss on sales and disposal of fixed assets                                                 |   |   | 355         |   |   |   | - |   |
| Gain on sales of securities                                                                |   |   | (250,461    | )      |   |   | (250,720 | ) |
| Loss on sales of other real estate owned                                                   |   |   | 687,613     |   |   |   | 195,692 |   |
| Change in assets and liabilities:                                                          |   |   |        |   |   |   |   |   |
| Interest receivable and other assets                                                       |   |   | (684,146    | )      |   |   | (96,810 | ) |
| Interest payable and other liabilities                                                     |   |   | 391,821     |   |   |   | 972 |   |
| Mortgage loans held for sale                                                               |   |   | (296,500    | )      |   |   | (171,910 | ) |
|                                                                                       |   |   |        |   |   |   |   |   |
| Net cash provided by operating activities                                                  |   |   | 2,186,719   |   |   |   | 943,763 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Cash flows from investing activities:                                                      |   |   |        |   |   |   |   |   |
| Proceeds from sales of investment securities available for sale                            |   |   | 9,235,775   |   |   |   | 12,937,169 |   |
| Proceeds from calls, maturities, and paydowns of investment securities available for sale  |   |   | 42,501,148  |   |   |   | 141,315,102 |   |
| Purchases of investment securities available for sale                                      |   |   | (50,969,080 | )      |   |   | (143,423,909 | ) |
| Proceeds from redemption of other investments                                              |   |   | -           |   |   |   | 22,500 |   |
| Net change in loans                                                                        |   |   | 8,277,917   |   |   |   | 8,619,687 |   |
| Purchases of premises and equipment                                                        |   |   | (95,438     | )      |   |   | (25,649 | ) |
| Capital improvements on other real estate                                                  |   |   | (211,085    | )      |   |   | (164,965 | ) |
| Proceeds from sales of other real estate                                                   |   |   | 1,352,173   |   |   |   | 296,753 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Net cash provided by investing activities                                                  |   |   | 10,091,410  |   |   |   | 19,576,688 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Cash flows from financing activities:                                                      |   |   |        |   |   |   |   |   |
| Net change in deposits                                                                     |   |   | (12,127,175 | )      |   |   | (21,619,574 | ) |
| Net change in securities sold under repurchase agreements                                  |   |   | 3,488,190   |   |   |   | 4,870,780 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Net cash used by financing activities                                                      |   |   | (8,638,985  | )      |   |   | (16,748,794 | ) |
|                                                                                       |   |   |        |   |   |   |   |   |
| Net increase in cash and cash equivalents                                                  |   |   | 3,639,144   |   |   |   | 3,771,657 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                           |   |   | 24,736,354  |   |   |   | 20,062,492 |   |
|                                                                                       |   |   |        |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                 |   | $      | 28,375,498  |   |   | $      | 23,834,149 |   |

----

|                                                                                                    |   | 2010   |      |   | 2009   |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                                    |   |   |      |   |   |   |
|                                                                                                    |   |   |      |   |   |   |
| Supplemental cash flow information:                                                                     |   |   |      |   |   |   |
| Cash paid for interest                                                                                  |   | $      | 2,950,916 |   |   | $      | 4,694,453 |   |
|                                                                                                    |   |   |      |   |   |   |   |   |
| Noncash investing and financing activities:                                                             |   |   |      |   |   |   |   |   |
| Transfer from loans to other real estate owned                                                          |   | $      | 3,023,074 |   |   | $      | 4,215,782 |   |
| Internally financed sales of other real estate owned                                                    |   | $      | 2,127,850 |   |   | $      | - |   |
| Change in net unrealized gains (losses) on investment securities available for sale, net of tax benefit |   | $      | 623,239   |   |   | $      | 472,538 |   |

----

| (1)  | Basis of Presentation |
|-----------|-----------------------|

| (2)  | Net Earnings (Loss) Per Common Share |
|-----------|--------------------------------------|

| (3)  | Allowance for Loan Losses |
|-----------|---------------------------|

|                                         |   | Nine Months Ended September 30, |       |
|----------------------------------------------|--------|---------------------------------|------------|
|                                         |   | 2010                            |       |   | 2009 |   |
|                                         |   |                            |       |   |   |   |
| Balance at beginning of year                 |   | $                               | 3,497,292  |   |   |   | 4,215,262 |   |
| Amounts charged off                          |   |                            | (2,734,149 | ) |   |   | (985,924 | ) |
| Recoveries on amounts previously charged off |   |                            | 36,891     |   |   |   | 28,321 |   |
| Provision for loan losses                    |   |                            | 2,770,000  |   |   |   | 1,340,000 |   |
|                                         |   |                            |       |   |   |   |   |   |
| Balance at September 30                      |   | $                               | 3,570,034  |   |   |   | 4,597,659 |   |

----

| (4)  | Fair Value Measurements |
|-----------|-------------------------|

----

|                |   | Balance atSeptember 30, 2010 |   |   |           |   |   |      |   |   |      |   |
|---------------------|--------|------------------------------|--------|--------|----------------|--------|--------|-----------|--------|--------|-----------|--------|
|                |   | (In thousands)               |   |   | (Level 1)      |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets              |   |                         |   |   | (In thousands) |   |
| Securities          |   | $                            | 67,373 |   |           | $      | -      |      |   | $      | 67,373    |   |   | $ | - |   |
| Loans held for sale |   |                         | 297    |   |           |   | -      |      |   |   | 297       |   |   |   | - |   |

|       |   | Balance atDecember 31, 2009 |   |   |           |   |   |      |   |   |      |   |
|------------|--------|-----------------------------|--------|--------|----------------|--------|--------|-----------|--------|--------|-----------|--------|
|       |   | (In thousands)              |   |   | (Level 1)      |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets     |   |                        |   |   | (In thousands) |   |
| Securities |   | $                           | 66,903 |   |           | $      | -      |      |   | $      | 66,903    |   |   | $ | - |   |

|              |   | Balance at September 30, 2010 |   |   |           |   |   |      |   |   |      |   |
|-------------------|--------|------------------------------------|--------|--------|----------------|--------|--------|-----------|--------|--------|-----------|--------|
|              |   | (In thousands)                     |   |   | (Level 1)      |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets            |   |                               |   |   | (In thousands) |   |
| Impaired loans    |   | $                                  | 14,221 |   |           | $      | -      |      |   | $      | -         |   |   | $ | 14,221 |   |
| Other real estate |   |                               | 5,982  |   |           |   | -      |      |   |   | -         |   |   |   | 5,982 |   |

|              |   | Balance at December 31, 2009 |   |   |           |   |   |      |   |   |      |   |
|-------------------|--------|-----------------------------------|--------|--------|----------------|--------|--------|-----------|--------|--------|-----------|--------|
|              |   | (In thousands)                    |   |   | (Level 1)      |   |   | (Level 2) |   |   | (Level 3) |   |
| Assets            |   |                              |   |   | (In thousands) |   |
| Impaired loans    |   | $                                 | 17,706 |   |           | $      | -      |      |   | $      | -         |   |   | $ | 17,706 |   |
| Other real estate |   |                              | 6,915  |   |           |   | -      |      |   |   | -         |   |   |   | 6,915 |   |

----

|                                                           |   | September 30, 2010 |    |   | December 31, 2009 |   |
|----------------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                                           |   | Carrying           |    |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|                                                           |   | Amount             |    |   | Fair Value        |   |   | Amount |   |   | Fair Value |   |
| Assets:                                                        |   | (In thousands)     |    |   | (In thousands)    |   |
| Cash and cash equivalents                                      |   | $                  | 28,375  |   |              |   | 28,375 |   |   |   | 24,736 |   |   |   | 24,736 |   |
| Investment securities                                          |   | $                  | 67,373  |   |              |   | 67,373 |   |   |   | 66,903 |   |   |   | 66,903 |   |
| Restricted equity securities                                   |   | $                  | 556     |   |              |   | 556 |   |   |   | 556 |   |   |   | 556 |   |
| Mortgage loans held for sale                                   |   | $                  | 297     |   |              |   | 297 |   |   |   | - |   |   |   | - |   |
| Loans, net                                                     |   | $                  | 164,397 |   |              |   | 163,597 |   |   |   | 176,340 |   |   |   | 174,696 |   |
|                                                           |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                   |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits and securities sold under                             |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|        repurchase agreement |   | $                  | 251,617 |   |              |   | 251,607 |   |   |   | 260,256 |   |   |   | 260,651 |   |

| (5)  | Investments |
|-----------|-------------|

|                                               |   | September 30, 2010 |       |
|----------------------------------------------------|--------|--------------------|------------|
|                                               |   | AmortizedCost      |       |   | GrossUnrealized Gains |   |   | GrossUnrealized Losses |   |   | EstimatedFair  Value |   |
|                                               |   |               |       |   |   |   |   |   |   |   |   |   |
| U.S. Government-sponsored enterprises (GSEs)*      |   | $                  | 28,968,666 |   |   |   | 458,043 |   |   |   | (10,897 | ) |   |   | 29,415,812 |   |
| State, county and municipal                        |   |               | 11,368,066 |   |   |   | 242,532 |   |   |   | (73,660 | ) |   |   | 11,536,938 |   |
| Mortgage-backed securities – GSE residential |   |               | 23,865,918 |   |   |   | 1,032,213 |   |   |   | - |   |   |   | 24,898,131 |   |
| Corporate bonds                                    |   |               | 1,615,533  |   |   |   | - |   |   |   | (93,062 | ) |   |   | 1,522,471 |   |
|                                               |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $                  | 65,818,183 |   |   |   | 1,732,788 |   |   |   | (177,619 | ) |   |   | 67,373,352 |   |

----

|                                               |   | December 31, 2009 |       |
|----------------------------------------------------|--------|-------------------|------------|
|                                               |   | AmortizedCost     |       |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|                                               |   |              |       |   |   |   |   |   |   |   |   |   |
| U.S. Government-sponsored enterprises (GSEs)*      |   | $                 | 28,989,082 |   |   |   | 191,702 |   |   |   | (226,629 | ) |   |   | 28,954,155 |   |
| State, county and municipal                        |   |              | 11,223,018 |   |   |   | 124,977 |   |   |   | (193,576 | ) |   |   | 11,154,419 |   |
| Mortgage-backed securities – GSE residential |   |              | 24,522,979 |   |   |   | 800,214 |   |   |   | (12,795 | ) |   |   | 25,310,398 |   |
| Corporate bonds                                    |   |              | 1,617,611  |   |   |   | - |   |   |   | (133,300 | ) |   |   | 1,484,311 |   |
|                                               |   |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $                 | 66,532,690 |   |   |   | 1,116,893 |   |   |   | (566,300 | ) |   |   | 66,903,283 |   |

|   | * | Such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal Home Loan Banks. |
|--------|---|---------------------------------------------------------------------------------------------------------------------|

|                        |   | September 30, 2010  |      |
|-----------------------------|--------|---------------------|-----------|
|                        |   | Less than 12 Months |      |   | 12 Months or More |   |   |   |   |
|                        |   | FairValue           |      |   | GrossUnrealizedLosses |   |   | FairValue |   |   | GrossUnrealizedLosses |   |   | Total Unrealized Losses |   |
|                        |
| GSEs                        |   | $                   | 1,739,103 |   |   |   | 10,897 |   |   |   | - |   |   |   | - |   |   |   | 10,897 |   |
| State, county and municipal |   |                | -         |   |   |   | - |   |   |   | 1,237,560 |   |   |   | 73,660 |   |   |   | 73,660 |   |
| Corporate bonds             |   |                | 608,821   |   |   |   | 6,712 |   |   |   | 913,650 |   |   |   | 86,350 |   |   |   | 93,062 |   |
|                        |   |                |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   | $                   | 2,347,924 |   |   |   | 17,609 |   |   |   | 2,151,210 |   |   |   | 160,010 |   |   |   | 177,619 |   |

|                        |   | December 31, 2009   |       |
|-----------------------------|--------|---------------------|------------|
|                        |   | Less than 12 Months |       |   | 12 Months or More |   |   |   |   |
|                        |   | FairValue           |       |   | GrossUnrealizedLosses |   |   | FairValue |   |   | GrossUnrealizedLosses |   |   | Total Unrealized Losses |   |
|                        |
| GSEs                        |   | $                   | 16,378,577 |   |   |   | 226,629 |   |   |   | - |   |   |   | - |   |   |   | 226,629 |   |
| State, county and municipal |   |                | 2,117,963  |   |   |   | 71,729 |   |   |   | 1,178,181 |   |   |   | 95,351 |   |   |   | 167,080 |   |
| Mortgage-backed securities  |   |                | 5,861,084  |   |   |   | 39,291 |   |   |   | - |   |   |   | - |   |   |   | 39,291 |   |
| Corporate bonds             |   |                | -          |   |   |   | - |   |   |   | 1,484,311 |   |   |   | 133,300 |   |   |   | 133,300 |   |
|                        |   |                |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   | $                   | 24,357,624 |   |   |   | 337,649 |   |   |   | 2,662,492 |   |   |   | 228,651 |   |   |   | 566,300 |   |

----

|                       |   | AmortizedCost |       |   | EstimatedFair Value |   |
|----------------------------|--------|---------------|------------|--------|---------------------|--------|
| Due within one year        |   | $             | 999,827    |   |                |   | 999,888 |   |
| Due from one to five years |   |          | 1,315,153  |   |                |   | 1,229,387 |   |
| Due from five to ten years |   |          | 22,151,158 |   |                |   | 22,547,360 |   |
| Due after ten years        |   |          | 17,486,127 |   |                |   | 17,698,586 |   |
| Mortgage-backed securities |   |          | 23,865,918 |   |                |   | 24,898,131 |   |
|                       |   |          |       |   |                |   |   |   |
|                       |   | $             | 65,818,183 |   |                |   | 67,373,352 |   |

|                  |   | Three Months EndedSeptember 30, |   |   | Nine Months EndedSeptember 30, |   |
|-----------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
|                  |   | 2010                            |   |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                  |   |                            |   |   |                           |   |   |   |   |   |   |   |
| Proceeds from sales   |   | $                               | -      |   |                           |   | 5,448,403 |   |   |   | 9,235,775 |   |   |   | 12,937,169 |   |
|                  |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Gross gains realized  |   | $                               | -      |   |                           |   | 52,497 |   |   |   | 250,461 |   |   |   | 258,874 |   |
| Gross losses realized |   |                            | -      |   |                           |   | 8,154 |   |   |   | - |   |   |   | 8,154 |   |
|                  |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net gain realized     |   | $                               | -      |   |                           |   | 44,343 |   |   |   | 250,461 |   |   |   | 250,720 |   |

----

| (6)  | Accounting Standards Updates |
|-----------|------------------------------|

----

|   | · | the Board of Directors of the Bank must increase its participation in the affairs of the Bank and establish a Board committee responsible for ensuring compliance with the Order; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank must have and retain qualified management and notify the FDIC and the GDBF in writing when it proposes to add any individual to the Bank’s Board of Directors or employ any individual as a senior executive officer; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank must have and maintain a Tier 1 (Leverage) Capital ratio of not less than 8% and a Total Risk-based Capital ratio of at least 10%; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank must collect or charge-off problem loans; |
|--------|--------|----------------------------------------------------|

|   | · | the Bank must formulate a written plan to reduce the Bank’s adversely classified assets in accordance with a defined asset reduction schedule; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank may not extend any additional credit to, or for the benefit of, any borrower who has a loan or other extension of credit from the Bank that has been charged-off or adversely classified and is uncollected; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank must strengthen its lending and collection policy to provide effective guidance and control over the Bank’s lending functions; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank must perform a risk segmentation analysis with respect to concentrations of credit and reduce such concentrations; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | the Board of Directors of the Bank must review the adequacy of the allowance for loan and lease losses (the “ALLL”) and establish a comprehensive policy for determining the adequacy of the ALLL; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | the Bank must revise its budget and include formal goals and strategies to improve the Bank’s net interest margin, increase interest income, reduce discretionary expenses and improve and sustain earnings of the Bank; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank may not pay a cash dividend to Oconee Financial Corporation; |
|--------|--------|-----------------------------------------------------------------------|

|   | · | the Board of Directors of the Bank must strengthen its asset/liability management and interest rate risk policies and liquidity contingency funding plan, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank may not accept, renew or rollover brokered deposits without obtaining a brokered deposit waiver from the FDIC. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | the Bank must eliminate or correct all violations of law and contraventions of policy; |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | the Bank must submit quarterly reports to the FDIC and GDBF regarding compliance with the Order. |
|--------|--------|--------------------------------------------------------------------------------------------------|

|                                        |   | September 30, 2010 |    |   | December 31, 2009 |
|---------------------------------------------|--------|--------------------|---------|--------|-------------------|
|                                        |   | Amount             |    |   | Percentage        |   |   | Amount |   |   | Percentage |
| Commercial, financial and agricultural      |   | $                  | 25,655  |   |              |   | 15.3% |   |   | $ | 28,393 |   |   |   | 15.8% |
| Real estate – mortgage                |   |               | 116,651 |   |              |   | 69.4% |   |   |   | 114,253 |   |   |   | 63.6% |
| Real estate – commercial construction |   |               | 19,703  |   |              |   | 11.7% |   |   |   | 29,568 |   |   |   | 16.4% |
| Real estate – consumer construction   |   |               | 151     |   |              |   | 0.1% |   |   |   | 801 |   |   |   | 0.4% |
| Consumer                                    |   |               | 5,807   |   |              |   | 3.5% |   |   |   | 6,768 |   |   |   | 3.8% |
| Total loans                                 |   | $                  | 167,967 |   |              |   | 100.0% |   |   | $ | 179,783 |   |   |   | 100.0% |

----

|                                    |   | September 30, 2010 |   |   | December 31, 2009 |   |   | September 30, 2009 |   |
|-----------------------------------------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------------|--------|
| Other real estate owned                 |   | $                  | 5,982  |   |              |   | 6,915  |               |   |   | 5,665 |   |
| Repossessions                           |   |               | -      |   |              |   | 50     |               |   |   | - |   |
| Non-accrual loans                       |   |               | 15,972 |   |              |   | 17,706 |               |   |   | 22,203 |   |
| Accruing loans 90 days or more past due |   |               | -      |   |              |   | -      |               |   |   | 550 |   |
|                                    |   | $                  | 21,954 |   |              |   | 24,671 |               |   |   | 28,418 |   |

|                                             |   | 2010   |   |   | 2009   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Balance at January 1                             |   | $      | 6,915  |   |   |   | 1,777 |   |
| Transfer from loans to other real estate         |   |   | 3,023  |   |   |   | 4,216 |   |
| Capital Improvements on other real estate        |   |   | 211    |   |   |   | 165 |   |
| External and internal sales of other real estate |   |   | (3,480 | )      |   |   | (297 | ) |
| Net write-downs and loss on sales                |   |   | (687   | )      |   |   | (196 | ) |
| Balance at September 30                          |   | $      | 5,982  |   |   |   | 5,665 |   |

|                                   |   | Allocation of Allowance for Loan Losses |   |   | % of Allowance for Loan Losses |   |   | % of Loans by Category toTotal Loans |   |
|----------------------------------------|--------|----------------------------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|
| Commercial, financial and agricultural |   | $                                            | 798    |   |                           |   | 22.3%  |                                 |   |   | 15.3% |   |
| Real Estate - Construction             |   |                                         | 1,711  |   |                           |   | 47.9%  |                                 |   |   | 11.8% |   |
| Consumer                               |   |                                         | 111    |   |                           |   | 3.1%   |                                 |   |   | 3.5% |   |
| Real Estate - Mortgage                 |   |                                         | 917    |   |                           |   | 25.7%  |                                 |   |   | 69.4% |   |
| Unallocated                            |   |                                         | 33     |   |                           |   | 1.0%   |                                 |   |   | 0.0% |   |
| Total                                  |   | $                                            | 3,570  |   |                           |   | 100.0% |                                 |   |   | 100.0% |   |

----

----

|                                                                                      |   | Three Months Ending |   |   | Nine Months Ending |   |
|-------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------------------|--------|
|                                                                                      |   | September 30,       |   |   | September 30,      |   |
|                                                                                      |   | 2010                |   |   | 2009               |   |   | 2010 |   |   | 2009 |   |
|                                                                                      |   |                |   |   |               |   |   |   |   |   |   |   |
| Balance at beginning of period                                                            |   | $                   | 3,552  |   |               | $      | 4,689 |   |   | $ | 3,497 |   |   | $ | 4,215 |   |
| Charges-offs:                                                                             |   |                |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural                                                    |   |                | 150    |   |               |   | 139 |   |   |   | 150 |   |   |   | 194 |   |
| Installment                                                                               |   |                | 13     |   |               |   | 19 |   |   |   | 32 |   |   |   | 57 |   |
| Real Estate                                                                               |   |                | 1,186  |   |               |   | 181 |   |   |   | 2,552 |   |   |   | 734 |   |
| Total charge-offs                                                                         |   |                | 1,349  |   |               |   | 339 |   |   |   | 2,734 |   |   |   | 985 |   |
| Recoveries:                                                                               |   |                |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Commercial, financial and agricultural                                                    |   |                | -      |   |               |   | 1 |   |   |   | 6 |   |   |   | 5 |   |
| Installment                                                                               |   |                | 17     |   |               |   | 7 |   |   |   | 24 |   |   |   | 23 |   |
| Real Estate                                                                               |   |                | -      |   |               |   | - |   |   |   | 7 |   |   |   | - |   |
| Total recoveries                                                                          |   |                | 17     |   |               |   | 8 |   |   |   | 37 |   |   |   | 28 |   |
| Net charge-offs                                                                           |   |                | 1,332  |   |               |   | 331 |   |   |   | 2,697 |   |   |   | 957 |   |
| Provisions charged to operations                                                          |   |                | 1,350  |   |               |   | 240 |   |   |   | 2,770 |   |   |   | 1,340 |   |
| Balance at end of period                                                                  |   | $                   | 3,570  |   |               | $      | 4,598 |   |   | $ | 3,570 |   |   | $ | 4,598 |   |
| Ratio of net charge-offs during the period to average loans outstanding during the period |   |                | 0.77%  |   |               |   | 0.18% |   |   |   | 1.54% |   |   |   | 0.50% |   |

----

----

----

| Risk-Based Capital Ratios               |   | September 30,2010 |   | December 31,2009 |
|-----------------------------------------|--------|-------------------|--------|------------------|
|                                    |   |              |   |             |   |   |
| Tier 1 Capital, Actual                  |   |              | 12.8   | %                |   |   | 12.2 | % |
| Tier 1 Capital minimum requirement      |   |              | 4.0    | %                |   |   | 4.0 | % |
|                                    |   |              |   |             |   |   |   |   |
| Excess                                  |   |              | 8.8    | %                |   |   | 8.2 | % |
|                                    |   |              |   |             |   |   |   |   |
| Total Capital, Actual                   |   |              | 14.2   | %                |   |   | 13.5 | % |
| Total Capital minimum requirement       |   |              | 8.0    | %                |   |   | 8.0 | % |
|                                    |   |              |   |             |   |   |   |   |
| Excess                                  |   |              | 6.2    | %                |   |   | 5.5 | % |
|                                    |   |              |   |             |   |   |   |   |
| Leverage Ratio                          |   |              |   |             |   |   |   |   |
|                                    |   |              |   |             |   |   |   |   |
| Tier 1 Capital to adjusted total assets |   |              | 8.3    | %                |   |   | 8.3 | % |
| Minimum leverage requirement            |   |              | 4.0    | %                |   |   | 4.0 | % |
|                                    |   |              |   |             |   |   |   |   |
| Excess                                  |   |              | 4.3    | %                |   |   | 4.3 | % |

| Item 3.  | Qualitative and Quantitative Disclosures about Market Risk. |
|---------------|-------------------------------------------------------------|

| Item 4T.  | Controls and Procedures. |
|----------------|--------------------------|

----

| (a)   | Exhibits |                                                                                                                                                                          |
|-----------------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            | 10.1     | Order to Cease and Desist, dated August 18, 2009, and Stipulation and Consent thereto.                                                                                   |
|            | 31.1     | Certification by B. Amrey Harden, CEO and President of the Corporation, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                            |
|            | 31.2     | Certification by Steven A. Rogers, Vice President and Chief Financial Officer of the Corporation, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  |
|            | 32       | Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                       |

----

|   |           OCONEE FINANCIAL CORPORATION  By: /s/ B. Amrey Harden       B. Amrey Harden, President and CEO       (Principal Executive Officer) Date:    November 15, 2010    By: /s/ Steven A. Rogers       Steven A. Rogers, Vice President and CFO       (Principal Financial Officer) Date:    November 15, 2010      |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----