##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K







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

For the Fiscal Year Ended June 30, 2011

OR



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

For the transition period from  to

Commission File Number: 001-34593





OBA Financial Services, Inc.

(Name of Registrant as Specified in its Charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Maryland                                                       |  | 27-1898270                             
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|20300 Seneca Meadows Parkway, Germantown, Maryland             |  | 20876                                  
|(Address of Principal Executive Office)                        |  | (Zip Code)                             

(301) 916-0742

(Registrants Telephone Number including area code)

Securities
Registered pursuant to Section 12(b) of the Act:

Common Stock, par value $0.01 per share

(Title of Class)

The NASDAQ Stock Market LLC

(Name of exchange on which registered)

Securities Registered Under Section 12(g) of the Exchange Act:

None





Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES   ̈    NO  x

Indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 of 15(d) of the Act.    YES   ̈    NO  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file reports), and (2) has been subject to such requirements for the past 90 days.

(1)    YES  x    NO   ̈

(2)    YES  x    NO   ̈

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).    Yes   ̈    No   ̈

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check
one):



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  | x

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

The aggregate value of the voting common equity held by non-affiliates of the Registrant, computed by reference to the closing price of
the Registrants shares of common stock as of December 31, 2010 ($13.82) was $63.0 million.

As of September 23,
2011, there were 4,395,200 shares outstanding of the Registrants common stock.







DOCUMENTS INCORPORATED BY REFERENCE

1. Proxy Statement for the 2011 Annual Meeting of Stockholders (Part II and III)









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##### Table of Contents

OBA FINANCIAL SERVICES, INC.

FORM 10-K

INDEX



|           |  |                                                                                                              |    |  |    | 
|---------- |  | ------------------------------------------------------------------------------------------------------------ | -- |  | -- | 
|PART I     |  |                                                                                                              |    |  |    | 
|           |  |                                                                                                             
|           |  | Forward-Looking Statements Disclosure                                                                        |    |  | 2  | 
|           |  |                                                                                                             
|Item 1.    |  | Business                                                                                                     |    |  | 4  | 
|           |  |                                                                                                             
|Item 1A.   |  | Risk Factors                                                                                                 |    |  | 19 | 
|           |  |                                                                                                             
|Item 1B.   |  | Unresolved Staff Concerns                                                                                    |    |  | 25 | 
|           |  |                                                                                                             
|Item 2.    |  | Properties                                                                                                   |    |  | 25 | 
|           |  |                                                                                                             
|Item 3.    |  | Legal Proceedings                                                                                            |    |  | 25 | 
|           |  |                                                                                                             
|Item 4.    |  | [Reserved]                                                                                                   |    |  | 25 | 
|           |  |                                                                                                             
|PART II    |  |                                                                                                              |    |  |    | 
|           |  |                                                                                                             
|Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |    |  | 26 | 
|           |  |                                                                                                             
|Item 6.    |  | Selected Financial Data                                                                                      |    |  | 28 | 
|           |  |                                                                                                             
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |    |  | 30 | 
|           |  |                                                                                                             
|Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |    |  | 53 | 
|           |  |                                                                                                             
|Item 8.    |  | Financial Statements and Supplementary Data                                                                  |    |  | 54 | 
|           |  |                                                                                                             
|Item 9.    |  | Changes in And Disagreements With Accountants on Accounting and Financial Disclosure                         |    |  | 90 | 
|           |  |                                                                                                             
|Item 9A.   |  | Controls and Procedures                                                                                      |    |  | 90 | 
|           |  |                                                                                                             
|Item 9B.   |  | Other Information                                                                                            |    |  | 90 | 
|           |  |                                                                                                             
|PART III   |  |                                                                                                              |    |  |    | 
|           |  |                                                                                                             
|Item 10.   |  | Directors, Executive Officers, and Corporate Governance                                                      |    |  | 91 | 
|           |  |                                                                                                             
|Item 11.   |  | Executive Compensation                                                                                       |    |  | 91 | 
|           |  |                                                                                                             
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |    |  | 91 | 
|           |  |                                                                                                             
|Item 13.   |  | Certain Relationships and Related Transactions and Director Independence                                     |    |  | 91 | 
|           |  |                                                                                                             
|Item 14.   |  | Principal Accountant Fees and Services                                                                       |    |  | 91 | 
|           |  |                                                                                                             
|PART IV    |  |                                                                                                              |    |  |    | 
|           |  |                                                                                                             
|Item 15.   |  | Exhibits and Financial Statement Schedules                                                                   |    |  | 92 | 
|           | 
|Signatures |  |                                                                                                              | 93 | 



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Forward-looking Statements

This report, as well as other written communications made from time to time by OBA Financial Services, Inc., and its subsidiary, OBA
Bank, (collectively, the Company) and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business
trends) that are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements can be identified by the use of words such as
estimate, project, believe, intend, anticipate, plan, seek, expect, will, may, potential, and words of similar
meaning. These forward-looking statements include, but are not limited to:



| |  |  | possible or assumed estimates with respect to the financial condition, expected or anticipated revenue, and results of operations and business of the
Company, including earnings growth determined using accounting principles generally accepted in the United States of America (U.S. GAAP);
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | estimates of revenue growth in retail banking, lending, and other areas and origination volume in the Companys consumer, commercial, and other
lending businesses;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | statements regarding the asset quality and levels of non-performing assets and impairment charges with respect to the Banks investment portfolio;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | statements regarding current and future capital management programs, tangible capital generation, and market share;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | estimates of non-interest income levels, including fees from services and product sales, and expense levels;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | statements of the Companys goals, intentions, and expectations;
| | - |  | ----------------------------------------------------------------



| |  |  | statements regarding the Companys business plans, prospects, growth, and operating strategies; and
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | estimates of the Companys risks and future costs and benefits.
| | - |  | ---------------------------------------------------------------

The Company cautions that a number of important factors could cause actual results to differ materially from the anticipated results or
other expectations expressed in the forward-looking statements. Such factors include, but are not limited to:



| |  |  | prevailing general economic conditions, either nationally or locally in some or all areas in which the Company conducts business;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the securities market, the banking industry, or competition among depository and other financial institutions;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | inflation and changes in interest rates, deposit flows, loan demand, real estate values, consumer spending, savings, and borrowing habits which can
materially affect, among other things, consumer banking revenues, origination levels in the Companys lending businesses and the level of defaults, losses, and prepayments on loans made by the Company, whether held in portfolio or sold in the
secondary markets, and the Companys margin and fair value of financial instruments;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in any applicable law, rule, government regulation, policy, or practice with respect to tax or legal issues affecting financial institutions,
including changes in regulatory fees and capital requirements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | risks and uncertainties related to the Companys ability to successfully integrate any assets, liabilities, customers, systems, and management
personnel the Company may acquire, if any, into its operations and its ability to realize related revenue synergies and cost savings within the expected time frame;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys timely development of new and competitive products or services in a changing environment, and the acceptance of such products or
services by the Companys customers so the Company is able to enter new markets successfully and capitalize on growth opportunities;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | operational issues and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems, on which
it is highly dependent;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in accounting principles, policies, guidelines, and practices, as may be adopted by the Companys regulatory agencies, the Financial
Accounting Standards Board (FASB), the Securities and Exchange Commission (SEC), and the Public Company Accounting Oversight Board (PCAOB), or changes to the Companys primary banking regulator;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | litigation liability, including costs, expenses, settlements, and judgments, or the outcome of other matters before regulatory agencies, whether
pending or commencing in the future;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the quality or composition of the investment and loan portfolios;
| | - |  | ----------------------------------------------------------------------------



| |  |  | changes in the Companys organization, compensation, and benefit plans;
| | - |  | -----------------------------------------------------------------------



| |  |  | changes in other economic, competitive, governmental, regulatory, and technological factors affecting the Companys operations, pricing, products,
and services; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the timing and occurrence or non-occurrence of events that may be subject to circumstances beyond the Companys control.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

These forward-looking statements are based on the Companys current beliefs and expectations and are
inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the Companys control. In addition, these forward-looking statements are subject to assumptions with respect to
future business strategies and decisions that are subject to change. Readers are cautioned not to place undue reliance on these forward-looking statements which are made as of the date of this report, and except as may be required by applicable law
or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. For these statements, the Company claims the
protection of the safe harbor for forward-looking statements contained in the PSLRA.



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PART I



|ITEM 1. | Business
|------- | --------

OBA
Financial Services, Inc.

OBA Financial Services, Inc. is a Maryland corporation that owns 100% of the common stock of
OBA Bank (the Bank). On January 21, 2010, the Company completed its initial public offering of common stock in connection with the mutual-to-stock conversion of OBA Bancorp, MHC, selling 4,628,750 shares of common stock at $10.00
per share and raising $46.3 million of gross proceeds. Since the completion of the initial public offering, the Company has not engaged in any significant business activity other than owning the common stock of and having deposits in the Bank. At
June 30, 2011, the Company had consolidated assets of $386.4 million, consolidated deposits of $257.0 million, and consolidated stockholders equity of $80.9 million.

The Companys executive offices are located at 20300 Seneca Meadows Parkway, Germantown, Maryland 20876. The Companys
telephone number at this address is (301) 916-0742.

OBA Bank

The Bank is a federally chartered savings bank headquartered in Germantown, Maryland. The Bank was organized in 1861, and reorganized into
the mutual holding company structure in 2007. The Bank is a wholly-owned subsidiary of OBA Financial Services, Inc. The Bank provides financial services to individuals, families, and businesses through five banking offices located in the Maryland
counties of Montgomery and Howard.

The Banks executive offices are located at 20300 Seneca Meadows Parkway, Germantown,
Maryland 20876. The Banks telephone number at this address is (301) 916-0742.

Available Information

OBA Financial Services, Inc. is a public company and files interim, quarterly, and annual reports with the SEC. These
respective reports are on file and a matter of public record with the SEC and may be read and copied at the SECs Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC
(http://www.sec.gov).

The Companys and the Banks website address is www.obabank.com. Information on
this website should not be considered a part of this annual report.

General

The Banks business consists primarily of accepting deposits from the general public and investing those deposits, together with
funds generated from operations and borrowings, in commercial real estate loans, commercial business loans, one- to four-family residential mortgage loans, home equity loans and lines of credit, and investment securities. To a lesser extent, the
Bank also originates construction loans and consumer loans. The Bank offers a variety of deposit accounts, including statement savings accounts, certificates of deposit, money market accounts, commercial and regular checking accounts, and individual
retirement accounts.

Market Area

The Banks operations are conducted from four full-service branch offices located in Montgomery County, Maryland, which is on the northwest border of Washington, D.C., as well as, the Banks
full-service branch office located in Howard County, Maryland. Government, professional and business services, and education and health services are the leading industries. Maryland has a larger share of professional, technical, and government jobs
and a smaller share of manufacturing jobs than the United States.



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Maryland has a civilian labor force of approximately three million. The unemployment rate
consistently remains below the national average of 9.1%. The state of Maryland unemployment rate is 7.0% for June 2011, down from 7.4% in June of 2010. Unemployment rates for Montgomery and Howard Counties are 5.6% and 5.5%, respectively, showing
little variation for the past several quarters.

Total housing starts in the United States are near historic lows,
approximately 600 thousand units per year, as compared to the 50-year annual average of 1.5 million units per year. The average sales price of Maryland homes increased from $319,413 in July 2010 to $333,317 in July 2011. The average sales
price of homes in Howard County, Maryland decreased to $419,131 during the first seven months of 2011 while Montgomery County, Maryland the average sales price rose to $506,176 during the first seven months of 2011.

Based on the 2009 United States Census data, the median household income for Howard and Montgomery Counties is $101,003 and $92,213,
respectively. This ranks Howard County fourth versus all other counties in the United States and ranks Montgomery County eleventh versus all other counties in the United States.

Competition

The Bank faces intense competition in making loans and attracting deposits in the market areas served by the Bank. The Bank competes with commercial banks, savings institutions, mortgage brokerage firms,
credit unions, finance companies, mutual funds, insurance companies, and investment banking firms. Some competitors have greater name recognition and market presence that benefit them in attracting business and offer certain services that the bank
does not or cannot provide.

Lending Activities

The Banks primary lending activities are the origination of commercial real estate loans, commercial business loans, one- to
four-family residential mortgage loans, and home equity loans and lines of credit. To a lesser extent, the Bank also originates construction loans and consumer loans.

Commercial Real Estate Loans. At June 30, 2011, $108.8 million, or 38.6 %, of the total loan portfolio, consisted of commercial real estate loans as compared to $85.4 million, or
30.7%, at June 30, 2010. Properties securing the Banks commercial real estate loans primarily include small office buildings, office suites, and churches. The Bank is seeking to originate more loans for business owner-occupied properties.
The Bank typically seeks to originate commercial real estate loans with initial principal balances of $2.5 million or less. All of the Banks commercial real estate loans are secured by properties located in the Banks primary market area.

In the underwriting of commercial real estate loans, the Bank generally lends up to the lesser of 80% of the propertys
appraised value or purchase price. The credit decision is based primarily on the economic viability of the property and the creditworthiness of the borrower. In evaluating a proposed commercial real estate loan, the ratio of the propertys
projected net cash flow to the loans debt service requirement, generally requiring a minimum ratio of 125%, is emphasized and is computed after deductions for a vacancy factor and property expenses, as deemed appropriate. Personal guarantees
are usually obtained from commercial real estate borrowers. The Bank requires title insurance, fire and extended coverage casualty insurance, and, if appropriate, flood insurance, in order to protect the Banks security interest in the
underlying property. Almost all of the Banks commercial real estate loans are generated internally by the Banks loan officers.

Commercial Business Loans. At June 30, 2011, commercial business loans totaled $35.9 million, or 12.7%, of the Banks total loans as compared to $26.2 million, or 9.4%, of the
Banks total loans at June 30, 2010. The Bank makes secured and unsecured business loans primarily to small and medium sized businesses primarily located in Montgomery and Howard Counties, Maryland. The Bank is well diversified from an
industry perspective with no major concentrations in any industry. Commercial business loans, both fixed and adjustable rate, consist of term loans as well as closed-end and open-end lines of credit for the purpose of current asset



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financing, equipment purchases, working capital, and other general business purposes. The adjustable-rate is generally indexed to a short-term market rate. The Bank seeks to originate loans with
principal balances between $100 thousand and $2.5 million. Generally, The maximum term of a commercial business loan is ten years.

Construction Loans.At June 30, 2011, construction loans totaled $1.2 million, or 0.4%, of the Banks total loans as compared to $1.1 million, or 0.4%, of the Banks total
loans at June 30, 2010. The Bank makes construction loans for rental properties, commercial buildings, and homes built by developers on speculative, undeveloped property. The terms of commercial construction loans are made in accordance with
the Banks commercial loan policy. Advances on construction loans are made in accordance with a schedule reflecting the cost of construction, but are generally limited to an 80% loan-to-completed-appraised-value ratio. Generally, before making
a commitment to fund a construction loan, the Bank requires an appraisal of the property by a state-certified or state-licensed appraiser. The Bank reviews and inspects all properties before disbursement of funds during the term of the construction
loan. Repayment of construction loans on residential properties is normally expected from the propertys eventual rental income, income from the borrowers operating entity, or the sale of the subject property. In the case of
income-producing property, repayment is usually expected from permanent financing upon completion of construction. Construction loans are interest-only loans during the construction period, which generally will not exceed twelve months,
and convert to permanent, fully amortizing financing following the completion of construction. The Bank typically provides the permanent mortgage financing on the Banks construction loans on income-producing property.

One- to Four-Family Residential Mortgage Loans. At June 30, 2011, $97.3 million, or 34.5%, of the Banks total
loan portfolio consisted of one- to four-family residential mortgage loans as compared to $123.5 million, or 44.5%, at June 30, 2010. The Bank offers fixed-rate and adjustable-rate residential mortgage loans with maturities generally up to 30
years.

One- to four-family residential mortgage loans are generally underwritten according to Freddie Mac guidelines. The
Bank refers to loans that conform to such guidelines as conforming loans. The Bank generally originates both fixed and adjustable rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal
Housing Finance Agency, which is generally $417 thousand for single-family homes, but is $729,750 for single-family homes located in the Washington, DC metropolitan area. The Bank also originates loans above the amounts for conforming loans, which
are referred to as jumbo loans. The Banks maximum loan amount for jumbo loans is generally $1.0 million. The Bank generally underwrites jumbo loans in a manner similar to conforming loans. Jumbo loans are not uncommon in the
Banks market area. Loans in excess of $417 thousand are generally originated for retention in the Banks loan portfolio.

The Bank originates loans with loan-to-value ratios up to 95%. The Bank generally requires private mortgage insurance for loans with loan-to-value ratios in excess of 80%. During the year ended
June 30, 2011, the Bank did not originate any one- to four-family residential mortgage loans with loan-to-value ratios in excess of 80%. The Bank currently retains the servicing rights on loans sold to generate servicing fee income and cross
selling opportunities.

The Bank offers special programs for first-time home buyers and low and moderate-income home buyers.
Through the Banks first-time home buyer program, the borrowers could potentially qualify for grant funds which could be applied as a credit towards closing costs. Under the Banks affordable housing program, the Bank waives certain
processing and underwriting fees and reduces the appraisal fee for those buyers that meet the programs qualifications, which for calendar year 2011 are: (i) a maximum sales price of $364,650; (ii) a maximum loan amount of $346,418;
and (iii) maximum combined income of $89,300.

Other than the Banks loans for the construction of one- to
four-family residential mortgage loans and home equity lines of credit, the Bank does not offer interest only mortgage loans on one- to four-family residential properties. An interest only loan is defined as the borrower paying interest
only for an initial period, after which the loan converts to a fully amortizing loan. Additionally, the Bank does not offer loans that provide for negative



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amortization of principal, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. The Bank does not offer
subprime loans, loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as
evidenced by low credit scores or high debt-burden ratios, or Alt-A loans, traditionally defined as loans having less than full documentation.

Home Equity Loans and Lines of Credit.At June 30, 2011, $38.8 million, or 13.8%, of the total loan portfolio, consisted of home equity loans and lines of credit as compared to $41.7
million, or 15.0%, at June 30, 2010. Home equity loans and home equity lines of credit are, generally, secured by the borrowers primary residence or secondary residence. The Banks home equity loans are originated with fixed rates of
interest and with terms of up to 30 years. Home equity lines of credit have a maximum term of 25 years. The borrower is permitted to draw against the line during the first ten years of the line of credit. During this draw period, repayments are made
on an interest-only basis. After this initial ten-year draw period, the borrower is required to make payments to principal based on a 15-year amortization.

The home equity lines of credit are currently originated with adjustable rates of interest. Home equity loans and lines of credit are generally underwritten with the same criteria that are used to
underwrite one- to four-family residential mortgage loans. For a borrowers primary residence, home equity loans and lines of credit may be underwritten with a maximum loan-to-value ratio of 90% when combined with the principal balance of the
existing mortgage loan, while the maximum loan-to-value ratio on secondary residences and investment properties is 75% when combined with the principal balance of the existing mortgage loan. Generally, the Bank requires that home equity loans and
lines of credit be underwritten with a loan-to-value ratio of no greater than 75% when combined with the principal balance of the existing mortgage loan and that, secondary residences and investment properties be underwritten with loan-to-value
ratio of 70% when combined with the principal balance of the existing mortgage loan.

The Bank requires appraisals on home
equity loans and lines of credit. At the time of closing a home equity loan or line of credit, the Bank records the mortgage to perfect the security interest in the underlying collateral. At June 30, 2011 the Banks self-imposed maximum
limit for a home equity loan or a line of credit was generally $200 thousand.

Loan Originations, Purchases, Sales,
Participations and Servicing.All loans originated are underwritten pursuant to the Banks policies and procedures, which incorporate standard underwriting guidelines, including those of Freddie Mac, to the extent applicable. The Bank
originates both adjustable-rate and fixed-rate loans. Most of the Banks one- to four-family residential mortgage loan originations are generated by the Banks employees located in the Banks branch offices and corporate headquarters.

Historically, the Bank has retained, in portfolio, the significant majority of originated loans. Loans sold by the Bank are
sold without recourse, except for normal representations and warranties provided in sale transactions. Historically, the Bank has retained the servicing rights on sold residential mortgage loans. The Bank intends to continue this practice, subject
to the pricing of retaining servicing rights. Loan servicing includes collecting and remitting loan payments, accounting for principal and interest, contacting delinquent borrowers, supervising foreclosures and property dispositions in the event of
un-remedied defaults, making certain insurance and tax payments on behalf of the borrowers, and generally administering the loans. The Bank retains a portion of the interest paid by the borrower on the loans serviced as consideration for the
servicing activities.

During the fiscal years ended 2011 and 2010, the Bank did not have to repurchase any loans or provide
loss reimbursement on loans sold to Freddie Mac.

From time to time, the Bank enters into participations in commercial loans
with other banks. In these circumstances, the Bank will generally follow the Banks customary loan underwriting and approval policies.



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Loan Approval Procedures and Authority. The Banks lending activities
follow written, non-discriminatory underwriting standards and loan origination procedures established by the Banks Board of Directors. The loan approval process is intended to assess the borrowers ability to repay the loan and value of
the property that will secure the loan. To assess the borrowers ability to repay, the Bank reviews the borrowers employment and credit history and information on the historical and projected income and expenses of the borrower. The Bank
requires full documentation on all loan applications.

Management establishes the Banks policies and loan approval
limits, which are approved by the Board of Directors. Consumer loans in amounts up to $100 thousand, residential real estate loans up to the Freddie Mac conforming loan limit, and commercial loans up to $2.0 million can be approved by designated
individual officers or officers acting together with specific lending approval authority. Relationships in excess of these amounts require the approval of the Board of Directors or its loan committee.

The Bank requires appraisals for all real property securing one- to four-family residential, commercial real estate loans and home equity
loans and lines of credit. All appraisals are performed by state-licensed or state-certified appraisers. The Banks practice is to have local appraisers approved annually by the Board of Directors.

Investments

The Banks securities portfolio at June 30, 2011 consisted primarily of mortgage-backed securities issued by U.S. Government agencies and U.S. Government-sponsored enterprises. Investment
securities had an amortized cost of $38.3 million at June 30, 2011. At June 30, 2011, $3.6 million of the securities portfolio was designated as held-to-maturity and $34.7 million of the securities portfolio was classified as available for
sale.

See Managements Discussion of Financial Condition and Results of OperationsBalance Sheet
AnalysisSecurities for a discussion of the recent performance of the Banks securities portfolio.

The
Banks Investment Committee, which is comprised of the Boards Executive Committee and the Banks Chief Financial Officer, has primary responsibility for establishing and overseeing the investment policy. The general investment
strategies are developed and authorized by the Investment Committee. The Banks President and the Chief Financial Officer are responsible for the execution of specific investment actions. These officers are authorized to execute investment
transactions of up to $1.0 million per transaction without the Investment Committees prior approval provided the transactions are within the scope of the established investment policy. The investment policy is reviewed annually by the
Investment Committee and changes to the policy are subject to approval by the full Board of Directors. Investment policy objectives include providing liquidity necessary to conduct business activities of the Bank, collateral for pledging, a
portfolio of high credit quality assets, and enhancing profitability within the overall asset/liability management objectives of the Bank. All gains and losses on securities transactions are reported to the Board of Directors on a monthly basis.

The Banks current investment policy permits, among other securities, investments in securities issued by the U.S.
Government as well as mortgage-backed securities and direct obligations of Fannie Mae, Freddie Mac and Ginnie Mae. In September 2008, the Federal Housing Finance Agency placed Freddie Mac and Fannie Mae into conservatorship. The U.S. Treasury
Department has established financing agreements to ensure that Freddie Mac and Fannie Mae meet their obligations to holders of mortgage-backed securities that they have issued or guaranteed. These actions have not affected the markets for
mortgage-backed securities issued by Freddie Mac or Fannie Mae. The Banks current investment policy does not permit investment in stripped mortgage-backed securities or derivatives as defined in federal banking regulations, or in other
high-risk securities. The investment policy permits, with certain limitations, investments in certificates of deposit, collateralized mortgage obligations, auction rate/money market preferred securities, and mutual funds, limited to adjustable rate
mortgage funds. The policy also permits investments in equity securities, generally limited to agency and Federal Home Loan Bank of Atlanta common and preferred stock. The Banks investment in equity securities outside the policys general
limitation totaled $50 thousand at June 30, 2011.



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The Banks investment policy expressly prohibits the use of the investment portfolio
for market-oriented trading activities or speculative purposes unless otherwise approved by the Board of Directors. The Bank does not intend to profit in the investment account from short-term securities price movements. Accordingly, the Bank does
not currently have a trading account for investment securities.

Accounting guidance requires that, at the time of purchase,
the Bank designate a security as either held to maturity, available-for-sale, or trading, based upon the Banks ability and intent to hold the security. Securities available-for-sale and trading securities are reported at fair value and
securities held to maturity are reported at amortized cost. A periodic review and evaluation of the available-for-sale and held-to-maturity securities portfolios is conducted to determine if the fair value of any security has declined below its
carrying value and whether such decline is other-than-temporary. The fair values of mortgage-backed securities, which, at June 30, 2011, comprised the significant majority of the investment portfolio, are based on quoted market prices or, when
quoted prices in active markets for identical assets are not available, are based on matrix pricing, which is a mathematical technique that relies on the securities relationship to other benchmark quoted prices.

Mortgage-backed securities are securities issued in the secondary market that are collateralized by pools of mortgages. Certain types of
mortgage-backed securities are commonly referred to as pass-through certificates because the principal and interest of the underlying loans are passed through to investors, net of certain costs, including servicing and
guarantee fees. Mortgage-backed securities typically are collateralized by pools of one- to four-family or multifamily mortgages. The Bank invests primarily in mortgage-backed securities backed by one- to four-family mortgages. The issuers of such
securities pool the loans and resell the participation interests in the form of securities to investors. The interest rate on the security is lower than the interest rates on the underlying loans to allow for payment of servicing and guaranty fees.
Ginnie Mae, a U.S. Government agency, and Fannie Mae and Freddie Mac, either guarantee the payments or guarantee the timely payment of principal and interest to investors. Mortgage-backed securities are more liquid than individual mortgage
loans since there is an active trading market for such securities. In addition, mortgage-backed securities may be used to collateralize borrowings. Investments in mortgage-backed securities include a risk that actual principal payments will be
greater or less than the prepayment rate estimated at the time of purchase, or prepayment risk. The difference in expected cash flow may require adjustments to the amortization of premium or accretion of discount relating to the security, thereby
affecting the net yield on the security.

Sources of Funds

General.Deposits traditionally have been the primary source of funds for investment and lending activities. The Bank also
borrows from the Federal Home Loan Bank of Atlanta and from securities dealers to supplement cash flow needs, to change the maturity of liabilities for interest rate risk management purposes, and to manage the Banks cost of funds. Additional
sources of funds are scheduled loan payments, maturing investments, loan repayments, customer repurchase agreements, retained earnings, income on other earning assets, and the proceeds of loan sales.

Deposits.At June 30, 2011 total deposits were $257.0 million. The Bank accepts deposits primarily from the areas in
which the Banks offices are located. The Bank relies on competitive pricing and products, convenient locations, and quality customer service to attract and retain deposits. The Bank offers a variety of deposit accounts with a range of interest
rates and terms. The deposit accounts consist of statement savings accounts, certificates of deposit, money market and regular checking accounts. The Bank accepts deposits through the Certificate of Deposit Account Registry Service
(CDARS) program, which are classified as brokered deposits for regulatory purposes and can accept brokered deposits.

Interest rates paid, maturity terms, service fees, and withdrawal penalties are reviewed and adjusted on a periodic basis by Management. Deposit rates and terms are based primarily on current operating
strategies, market interest rates, liquidity requirements, and the Banks deposit growth goals.



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Borrowings.The Banks borrowings consist of advances from the Federal
Home Loan Bank of Atlanta and funds borrowed from securities dealers and customers under repurchase agreements. At June 30, 2011, Federal Home Loan Bank advances totaled $29.6 million, or 9.7% of total liabilities and repurchase agreements
totaled $15.6 million, or 5.1% of total liabilities. At June 30, 2011, the Bank had access to additional Federal Home Loan Bank advances of up to $39.5 million. Advances from the Federal Home Loan Bank of Atlanta are secured by pledged
mortgage-backed securities, as well as, a blanket pledge on various categories of assets. Repurchase agreements are generally secured by mortgage-backed securities.

Personnel

As of June 30, 2011, the Company had 64 full-time
employees and five part-time employees. The Companys employees are not represented by any collective bargaining group. Management believes that there is a good working relationship with the Companys employees.

FEDERAL AND STATE TAXATION

Federal Taxation

General.OBA Financial Services, Inc. and
OBA Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters
and is not a comprehensive description of the tax rules applicable to OBA Financial Services, Inc. and OBA Bank.

Method
of Accounting. For federal income tax purposes, the Bank files a consolidated tax return with OBA Financial Services, Inc., reports its income and expenses on the accrual method of accounting, and uses a tax year ending June 30th
for filing their consolidated federal income tax returns.

Minimum Tax. The Internal Revenue Code of 1986, as
amended, imposes an alternative minimum tax at a rate of 20.0% on a base of regular taxable income plus certain tax preferences, referred to as alternative minimum taxable income. The alternative minimum tax is payable to the extent
alternative minimum taxable income is in excess of an exemption amount. Net operating losses can, in general, offset no more than 90.0% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against
regular tax liabilities in future years. At June 30, 2011, the Company had approximately $118 thousand in minimum tax credit carry forwards.

Net Operating Loss Carryovers. Generally, a financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years.
However, as a result of recent legislation, subject to certain limitations, the carry back period for net operating losses incurred in 2008 or 2009 (but not both years) has been expanded to five years. At June 30, 2011, the Company had
approximately $1.1 million of net operating losses to be carried back and/or forward for federal income tax purposes.

Corporate Dividends.OBA Financial Services, Inc. can exclude from its income 100.0% of dividends received from OBA Bank as
a member of the same affiliated group of corporations.

Audit of Tax Returns.The Companys federal income
tax returns, as applicable, have not been audited in the most recent five-year period.

State Taxation

The State of Maryland imposes an income tax of approximately 8.25% and the District of Columbia imposes an income tax of approximately
9.975% on income measured substantially the same as federally taxable income, except that U.S. Government interest is not fully taxable. The Companys state income tax returns, as applicable, have not been audited in the most recent five-year
period.



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SUPERVISION AND REGULATION

General

The Bank is supervised and examined by the Office of the
Comptroller of the Currency (OCC) and is subject to examination by the Federal Deposit Insurance Corporation (FDIC). This regulation and supervision establishes a comprehensive framework of activities in which an institution
may engage and is intended primarily for the protection of the FDICs deposit insurance funds and depositors, and not for the protection of security holders. Under this system of federal regulation, financial institutions are periodically
examined to ensure that they satisfy applicable standards with respect to their capital adequacy, assets, management, earnings, liquidity and, sensitivity to market interest rates. The OCC examines the Bank and prepares reports on any operating
deficiencies for the consideration of its Board of Directors. The Bank also is a member of and owns stock in the Federal Home Loan Bank of Atlanta, which is one of the twelve regional banks in the Federal Home Loan Bank System. The Bank also is
regulated to a lesser extent by the Board of Governors of the Federal Reserve System (the Federal Reserve Board), governing reserves to be maintained against deposits and other matters. The Banks relationship with its depositors
and borrowers also is regulated to a great extent by federal law and, to a much lesser extent, state law, especially in matters concerning the ownership of deposit accounts and the form and content of the Banks loan documents.

Any change in these laws or regulations, whether by the FDIC, the OCC, or Congress, could have a material adverse impact on the Company,
and its operations.

OBA Financial Services, Inc., as a savings and loan holding company, is required to file certain reports
with, is subject to examination by, and otherwise must comply with the rules and regulations of the Federal Reserve Board. The Company is also subject to the rules and regulations of the SEC under the federal securities laws.

Certain of the regulatory requirements that are applicable to OBA Bank and OBA Financial Services, Inc. are described below. This
description of statutes and regulations is not intended to be a complete description of such statutes and regulations and their effects on OBA Bank and OBA Financial Services, Inc., and is qualified in its entirety by reference to the actual
statutes and regulations.

Dodd-Frank Act

The Dodd-Frank Act has changed current bank regulatory structure and affected the lending, investment, trading, and operating activities of financial institutions and their holding companies. The
Dodd-Frank Act eliminated the Companys former primary federal regulator, the Office of Thrift Supervision (OTS), and required the Bank to be regulated by the OCC (the primary federal regulator for national banks) as of
July 21, 2011. The Dodd-Frank Act also authorizes the Federal Reserve Board to supervise and regulate all savings and loan holding companies like OBA Financial Services, Inc., in addition to the bank holding companies that it previously
regulated. The Dodd-Frank Act also requires the Federal Reserve Board to set minimum capital levels for depository institution holding companies that are as stringent as those required for the insured depository subsidiaries, and the components of
Tier 1 capital would be restricted to capital instruments that are currently considered to be Tier 1 capital for insured depository institutions. Bank holding companies with assets of less than $500 million are exempt from these capital
requirements. Under the Dodd-Frank Act, the proceeds of trust preferred securities are excluded from Tier 1 capital unless such securities were issued prior to May 19, 2010 by bank or savings and loan holding companies with less than $15
billion of assets. The legislation also establishes a floor for capital of insured depository institutions that cannot be lower than the standards in effect when the statute was enacted, and directs the federal banking regulators to implement new
leverage and capital requirements within 18 months that take into account off-balance sheet activities and other risks, including risks relating to securitized products and derivatives.

The Dodd-Frank Act also created a new Consumer Financial Protection Bureau (CFPB) with broad powers to supervise and enforce
consumer protection laws. The CFPB has broad rule-making authority for a



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wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit unfair, deceptive or abusive acts and practices. The CFPB
has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Banks and savings institutions with $10 billion or less in assets will continue to be examined for compliance by their applicable
bank regulators. The legislation also weakened the federal preemption available for national banks and federal savings associations, and gave state attorneys general the ability to enforce applicable federal consumer protection laws.

The legislation also broadened the base for FDIC insurance assessments. Assessments are now based on an institutions average
consolidated total assets less tangible equity capital. The Dodd-Frank Act also permanently increased the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250 thousand per depositor, retroactive to
January 1, 2009, and non-interest bearing transaction accounts have unlimited deposit insurance through December 31, 2012. The Dodd-Frank Act increased stockholder influence over boards of directors by requiring companies to give
stockholders a non-binding vote on executive compensation and so-called golden parachute payments, and authorizing the SEC to promulgate rules that would allow stockholders to nominate and solicit votes for their own candidates using a
companys proxy materials. The legislation directed the Federal Reserve Board to promulgate rules prohibiting excessive compensation paid to bank holding company executives, regardless of whether the company is publicly traded or not. The
Dodd-Frank Act provided for originators of certain securitized loans to retain a percentage of the risk for transferred loans, directed the Federal Reserve Board to regulate pricing of certain debit card interchange fees and contained a number of
reforms related to mortgage origination.

Federal Banking Regulation

Business Activities.A federal savings bank derives its lending and investment powers from the Home Owners Loan Act,
as amended and federal regulations. Under these laws and regulations, the Bank may invest in mortgage loans secured by residential and commercial real estate, commercial business and consumer loans, certain types of debt securities, and certain
other assets, subject to applicable limits. The Bank also may establish subsidiaries that may engage in activities not otherwise permissible for the Bank, including real estate investment and securities and insurance brokerage.

Capital Requirements. Federal regulations require savings banks to meet three minimum capital standards: a 1.5% tangible
capital ratio, a 4% leverage ratio (3% for savings banks receiving the highest rating on the CAMELS rating system) and an 8% risk-based capital ratio.

The risk-based capital standard for savings banks requires the maintenance of Tier 1 (core) and total capital (which is defined as core capital and supplementary capital) to risk-weighted assets of
at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100%, based on the risks believed inherent in the type of
asset. Core capital is defined as common stockholders equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less
intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated
debt and intermediate preferred stock, the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets, and up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market
values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital. Additionally, a savings bank that retains credit risk in connection with an asset sale may be required to maintain additional
regulatory capital because of the purchasers recourse against the savings bank. In assessing an institutions capital adequacy, the OCC takes into consideration not only these numeric factors but also qualitative factors as well, and has
the authority to establish higher capital requirements for individual associations where necessary.

At June 30, 2011,
the Banks capital exceeded all applicable requirements.



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Loans-to-One Borrower.Generally, a federal savings bank may not make a loan
or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable
collateral, which generally does not include real estate.

Qualified Thrift Lender Test.As a federal savings
bank, the Bank must satisfy the qualified thrift lender, or (QTL), test. Under the QTL test, the Bank must maintain at least 65% of its portfolio assets in qualified thrift investments, primarily residential
mortgages and related investments, including mortgage-backed securities, in at least nine months of the most recent 12-month period. Portfolio assets generally means total assets of a savings bank, less the sum of specified liquid assets
up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conduct of the savings banks business. the Bank also may satisfy the QTL test by qualifying as a domestic building and loan
association as defined in the Internal Revenue Code. A savings bank that fails the qualified thrift lender test is subject to certain operating restrictions. In addition, the Dodd-Frank Act made noncompliance with the QTL test potentially
subject to agency enforcement action for violation of laws.

Capital Distributions.Federal regulations govern
capital distributions by a federal savings bank, which include cash dividends, stock repurchases and other transactions charged to the savings banks capital account. A savings bank must file an application for approval of a capital
distribution if:



| |  |  | the total capital distributions for the applicable calendar year exceed the sum of the savings banks net income for that year to date plus the
savings banks retained net income for the preceding two years;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the savings bank would not be at least adequately capitalized following the distribution;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | the distribution would violate any applicable statute, regulation, agreement or OCC-imposed condition; or
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | the savings bank is not eligible for expedited treatment of its filings.
| | - |  | ------------------------------------------------------------------------

Even if an application is not otherwise required, every savings bank that is a subsidiary of a holding company must still file a
regulatory notice at least 30 days before the Board of Directors declares a dividend or approves a capital distribution.

Such
a notice or application may be disapproved if:



| |  |  | the savings bank would be undercapitalized following the distribution;
| | - |  | ----------------------------------------------------------------------



| |  |  | the proposed capital distribution raises safety and soundness concerns; or
| | - |  | --------------------------------------------------------------------------



| |  |  | the capital distribution would violate a prohibition contained in any statute, regulation or agreement.
| | - |  | -------------------------------------------------------------------------------------------------------

In addition, the Federal Deposit Insurance Act provides that an insured depository institution shall not make any capital distribution,
if after making such distribution the institution would be undercapitalized.

Liquidity.A federal savings bank
is required to maintain a sufficient amount of liquid assets to ensure its safe and sound operation. The Banks primary source of liquidity to meet short- and long-term funding needs are cash balances at the Federal Reserve Bank, savings
deposits, loan repayments, repurchase agreements with security dealers, and borrowing lines at the Federal Home Loan Bank of Atlanta.

Community Reinvestment Act and Fair Lending Laws. All federal savings banks have a responsibility under the Community Reinvestment Act and related federal regulations to help meet the credit
needs of their communities, including low- and moderate-income borrowers. In connection with its examination of a federal savings bank, the OCC is required to assess the savings banks record of compliance with the Community Reinvestment Act.
In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. A savings



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banks failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers. The
failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by regulators and the Department of Justice. The Bank received an outstanding Community Reinvestment Act rating in its
most recent federal examination. The Community Reinvestment Act requires all Federal Deposit Insurance-insured institutions to publicly disclose their rating.

Transactions with Related Parties. A federal savings banks authority to engage in transactions with its affiliates is limited by federal regulations and by Sections 23A and 23B of the
Federal Reserve Act and its implementing Regulation W promulgated by the Board of Governors of the Federal Reserve System. An affiliate is generally a company that controls, is controlled by, or is under common control with an insured depository
institution such as the Bank. OBA Financial Services, Inc. is an affiliate of OBA Bank. In general, transactions between an insured depository institution and its affiliates are subject to certain quantitative and collateral requirements. In
addition, federal regulations prohibit a savings bank from lending to any of its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing the securities of any affiliate, other than a
subsidiary. Finally, transactions with affiliates must be consistent with safe and sound banking practices, not involve low-quality assets and be on terms that are as favorable to the institution as comparable transactions with non-affiliates.
Federal regulations require savings banks to maintain detailed records of all transactions with affiliates.

The Banks
authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and
Regulation O of the Federal Reserve Board. Among other things, these provisions require that extensions of credit to insiders:



| | (i) | be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable
transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of
the Banks capital.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, extensions of credit in excess of certain limits must be approved by the
Banks Board of Directors.

Enforcement.The OCC has primary enforcement responsibility over federal
savings banks and has the authority to bring enforcement action against all institution-affiliated parties, including directors, officers, stockholders, and attorneys, appraisers and accountants who knowingly or recklessly participate in
wrongful action likely to have an adverse effect on a federal savings bank. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution, and the
appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions, and range up to $25 thousand per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1 million per
day. The FDIC also has the authority to terminate deposit insurance or to recommend to the OCC that enforcement action be taken with respect to a particular savings institution. If action is not taken by the Director, the FDIC has authority to take
action under specified circumstances.

Standards for Safety and Soundness. Federal law requires each federal
banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate
risk exposure, asset growth, compensation, and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and
address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the
institution to submit to the agency an acceptable plan to achieve



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compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to implement an acceptable compliance plan.
Failure to implement such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil money penalties.

Prompt Corrective Action Regulations. Under prompt corrective action regulations, the OCC is authorized and, under certain circumstances, required to take supervisory actions against
undercapitalized savings banks. For this purpose, a savings bank is placed in one of the following five categories based on the savings banks capital:



| |  |  | well-capitalized (at least 5% leverage capital, 6% Tier 1 risk-based capital and 10% total risk-based capital);
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | adequately capitalized (at least 4% leverage capital (3% for savings banks with a composite examination rating of 1), 4% Tier 1 risk-based capital and
8% total risk-based capital);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | undercapitalized (less than 4% leverage capital (3% for savings banks with a composite examination rating of 1), 4% Tier 1 risk-based capital or 3%
leverage capital);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | significantly undercapitalized (less than 6% total risk-based capital, 3% Tier 1 risk-based capital or 3% leverage capital); or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | critically undercapitalized (less than 2% tangible capital).
| | - |  | ------------------------------------------------------------

Generally, the OCC is required to appoint a receiver or conservator for a savings bank that is critically undercapitalized
within specific time frames. The regulations also provide that a capital restoration plan must be filed with the OCC within 45 days of the date a savings bank receives notice that it is undercapitalized, significantly
undercapitalized or critically undercapitalized. Any holding company of the savings bank that is required to submit a capital restoration plan must guarantee the lesser of an amount equal to 5% of the savings banks assets at
the time it was notified or deemed to be undercapitalized by the OCC, or the amount necessary to restore the savings bank to adequately capitalized status. This guarantee remains in place until the OCC notifies the savings bank that it has
maintained adequately capitalized status for each of four consecutive calendar quarters. Failure by a holding company to provide the required guarantee will result in certain operating restrictions on the savings bank, such as restrictions on the
ability to declare and pay dividends, pay executive compensation and management fees, and increase assets or expand operations. The OCC may also take any one of a number of discretionary supervisory actions against undercapitalized savings banks,
including the issuance of a capital directive and the replacement of senior executive officers and directors.

At
June 30, 2011, the Bank met the criteria for being considered well-capitalized.

Insurance of Deposit
Accounts. The Deposit Insurance Fund of the FDIC insures deposits at FDIC-insured depository institutions such as the Bank. Deposit accounts in the Bank are insured by the FDIC generally up to a maximum of $250 thousand per separately
insured depositor and up to a maximum of $250 thousand for self-directed retirement accounts. The Dodd-Frank Act also extended unlimited deposit insurance on noninterest bearing transaction accounts through December 31, 2012.

The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund. Under the FDICs risk-based
assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other risk factors. Rates are based on each institutions risk category and certain
specified risk adjustments. Stronger institutions pay lower rates while riskier institutions pay higher rates. Previously, the rates for insured institutions varied between seven and 77.5 basis points of assessable deposits.

In February 2011, as required by the Dodd-Frank Act, the FDIC published a rule revising the risk-based deposit insurance assessment
system. The rule redefined the assessment base used for calculating deposit



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insurance assessments, effective April 1, 2011. Under the new rule, assessments are based on an institutions average consolidated total assets minus average tangible equity, instead of
total deposits. The proposed rule also revised the assessment rate schedule to provide for assessments ranging from 2.5 to 45 basis points.

As part of a plan to restore the deposit insurance fund as a result of numerous failures of financial institutions, the FDIC imposed a special assessment on all insured institutions equal to five basis
points of assets less Tier 1 capital as of June 30, 2009, which was payable on September 30, 2009. On November 12, 2009, the FDIC approved a final rule requiring insured depository institutions to prepay on December 30, 2009,
their estimated quarterly risk-based assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012. Estimated assessments for the fourth quarter of 2009 and for all of 2010 were based upon the assessment rate in effect on
September 30, 2009, with three basis points added for the 2011 and 2012 assessment rates. In addition, a 5% annual growth in the assessment base was assumed. Prepaid assessments were to be applied against the actual quarterly assessments until
exhausted, and may not be applied to any special assessments that may occur in the future. Any unused prepayments will be returned to the institution on June 30, 2013. On December 30, 2009, the Bank prepaid $1.4 million in estimated
assessment fees for the fourth quarter of 2009 through 2012. At June 30, 2010, the prepaid assessment balance was $885 thousand. Because the prepaid assessments represent the prepayment of future expense, they do not affect regulatory capital
(the prepaid asset will have a risk-weighting of 0%) or tax obligations.

Insurance of deposits may be terminated by the
Federal Deposit Insurance Corporation upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition
imposed by the Federal Deposit Insurance Corporation. The Bank does not believe it is taking or is subject to any action, condition or violation that could lead to termination of its deposit insurance.

In addition to the Federal Deposit Insurance Corporation assessments, the Financing Corporation (FICO) is authorized to
impose and collect, with the approval of the Federal Deposit Insurance Corporation, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal Savings and Loan
Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended June 30, 2011, the annualized FICO assessment was equal to 1.00 basis points for each $100 in domestic deposits maintained at an
institution.

Prohibitions Against Tying Arrangements. Federal savings banks are prohibited, subject to
some exceptions, from extending credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution or its
affiliates or not obtain services of a competitor of the institution.

Federal Home Loan Bank System. The Bank
is a member of the Federal Home Loan Bank System, which consists of twelve regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions as well as other entities involved in
home mortgage lending. As a member of the Federal Home Loan Bank of Atlanta, the Bank is required to acquire and hold shares of capital stock in the Federal Home Loan Bank.

Federal Reserve System

Federal Reserve Board regulations require savings
banks to maintain noninterest-earning reserves against their transaction accounts, such as negotiable order of withdrawal and regular checking accounts. At June 30, 2011, the Bank was in compliance with these reserve requirements.



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Other Regulations

Interest and other charges collected or contracted for by the Bank are subject to state usury laws and federal laws concerning interest rates. The Banks operations are also subject to federal laws
applicable to credit transactions, such as the:



| |  |  | Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various
disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a
financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | Truth in Savings Act; and
| | - |  | -------------------------



| |  |  | Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

The operations of the Bank also are subject to the:



| |  |  | Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying
with administrative subpoenas of financial records;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and
customers rights and liabilities arising from the use of automated teller machines and other electronic banking services;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Check Clearing for the
21stCentury Act (also known as Check 21),
which gives substitute checks, such as digital check images and copies made from that image, the same legal standing as the original paper check;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The USA PATRIOT Act, which requires savings banks to, among other things, establish broadened anti-money laundering compliance programs, and due
diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements that also apply to financial institutions under the Bank Secrecy
Act and the Office of Foreign Assets Control regulations; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third
parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institutions privacy policy and provide such
customers the opportunity to opt out of the sharing of certain personal financial information with unaffiliated third parties.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Holding Company Regulation

General.OBA Financial
Services, Inc. is a non-diversified savings and loan holding company within the meaning of the Home Owners Loan Act. As such, the Company is registered with the Federal Reserve Board and subject to Federal Reserve Board regulations,
examinations, supervision and reporting requirements. In



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addition, the Federal Reserve Board has enforcement authority over the Company and its subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit
activities that are determined to be a serious risk to the subsidiary savings institution.

The functions of the OTS relating
to savings and loan holding companies and their subsidiaries, as well as rulemaking and supervision authority over savings and holding companies, were transferred to the Federal Reserve Board on July 21, 2011, as required by the Dodd-Frank Act.

Permissible Activities.The business activities of the Company are generally limited to those activities
permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act of 1956, as amended, or for multiple savings and loan holding companies. A financial holding company may engage in activities that are financial in
nature, including underwriting equity securities and insurance as well as activities that are incidental to financial activities or complementary to a financial activity. A multiple savings and loan holding company is generally limited to activities
permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, subject to prior regulatory approval and certain additional activities authorized by federal regulations.

Federal law prohibits a savings and loan holding company, including the Company, directly or indirectly, or through one or more
subsidiaries, from acquiring more than 5% of another savings institution or holding company thereof, without prior written approval of the Federal Reserve Board. It also prohibits the acquisition or retention of, with certain exceptions, more than
5% of a non-subsidiary company engaged in activities that are not closely related to banking or financial in nature, or acquiring or retaining control of an institution that is not federally insured. In evaluating applications by holding companies
to acquire savings institutions, the Federal Reserve Board must consider the financial and managerial resources, future prospects of the company and institution involved, the effect of the acquisition on the risk to the federal deposit insurance
fund, the convenience and needs of the community and competitive factors.

The Federal Reserve Board is prohibited from
approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions:



| | (i) | the approval of interstate supervisory acquisitions by savings and loan holding companies; and
| | --- | ----------------------------------------------------------------------------------------------



| | (ii) | the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisition.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Capital. Savings and loan holding companies are not currently subject to specific regulatory capital
requirements. The Dodd-Frank Act, however, requires the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of
capital, than those applicable to institutions themselves. Instruments such as cumulative preferred stock and trust preferred securities will no longer be includable as Tier 1 capital, which is currently permitted for bank holding companies.
Instruments issued by May 19, 2010 will be grandfathered for companies with consolidated assets of $15 billion or less. There is a five-year transition period (from the July 21, 2010 effective date of the Dodd-Frank Act) before the capital
requirements will apply to savings and loan holding companies.

Source of Strength.The Dodd-Frank Act extended
the source of strength doctrine to savings and loan holding companies. The regulatory agencies must issue regulations requiring that all bank and savings and loan holding companies serve as a source of strength to their subsidiary
depository institutions by providing capital, liquidity and other support in times of financial stress.



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Dividends. A federal savings bank must notify the Federal Reserve Board at
least 30 days before declaring any dividend to its holding company. The dividend notice may be denied under certain circumstances, such as where the dividend raises safety or soundness concerns, the dividend would cause the savings bank to be
undercapitalized or the dividend would violate a law, regulation, regulatory condition or enforcement order.

Acquisition.Under the Federal Change in Control Act, a notice must be submitted to the Federal Reserve Board if any
person (including a company), or group acting in concert, seeks to acquire direct or indirect control of a savings and loan holding company. Under certain circumstances, such as where the company involved has securities registered with
the SEC under the Securities Exchange Act of 1934, a change of control may occur, and prior notice is required, upon the acquisition of 10% or more of the companys outstanding voting stock, unless the Federal Reserve Board has found that the
acquisition will not result in control of the company. That rebuttable presumption applies to the Company. A change in control definitively occurs upon the acquisition of 25% or more of the companys outstanding voting stock. Under the Change
in Control Act, the Federal Reserve Board generally has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of
the acquisition.

Federal Securities Laws

The Companys common stock is registered with the SEC under the Securities Exchange Act of 1934. The Company is subject to the information, proxy solicitation, insider trading restrictions and, other
requirements under the Securities Exchange Act of 1934.

OBA Financial Services, Inc. common stock held by persons who are
affiliates (generally officers, directors and principal shareholders) of the Company may not be resold without registration or unless sold in accordance with certain resale restrictions. If the Company meets specified current public information
requirements, each affiliate of the Company is able to sell in the public market, without registration, a limited number of shares in any three-month period.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 addresses, among
other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. As directed by the Sarbanes-Oxley Act, the Companys Chief Executive Officer and Chief Financial
Officer are required to certify that the Companys quarterly and annual reports do not contain any untrue statement of a material fact. The rules adopted by the SEC under the Sarbanes-Oxley Act have several requirements, including having these
officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of the Companys internal control over financial reporting; they have made certain disclosures to the Companys auditors
and the audit committee of the Board of Directors about the Companys internal control over financial reporting; and they have included information in the Companys quarterly and annual reports about their evaluation and whether there have
been changes in the Companys internal control over financial reporting or in other factors that could materially affect internal control over financial reporting. The Company was subject to further reporting requirements beginning with the
fiscal year ending June 30, 2011 under the requirements of the Sarbanes-Oxley Act. The Company will prepare policies, procedures and systems designed to ensure compliance with these regulations.



|ITEM 1A. | Risk Factors
|-------- | ------------

Readers
should carefully consider the following risks prior to making an investment decision regarding OBA Financial Services, Inc. The following risk factors may cause future earnings to be lower or the financial condition less favorable than Management
expects. In addition, other risks of which Management is not currently aware or which Management does not believe to be material, may cause earnings to be lower or may cause the financial condition to be worse than expected. Please consider all
information contained within this Annual Report on Form 10-K, as well as, the documents incorporated by reference.



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##### Table of Contents

The Company intends to continue its emphasis on commercial real estate and commercial
business loan originations. Credit risk will increase and a continued downturn in the local real estate market or the local or national economy could adversely affect earnings.

The Company intends to continue its recent emphasis on originating commercial real estate and commercial business loans. Commercial real
estate and commercial business loans generally have more risk than the one- to four-family residential real estate loans that we originate. Because the repayment of commercial real estate and commercial business loans depends on the successful
management and operation of the borrowers properties or related businesses, repayment of such loans can be affected by adverse conditions in the local real estate market or economy. Commercial real estate and commercial business loans may also
involve relatively large loan balances to individual borrowers or groups of related borrowers. A downturn in the real estate market or the local economy could adversely affect the value of properties securing the loan or the revenues from the
borrowers business, thereby increasing the risk of nonperforming loans. As the Companys commercial real estate and commercial business loan portfolios increase, the corresponding risks and potential for losses from these loans may also
increase. This increasing risk has contributed to the Companys need to increase the allowance for loan losses through charges to earnings. Future increases in commercial real estate loans and commercial loans may require additional increases
in the Companys allowance for loan losses through charges to earnings.

The Company has increased its origination
and retaining in its portfolio one- to four-family residential real estate loans. A continued downturn in the local real estate market and economy could adversely affect earnings.

The Company has increased its origination and retention in the portfolio of one- to four residential loans. Although the local real estate
market and economy have performed better than many other markets, a continued downturn could cause higher unemployment, more delinquencies, and could adversely affect the value of properties securing loans. In addition, the real estate market may
take longer to recover or not recover to previous levels. These risks increase the probability of an adverse impact on the Companys financial results as fewer borrowers would be eligible to borrow and property values could be below necessary
levels required for adequate coverage on the requested loan.

A significant portion of the commercial business loan
portfolio is unseasoned.

The Company has grown its commercial business loan portfolio to $35.9 million, or 12.7%, of
the total loan portfolio, at June 30, 2011 from $5.7 million, or 1.9% of the total loan portfolio, at June 30, 2008. The future performance of this portion of the loan portfolio is difficult to assess due to the recent origination of many
of these loans. These loans may have delinquency or charge-off levels above the Companys historical experience, which could adversely affect future performance.

If the Companys allowance for loan losses is not sufficient to cover actual loan losses, earnings could be adversely affected.

The Company makes various assumptions and judgments about the collectability of the loan portfolio, including the creditworthiness of the
Companys borrowers and the value of the real estate and other assets serving as collateral for the repayment of the Companys loans. In determining the amount of the allowance for loan losses, Management reviews the loans and the loss and
delinquency experience, and evaluates economic conditions. If the assumptions are incorrect, the allowance for loan losses may not be sufficient to cover probable incurred losses in the Companys loan portfolio, resulting in additions to the
allowance through charges to earnings. Material additions to the allowance could materially decrease the Companys net income. In addition, bank regulators periodically review the Companys allowance for loan losses and may require the
Company to increase the allowance for loan losses or recognize further loan charge-offs. Any increase in the allowance for loan losses or loan charge-offs as required by these regulatory authorities might have a material adverse effect on the
Companys financial condition and results of operations.



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The Companys branch network expansion strategy may negatively affect the
Companys financial performance.

The Company intends to expand its branch network over the next five years. This
strategy may not generate earnings, or may not generate earnings within a reasonable period of time. Numerous factors contribute to the performance of a new branch, such as a suitable location, qualified personnel, and an effective marketing
strategy. Additionally, a new branch takes time to originate sufficient loans and generate sufficient deposits to produce enough income to offset expenses, some of which, like salaries and occupancy expense, are relatively fixed costs.

Concentration of loans in the Companys primary market area, which has recently experienced an economic downturn, may increase
risk.

The Companys success depends primarily on the general economic conditions in Howard and Montgomery
Counties, Maryland as nearly all of the Companys loans are to customers in these markets. Accordingly, the local economic conditions in these markets have a significant impact on the ability of borrowers to repay loans as well as the
Companys ability to originate new loans. As such, a further decline in real estate values in these markets would also lower the value of the collateral securing loans on properties in these markets. In addition, a continued weakening in
general economic conditions, such as; inflation, recession, unemployment, or other factors beyond the Companys control could negatively affect financial results.

The Companys 2011 Equity Incentive Plan will increase expenses and, reduce income.

In May 2011, the Companys stockholders approved the OBA Financial Services, Inc. 2011 Equity Incentive Plan. Stockholders approved the issuance of a total of 648,025 shares under the plan. No
expense for this plan was recognized in the fiscal year ended June 30, 2011 as no shares had been granted under the plan. Grants under the plan were issued on July 21, 2011 as described in the Companys Current Report on Form 8-K as
filed with the SEC on May 17, 2011. Subsequent periods will include expenses for the 2011 equity incentive plan which will reduce income.

The implementation of the 2011 Equity Incentive Plan may dilute stockholders ownership interest.

The Companys 2011 Equity Incentive Plan will be funded through either open market purchases of shares of common stock or from the issuance of authorized but unissued shares of common stock. The
ability to repurchase shares of common stock to fund the plan will be subject to many factors, including, but not limited to, applicable regulatory restrictions on stock repurchases, the availability of stock in the market, the trading price of the
stock, alternative uses for the capital, and the Companys capital levels and financial performance. Although the Companys current intention is to fund the plan with stock repurchases, the Company may not be able to conduct such
repurchases. If the Company does not repurchase shares of common stock to fund the plan, then stockholders would experience a reduction in their ownership interest, which would total 12.3% in the event newly issued shares are used to fund stock
options or awards of shares of common stock under the plan.

If the Companys investment in the common stock of the
Federal Home Loan Bank of Atlanta is classified as other-than-temporarily impaired, the Companys earnings and stockholders equity could decrease.

The Company owns common stock of the Federal Home Loan Bank of Atlanta. The Company holds this stock to qualify for membership in the Federal Home Loan Bank System and to be eligible to borrow funds under
the Federal Home Loan Bank of Atlantas advance program. There is no market for Federal Home Loan Bank of Atlanta common stock. Certain member banks of the Federal Home Loan Bank System may be subject to accounting rules and asset quality risks
that could result in materially lower regulatory capital levels. In an extreme situation, the capital of a Federal Home Loan Bank, including the Federal Home Loan Bank of Atlanta, could be substantially diminished or reduced to zero. Consequently,
the Company believes that there is a risk that the investment in Federal Home Loan Bank of Atlanta common stock could be impaired at some time in the future, and if this occurs, it would cause earnings and stockholders equity to decrease by
the after-tax amount of the impairment charge.



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Strong competition within the Companys market areas may limit the Companys
growth and profitability.

Competition in the banking and financial services industry is intense. In the Companys
market areas, the Company competes with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and
elsewhere. Some competitors have greater name recognition and market presence that benefit them in attracting business, and offer certain services that the Company does not or cannot provide. In addition, larger competitors may be able to price
loans and deposits more aggressively, which could affect the Companys ability to grow and remain profitable on a long-term basis. The Companys profitability depends upon the continued ability to successfully compete in the Companys
market areas. If interest rates paid on deposits increase or interest rates charged on loans decrease, net interest margin and profitability could be adversely affected. For additional information see Item 1. BusinessCompetition.

Higher FDIC insurance premiums and special assessments will adversely affect earnings.

On May 22, 2009, the FDIC adopted a final rule levying a five basis point special assessment on each insured depository
institutions assets minus Tier 1 capital as of June 30, 2009. The Company recorded an expense to reflect the special assessment. Any further special assessments that the FDIC levies will be recorded as an expense during the appropriate
period. In addition, at that time, the FDIC increased the general deposit insurance assessment rate and, therefore, the Companys FDIC insurance premium expense increased compared to prior periods. The FDIC also adopted a rule pursuant to which
all insured depository institutions were required to prepay their estimated assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012. This pre-payment was due on December 30, 2009. The assessment rate for 2010 was based
on the Companys total base assessment rate for the third quarter of 2009, modified to assume that the assessment rate in effect on September 30, 2009 had been in effect for the entire third quarter, and the assessment rate for 2011 and
2012 will be equal to the modified third quarter assessment rate plus an additional three basis points. In addition, each institutions base assessment rate for each period will be calculated using its third quarter assessment base, adjusted
quarterly for an estimated 5% annual growth rate in the assessment base through the end of 2012. The Company recorded the pre-payment as a prepaid expense, which will be amortized to expense over three years.

Historically low interest rates may adversely affect our net interest income and profitability.

During the past three years, the policy of the Board of Governors of the Federal Reserve System has been to maintain interest rates at
historically low levels through its targeted federal funds rate and the purchase of mortgage-backed securities. As a result, market rates on the loans the Bank has originated and the yields on securities purchased have been at lower levels than as
available prior to 2008. As a general matter, the Banks interest-bearing liabilities reprice or mature more quickly than the Banks interest-earning assets; which have resulted in increases in net interest income in the short term. The
Banks ability to lower its interest expense is limited at these interest rate levels while the average yield on the Banks interest-earning assets may continue to decrease. The Board of Governors of the Federal Reserve System has
indicated its intention to maintain low interest rates in the near future. Accordingly, the Banks net interest income (the difference between interest income earned on assets and interest expense paid on liabilities) may decrease, which may
have an adverse affect on the Banks profitability.

Future changes in interest rates could reduce profits.

The Companys ability to make a profit largely depends on net interest income, which could be negatively affected
by changes in interest rates. Net interest income is the difference between:



| |  |  | the interest income earned on interest-earning assets, such as loans and securities; and
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | the interest expense paid on interest-bearing liabilities, such as deposits and borrowings.
| | - |  | -------------------------------------------------------------------------------------------

Net interest income is affected by changes in market interest rates because different types of assets and liabilities may react
differently, and at different times, to market interest rate changes. In a period of rising



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interest rates, the interest income earned on assets, such as loans and investments, may not increase as rapidly as the interest paid on liabilities, such as deposits causing a reduction in net
interest income. In a period of declining interest rates, the interest income earned on assets may decrease more rapidly than the interest paid on liabilities causing a reduction in net interest income.

Changes in market interest rates create reinvestment or prepayment risk, which is the risk that the Bank receives an amount of cashflows
inconsistent with original estimates. In a declining rate environment, the risk is that Management may not be able to reinvest additional prepayments at interest rates that are comparable to the interest rates earned on the prepaid loans or
securities. In an increasing rate environment, loan demand may decrease, the repayment of adjustable-rate loans may be more difficult for borrowers, and a decrease in prepayments may result in a lost opportunity to reinvest those additional cash
flows at higher yields.

Changes in interest rates also affect the current fair value of interest-earning securities
portfolio. Generally, the value of securities moves inversely with changes in interest rates.

See Managements
Discussion and Analysis of Financial Condition and Results of OperationsManagement of Market Risk.

Government responses to economic conditions may adversely affect our operations, financial condition and earnings.

The Dodd-Frank Wall Street Reform and Consumer Protection Act has changed the bank regulatory framework, created an
independent consumer protection bureau that has assumed the consumer protection responsibilities of the various federal banking agencies, and established more stringent capital standards for banks and bank holding companies. Bank regulatory agencies
also have been responding aggressively to concerns and adverse trends identified in examinations. Ongoing uncertainty and adverse developments in the financial services industry and the domestic and international credit markets, and the effect of
the Dodd-Frank Act and regulatory actions, may adversely affect the Companys operations by restricting its business activities, including the ability to originate or sell loans, modify loan terms, or foreclose on property securing loans. These
risks could affect the performance and value of the Banks loan and investment securities portfolios, which also would negatively affect financial performance. In addition, the Dodd-Frank Act and implementing regulations are likely to have a
significant effect on the financial services industry, which are likely to increase operating costs and reduce profitability. Regulatory or legislative changes could make regulatory compliance more difficult or expensive, and could cause changes to
or limits on some products and services, or the way business is operated.

If the Board of Governors of the Federal Reserve
System increases the federal funds rate, overall interest rates will likely rise, which may negatively impact the housing markets and the U.S. economic recovery. In addition, deflationary pressures, while possibly lowering the Banks operating
costs, could have a significant negative effect on the Banks borrowers, especially business borrowers, and the values of underlying collateral securing loans, which could negatively affect the Banks financial performance.

The Company is subject to extensive regulatory oversight.

The Company is subject to extensive regulation and supervision. Regulators have intensified their focus on bank lending criteria and
controls, and on the USA PATRIOT Acts anti-money laundering and Bank Secrecy Act compliance requirements. There also is increased scrutiny of compliance practices generally and particularly with the rules enforced by the Office of Foreign
Assets Control. The Companys failure to comply with these and other regulatory requirements could lead to, among other remedies, administrative enforcement actions and legal proceedings.



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Recent health care legislation could increase the Companys expenses or require
the Company to pass further costs on to employees, which could adversely affect the Companys operations, financial condition, and earnings.

Legislation enacted in 2010 requires companies to provide expanded health care coverage to their employees, such as affordable coverage to part-time employees and coverage to dependent adult children of
employees. Companies will also be required to enroll new employees automatically into one of their health plans. Compliance with these and other new requirements of the health care legislation will increase employee benefits expense, and may require
the Company to pass these costs on to employees, which could create a competitive disadvantage in hiring and retaining qualified employees.

The Companys stock value may be negatively affected by federal regulations that restrict takeovers.

For three years following the Companys stock offering, federal regulations prohibit any person from acquiring or offering to acquire more than 10% of the Companys common stock without prior
written regulatory approval.

The corporate governance provisions in the Companys articles of incorporation and
bylaws, the Banks Charter, and the corporate governance provisions under Maryland law, may prevent or impede the holders of the Companys common stock from obtaining representation on the Companys Board of Directors and may impede
takeovers of the company that the board might conclude are not in the best interest of the Company or its stockholders.

Provisions in the Companys articles of incorporation and bylaws may prevent or impede holders of the Companys common stock
from obtaining representation on the Companys Board of Directors and may make takeovers of the Company. more difficult. For example, the Companys Board of Directors is divided into three staggered classes. A classified board makes it
more difficult for stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for this to occur. The Companys articles of incorporation include a provision that no person will be
entitled to vote any shares of the Companys common stock in excess of 10% of the Companys outstanding shares of common stock. This limitation does not apply to the purchase of shares by a tax-qualified employee stock benefit plan
established by us. In addition, the Companys articles of incorporation and bylaws restrict who may call special meetings of stockholders and how directors may be removed from office. The charter of the Bank generally provides that for a
period of five years from the closing of the stock offering, no person other than the Company may directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10% of any class of equity security of the Bank. In addition,
during this five-year period, all shares owned over the 10% limit may not be voted on any matter submitted to stockholders for a vote. Additionally, in certain instances, the Maryland General Corporation Law requires a supermajority vote of
stockholders to approve a merger or other business combination with a large stockholder, if the proposed transaction is not approved by a majority of the Companys Board of Directors.

The requirement to account for certain assets at estimated fair value may adversely affect results of operations.

The Company reports certain assets, including securities, at fair value. Generally, for securities that are reported
at fair value, the Company uses quoted market prices or valuation models that utilize observable market inputs to estimate fair value. Because these assets are carried on the Companys books at their estimated fair value, the Company may record
losses even if the asset in question presents minimal credit risk.

Because the nature of the financial services
business involves a high volume of transactions, the Bank may face significant operational risks.

The Company operates
in diverse markets and relies on the ability of its employees and systems to process a high number of transactions. Operational risk is the risk of loss resulting from the Companys operations, including but not limited to, the risk of fraud by
employees or persons outside the company, the execution of



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unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system and compliance requirements, and business continuation
and disaster recovery. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits. This risk of loss also includes the potential legal actions that could arise as a result of an operational
deficiency or as a result of noncompliance with applicable regulatory standards, adverse business decisions or their implementation, and customer attrition due to potential negative publicity. In the event of a breakdown in the internal control
system, improper operation of systems or improper employee actions, we could suffer financial loss, face regulatory action, and suffer damage to the Companys reputation.

The ratings downgrade of the United States Government may adversely affect the Bank.

In July 2011, certain rating agencies placed the United States governments long-term sovereign debt rating on their equivalent of negative watch and announced the possibility of a credit rating
downgrade. In August 2011, one rating agency deceased their rating of the United States Government to AA+. The rating agencies, due to constraints related to the rating of the United States, also placed government-sponsored enterprises on
negative watch. A downgrade of the United States credit rating would trigger a similar downgrade in the credit rating of these government-sponsored enterprises. Furthermore, the credit rating of other entities, such as state and local
governments, may be downgraded if the United States credit rating is downgraded. The impact that these credit rating downgrades may have on the national and local economy and the Banks financial condition and results of operations is
uncertain.



|ITEM 1B. | Unresolved Staff Comments
|-------- | -------------------------

Not applicable.



|ITEM 2. | Properties
|------- | ----------

The Bank
operates from a main office and four full-service branches located in Montgomery County and Howard County, Maryland. The following table sets forth information with respect to the Companys full-service banking offices, including the expiration
date of leases with respect to leased facilities.



|                                                                                            |  |                                                                        |  |                                                                                            
|------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------
|CORPORATE
HEADQUARTERS GERMANTOWN
BRANCH 20300 Seneca Meadows Parkway
Germantown, MD 20876 |  | BETHESDA 5229 River
Road Bethesda, MD 20816
2/28/2021                  |  | GAITHERSBURG 201 N.
Frederick Avenue, Suite 100 Suite
100 Gaithersburg, MD 20877
11/30/2018
|                                                                                            |  |                                                                       
|COLUMBIA 10840 Little
Patuxent Parkway Columbia, MD 21044
2/28/2013                         |  | ROCKVILLE 451
Hungerford Drive Suite 101 Rockville,
MD 20850 9/30/2020 |  | ARUNDEL MILLS 7556
Teague Road Suite 108 Hanover, MD
21076 11/30/2021                      



|ITEM 3. | Legal Proceedings
|------- | -----------------

At
June 30, 2011, the Company was not involved in any legal proceedings the outcome of which the Company believes would be material to its financial condition or results of operations.



|ITEM 4. | [Reserved]
|------- | ----------



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PART II



|ITEM 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ------------------------------------------------------------------------------------------------------------

(a)Market, Holder and Dividend Information. The Companys common stock is traded on the NASDAQ
Capital Market under the symbol OBAF. The approximate number of holders of record of OBA Financial Services, Inc.s common stock as of September 16, 2011 was 824. Certain shares of OBA Financial Services, Inc. are held in
nominee or street name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. The following table presents quarterly market information for OBA Financial Services,
Inc.s common stock for the year ended June 30, 2011 and the period beginning January 21, 2010 (the date of completion of the Companys initial public offering) and ended June 30, 2010. The following information with respect
to trading prices was provided by the NASDAQ Capital Market.



|                                 |  |      |       |  |     |   |       |                   |  |  |   | 
|-------------------------------- |  | ---- | ----- |  | --- | - | ----- | ----------------- |  |  | - | 
|Year ended June 30, 2011         |  | High |       |  | Low |   |       | DividendsDeclared | 
|Quarter ended September 30, 2010 |  | $    | 11.44 |  |     | $ | 10.99 |                   |  |  |  | 
|Quarter ended December 31, 2010  |  | $    | 13.99 |  |     | $ | 11.03 |                   |  |  |  | 
|Quarter ended March 31, 2011     |  | $    | 14.99 |  |     | $ | 13.70 |                   |  |  |  | 
|Quarter ended June 30, 2011      |  | $    | 15.10 |  |     | $ | 14.36 |                   |  |  |  | 
|                                 |  |      |      
|Year ended June 30, 2010         |  | High |       |  | Low |   |       | DividendsDeclared | 
|Quarter ended March 31, 2010     |  | $    | 10.82 |  |     | $ | 9.95  |                   |  |  |  | 
|Quarter ended June 30, 2010      |  | $    | 11.50 |  |     | $ | 10.74 |                   |  |  |  | 

Dividend payments by OBA Financial Services, Inc. are dependent on dividends it receives from OBA Bank,
because OBA Financial Services, Inc. has no source of income other than dividends from OBA Bank, earnings from the investment of proceeds from the sale of shares of common stock retained by OBA Financial Services, Inc. and interest payments with
respect to OBA Financial Services, Inc.s loan to the Employee Stock Ownership Plan. See Item 1. BusinessSupervision and RegulationFederal Banking RegulationCapital Distributions.

(b) Sales of Unregistered Securities. Not applicable.

(c) Use of Proceeds. Not applicable.

(d) Securities Authorized for Issuance Under Equity Compensation Plans. The following table sets for the information as of June 30, 2011 with respect to compensation plans (other than
our employee stock ownership plan) under which equity securities of the registrant are authorized for issuance.



|                                                       |  |                                                                                          |     |     |                                                                           |  |     |                                                                                                                                                |  |  |         | 
|------------------------------------------------------ |  | ---------------------------------------------------------------------------------------- | --- | --- | ------------------------------------------------------------------------- |  | --- | ---------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------- | 
|                                                       |  | Number of securities tobe issued upon exerciseof outstanding
options,warrants and rights |     |     | Weighted averageexercise prices ofoutstanding options,warrants and
rights |  |     | Number of common stockremaining available forfuture issuance
understock basedcompensation plans(excluding securities reflectedin first column) | 
|Equity compensation Plans approved by stockholders     |  |                                                                                          | N/A | (1) |                                                                           |  | N/A |                                                                                                                                                |  |  | 648,025 | 
|Equity compensation plans not approved by stockholders |  |                                                                                          | N/A |     |                                                                           |  | N/A |                                                                                                                                                |  |  | N/A     | 
|                                                       |  |                                                                                          |     |     |                                                                           |  |     |                                                                                                                                                |  |  |         | 
|Total                                                  |  |                                                                                          |    |     |                                                                           |  |     |                                                                                                                                                |  |  | 648,025 | 
|                                                       |  |                                                                                          |     |     |                                                                           |  |     |                                                                                                                                                |  |  |         | 



|(1) | Grants under the plan were issued on July 21, 2011 as described on the Companys Current Report on the Registrants Form 8-K filing as filed with the SEC
on April 11, 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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(e) Stock Repurchases. The following table sets forth information in
connection with repurchases of the Companys shares of common stock during the fourth fiscal quarter of 2011.



|                                    |  |                                 |        |  |                            |  |       |                                                                              |  |  |                                                                                |  |  |  |         | 
|----------------------------------- |  | ------------------------------- | ------ |  | -------------------------- |  | ----- | ---------------------------------------------------------------------------- |  |  | ------------------------------------------------------------------------------ |  |  |  | ------- | 
|Period                              |  | Total Number ofShares Purchased |        |  | Average PricePaid perShare |  |       | Total Number ofShares Purchased asPart of PubliclyAnnounced Plans
orPrograms |  |  | Maximum Number ofShares That May yetbe Purchased Underthe Plans orPrograms (1) | 
|April 1, 2011 though April 30, 2011 |  |                                 |       |  |                            |  |      |                                                                              |  |  |                                                                               |  |  |  |        | 
|May 1, 2011 through May 31, 2011    |  |                                 |       |  |                            |  |      |                                                                              |  |  |                                                                               |  |  |  | 462,875 | 
|June 1, 2011 through June 30, 2011  |  |                                 | 26,700 |  |                            |  | 14.80 |                                                                              |  |  | 26,700                                                                         |  |  |  | 436,175 | 
|                                    |  |                                 |        |  |                            |  |       |                                                                              |  |  |                                                                                |  |  |  |         | 
|Total                               |  |                                 | 26,700 |  |                            |  | 14.80 |                                                                              |  |  | 26,700                                                                         |  |  |  |         | 



|(2) | On May 19, 2011 the Board of Directors authorized the repurchase of up to 462,875 shares, or 10% of the Companys common stock. In accordance with this
authorization, at June 30, 2011 the Company had repurchased 26,700 shares of the common stock. The repurchase authorization has no expiration date.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(f) Stock Performance Graph. Not applicable.



27



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##### Table of Contents

|ITEM 6. | Selected Financial Data
|------- | -----------------------

The following selected consolidated financial and other data has been derived, in part, from the consolidated financial statements and
notes appearing elsewhere in this annual report.



|                                                                          |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  
|------------------------------------------------------------------------- |  | ---------------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- |  |  | - | ------- | -
|                                                                          |  | At June 30,                  |        
|                                                                          |  | 2011                         |         |  | 2010 |   |         | 2009 |  |   | 2008    |   |  | 2007 |        
|                                                                          |  | (in thousands)               |        
|Selected Financial Condition Data:                                        |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  
|Total assets                                                              |  | $                            | 386,445 |  |      | $ | 374,095 |      |  | $ | 362,361 |   |  | $    | 354,146 |  |  | $ | 379,829 |  
|Cash and cash equivalents                                                 |  |                              | 37,968  |  |      |   | 36,046  |      |  |   | 33,657  |   |  |      | 16,144  |  |  |   | 16,444  |  
|Interest bearing deposits with other banks                                |  |                              | 7,058   |  |      |   | 5,072   |      |  |   |        |   |  |      |        |  |  |   |        |  
|Securities available for sale                                             |  |                              | 35,828  |  |      |   | 29,346  |      |  |   | 25,909  |   |  |      | 30,225  |  |  |   | 44,284  |  
|Securities held to maturity                                               |  |                              | 3,623   |  |      |   | 4,637   |      |  |   |        |   |  |      |        |  |  |   |        |  
|Federal Home Loan Bank stock, at cost                                     |  |                              | 2,987   |  |      |   | 3,883   |      |  |   | 3,883   |   |  |      | 3,846   |  |  |   | 3,910   |  
|Loans receivable, net                                                     |  |                              | 279,620 |  |      |   | 276,098 |      |  |   | 283,459 |   |  |      | 290,061 |  |  |   | 302,441 |  
|Bank owned life insurance                                                 |  |                              | 8,601   |  |      |   | 8,297   |      |  |   | 5,455   |   |  |      | 5,211   |  |  |   |        |  
|Deposits                                                                  |  |                              | 257,031 |  |      |   | 233,441 |      |  |   | 244,536 |   |  |      | 216,230 |  |  |   | 227,919 |  
|Securities sold under agreements to repurchase                            |  |                              | 15,566  |  |      |   | 20,292  |      |  |   | 18,779  |   |  |      | 23,809  |  |  |   | 38,789  |  
|Federal Home Loan Bank advances                                           |  |                              | 29,618  |  |      |   | 36,834  |      |  |   | 56,400  |   |  |      | 71,400  |  |  |   | 70,400  |  
|Stockholders equity                                                      |  |                              | 80,860  |  |      |   | 80,222  |      |  |   | 38,502  |   |  |      | 38,887  |  |  |   | 38,521  |  
|                                                                          | 
|                                                                          |  | For The Years Ended June 30, |        
|                                                                          |  | 2011                         |         |  | 2010 |   |         | 2009 |  |   | 2008    |   |  | 2007 |        
|                                                                          |  | (in thousands)               |        
|Selected Operating Data:                                                  |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  
|Interest and dividend income                                              |  | $                            | 16,248  |  |      | $ | 16,050  |      |  | $ | 17,398  |   |  | $    | 19,603  |  |  | $ | 20,694  |  
|Interest expense                                                          |  |                              | 4,201   |  |      |   | 5,921   |      |  |   | 8,880   |   |  |      | 11,729  |  |  |   | 12,345  |  
|                                                                          |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  
|Net interest income                                                       |  |                              | 12,047  |  |      |   | 10,129  |      |  |   | 8,518   |   |  |      | 7,874   |  |  |   | 8,349   |  
|Provision (credit) for loan losses                                        |  |                              | 739     |  |      |   | 1,278   |      |  |   | 877     |   |  |      |        |  |  |   | (452    | )
|                                                                          |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  
|Net interest and dividend income after provision (credit) for loan losses |  |                              | 11,308  |  |      |   | 8,851   |      |  |   | 7,641   |   |  |      | 7,874   |  |  |   | 8,801   |  
|Noninterest income, excluding impairment on investment securities         |  |                              | 967     |  |      |   | 1,013   |      |  |   | 931     |   |  |      | 895     |  |  |   | 648     |  
|Impairment on investment securities                                       |  |                              |        |  |      |   | (1,882  | )    |  |   | (1,020  | ) |  |      |        |  |  |   |        |  
|Noninterest expense                                                       |  |                              | 11,035  |  |      |   | 9,331   |      |  |   | 8,764   |   |  |      | 7,614   |  |  |   | 7,946   |  
|                                                                          |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  
|Income (loss) before income taxes                                         |  |                              | 1,240   |  |      |   | (1,349  | )    |  |   | (1,212  | ) |  |      | 1,155   |  |  |   | 1,503   |  
|Income tax expense (benefit)                                              |  |                              | 383     |  |      |   | (639    | )    |  |   | (552    | ) |  |      | 342     |  |  |   | 616     |  
|                                                                          |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  
|Net income (loss)                                                         |  | $                            | 857     |  |      | $ | (710    | )    |  | $ | (660    | ) |  | $    | 813     |  |  | $ | 887     |  
|                                                                          |  |                              |         |  |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         |  



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|                                                                        |  |                                    |        |   |      |   |        |      |  |  |        |    |  |      |        |   |  |  |        |  
|----------------------------------------------------------------------- |  | ---------------------------------- | ------ | - | ---- | - | ------ | ---- |  |  | ------ | -- |  | ---- | ------ | - |  |  | ------ | -
|                                                                        |  | At or For The Years Ended June 30, |       
|                                                                        |  | 2011                               |        |   | 2010 |   |        | 2009 |  |  | 2008   |    |  | 2007 |       
|Selected Operating Data:                                                |  |                                    |        |   |      |   |        |      |  |  |        |    |  |      |        |   |  |  |        |  
|Performance Ratios:                                                     |  |                                    |        |   |      |   |        |      |  |  |        |    |  |      |        |   |  |  |        |  
|Return on average assets                                                |  |                                    | 0.23   | % |      |   | (0.19  | )%   |  |  | (0.19  | )% |  |      | 0.23   | % |  |  | 0.24   | %
|Return on average equity                                                |  |                                    | 1.06   |   |      |   | (1.24  | )    |  |  | (1.70  | )  |  |      | 2.07   |   |  |  | 2.31   |  
|Interest rate spread(1)                                                 |  |                                    | 3.36   |   |      |   | 2.82   |      |  |  | 2.21   |    |  |      | 1.94   |   |  |  | 1.96   |  
|Net interest margin(2)                                                  |  |                                    | 3.70   |   |      |   | 3.09   |      |  |  | 2.52   |    |  |      | 2.30   |   |  |  | 2.33   |  
|Efficiency ratio(3)                                                     |  |                                    | 84.79  |   |      |   | 83.75  |      |  |  | 92.75  |    |  |      | 86.83  |   |  |  | 88.32  |  
|Non-interest expense to average total assets                            |  |                                    | 3.02   |   |      |   | 2.48   |      |  |  | 2.48   |    |  |      | 2.13   |   |  |  | 2.14   |  
|Average interest-earning assets to average interest-bearing liabilities |  |                                    | 125.92 |   |      |   | 114.80 |      |  |  | 111.72 |    |  |      | 110.75 |   |  |  | 110.66 |  
|Average equity to average total assets                                  |  |                                    | 22.15  |   |      |   | 15.23  |      |  |  | 11.01  |    |  |      | 10.96  |   |  |  | 10.35  |  
|Earnings (loss) per share, basic/diluted                                |  | $                                  | 0.20   |   |      | $ | (0.17  | )    |  |  | na     |    |  |      | na     |   |  |  | na     |  
|Asset Quality Ratios:                                                   |  |                                    |        |   |      |   |        |      |  |  |        |    |  |      |        |   |  |  |        |  
|Non-performing loans to total loans                                     |  |                                    | 1.88   | % |      |   | 0.16   | %    |  |  | 0.86   | %  |  |      | 0.11   | % |  |  | 0.08   | %
|Non-performing assets to total assets                                   |  |                                    | 1.40   |   |      |   | 0.17   |      |  |  | 0.73   |    |  |      | 0.09   |   |  |  | 0.07   |  
|Allowance for loan losses to non-performing loans                       |  |                                    | 42.44  |   |      |   | 389.46 |      |  |  | 47.46  |    |  |      | 153.33 |   |  |  | 238.82 |  
|Allowance for loan losses to total loans                                |  |                                    | 0.80   |   |      |   | 0.63   |      |  |  | 0.41   |    |  |      | 0.17   |   |  |  | 0.20   |  
|Capital Ratios (bank-level only):                                       |  |                                    |        |   |      |   |        |      |  |  |        |    |  |      |        |   |  |  |        |  
|Total capital (to risk-weighted assets)                                 |  |                                    | 24.40  | % |      |   | 25.44  | %    |  |  | 17.34  | %  |  |      | 18.03  | % |  |  | 17.48  | %
|Tier I capital (to risk-weighted assets)                                |  |                                    | 23.49  |   |      |   | 24.69  |      |  |  | 16.84  |    |  |      | 17.81  |   |  |  | 17.22  |  
|Tier I capital (to average assets)                                      |  |                                    | 15.98  |   |      |   | 15.22  |      |  |  | 11.03  |    |  |      | 11.17  |   |  |  | 10.27  |  
|Other Data:                                                             |  |                                    |        |   |      |   |        |      |  |  |        |    |  |      |        |   |  |  |        |  
|Number of full service offices                                          |  |                                    | 5      |   |      |   | 5      |      |  |  | 5      |    |  |      | 4      |   |  |  | 5      |  
|Full time equivalent employees                                          |  |                                    | 67     |   |      |   | 61     |      |  |  | 59     |    |  |      | 56     |   |  |  | 69     |  



|(1) | The interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing
liabilities for the year.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The net interest margin represents net interest income as a percent of average interest-earning assets for the year.
|--- | --------------------------------------------------------------------------------------------------------------------

|(3) | The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
|--- | -----------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|ITEM 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The principal objective of this financial review is to provide an overview of the financial condition and results of operations of OBA
Financial Services, Inc. and its subsidiary, OBA Bank. This discussion and tabular presentations should be read in conjunction with the accompanying Consolidated Financial Statements and Notes, as well as, other information contained herein.

Overview of Income and Expenses

Income

The Company has two primary sources of pre-tax income. Net interest
income is the difference between interest income, which is the income the Company earns on its loans and investments, and interest expense, which is the interest the Company pays on its deposits and borrowings.

Non-interest income is the compensation received from providing products and services and from other income. The majority of the
non-interest income is earned from service charges on deposit accounts, bank owned life insurance income, and loan servicing fees. The Company also earns income from the sale of residential mortgage loans and other fees and charges.

The Company recognizes gains or losses as a result of the sale of investment securities, foreclosed property, and premises and equipment.
In addition, the Company recognizes losses on its investment securities that are considered other-than-temporarily impaired. Gains and losses are not a regular part of the Companys primary sources of income.

Expenses

The expenses the Company incurs in operating its business consist of salaries and employee benefits, occupancy and equipment expense,
external processing fees, FDIC assessments, Director fees, and other non-interest expenses.

Salaries and employee benefits
expense consists primarily of the salaries and wages paid to employees, payroll taxes, and expenses for health care, retirement, and other employee benefits.

Occupancy expenses, which are fixed or variable costs associated with premises and equipment, consist primarily of lease payments, real estate taxes, depreciation charges, maintenance, and cost of
utilities.

Equipment expense includes expenses and depreciation charges related to office and banking equipment.

External processing fees are paid to third parties mainly for data processing services.

Other expenses include expenses for professional services, including, but not limited to, attorney, accountant and consultant fees,
advertising and marketing, charitable contributions, insurance, office supplies, postage, telephone, and other miscellaneous operating expenses.

Critical Accounting Policies and Estimates

Note 2 to the
Consolidated Financial Statements contains a summary of the Companys significant accounting policies, including a discussion of recently issued accounting pronouncements. These policies, as well as, estimates made by Management, are integral
to the presentation of the Companys operations and financial condition. These accounting policies require that Management make highly difficult, complex, or subjective judgments and estimates at times regarding matters that are inherently
uncertain or susceptible to change. Management has discussed these significant accounting policies, the related estimates, and its judgments with the Audit Committee of the Board of Directors. Additional information regarding these policies can be
found in Note 2 to the Consolidated Financial Statements.



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##### Table of Contents

Discussion and analysis of the financial condition and results of operations are based on
the consolidated financial statements of the Company, which are prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of any contingent assets and liabilities for the reporting periods. Management evaluates estimates on an on-going basis and bases its estimates on historical experience and various other
factors and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Management believes the following critical accounting policies require the most significant judgments and estimates used in
preparation of the financial statements:

Allowance for Loan Losses. Management maintains an allowance for loan
losses at an amount estimated to equal all credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the statement of condition date. Managements determination of the adequacy of the allowance is based on
periodic evaluations of the loan portfolio and other relevant factors. However, this evaluation is inherently subjective, as it requires an estimate of the loss rates for each loan group and for each impaired loan, an estimate of the amounts
and timing of expected future cash flows, or an estimate of the value of collateral. Based on the estimate of the level of allowance for loan losses required, Management records a provision for loan losses to maintain the allowance for loan losses
at an appropriate level.

The determination of the allowance for loan losses is based on Managements current judgments
about the loan portfolio credit quality and Managements consideration of all known relevant internal and external factors that affect loan collectability, as of the reporting date. Management cannot predict with certainty the amount of loan
charge-offs that will be incurred. Management does not currently determine a range of loss with respect to the allowance for loan losses. In addition, various regulatory agencies, as an integral part of their examination processes, periodically
review the Companys allowance for loan losses. Such agencies may require that Management recognize additions to the allowance for loan losses based on their judgments about information available to them at the time of their examination.
Accordingly, actual results could differ from those estimates.

Other-Than-Temporary Impairment. In
estimating other-than-temporary impairment of investment securities, securities are evaluated periodically, and at least quarterly, to determine whether a decline in their value is other than temporary.

Management considers numerous factors when determining whether potential other-than-temporary impairment exists and the period over which
a debt security is expected to recover. The principal factors considered are (1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issuer (and
guarantor, if any), (3) any adverse conditions specifically related to the security, industry, or geographic area, (4) failure of the issuer of the security to make scheduled interest or principal payments, (5) any changes to the
rating of a security by a rating agency, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies.

For debt securities, other-than-temporary impairment is considered to have occurred if (1) Management intends to sell the security, (2) it is more likely than not that Management will be
required to sell the security before recovery of its amortized cost basis, or (3) if the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. In determining the present value of expected cash flows,
Management discounts the expected cash flows at the effective interest rate implicit in the security at the date of acquisition or, for debt securities that are beneficial interests in securitized financial assets, at the current rate used to
accrete the beneficial interest. In estimating cash flows expected to be collected, Management uses available information with respect to security prepayment speeds, expected deferral rates and severity, whether subordinated interests, if any, are
capable of absorbing estimated losses and the value of any underlying collateral.



31



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##### Table of Contents

Overview

Total assets increased $12.4 million, or 3.3%, to $386.4 million at June 30, 2011 from $374.1 million at June 30, 2010. For the
fiscal year ended June 30, 2011, the Company had net income of $857 thousand, or $0.20 earnings per share, compared to a net loss of $710 thousand, or $0.17 loss per share, for the fiscal year ended June 30, 2010. Net interest margin, the
percentage of net interest income to average interest-earning assets, increased to 3.70% for the fiscal year ended June 30, 2011 from 3.09% for the fiscal year ended June 30, 2010. Net interest income, the difference between interest
income and interest expense, increased to $12.0 million for the fiscal year ended June 30, 2011 from $10.1 million for the fiscal year ended June 30, 2010.

Non-performing assets totaled $5.4 million or 1.40% of total assets at June 30, 2011, compared to $639 thousand or 0.17% of total assets at June 30, 2010. The Bank had $2.7 million of loans
delinquent 30 days or greater at June 30, 2011, compared to $1.7 million of such delinquencies at June 30, 2010. In addition, the Bank provided $739 thousand for loan losses during the fiscal year ended June 30, 2011 compared to a
provision of $1.3 million for loan losses during the fiscal year ended June 30, 2010.

Balance Sheet Analysis

Cash and Cash Equivalents.At June 30, 2011 and 2010, the Company had $38.0 million and $36.0
million of cash and cash equivalents, respectively. Prepayments on longer-term, one- to four-family residential real estate loans, resulting from refinancing with other financial institutions, and an increase in total deposits provided cash in
excess of the Companys funding needs.

Loans.At June 30, 2011, total loans were $281.9 million, or
72.9% of total assets. During the year ended June 30, 2011, the loan portfolio increased $4.1 million, or 1.5%, as compared to $277.8 million, or 74.3% of total assets at June 30, 2010. The increase in loans was due to an increase in
commercial real estate and commercial business loans partially offset by decreases in one- to four family residential real estate loans and home equity loans and lines of credit.

Loan Portfolio Composition.The following table sets forth the composition of the Companys loan portfolio at the
dates indicated.



|                                      |  |                        |         |   |         |  |       |        |  |   |         |   |  |        |       |   |         |   |         |        |  |  |         |   |  |        |         |   |         |  |       |   |  |   |         |   |  |  |       |  
|------------------------------------- |  | ---------------------- | ------- | - | ------- |  | ----- | ------ |  | - | ------- | - |  | ------ | ----- | - | ------- | - | ------- | ------ |  |  | ------- | - |  | ------ | ------- | - | ------- |  | ----- | - |  | - | ------- | - |  |  | ----- | -
|                                      |  | At June 30,            |        
|                                      |  | 2011                   |         |   | 2010    |  |       | 2009   |  |   | 2008    |   |  | 2007   |      
|                                      |  | Amount                 |         |   | Percent |  |       | Amount |  |   | Percent |   |  | Amount |       |   | Percent |   |         | Amount |  |  | Percent |   |  | Amount |         |   | Percent | 
|                                      |  | (Dollars in thousands) |        
|Real estate loans:                    |  |                        |         |   |         |  |       |        |  |   |         |   |  |        |       |   |         |   |         |        |  |  |         |   |  |        |         |   |         |  |       |   |  |   |         |   |  |  |       |  
|One-to four family residential        |  | $                      | 97,285  |   |         |  | 34.5  | %      |  | $ | 123,452 |   |  |        | 44.5  | % |         | $ | 151,468 |        |  |  | 53.3    | % |  | $      | 179,951 |   |         |  | 62.0  | % |  | $ | 199,577 |   |  |  | 66.0  | %
|Commercial real estate                |  |                        | 108,756 |   |         |  | 38.6  |        |  |   | 85,423  |   |  |        | 30.7  |   |         |   | 64,930  |        |  |  | 22.8    |   |  |        | 65,392  |   |         |  | 22.5  |   |  |   | 61,636  |   |  |  | 20.3  |  
|Construction                          |  |                        | 1,180   |   |         |  | 0.4   |        |  |   | 1,071   |   |  |        | 0.4   |   |         |   | 4,935   |        |  |  | 1.7     |   |  |        | 3,141   |   |         |  | 1.1   |   |  |   | 418     |   |  |  | 0.1   |  
|Home equity loans and lines of credit |  |                        | 38,785  |   |         |  | 13.8  |        |  |   | 41,655  |   |  |        | 15.0  |   |         |   | 40,812  |        |  |  | 14.3    |   |  |        | 35,971  |   |         |  | 12.4  |   |  |   | 36,661  |   |  |  | 12.1  |  
|Commercial business loans             |  |                        | 35,860  |   |         |  | 12.7  |        |  |   | 26,234  |   |  |        | 9.4   |   |         |   | 22,481  |        |  |  | 7.9     |   |  |        | 5,659   |   |         |  | 1.9   |   |  |   | 4,611   |   |  |  | 1.5   |  
|Consumer loans                        |  |                        |        |   |         |  |      |        |  |   |        |   |  |        |      |   |         |   |        |        |  |  |        |   |  |        | 430     |   |         |  | 0.1   |   |  |   | 147     |   |  |  |      |  
|                                      |  |                        |         |   |         |  |       |        |  |   |         |   |  |        |       |   |         |   |         |        |  |  |         |   |  |        |         |   |         |  |       |   |  |   |         |   |  |  |       |  
|Total loans                           |  |                        | 281,866 |   |         |  | 100.0 | %      |  |   | 277,835 |   |  |        | 100.0 | % |         |   | 284,626 |        |  |  | 100.0   | % |  |        | 290,544 |   |         |  | 100.0 | % |  |   | 303,050 |   |  |  | 100.0 | %
|                                      |  |                        |         |   |         |  |       |        |  |   |         |   |  |        |       |   |         |   |         |        |  |  |         |   |  |        |         |   |         |  |       |   |  |   |         |   |  |  |       |  
|Allowance for loan losses             |  |                        | (2,246  | ) |         |  |       |        |  |   | (1,737  | ) |  |        |       |   |         |   | (1,167  | )      |  |  |         |   |  |        | (483    | ) |         |  |       |   |  |   | (609    | ) |  |  |       |  
|                                      |  |                        |         |   |         |  |       |        |  |   |         |   |  |        |       |   |         |   |         |        |  |  |         |   |  |        |         |   |         |  |       |   |  |   |         |   |  |  |       |  
|Total loans, net                      |  | $                      | 279,620 |   |         |  |       |        |  | $ | 276,098 |   |  |        |       |   |         | $ | 283,459 |        |  |  |         |   |  | $      | 290,061 |   |         |  |       |   |  | $ | 302,441 |   |  |  |       |  
|                                      |  |                        |         |   |         |  |       |        |  |   |         |   |  |        |       |   |         |   |         |        |  |  |         |   |  |        |         |   |         |  |       |   |  |   |         |   |  |  |       |  

Loan Portfolio Maturities.The following table summarizes the scheduled repayments of the
loan portfolio at June 30, 2011. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.



32



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|                                     |  |                                              |        |  |                            |   |         |                   |  |   |                                    |  |  |                         |        |  |       |   |        |  |  |   |         | 
|------------------------------------ |  | -------------------------------------------- | ------ |  | -------------------------- | - | ------- | ----------------- |  | - | ---------------------------------- |  |  | ----------------------- | ------ |  | ----- | - | ------ |  |  | - | ------- | 
|                                     |  | One-to FourFamilyResidentialReal EstateLoans |        |  | CommercialReal EstateLoans |   |         | ConstructionLoans |  |   | Home EquityLoans andLines ofCredit |  |  | CommercialBusinessLoans |        |  | Total |  
|                                     |  | (In thousands)                               |       
|Due during the Years Ending June 30, |  |                                              |        |  |                            |   |         |                   |  |   |                                    |  |  |                         |        |  |       |   |        |  |  |   |         | 
|2012                                 |  | $                                            | 24,090 |  |                            | $ | 16,019  |                   |  | $ |                                   |  |  | $                       | 6,964  |  |       | $ | 18,586 |  |  | $ | 65,659  | 
|2013                                 |  |                                              | 20,824 |  |                            |   | 15,368  |                   |  |   | 1,180                              |  |  |                         | 5,703  |  |       |   | 4,385  |  |  |   | 47,460  | 
|2014                                 |  |                                              | 16,902 |  |                            |   | 16,047  |                   |  |   |                                   |  |  |                         | 5,105  |  |       |   | 3,835  |  |  |   | 41,889  | 
|2015 to 2016                         |  |                                              | 20,365 |  |                            |   | 38,534  |                   |  |   |                                   |  |  |                         | 8,219  |  |       |   | 4,088  |  |  |   | 71,206  | 
|2017 to 2021                         |  |                                              | 12,551 |  |                            |   | 15,521  |                   |  |   |                                   |  |  |                         | 9,132  |  |       |   | 4,164  |  |  |   | 41,368  | 
|2022 to 2026                         |  |                                              | 1,917  |  |                            |   | 938     |                   |  |   |                                   |  |  |                         | 2,486  |  |       |   | 315    |  |  |   | 5,656   | 
|2027 and beyond                      |  |                                              | 636    |  |                            |   | 6,329   |                   |  |   |                                   |  |  |                         | 1,176  |  |       |   | 487    |  |  |   | 8,628   | 
|                                     |  |                                              |        |  |                            |   |         |                   |  |   |                                    |  |  |                         |        |  |       |   |        |  |  |   |         | 
|Total                                |  | $                                            | 97,285 |  |                            | $ | 108,756 |                   |  | $ | 1,180                              |  |  | $                       | 38,785 |  |       | $ | 35,860 |  |  | $ | 281,866 | 
|                                     |  |                                              |        |  |                            |   |         |                   |  |   |                                    |  |  |                         |        |  |       |   |        |  |  |   |         | 

The following table sets forth the scheduled repayments of fixed- and adjustable-rate loans at
June 30, 2011:



|                                         |  |                         |         |  |            |   |         |       |  |   |         | 
|---------------------------------------- |  | ----------------------- | ------- |  | ---------- | - | ------- | ----- |  | - | ------- | 
|                                         |  | Due after June 30, 2011 |        
|                                         |  | Fixed                   |         |  | Adjustable |   |         | Total | 
|                                         |  | (In thousands)          |        
|Real estate loans:                       |  |                         |         |  |            |   |         |       |  |   |         | 
|One-to four family residential           |  | $                       | 50,449  |  |            | $ | 22,746  |       |  | $ | 73,195  | 
|Commercial real estate                   |  |                         | 66,496  |  |            |   | 26,241  |       |  |   | 92,737  | 
|Construction                             |  |                         |        |  |            |   | 1,180   |       |  |   | 1,180   | 
|Home equity loans and lines of credit    |  |                         | 2,574   |  |            |   | 29,247  |       |  |   | 31,821  | 
|Commercial business loans                |  |                         | 14,113  |  |            |   | 3,161   |       |  |   | 17,274  | 
|                                         |  |                         |         |  |            |   |         |       |  |   |         | 
|Loans contractually due after one year   |  |                         | 133,632 |  |            |   | 82,575  |       |  |   | 216,207 | 
|Loans contractually due one year or less |  |                         | 34,106  |  |            |   | 31,553  |       |  |   | 65,659  | 
|                                         |  |                         |         |  |            |   |         |       |  |   |         | 
|Total loans                              |  | $                       | 167,738 |  |            | $ | 114,128 |       |  | $ | 281,866 | 
|                                         |  |                         |         |  |            |   |         |       |  |   |         | 

Securities.The following table sets forth the amortized cost and estimated fair value of
the available for sale and held to maturity securities portfolios, excluding Federal Home Loan Bank of Atlanta common stock, at the dates indicated.



|                                       |  |                        |        |  |           |   |        |               |  |   |           |  |  |               |        |  |           |   |        |  |  |   |        | 
|-------------------------------------- |  | ---------------------- | ------ |  | --------- | - | ------ | ------------- |  | - | --------- |  |  | ------------- | ------ |  | --------- | - | ------ |  |  | - | ------ | 
|                                       |  | At June 30,            |       
|                                       |  | 2011                   |        |  | 2010      |   |        | 2009          | 
|                                       |  | AmortizedCost          |        |  | FairValue |   |        | AmortizedCost |  |   | FairValue |  |  | AmortizedCost |        |  | FairValue |  
|                                       |  | (Dollars in thousands) |       
|U.S. Government and federal agencies   |  | $                      |       |  |           | $ |       |               |  | $ |          |  |  | $             |       |  |           | $ |       |  |  | $ |       | 
|Residential mortgage-backed securities |  |                        | 38,170 |  |           |   | 39,458 |               |  |   | 32,581    |  |  |               | 33,996 |  |           |   | 24,525 |  |  |   | 25,182 | 
|Trust preferred securities             |  |                        | 117    |  |           |   | 115    |               |  |   | 135       |  |  |               | 109    |  |           |   | 2,140  |  |  |   | 677    | 
|Other securities                       |  |                        | 50     |  |           |   | 50     |               |  |   | 50        |  |  |               | 50     |  |           |   | 50     |  |  |   | 50     | 
|                                       |  |                        |        |  |           |   |        |               |  |   |           |  |  |               |        |  |           |   |        |  |  |   |        | 
|Total securities                       |  | $                      | 38,337 |  |           | $ | 39,623 |               |  | $ | 32,766    |  |  | $             | 34,155 |  |           | $ | 26,715 |  |  | $ | 25,909 | 
|                                       |  |                        |        |  |           |   |        |               |  |   |           |  |  |               |        |  |           |   |        |  |  |   |        | 

All of the Banks mortgage-backed securities were issued by U.S. government agencies or
government-sponsored enterprises. Total securities increased $5.5 million, or 17.0%, to $38.3 million, or 9.9% of total assets, at June 30, 2011 from $32.8 million, or 8.8% of total assets, at June 30, 2010. The increase in the investment
portfolio is due to the deployment of excess liquidity as a result of increased deposits and capital from the Companys initial public stock offering. The net unrealized gains on individual residential mortgage-backed securities as of
June 30, 2011 and 2010 were the result of changes to current market interest rates as compared to the original purchase yield of the security. At June 30, 2011 and 2010, the Bank had no mortgage-backed securities with unrealized losses.



33



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##### Table of Contents

The Bank currently owns one immaterial position in an insurance company-backed pooled trust
preferred security that is performing as contractually obligated.

Portfolio Maturities and Yields.The
composition and maturities of the investment securities portfolio at June 30, 2011 are summarized in the following table. Maturities are based on the final contractual maturity dates and do not reflect the impact of repayments or early
redemptions that may occur. No tax-equivalent adjustments have been made, as the Bank did not hold any tax-advantaged investment securities at June 30, 2011.



|                                       |  |                  |   |  |                                      |  |   |                                      |  |   |                      |  |  |                  |   |   |                      |   |        |               |  |  |                      |   |  |               |        |  |           |  |      |                      |  |   |        |  |  |   |        |  |  |  |      |  
|-------------------------------------- |  | ---------------- | - |  | ------------------------------------ |  | - | ------------------------------------ |  | - | -------------------- |  |  | ---------------- | - | - | -------------------- | - | ------ | ------------- |  |  | -------------------- | - |  | ------------- | ------ |  | --------- |  | ---- | -------------------- |  | - | ------ |  |  | - | ------ |  |  |  | ---- | -
|                                       |  | One Year or Less |   |  | More than One Yearthrough Five Years |  |   | More than FiveYears through TenYears |  |   | More than TenYears   |  |  | Total Securities |  
|                                       |  | AmortizedCost    |   |  | WeightedAverageYield                 |  |   | AmortizedCost                        |  |   | WeightedAverageYield |  |  | AmortizedCost    |   |   | WeightedAverageYield |   |        | AmortizedCost |  |  | WeightedAverageYield |   |  | AmortizedCost |        |  | FairValue |  |      | WeightedAverageYield | 
|                                       |  |                  |   |  |                                      |  |   | (Dollars in thousands)               |  |   |                      |  |  |                  |   |   |                      |   |        |               |  |  |                      |   |  |               |        |  |           | 
|Residential mortgage-backed securities |  | $                |  |  |                                      |  |  | %                                    |  | $ |                     |  |  |                  |  | % |                      | $ | 11,592 |               |  |  | 2.81                 | % |  | $             | 26,578 |  |           |  | 3.73 | %                    |  | $ | 38,170 |  |  | $ | 39,458 |  |  |  | 3.45 | %
|Trust preferred securities             |  |                  |  |  |                                      |  |  |                                      |  |   |                     |  |  |                  |  |   |                      |   |       |               |  |  |                     |   |  |               | 117    |  |           |  | 1.50 |                      |  |   | 117    |  |  |   | 115    |  |  |  | 1.50 |  
|Other securities                       |  |                  |  |  |                                      |  |  |                                      |  |   |                     |  |  |                  |  |   |                      |   |       |               |  |  |                     |   |  |               | 50     |  |           |  |     |                      |  |   | 50     |  |  |   | 50     |  |  |  |     |  
|                                       |  |                  |   |  |                                      |  |   |                                      |  |   |                      |  |  |                  |   |   |                      |   |        |               |  |  |                      |   |  |               |        |  |           |  |      |                      |  |   |        |  |  |   |        |  |  |  |      |  
|Total                                  |  | $                |  |  |                                      |  |  | %                                    |  | $ |                     |  |  |                  |  | % |                      | $ | 11,592 |               |  |  | 2.81                 | % |  | $             | 26,745 |  |           |  | 3.71 | %                    |  | $ | 38,337 |  |  | $ | 39,623 |  |  |  | 3.44 | %
|                                       |  |                  |   |  |                                      |  |   |                                      |  |   |                      |  |  |                  |   |   |                      |   |        |               |  |  |                      |   |  |               |        |  |           |  |      |                      |  |   |        |  |  |   |        |  |  |  |      |  

Deposits.The Bank accepts deposits primarily from the areas in which the Banks
offices are located. Recently, Management has focused on building broader customer relationships and targeting small business customers to increase core deposits. The Bank also relies on enhanced technology and customer service to attract and retain
deposits. The Bank offers a variety of deposit accounts with a range of interest rates and terms. The Banks deposit accounts consist of statement savings accounts, certificates of deposit, money market accounts, commercial and regular checking
accounts, and individual retirement accounts. The Bank accepts deposits through the CDARS program, which are classified as brokered deposits for regulatory purposes, and can accept brokered deposits.

Interest rates paid, maturity terms, service fees, and withdrawal penalties are established on a periodic basis. Deposit rates and terms
are based primarily on current operating strategies, market interest rates, liquidity requirements, and the Banks deposit growth goals.

During the fiscal year ended June 30, 2011, deposits increased $23.6 million, or 10.1%, to $257.0 million from $233.4 million at June 30, 2010. The increase resulted from a $32.0 million, or
48.8%, increase in money market deposits to $97.5 million at June 30, 2011 from $65.5 million at June 30, 2010, and a $6.0 million, or 25.4%, increase in non-interest bearing deposits. This increase was offset by a decrease in total
certificates of deposit of $8.0 million, or 10.7%, to $67.0 million at June 30, 2011 from $75.1 million at June 30, 2010.

The following tables set forth the distribution of the average total deposit accounts by account type, for the years indicated.



|                          |  |                                     |         |  |         |  |       |                     |  |  |                        |   |  |         |         |  |                     |  |       |                |  |  |         |   |  |                     |         |  |  |  |       |   |  |  |      |  
|------------------------- |  | ----------------------------------- | ------- |  | ------- |  | ----- | ------------------- |  |  | ---------------------- | - |  | ------- | ------- |  | ------------------- |  | ----- | -------------- |  |  | ------- | - |  | ------------------- | ------- |  |  |  | ----- | - |  |  | ---- | -
|                          |  | For the Fiscal Years Ended June 30, |        
|                          |  | 2011                                |         |  | 2010    |  |       | 2009                | 
|                          |  |                                     |         |  |         |  |       |                     |  |  | (dollars in thousands) |   |  |         |         |  |                     |  |       |                | 
|                          |  | AverageBalance                      |         |  | Percent |  |       | WeightedAverageRate |  |  | AverageBalance         |   |  | Percent |         |  | WeightedAverageRate |  |       | AverageBalance |  |  | Percent |   |  | WeightedAverageRate |        
|Noninterest-bearing       |  | $                                   | 25,761  |  |         |  | 11.1  | %                   |  |  |                       | % |  | $       | 32,589  |  |                     |  | 12.9  | %              |  |  |        | % |  | $                   | 11,343  |  |  |  | 5.0   | % |  |  |     | %
|Interest-bearing checking |  |                                     | 59,917  |  |         |  | 25.9  |                     |  |  | 0.57                   |   |  |         | 58,442  |  |                     |  | 23.1  |                |  |  | 0.72    |   |  |                     | 45,052  |  |  |  | 19.7  |   |  |  | 0.97 |  
|Saving and escrow         |  |                                     | 7,134   |  |         |  | 3.1   |                     |  |  | 0.43                   |   |  |         | 7,555   |  |                     |  | 3.0   |                |  |  | 0.45    |   |  |                     | 7,601   |  |  |  | 3.3   |   |  |  | 0.66 |  
|Money market checking     |  |                                     | 68,145  |  |         |  | 29.5  |                     |  |  | 0.79                   |   |  |         | 64,767  |  |                     |  | 25.6  |                |  |  | 0.84    |   |  |                     | 55,729  |  |  |  | 24.4  |   |  |  | 1.67 |  
|Certificates of deposit   |  |                                     | 70,131  |  |         |  | 30.4  |                     |  |  | 2.44                   |   |  |         | 89,408  |  |                     |  | 35.4  |                |  |  | 2.90    |   |  |                     | 108,410 |  |  |  | 47.6  |   |  |  | 3.83 |  
|                          |  |                                     |         |  |         |  |       |                     |  |  |                        |   |  |         |         |  |                     |  |       |                |  |  |         |   |  |                     |         |  |  |  |       |   |  |  |      |  
|Total deposits            |  | $                                   | 231,088 |  |         |  | 100.0 | %                   |  |  | 1.14                   | % |  | $       | 252,761 |  |                     |  | 100.0 | %              |  |  | 1.42    | % |  | $                   | 228,135 |  |  |  | 100.0 | % |  |  | 2.44 | %
|                          |  |                                     |         |  |         |  |       |                     |  |  |                        |   |  |         |         |  |                     |  |       |                |  |  |         |   |  |                     |         |  |  |  |       |   |  |  |      |  



34



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##### Table of Contents

The following table sets forth the maturities of certificates of deposit in amounts greater
than or equal to $100 thousand as of June 30, 2011.



|                                     |  |                 |        | 
|------------------------------------ |  | --------------- | ------ | 
|                                     |  | AtJune 30, 2011 |       
|                                     |  | (In thousands)  |       
|Three months or less                 |  | $               | 6,476  | 
|Over three months through six months |  |                 | 5,167  | 
|Over six months through one year     |  |                 | 10,660 | 
|Over one year to three years         |  |                 | 7,743  | 
|Over three years                     |  |                 | 508    | 
|                                     |  |                 |        | 
|Total                                |  | $               | 30,554 | 
|                                     |  |                 |        | 

Borrowings.The Companys borrowings consist primarily of advances from the Federal
Home Loan Bank of Atlanta and funds borrowed from securities dealers and depositors, primarily small business customers under repurchase agreements. During the fiscal year ended June 30, 2011, borrowings decreased $11.9 million, or 20.5%, to
$45.2 million. At June 30, 2011, Federal Home Loan Bank advances totaled $29.6 million, or 9.7% of total liabilities, and repurchase agreements totaled $15.6 million, or 5.1% of total liabilities. At June 30, 2011, the Company had access
to additional Federal Home Loan Bank advances of up to $39.5 million. As of June 30, 2011, the Companys available credit lines and other sources of liquidity had not been reduced compared to levels from June 30, 2010.

The following table sets forth information concerning balances and interest rates on Federal Home Loan Bank advances at the dates and for
the fiscal years indicated.



|                                              |  |                                    |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------- |  | ---------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                              |  | At or for the Years Ended June 30, |       
|                                              |  | 2011                               |        |   | 2010 |   |        | 2009 | 
|                                              |  | (dollars in thousands)             |       
|Balance at end of year                        |  | $                                  | 29,618 |   |      | $ | 36,834 |      |  | $ | 56,400 |  
|Average balance during the year               |  | $                                  | 35,845 |   |      | $ | 47,290 |      |  | $ | 68,026 |  
|Maximum outstanding at any month end          |  | $                                  | 43,166 |   |      | $ | 55,700 |      |  | $ | 71,400 |  
|Weighted average interest rate at end of year |  |                                    | 3.90   | % |      |   | 4.17   | %    |  |   | 4.21   | %
|Weighted average interest rate during year    |  |                                    | 3.72   | % |      |   | 4.41   | %    |  |   | 4.39   | %

The following table sets forth information concerning balances and interest rates on securities dealer
repurchase agreements at the dates and for the years indicated.



|                                              |  |                                    |       |   |      |   |       |      |  |   |       |  
|--------------------------------------------- |  | ---------------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                              |  | At or for the Years Ended June 30, |      
|                                              |  | 2011                               |       |   | 2010 |   |       | 2009 | 
|                                              |  | (dollars in thousands)             |      
|Balance at end of year                        |  | $                                  | 5,000 |   |      | $ | 5,000 |      |  | $ | 5,000 |  
|Average balance during the year               |  | $                                  | 5,000 |   |      | $ | 5,000 |      |  | $ | 5,000 |  
|Maximum outstanding at any month end          |  | $                                  | 5,000 |   |      | $ | 5,000 |      |  | $ | 5,000 |  
|Weighted average interest rate at end of year |  |                                    | 3.23  | % |      |   | 3.23  | %    |  |   | 3.23  | %
|Weighted average interest rate during year    |  |                                    | 3.23  | % |      |   | 3.23  | %    |  |   | 3.23  | %



35



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##### Table of Contents

The following table sets forth information concerning balances and interest rates on
customer repurchase agreements at the dates and for the years indicated.



|                                              |  |                                    |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------- |  | ---------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                              |  | At or for the Years Ended June 30, |       
|                                              |  | 2011                               |        |   | 2010 |   |        | 2009 | 
|                                              |  | (dollars in thousands)             |       
|Balance at end of year                        |  | $                                  | 10,566 |   |      | $ | 15,292 |      |  | $ | 13,779 |  
|Average balance during the year               |  | $                                  | 12,300 |   |      | $ | 13,459 |      |  | $ | 12,267 |  
|Maximum outstanding at any month end          |  | $                                  | 18,361 |   |      | $ | 18,995 |      |  | $ | 19,008 |  
|Weighted average interest rate at end of year |  |                                    | 0.58   | % |      |   | 0.65   | %    |  |   | 0.57   | %
|Weighted average interest rate during year    |  |                                    | 0.68   | % |      |   | 0.59   | %    |  |   | 1.32   | %

Stockholders Equity.At June 30, 2011, stockholders equity was $80.9
million, an increase of $638 thousand, or 0.8%, from $80.2 million at June 30, 2010.



36



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##### Table of Contents

Average Balances and Yields

The following tables set forth average balance sheets, average yields and rates, and certain other information for the years indicated. No
tax-equivalent yield adjustments were made, as the Company did not hold any tax-advantaged interest-earning assets during the fiscal years indicated. All average balances are daily average balances. Non-accrual loans were included in the computation
of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of net deferred costs, discounts and premiums that are amortized or accreted to interest income.



|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|----------------------------------------------------------------------- |  | ----------------------------------- | ------- | - | -------- | - | ------ | ---------- |  |  | ------------------------- | - |  | -------- | ------- | - | ---------- | - | ------ | ------------------------- |  |  | -------- | - |  | ---------- | ------- | - |  | - | ------ |  |  |  | ---- | -
|                                                                        |  | For the Fiscal Years Ended June 30, |        
|                                                                        |  | 2011                                |         |   | 2010     |   |        | 2009       | 
|(dollars in thousands)                                                  |  | AverageOutstandingBalance           |         |   | Interest |   |        | Yield/Rate |  |  | AverageOutstandingBalance |   |  | Interest |         |   | Yield/Rate |   |        | AverageOutstandingBalance |  |  | Interest |   |  | Yield/Rate |        
|Assets:                                                                 |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Interest-earning assets:                                                |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Loans:                                                                  |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|One- to four family residential                                         |  | $                                   | 108,174 |   |          | $ | 5,490  |            |  |  | 5.08                      | % |  | $        | 136,125 |   |            | $ | 6,996  |                           |  |  | 5.14     | % |  | $          | 168,240 |   |  | $ | 8,892  |  |  |  | 5.29 | %
|Commercial real estate                                                  |  |                                     | 100,047 |   |          |   | 6,273  |            |  |  | 6.27                      |   |  |          | 71,127  |   |            |   | 4,619  |                           |  |  | 6.49     |   |  |            | 65,277  |   |  |   | 4,365  |  |  |  | 6.69 |  
|Construction                                                            |  |                                     | 1,458   |   |          |   | 73     |            |  |  | 5.01                      |   |  |          | 2,843   |   |            |   | 118    |                           |  |  | 4.15     |   |  |            | 4,349   |   |  |   | 180    |  |  |  | 4.14 |  
|Home equity & lines of credit                                           |  |                                     | 40,504  |   |          |   | 1,315  |            |  |  | 3.25                      |   |  |          | 41,061  |   |            |   | 1,317  |                           |  |  | 3.21     |   |  |            | 39,323  |   |  |   | 1,514  |  |  |  | 3.85 |  
|Commercial business loans                                               |  |                                     | 30,867  |   |          |   | 1,912  |            |  |  | 6.19                      |   |  |          | 25,041  |   |            |   | 1,586  |                           |  |  | 6.33     |   |  |            | 9,323   |   |  |   | 743    |  |  |  | 7.97 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Total loans                                                             |  |                                     | 281,050 |   |          |   | 15,063 |            |  |  | 5.36                      |   |  |          | 276,197 |   |            |   | 14,636 |                           |  |  | 5.30     |   |  |            | 286,512 |   |  |   | 15,694 |  |  |  | 5.48 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Investments                                                             |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|U.S Government and U.S. agencies securities                             |  |                                     |        |   |          |   |       |            |  |  |                          |   |  |          | 1,301   |   |            |   | 63     |                           |  |  | 4.84     |   |  |            | 1,310   |   |  |   | 46     |  |  |  | 3.51 |  
|Mortgage-backed securities                                              |  |                                     | 27,546  |   |          |   | 1,016  |            |  |  | 3.69                      |   |  |          | 25,679  |   |            |   | 1,212  |                           |  |  | 4.72     |   |  |            | 25,693  |   |  |   | 1,299  |  |  |  | 5.06 |  
|Trust preferred securities                                              |  |                                     | 128     |   |          |   | 2      |            |  |  | 1.56                      |   |  |          | 1,432   |   |            |   | 9      |                           |  |  | 0.63     |   |  |            | 2,848   |   |  |   | 128    |  |  |  | 4.49 |  
|Other investments & interest bearing deposits with banks                |  |                                     | 9,207   |   |          |   | 102    |            |  |  | 1.11                      |   |  |          | 4,661   |   |            |   | 27     |                           |  |  | 0.58     |   |  |            | 6,710   |   |  |   | 130    |  |  |  | 1.94 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Total investments                                                       |  |                                     | 36,881  |   |          |   | 1,120  |            |  |  | 3.04                      |   |  |          | 33,073  |   |            |   | 1,311  |                           |  |  | 3.96     |   |  |            | 36,561  |   |  |   | 1,603  |  |  |  | 4.38 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Other                                                                   |  |                                     | 7,539   |   |          |   | 65     |            |  |  | 0.86                      |   |  |          | 18,955  |   |            |   | 103    |                           |  |  | 0.54     |   |  |            | 14,439  |   |  |   | 101    |  |  |  | 0.70 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Total interest-earning assets                                           |  |                                     | 325,470 |   |          |   | 16,248 |            |  |  | 4.99                      |   |  |          | 328,225 |   |            |   | 16,050 |                           |  |  | 4.89     |   |  |            | 337,512 |   |  |   | 17,398 |  |  |  | 5.15 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Allowance for loan losses                                               |  |                                     | (2,078  | ) |          |   |        |            |  |  |                           |   |  |          | (1,265  | ) |            |   |        |                           |  |  |          |   |  |            | (493    | ) |  |   |        |  |  |  |      |  
|Cash and due from banks                                                 |  |                                     | 22,827  |   |          |   |        |            |  |  |                           |   |  |          | 31,311  |   |            |   |        |                           |  |  |          |   |  |            | 4,085   |   |  |   |        |  |  |  |      |  
|Other assets                                                            |  |                                     | 19,113  |   |          |   |        |            |  |  |                           |   |  |          | 17,983  |   |            |   |        |                           |  |  |          |   |  |            | 12,238  |   |  |   |        |  |  |  |      |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Total assets                                                            |  | $                                   | 365,332 |   |          |   |        |            |  |  |                           |   |  | $        | 376,254 |   |            |   |        |                           |  |  |          |   |  | $          | 353,342 |   |  |   |        |  |  |  |      |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Liabilities and Stockholders Equity:                                   |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Interest-bearing liabilities:                                           |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Interest-bearing checking                                               |  | $                                   | 59,917  |   |          | $ | 342    |            |  |  | 0.57                      |   |  | $        | 58,442  |   |            | $ | 418    |                           |  |  | 0.72     |   |  | $          | 45,052  |   |  | $ | 438    |  |  |  | 0.97 |  
|Saving and escrow                                                       |  |                                     | 7,134   |   |          |   | 31     |            |  |  | 0.43                      |   |  |          | 7,555   |   |            |   | 34     |                           |  |  | 0.45     |   |  |            | 7,601   |   |  |   | 50     |  |  |  | 0.66 |  
|Money market checking                                                   |  |                                     | 68,145  |   |          |   | 537    |            |  |  | 0.79                      |   |  |          | 64,767  |   |            |   | 546    |                           |  |  | 0.84     |   |  |            | 55,729  |   |  |   | 933    |  |  |  | 1.67 |  
|Certificates of deposit                                                 |  |                                     | 70,131  |   |          |   | 1,713  |            |  |  | 2.44                      |   |  |          | 89,408  |   |            |   | 2,595  |                           |  |  | 2.90     |   |  |            | 108,410 |   |  |   | 4,147  |  |  |  | 3.83 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Total interest bearing deposits                                         |  |                                     | 205,327 |   |          |   | 2,623  |            |  |  | 1.28                      |   |  |          | 220,172 |   |            |   | 3,593  |                           |  |  | 1.63     |   |  |            | 216,792 |   |  |   | 5,568  |  |  |  | 2.57 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|FHLB advances                                                           |  |                                     | 35,845  |   |          |   | 1,333  |            |  |  | 3.72                      |   |  |          | 47,290  |   |            |   | 2,087  |                           |  |  | 4.41     |   |  |            | 68,034  |   |  |   | 2,990  |  |  |  | 4.39 |  
|Repurchase agreements                                                   |  |                                     | 17,300  |   |          |   | 245    |            |  |  | 1.42                      |   |  |          | 18,459  |   |            |   | 241    |                           |  |  | 1.31     |   |  |            | 17,267  |   |  |   | 322    |  |  |  | 1.86 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Total interest-bearing liabilities                                      |  |                                     | 258,472 |   |          |   | 4,201  |            |  |  | 1.63                      |   |  |          | 285,921 |   |            |   | 5,921  |                           |  |  | 2.07     |   |  |            | 302,093 |   |  |   | 8,880  |  |  |  | 2.94 |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Noninterest-bearing demand deposits                                     |  |                                     | 25,761  |   |          |   |        |            |  |  |                           |   |  |          | 32,589  |   |            |   |        |                           |  |  |          |   |  |            | 11,343  |   |  |   |        |  |  |  |      |  
|Other liabilities                                                       |  |                                     | 193     |   |          |   |        |            |  |  |                           |   |  |          | 439     |   |            |   |        |                           |  |  |          |   |  |            | 1,011   |   |  |   |        |  |  |  |      |  
|Stockholders equity                                                    |  |                                     | 80,906  |   |          |   |        |            |  |  |                           |   |  |          | 57,305  |   |            |   |        |                           |  |  |          |   |  |            | 38,895  |   |  |   |        |  |  |  |      |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Total liabilities and stockholders equity                              |  | $                                   | 365,332 |   |          |   |        |            |  |  |                           |   |  | $        | 376,254 |   |            |   |        |                           |  |  |          |   |  | $          | 353,342 |   |  |   |        |  |  |  |      |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Net interest income                                                     |  |                                     |         |   |          | $ | 12,047 |            |  |  |                           |   |  |          |         |   |            | $ | 10,129 |                           |  |  |          |   |  |            |         |   |  | $ | 8,518  |  |  |  |      |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Net interest rate spread(1)                                             |  |                                     |         |   |          |   |        |            |  |  | 3.36                      | % |  |          |         |   |            |   |        |                           |  |  | 2.82     | % |  |            |         |   |  |   |        |  |  |  | 2.21 | %
|Net interest-earning assets(2)                                          |  | $                                   | 66,998  |   |          |   |        |            |  |  |                           |   |  | $        | 42,304  |   |            |   |        |                           |  |  |          |   |  | $          | 35,419  |   |  |   |        |  |  |  |      |  
|                                                                        |  |                                     |         |   |          |   |        |            |  |  |                           |   |  |          |         |   |            |   |        |                           |  |  |          |   |  |            |         |   |  |   |        |  |  |  |      |  
|Net interest margin(3)                                                  |  |                                     |         |   |          |   |        |            |  |  | 3.70                      | % |  |          |         |   |            |   |        |                           |  |  | 3.09     | % |  |            |         |   |  |   |        |  |  |  | 2.52 | %
|Average interest-earning assets to average interest-bearing liabilities |  |                                     | 125.92  | % |          |   |        |            |  |  |                           |   |  |          | 114.80  | % |            |   |        |                           |  |  |          |   |  |            | 111.72  | % |  |   |        |  |  |  |      |  



|(1) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
|--- | -------------------------------------------------------------------------------------------------------------

|(3) | Net interest margin represents net interest income divided by average total interest-earning assets.
|--- | ----------------------------------------------------------------------------------------------------



37



---

##### Table of Contents

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on the Companys net interest income for the years indicated.
The rate column shows the effects attributable to changes in rate, which are changes in rate multiplied by prior volume. The volume column shows the effects attributable to changes in volume, which are changes in volume multiplied by prior rate. The
total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to
volume.



|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------------------------ |  | ------------------------- | ------ | - | ----------------------- | - | ---- | ------------------------- | ------ | - | ----------------------- | ---- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                                             |  | 2011 vs. 2010             |        |   | 2010 vs. 2009           |  
|                                                             |  | Increase (Decrease)Due to |        |   | TotalIncrease(Decrease) |   |      | Increase (Decrease)Due to |        |   | TotalIncrease(Decrease) |     
|(in thousands)                                               |  | Volume                    |        |   | Rate                    |   |      |                           | Volume |   |                         | Rate |  |  
|Assets:                                                      |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Interest-earning assets:                                     |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Loans:                                                       |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|One- to four family residential                              |  | $                         | (1,437 | ) |                         | $ | (69  | )                         |        | $ | (1,506                  | )    |  | $ | (1,697 | ) |  | $ | (199   | ) |  | $ | (1,896 | )
|Commercial real estate                                       |  |                           | 1,878  |   |                         |   | (224 | )                         |        |   | 1,654                   |      |  |   | 391    |   |  |   | (137   | ) |  |   | 254    |  
|Construction                                                 |  |                           | (57    | ) |                         |   | 12   |                           |        |   | (45                     | )    |  |   | (62    | ) |  |   |       |   |  |   | (62    | )
|Home equity & lines of credit                                |  |                           | (18    | ) |                         |   | 16   |                           |        |   | (2                      | )    |  |   | 67     |   |  |   | (264   | ) |  |   | (197   | )
|Commercial business loans                                    |  |                           | 369    |   |                         |   | (43  | )                         |        |   | 326                     |      |  |   | 1,253  |   |  |   | (410   | ) |  |   | 843    |  
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Total loans                                                  |  |                           | 735    |   |                         |   | (308 | )                         |        |   | 427                     |      |  |   | (48    | ) |  |   | (1,010 | ) |  |   | (1,058 | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Investments                                                  |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|U.S Government and U.S. agencies securities                  |  |                           | (63    | ) |                         |   |     |                           |        |   | (63                     | )    |  |   |       |   |  |   | 17     |   |  |   | 17     |  
|Mortgage-backed securities                                   |  |                           | 88     |   |                         |   | (284 | )                         |        |   | (196                    | )    |  |   | (1     | ) |  |   | (86    | ) |  |   | (87    | )
|Trust preferred securities                                   |  |                           | (8     | ) |                         |   | 1    |                           |        |   | (7                      | )    |  |   | (64    | ) |  |   | (55    | ) |  |   | (119   | )
|Other investments & Interest bearing deposits at other banks |  |                           | 26     |   |                         |   | 49   |                           |        |   | 75                      |      |  |   | (40    | ) |  |   | (63    | ) |  |   | (103   | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Total investments & Interest bearing deposits at other banks |  |                           | 43     |   |                         |   | (234 | )                         |        |   | (191                    | )    |  |   | (105   | ) |  |   | (187   | ) |  |   | (292   | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Other                                                        |  |                           | (62    | ) |                         |   | 24   |                           |        |   | (38                     | )    |  |   | 32     |   |  |   | (30    | ) |  |   | 2      |  
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Total interest-earning assets                                |  |                           | 716    |   |                         |   | (518 | )                         |        |   | 198                     |      |  |   | (121   | ) |  |   | (1,227 | ) |  |   | (1,348 | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Liabilities:                                                 |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Interest-bearing liabilities:                                |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Interest-bearing checking                                    |  |                           | 11     |   |                         |   | (87  | )                         |        |   | (76                     | )    |  |   | 130    |   |  |   | (150   | ) |  |   | (20    | )
|Saving and escrow                                            |  |                           | (2     | ) |                         |   | (1   | )                         |        |   | (3                      | )    |  |   |       |   |  |   | (16    | ) |  |   | (16    | )
|Money market checking                                        |  |                           | 28     |   |                         |   | (37  | )                         |        |   | (9                      | )    |  |   | 151    |   |  |   | (538   | ) |  |   | (387   | )
|Certificates of deposit                                      |  |                           | (560   | ) |                         |   | (322 | )                         |        |   | (882                    | )    |  |   | (727   | ) |  |   | (825   | ) |  |   | (1,552 | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Total interest bearing deposits                              |  |                           | (523   | ) |                         |   | (447 | )                         |        |   | (970                    | )    |  |   | (446   | ) |  |   | (1,529 | ) |  |   | (1,975 | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|FHLB advances                                                |  |                           | (505   | ) |                         |   | (249 | )                         |        |   | (754                    | )    |  |   | (912   | ) |  |   | 9      |   |  |   | (903   | )
|Repurchase agreements                                        |  |                           | (15    | ) |                         |   | 19   |                           |        |   | 4                       |      |  |   | 22     |   |  |   | (103   | ) |  |   | (81    | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Total interest-bearing liabilities                           |  |                           | (1,043 | ) |                         |   | (677 | )                         |        |   | (1,720                  | )    |  |   | (1,336 | ) |  |   | (1,623 | ) |  |   | (2,959 | )
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  
|Change in net interest income                                |  | $                         | 1,759  |   |                         | $ | 159  |                           |        | $ | 1,918                   |      |  | $ | 1,215  |   |  | $ | 396    |   |  | $ | 1,611  |  
|                                                             |  |                           |        |   |                         |   |      |                           |        |   |                         |      |  |   |        |   |  |   |        |   |  |   |        |  

Comparison of Operating Results for the Fiscal Years Ended June 30, 2011 and 2010

General.For the fiscal year ended June 30, 2011, the Company had net income of $857 thousand, or
$0.20 earnings per share, compared to a net loss of $710 thousand, or $0.17 loss per share, for the fiscal year ended June 30, 2010. Net income was significantly impacted by an increase in non-interest income of $1.8 million for the year ended
June 30, 2011. The increase in non-interest income reflects no impairment losses on investment



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securities in 2011 as compared to $1.9 million in 2010. The decrease in impairment losses is the result of the Companys previous sale of its bank and bank holding company pooled trust
preferred securities in March 2010. In addition, net income increased $1.6 million as the Companys net interest income increased $1.9 million and the provision for loan losses decreased by $539 thousand while being partially offset by an
increase in non-interest expense of $1.7 million at June 30, 2011 as compared to June 30, 2010.

Net Interest
Income. Net interest income increased $1.9 million, or 18.9%, to $12.0 million for the fiscal year ended June 30, 2011 compared to $10.1 million for the fiscal year ended June 30, 2010. Interest expense decreased $1.7
million as declining market interest rates allowed the Company to continue to reduce the cost of deposits. Also, deposit inflows and loan prepayments allowed the Company to reduce higher cost borrowings. Interest and dividend income increased
$198 thousand, or 1.2%, as interest income on loans increased $427 thousand. Net interest margin was 3.70% for the fiscal year ended June 30, 2011 compared to 3.09% for fiscal year 2010.

Interest and Dividend Income.Interest and dividend income increased $198 thousand, or 1.2%, to $16.2 million for the
fiscal year ended June 30, 2011 from $16.1 million for the fiscal year ended June 30, 2010. Interest income on loans increased $427 thousand, or 2.9%, to $15.1 million for the fiscal year ended June 30, 2011 from $14.6 million for the
fiscal year ended June 30, 2010, as the average yield on loans increased six basis points, to 5.36% for the fiscal year ended June 30, 2011 from 5.30% for the fiscal year ended June 30, 2010.

Average loans increased $4.9 million, or 1.8%. Average commercial loans increased $33.4 million offset by a decrease in average one- to
four- family residential loans of $28.0 million during fiscal year ended June 30, 2010. The average balance of commercial loans increased $33.4 million, or 33.7%, to $132.4 million for the fiscal year ended June 30, 2011 from $99.0 million
for the fiscal year ended June 30, 2010. The reduction in the one- to four-family residential real estate loan portfolio resulted from selling newly-originated longer term, primarily 30 year, one- to four-family residential real estate loans,
as well as, prepayments exceeding other originations that were held in portfolio.

Interest income on total investments and
interest bearing deposits at other banks decreased $191 thousand to $1.1 million for the fiscal year ended June 30, 2011 from $1.3 million for the fiscal year ended June 30, 2010. The average yield on securities decreased 0.92 basis points
to 3.04% for the fiscal year ended June 30, 2011 from 3.96% for the fiscal year ended June 30, 2010. The decrease reflects the purchase of U.S. Government backed mortgage backed securities at lower yields as market rates declined over the
period. Additionally, as market rates declined, the prepayment speed on mortgage backed securities increased causing the yield to decrease on bonds purchased at a premium.

Interest Expense.Interest expense decreased $1.7 million, or 29.0%, to $4.2 million for the fiscal year ended June 30, 2011 from $5.9 million for the fiscal year ended June 30,
2010. The Company experienced decreases in interest expense on deposits and borrowings. Declining market interest rates and a decrease in high cost certificates of deposit allowed for the reduction of deposit expense by $970 thousand or 27.0%. The
average rate paid on deposits decreased 35 basis points to 1.28% for the fiscal year ended June 30, 2011 from 1.63% for the fiscal year ended June 30, 2010. The average balance of interest bearing deposits decreased $14.8 million, or 6.7%,
during the fiscal year ended June 30, 2011. Increases of $3.4 million, or 5.2%, and $1.5 million, or 2.5%, in money market deposits and interest bearing checking deposits, respectively, were offset by a decrease of $19.3 million, or 21.6%, in
certificates of deposit.

Interest expense on Federal Home Loan Bank borrowings decreased $754 thousand to $1.3 million for
the fiscal year ended June 30, 2011 from $2.1 million for the fiscal year ended June 30, 2010. This change resulted from an $11.4 million, or 24.2%, decrease in average outstanding borrowings for the fiscal year ended June 30, 2011.
Additionally, average repurchase agreements decreased $1.2 million, or 6.3% for the fiscal year ended June 30, 2011. The average yield on repurchase agreements increased 11 basis points to 1.42% for the fiscal year ended June 30, 2011 from
1.31% for the fiscal year ended June 30, 2010. The decrease in FHLB borrowings reflects capital inflows and cash flows from the securities and loan portfolios that allowed the Company to reduce the average balance of borrowings.



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Provision for Loan Losses.Based on an analysis of the factors described in
Allowance for Loan Losses, the Company recorded a provision for loan losses of $739 thousand for the fiscal year ended June 30, 2011 and a provision for loan losses of $1.3 million for fiscal year ended June 30, 2010.
During the fiscal years ended June 30, 2011 and 2010, the Company had net loan charge-offs of $230 thousand and $708 thousand, respectively; a decrease of $478 thousand. The higher charge-off total for the year ended June 30, 2010 was
primarily the result of the charge-off of two loans in the amount of approximately $636 thousand. Net charge-offs for the fiscal year ended June 30, 2011 include a recovery of $30 thousand in home equity loans and lines of credit. The remaining
charge-offs include partial charge-offs of two loans that paid off; one home equity loan and one one- to four-family residential loan, as well as, a partial write-down to current market value of two commercial real estate loans.

The loan portfolio increased by $4.1 million, or 1.5%, to $281.9 million at June 30, 2011 from $277.8 million at June 30, 2010.
Commercial business loans increased by $9.6 million, or 36.7%, to $35.9 million and commercial real estate loans increased by $23.3 million, or 27.3%, to $108.8 million while one- to four- residential loans decreased $26.2 million, or 21.2%, to
$97.3 million.

Non-performing loans totaled $5.3 million at June 30, 2011 and $446 thousand at June 30, 2010. The
increase was a result of two loan relationships with not-for-profit entities that have collateral value well in excess of the loan value. Based on the value of the collateral, no specific allowances are required for these loans. The June 30,
2010 non-performing loan balance reflects a single one- to four-family residential mortgage loan. The Companys non-performing loans to total loans ratio increased to 1.88% from 0.16% at June 30, 2011 and 2010, respectively.

Non-performing assets totaled $5.4 million at June 30, 2011 and $639 thousand at June 30, 2010. In addition to the
aforementioned loan relationships with not-for-profit entities, the Bank has one real estate owned property that is included in total non-performing assets. The Companys non-performing assets to total assets ratio increased to 1.40% from 0.17%
at June 30, 2011 and 2010, respectively.

There were $600 thousand in loans delinquent less than 90 days and $2.1 million
in loans delinquent 90 days or more for a total of $2.7 million at June 30, 2011. This represents an increase in total delinquent loans of $1.0 million from June 30, 2010. Total delinquent loans were $1.7 million at June 30, 2010.
Loans delinquent less than 90 days were $1.3 million and loans delinquent 90 days or more were $446 thousand at June 30, 2010.

The allowance for loan losses to total loans was 0.80% and 0.63% at June 30, 2011 and 2010, respectively. The Company has provided for all losses that are both probable and reasonably estimable at
June 30, 2011 and 2010.



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Non-Interest Income.The following table summarizes changes in non-interest
income between the fiscal years ended June 30, 2011 and 2010.



|                                              |  |                             |     |   |            |   |        |   |  |   |       |   |  |  |       |   
|--------------------------------------------- |  | --------------------------- | --- | - | ---------- | - | ------ | - |  | - | ----- | - |  |  | ----- | --
|                                              |  | For the Years EndedJune 30, |     |   | Change (1) |  
|                                              |  | 2011                        |     |   | 2010       |   |        | $ |  |   | %     |  
|                                              |  | (In thousands)              |     |   |            |   |        |   | 
|Customer service fees                         |  | $                           | 409 |   |            | $ | 468    |   |  | $ | (59   | ) |  |  | (12.6 | )%
|Loan servicing fees                           |  |                             | 41  |   |            |   | 49     |   |  |   | (8    | ) |  |  | (16.3 | ) 
|Bank owned life insurance income              |  |                             | 305 |   |            |   | 342    |   |  |   | (37   | ) |  |  | (10.8 | ) 
|Other non-interest income                     |  |                             | 121 |   |            |   | 91     |   |  |   | 30    |   |  |  | 33.0  |   
|                                              |  |                             |     |   |            |   |        |   |  |   |       |   |  |  |       |   
|Non-interest income before net gains (losses) |  |                             | 876 |   |            |   | 950    |   |  |   | (74   | ) |  |  | (7.8  | ) 
|Impairment losses on investment securities    |  |                             |    |   |            |   | (1,882 | ) |  |   | 1,882 |   |  |  |      |   
|Net gain on the sale of investment securities |  |                             |    |   |            |   | 3      |   |  |   | (3    | ) |  |  |      |   
|Net gain on sale of loans                     |  |                             | 99  |   |            |   | 60     |   |  |   | 39    |   |  |  | 65.0  |   
|Net gain on sale of deposits                  |  |                             | 80  |   |            |   |       |   |  |   | 80    |   |  |  |      |   
|Write-down of other real estate property      |  |                             | (88 | ) |            |   |       |   |  |   | (88   | ) |  |  |      |   
|                                              |  |                             |     |   |            |   |        |   |  |   |       |   |  |  |       |   
|Net gains (losses)                            |  |                             | 91  |   |            |   | (1,819 | ) |  |   | 1,910 |   |  |  |      |   
|                                              |  |                             |     |   |            |   |        |   |  |   |       |   |  |  |       |   
|Total non-interest income (loss)              |  | $                           | 967 |   |            | $ | (869   | ) |  | $ | 1,836 |   |  |  |      |   
|                                              |  |                             |     |   |            |   |        |   |  |   |       |   |  |  |       |   



|(1) | For percent change greater than 99%, percent change will not be shown.
|--- | ----------------------------------------------------------------------

The Companys non-interest income increased $1.8 million for the year ended June 30, 2011. The increase in non-interest income reflects an increase in net gains of $1.9 million for the year
ended June 30, 2011 partially offset by a decrease in non-interest income before net gains (losses). The increase in net gains is primarily the result of no impairment losses on investment securities in 2011 as compared to $1.9 million in 2010.
The decrease in impairment losses is the result of the Companys recognition of a $1.9 million impairment loss on two bank and bank holding company backed pooled trust preferred securities that were other-than-temporarily impaired during the
fiscal year ended June 30, 2010, as described in Balance Sheet AnalysisSecurities. In addition, the Companys sale of its Washington D.C. branch resulted in a gain of $80 thousand for the year ended June 30,
2011. The Company wrote down its sole Other Real Estate Owned property to $105 thousand from $193 thousand for the year ended June 30, 2011. Net gains on the sale of loans increased $39 thousand, or 65.0%, to $99 thousand for the year ended
June 30, 2011. Non-interest income before net gains decreased $74 thousand to $876 thousand for the year ended June 30, 2011 as compared to $950 thousand for the year ended June 30, 2010. Other non-interest income increased by $30
thousand, or 33.0%, for the year ended June 30, 2011, primarily due to an increase in rental income as a result of additional leased space at the Companys corporate headquarters. This increase was offset by a decrease in customer service
fees of $59 thousand, or 12.6%, to $409 thousand for the year ended June 30, 2011 and a decrease in bank owned life insurance income of $37 thousand, or 10.8%, to $305 thousand for the year ended June 30, 2011 as compared to $342 thousand
for the year ended June 30, 2010.

Non-Interest Expense.The following table summarizes changes in
non-interest expense between the fiscal years ended June 30, 2011 and 2010.



|                               |  |                             |        |  |        |   |       |   |  |   |       |   |  |  |       |  
|------------------------------ |  | --------------------------- | ------ |  | ------ | - | ----- | - |  | - | ----- | - |  |  | ----- | -
|                               |  | For the Years EndedJune 30, |        |  | Change |  
|                               |  | 2011                        |        |  | 2010   |   |       | $ |  |   | %     |  
|                               |  | (In thousands)              |        |  |        |   |       |   | 
|Salaries and employee benefits |  | $                           | 5,955  |  |        | $ | 5,009 |   |  | $ | 946   |   |  |  | 18.9  | %
|Occupancy and equipment        |  |                             | 1,722  |  |        |   | 1,492 |   |  |   | 230   |   |  |  | 15.4  |  
|Data processing                |  |                             | 720    |  |        |   | 677   |   |  |   | 43    |   |  |  | 6.4   |  
|Directors fees                |  |                             | 331    |  |        |   | 310   |   |  |   | 21    |   |  |  | 6.8   |  
|FDIC assessments               |  |                             | 258    |  |        |   | 380   |   |  |   | (122  | ) |  |  | (32.1 | )
|Other non-interest expense     |  |                             | 2,049  |  |        |   | 1,463 |   |  |   | 586   |   |  |  | 40.1  |  
|                               |  |                             |        |  |        |   |       |   |  |   |       |   |  |  |       |  
|Total non-interest expense     |  | $                           | 11,035 |  |        | $ | 9,331 |   |  | $ | 1,704 |   |  |  | 18.3  |  
|                               |  |                             |        |  |        |   |       |   |  |   |       |   |  |  |       |  



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The Companys non-interest expense increased to $11.0 million for the fiscal year ended
June 30, 2011 from $9.3 million for the fiscal year ended June 30, 2010, or 18.3%. Salaries and employee benefits increased 18.9%, or $946 thousand, to $6.0 million in the period ended June 30, 2010 primarily due to the addition of
several commercial bankers as part of the Banks business strategy to increase the commercial loan portfolios, as well as, the addition of a residential loan manager. Other non-interest expenses increased $586 thousand, or 40.1%, to $2.0
million for the period ended June 30, 2011 primarily due to increased legal, regulatory, and accounting costs necessary to operate as a public company, and increased marketing expenses. FDIC assessments decreased 32.1%, or $122 thousand, to
$258 thousand in the period ended June 30, 2011. The decrease is primarily the result of a lower FDIC assessment rate due to the Banks increased capital level due to the initial public stock offering and a reduction in assessments due to
the sale of the Banks Washington D.C. branch. Occupancy and equipment increased 15.4%, or $230 thousand, to $1.7 million at June 30, 2011 as compared to $1.5 million at June 30, 2011. The increase is primarily the result of costs for
repairs to existing branches, as well as, the opening of one branch.

Income Tax Expense.The Bank recorded
income tax expense of $383 thousand for the fiscal year ended June 30, 2011, compared to an income tax benefit of $639 thousand for the fiscal year ended June 30, 2010. The effective tax rate for fiscal 2011 was 30.9%, while the effective
tax benefit rate for fiscal 2010 was 47.4%.

Non-performing and Problem Assets

When a residential mortgage loan or home equity line of credit is 15 calendar days past due, a notice is mailed informing the borrower
that the loan is past due. When the loan is 20 days past due, an additional notice is mailed and Bank personnel attempt to achieve direct contact with the borrower as an additional reminder of the delinquency. When a loan is 30 days or more past
due, a default notice is mailed and additional attempts at direct contact with the borrower are made. Bank personnel attempt to determine the reason(s) for the delinquency and establish a course of action by which the borrower will bring the loan
current. When the loan is 45 days past due, Bank personnel investigate the issues surrounding the delinquency and repayment options and issue an additional demand letter. In addition, Management determines whether to initiate foreclosure proceedings
and obtains Board approval. Foreclosure proceedings are initiated by counsel if the loan is not brought current by the end of the calendar month. Procedures for avoiding foreclosure can include restructuring the loan in a manner that provides
concessions to the borrower to facilitate repayment.

Commercial business loans, commercial real estate loans, and consumer
loans are generally handled in the same manner as residential mortgage loans or home equity lines of credit.

A loan is placed
on non-accrual status when payment of principal or interest is 90 days or more delinquent. If a loan is well secured and in the process of collection, exceptions to the non-accrual policy may be made. Loans are also placed on non-accrual status if
collection of principal or interest, in full, is in doubt. When loans are placed on a non-accrual status, unpaid accrued interest is fully reversed and further income is recognized only when full repayment of the loan is complete or the loan returns
to accrual status, at which point income is recognized to the extent received. The loan may be returned to accrual status if both principal and interest payments are brought current, there has been a period of sustained performance (generally six
months), and full payment of principal and interest is expected.



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Non-Performing Assets.The table below sets forth the amounts and categories
of non-performing assets at the dates indicated.



|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|----------------------------------------------------- |  | ---------------------- | ----- | - | ---- | - | ---- | ---- |  | - | ----- | - |  | ---- | ---- | - |  | - | ---- | -
|                                                      |  | At June 30,            |      
|                                                      |  | 2011                   |       |   | 2010 |   |      | 2009 |  |   | 2008  |   |  | 2007 |     
|                                                      |  | (Dollars in thousands) |      
|Non-accrual loans:                                    |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Real estate loans:                                    |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|One-to four family residential                        |  | $                      |      |   |      | $ | 446  |      |  | $ | 1,155 |   |  | $    | 315  |   |  | $ |     |  
|Commercial real estate                                |  |                        | 5,292 |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   | 181  |  
|Construction                                          |  |                        |      |   |      |   |     |      |  |   | 1,304 |   |  |      |     |   |  |   |     |  
|Home equity loans and lines of credit                 |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|Commercial business loans                             |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   | 74   |  
|Consumer loans                                        |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Total non-accrual loans                               |  |                        | 5,292 |   |      |   | 446  |      |  |   | 2,459 |   |  |      | 315  |   |  |   | 255  |  
|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Loan delinquent 90 days or greater and still accruing |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Total non-performing loans                            |  |                        | 5,292 |   |      |   | 446  |      |  |   | 2,459 |   |  |      | 315  |   |  |   | 255  |  
|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Real estate owned:                                    |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|One-to four family residential                        |  |                        | 105   |   |      |   | 193  |      |  |   | 193   |   |  |      |     |   |  |   |     |  
|Commercial real estate                                |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |      |   |  |   |     |  
|Construction                                          |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|Home equity loans and lines of credit                 |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|Commercial business loans                             |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|Consumer loans                                        |  |                        |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   |     |  
|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Total real estate owned                               |  |                        | 105   |   |      |   | 193  |      |  |   | 193   |   |  |      |     |   |  |   |     |  
|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Total non-performing assets                           |  | $                      | 5,397 |   |      | $ | 639  |      |  | $ | 2,652 |   |  | $    | 315  |   |  | $ | 255  |  
|                                                      |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Ratios:                                               |  |                        |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |      |  
|Non-performing loans to total loans                   |  |                        | 1.88  | % |      |   | 0.16 | %    |  |   | 0.86  | % |  |      | 0.11 | % |  |   | 0.08 | %
|Non-performing assets to total assets                 |  |                        | 1.40  | % |      |   | 0.17 | %    |  |   | 0.73  | % |  |      | 0.09 | % |  |   | 0.07 | %

For the year ended June 30, 2011, gross interest income that would have been recorded had
non-accruing loans been current in accordance with their original terms was $227 thousand. The Bank recognized $106 thousand of interest income on such non-accruing loans on a cash basis during the fiscal year.

Troubled Debt Restructurings.Loans are periodically modified to make concessions to help a borrower remain current on the
loan and to avoid foreclosure. Generally, the Bank does not forgive principal or interest on loans or modify the interest rate on loans to rates that are below market rates. At June 30, 2011 and 2010, the Bank had $2.8 million and $3.4 million
of these modified loans, respectively. At June 30, 2011, the Bank had $731 thousand in one- to four family residential mortgage loans and home equity loans and lines of credit that were considered troubled debt restructures. At June 30,
2011, the Bank had $2.0 million commercial real estate loans that were considered troubled debt restructures. At June 30, 2010, the Bank had $1.9 million in one- to four- residential loans and $1.5 million in commercial real estate loans that
were considered troubled debt restructures. At June 30, 2009, the Bank had $1.0 million in one- to four- residential loans that were considered trouble debt restructures. The Bank had no such modified loans at June 30, 2008 or 2007.

The following table summarizes information regarding troubled debt restructurings at June 30, 2011:



|                                      |  |                    |   |  |                                                 |   |       |                                                  |  |   |       | 
|------------------------------------- |  | ------------------ | - |  | ----------------------------------------------- | - | ----- | ------------------------------------------------ |  | - | ----- | 
|(In thousands)                        |  | Number ofContracts |   |  | Pre-ModificationOutstanding RecordedInvestments |   |       | Post-ModificationOutstanding RecordedInvestments | 
|Troubled Debt Restructurings          |  |                    |   |  |                                                 |   |       |                                                  |  |   |       | 
|Commercial real estate                |  |                    | 3 |  |                                                 | $ | 2,022 |                                                  |  | $ | 2,046 | 
|One-to four family residential        |  |                    | 2 |  |                                                 |   | 689   |                                                  |  |   | 697   | 
|Home equity loans and lines of credit |  |                    | 1 |  |                                                 |   | 34    |                                                  |  |   | 34    | 
|                                      |  |                    |   |  |                                                 |   |       |                                                  |  |   |       | 
|Total Troubled Debt Restructurings    |  |                    | 6 |  |                                                 | $ | 2,745 |                                                  |  | $ | 2,777 | 
|                                      |  |                    |   |  |                                                 |   |       |                                                  |  |   |       | 



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During the year ended June 30, 2011 no loans previously classified as troubled debt
restructurings subsequently defaulted.

Delinquent Loans. The following table sets forth loan delinquencies by
type and by amount at the dates indicated.



|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|------------------------------------- |  | -------------------- | ----- |  | ---------------- | - | ----- | ----------- |  | - | ----- | 
|                                      |  | Loans Delinquent For |       |  |                  |  
|                                      |  | 30-89 Days           |       |  | 90 Days and Over |   |       | TotalAmount | 
|(in thousands)                        |  | Amount               |       |  | Amount           |   |      
|At June 30, 2011                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Real estate loans:                    |  |                      |       |  |                  |   |       |             |  |   |       | 
|One-to four family residential        |  | $                    |      |  |                  | $ |      |             |  | $ |      | 
|Commercial real estate                |  |                      | 327   |  |                  |   | 2,094 |             |  |   | 2,421 | 
|Construction                          |  |                      |      |  |                  |   |      |             |  |   |      | 
|Home equity loans and lines of credit |  |                      | 273   |  |                  |   |      |             |  |   | 273   | 
|Commercial business loans             |  |                      |      |  |                  |   |      |             |  |   |      | 
|Consumer loans                        |  |                      |      |  |                  |   |      |             |  |   |      | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Total loans                           |  | $                    | 600   |  |                  | $ | 2,094 |             |  | $ | 2,694 | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|At June 30, 2010                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Real estate loans:                    |  |                      |       |  |                  |   |       |             |  |   |       | 
|One-to four family residential        |  | $                    |      |  |                  | $ | 446   |             |  | $ | 446   | 
|Commercial real estate                |  |                      | 1,290 |  |                  |   |      |             |  |   | 1,290 | 
|Construction                          |  |                      |      |  |                  |   |      |             |  |   |      | 
|Home equity loans and lines of credit |  |                      |      |  |                  |   |      |             |  |   |      | 
|Commercial business loans             |  |                      |      |  |                  |   |      |             |  |   |      | 
|Consumer loans                        |  |                      |      |  |                  |   |      |             |  |   |      | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Total loans                           |  | $                    | 1,290 |  |                  | $ | 446   |             |  | $ | 1,736 | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|At June 30, 2009                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Real estate loans:                    |  |                      |       |  |                  |   |       |             |  |   |       | 
|One-to four family residential        |  | $                    | 677   |  |                  | $ | 483   |             |  | $ | 1,160 | 
|Commercial real estate                |  |                      |      |  |                  |   |      |             |  |   |      | 
|Construction                          |  |                      |      |  |                  |   |      |             |  |   |      | 
|Home equity loans and lines of credit |  |                      |      |  |                  |   |      |             |  |   |      | 
|Commercial business loans             |  |                      |      |  |                  |   |      |             |  |   |      | 
|Consumer loans                        |  |                      |      |  |                  |   |      |             |  |   |      | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Total loans                           |  | $                    | 677   |  |                  | $ | 483   |             |  | $ | 1,160 | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|At June 30, 2008                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Real estate loans:                    |  |                      |       |  |                  |   |       |             |  |   |       | 
|One-to four family residential        |  | $                    |      |  |                  | $ | 315   |             |  | $ | 315   | 
|Commercial real estate                |  |                      | 359   |  |                  |   |      |             |  |   | 359   | 
|Construction                          |  |                      |      |  |                  |   |      |             |  |   |      | 
|Home equity loans and lines of credit |  |                      |      |  |                  |   |      |             |  |   |      | 
|Commercial business loans             |  |                      |      |  |                  |   |      |             |  |   |      | 
|Consumer loans                        |  |                      |      |  |                  |   |      |             |  |   |      | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Total loans                           |  | $                    | 359   |  |                  | $ | 315   |             |  | $ | 674   | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|At June 30, 2007                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Real estate loans:                    |  |                      |       |  |                  |   |       |             |  |   |       | 
|One-to four family residential        |  | $                    |      |  |                  | $ |      |             |  | $ |      | 
|Commercial real estate                |  |                      | 368   |  |                  |   | 181   |             |  |   | 549   | 
|Construction                          |  |                      |      |  |                  |   |      |             |  |   |      | 
|Home equity loans and lines of credit |  |                      |      |  |                  |   |      |             |  |   |      | 
|Commercial business loans             |  |                      | 62    |  |                  |   | 74    |             |  |   | 136   | 
|Consumer loans                        |  |                      | 100   |  |                  |   |      |             |  |   | 100   | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 
|Total loans                           |  | $                    | 530   |  |                  | $ | 255   |             |  | $ | 785   | 
|                                      |  |                      |       |  |                  |   |       |             |  |   |       | 



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Real Estate Owned. Real estate acquired by the Bank as a result of foreclosure
or by deed in lieu of foreclosure is classified as real estate owned. When property is acquired it is recorded at estimated fair value at the date of foreclosure less the cost to sell, establishing a new cost basis. Estimated fair value generally
represents the sale price a buyer would be willing to pay on the basis of current market conditions, including normal terms from other financial institutions. Holding costs and declines in estimated fair value result in charges to expense after
acquisition. At June 30, 2011 the Bank had $105 thousand of real estate owned. At June 30, 2010 and 2009, the same property was held at $193 thousand in real estate owned. The Bank had no real estate owned at June 30, 2008 or 2007.

Classification of Assets.Various Bank policies, consistent with regulatory guidelines, provide for the
classification of loans and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the
obligor or of the collateral pledged, if any. Substandard assets include those assets characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the
weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and
improbable. Assets, or portions of assets, classified as loss are those considered uncollectible and of such little value that their continuance as an asset is not warranted. Assets that do not expose the Bank to risk sufficient to warrant
classification in one of the aforementioned categories, but which possess potential weaknesses that deserve close attention, are required to be designated as Special Mention.

The Bank maintains an allowance for loan losses at an amount estimated to equal all credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the statement of
condition date. The Banks determination as to the classification of assets is subject to review by the Banks principal federal regulator, the OCC. The Bank regularly reviews the asset portfolio to determine whether any assets require
classification in accordance with applicable regulations.

The following table details classified assets, assets designated as
special mention, and criticized assets as of June 30, 2011 and 2010.



|                        |  |                |        |  |      |   |       | 
|----------------------- |  | -------------- | ------ |  | ---- | - | ----- | 
|                        |  | At June 30,    |       
|                        |  | 2011           |        |  | 2010 |  
|                        |  | (In thousands) |       
|Classified assets:      |  |                |        |  |      |   |       | 
|Substandard             |  | $              | 8,736  |  |      | $ | 2,607 | 
|Doubtful                |  |                |       |  |      |   |      | 
|Loss                    |  |                |       |  |      |   |      | 
|                        |  |                |        |  |      |   |       | 
|Total classified assets |  |                | 8,736  |  |      |   | 2,607 | 
|Special mention         |  |                | 5,475  |  |      |   | 6,200 | 
|                        |  |                |        |  |      |   |       | 
|Total criticized assets |  | $              | 14,211 |  |      | $ | 8,807 | 
|                        |  |                |        |  |      |   |       | 

The Bank had $8.7 million in loans classified as substandard at June 30, 2011 as compared to $2.6
million at June 30, 2010. At June 30, 2011, $7.7 million of the loans classified as substandard were one- to four-family residential or commercial real estate loans that were collateral-dependent. Management reviewed these loans for
impairment on an individual loan or relationship basis.

At June 30, 2011, Management determined that four of the loans
listed as substandard, for a total of $2.4 million, were both impaired and troubled debt restructures. Accordingly, a specific allowance for loan losses for these loans was provided or the loans were written down to current market value. An analysis
was completed for each of the loans listed as substandard according to the methodology described in Allowance for Loan Losses. Based on this analysis, Management provided specific reserves of $90 thousand for these loans.



45



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Allowance for Loan Losses

The Bank provides for loan losses based upon the consistent application of the documented allowance for loan loss methodology. All loan
losses are charged to the allowance for loan losses and all recoveries are credited to it. Additions to the allowance for loan losses are provided by charges to income based on various factors which, in Managements judgment, deserve current
recognition in estimating probable losses. Management regularly reviews the loan portfolio and makes provisions for loan losses in order to maintain the allowance for loan losses in accordance with U.S. GAAP. The Bank considers residential mortgage
loans and home equity loans and lines of credit to customers as small, homogeneous loans, which are evaluated for impairment collectively based on historical loss experience. Commercial mortgage and business loans are viewed individually and
considered impaired if it is probable that the Bank will not be able to collect scheduled payments of principal and interest when due; according to the contractual terms of the loan agreements. The allowance for loan losses consists primarily of
three components:



| | (1) | specific allowances established for impaired loans (as defined by U.S. GAAP). The amount of impairment provided for as a specific allowance is represented by the
deficiency, if any, between the estimated fair value of the loan, or the loans observable market price, if any, or the underlying collateral, if the loan is collateral dependent, and the carrying value of the loan. Impaired loans for which the
estimated fair value of the loan exceeds the carrying value of the loan do not reduce specific allowances;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | general allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. The portfolio is grouped into similar
risk characteristics, primarily loan type. The Bank applies an estimated loss rate to each loan group. The loss rates applied are based upon loss experience adjusted, as appropriate, for the environmental factors discussed below. This evaluation is
inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | unallocated allowances established to provide for probable losses that have been incurred as of the reporting date but are not reflected in the allocated allowance.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Actual loan losses may be significantly more than the allowance for loan losses established, which could have a
material negative effect on financial results.

The adjustments to historical loss experience are based on Managements
evaluation of several qualitative and environmental factors, including:



| |  |  | changes in any concentration of credit (including, but not limited to, concentrations by geography, industry, or collateral type);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the number and amount of non-accrual loans, watch list loans, and past due loans;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | changes in national, state, and local economic trends;
| | - |  | ------------------------------------------------------



| |  |  | changes to other external influences including, but not limited to, legal, accounting, peer, and regulatory changes;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the types of loans in the loan portfolio;
| | - |  | ----------------------------------------------------



| |  |  | changes in the experience and ability of personnel and management in the loan origination and loan servicing departments;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the value of underlying collateral for collateral dependent loans;
| | - |  | -----------------------------------------------------------------------------



| |  |  | changes in lending strategies; and
| | - |  | ----------------------------------



| |  |  | changes in lending policies and procedures.
| | - |  | -------------------------------------------

Historically, the Bank experienced limited loan losses. More recently, as the Bank has experienced increased loan losses, Management utilized the Banks historical loss experience in determining
applicable



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portions of the allowance for loan losses. During the fiscal year ended June 30, 2011, the Bank adjusted its historical loss experience to reflect worsening economic conditions, as well as
increases in commercial real estate and commercial business loans.

Management evaluates the allowance for loan losses based
upon the combined total of the specific, general, and unallocated components. Generally, when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of estimated probable losses
than would be the case without the increase. Generally, when the loan portfolio decreases, absent other factors, the allowance for loan loss methodology results in a lower dollar amount of estimated probable losses than would be the case without the
decrease.

Generally, the Bank underwrites commercial real estate and residential real estate loans at a loan-to-value ratio
of 75% or less. Accordingly, in the event that a loan becomes past due, Management will conduct visual inspections of collateral properties and/or review publicly available information, such as online databases, to ascertain property values. The
Bank may request a formal third party appraisal for various reasons including, but not limited to, age of previous appraisal, changes in market condition, and changes in borrowers condition. For loans initially determined to be impaired loans,
the Bank utilizes the ascertained or appraised property value in determining the appropriate specific allowance for loan losses attributable to a loan as described in Allowance for Loan Losses. In addition, changes in the appraised value
of properties securing loans can result in an increase or decrease in the general allowance for loan losses as an adjustment to the historical loss experience due to qualitative and environmental factors, as described above.

The loan portfolio is evaluated on a quarterly basis and the allowance is adjusted accordingly. While the best information available is
used to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, as an integral part of their examination process, the OCC will
periodically review the allowance for loan losses. The OCC may require the Bank to recognize additions to the allowance based on their analysis of information available to them at the time of their examination.

Loans are placed on non-accrual status when payment of principal or interest is 90 days or more delinquent. If a loan is well secured and
in the process of collection, exceptions to the non-accrual policy are acceptable. Loans are also placed on non-accrual status if collection of principal or interest, in full, is in doubt. When loans are placed on a non-accrual status, unpaid
accrued interest is fully reversed and further income is recognized only when full repayment of the loan is complete or the loan returns to accrual status, at which point income is recognized to the extent received. The loan may be returned to
accrual status if both principal and interest payments are brought current, there has been a period of sustained performance (generally six months), and full payment of principal and interest is expected.



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The following table sets forth activity in the Companys allowance for loan losses for
the fiscal years indicated.



|                                                  |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|------------------------------------------------- |  | ----------------------------------------- | ----- | - | ---- | - | ------ | ---- |  | - | ----- | - |  | ---- | ------ | - |  | - | ------ | -
|                                                  |  | At or for the Fiscal Years Ended June 30, |      
|                                                  |  | 2011                                      |       |   | 2010 |   |        | 2009 |  |   | 2008  |   |  | 2007 |       
|                                                  |  | (dollars in thousands)                    |      
|Balance at beginning of the year                  |  | $                                         | 1,737 |   |      | $ | 1,167  |      |  | $ | 483   |   |  | $    | 609    |   |  | $ | 1,061  |  
|Charge-offs:                                      |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|Real estate loans:                                |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|One-to four family residential                    |  |                                           | 15    |   |      |   | 1      |      |  |   | 39    |   |  |      |       |   |  |   |       |  
|Commercial real estate                            |  |                                           | 166   |   |      |   | 136    |      |  |   | 164   |   |  |      | 126    |   |  |   |       |  
|Construction                                      |  |                                           |      |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|Home equity loans and lines of credit             |  |                                           | 79    |   |      |   | 571    |      |  |   |      |   |  |      |       |   |  |   |       |  
|Commercial business loans                         |  |                                           |      |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|Consumer loans                                    |  |                                           |      |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|                                                  |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|Total charge-offs                                 |  |                                           | 260   |   |      |   | 708    |      |  |   | 203   |   |  |      | 126    |   |  |   |       |  
|Recoveries:                                       |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|Real estate loans:                                |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|One-to four family residential                    |  |                                           |      |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|Commercial real estate                            |  |                                           |      |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|Construction                                      |  |                                           |      |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|Home equity loans and lines of credit             |  |                                           | 30    |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|Commercial business loans                         |  |                                           |      |   |      |   |       |      |  |   | 10    |   |  |      |       |   |  |   |       |  
|Consumer loans                                    |  |                                           |      |   |      |   |       |      |  |   |      |   |  |      |       |   |  |   |       |  
|                                                  |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|Total recoveries                                  |  |                                           | 30    |   |      |   |       |      |  |   | 10    |   |  |      |       |   |  |   |       |  
|Net charge-offs                                   |  |                                           | 230   |   |      |   | 708    |      |  |   | 193   |   |  |      | 126    |   |  |   |       |  
|Provision                                         |  |                                           | 739   |   |      |   | 1,278  |      |  |   | 877   |   |  |      |       |   |  |   | (452   | )
|                                                  |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|Balance at end of year                            |  | $                                         | 2,246 |   |      | $ | 1,737  |      |  | $ | 1,167 |   |  | $    | 483    |   |  | $ | 609    |  
|                                                  |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|Ratios:                                           |  |                                           |       |   |      |   |        |      |  |   |       |   |  |      |        |   |  |   |        |  
|Net charge-offs to average loans                  |  |                                           | 0.08  | % |      |   | 0.26   | %    |  |   | 0.07  | % |  |      | 0.04   | % |  |   | 0.00   | %
|Allowance for loan losses to non-performing loans |  |                                           | 42.44 | % |      |   | 389.46 | %    |  |   | 47.46 | % |  |      | 153.33 | % |  |   | 238.82 | %
|Allowance for loan losses to total loans          |  |                                           | 0.80  | % |      |   | 0.63   | %    |  |   | 0.41  | % |  |      | 0.17   | % |  |   | 0.20   | %

For additional information with respect to the portions of the allowance for loan losses attributable to
the Companys loan classifications see Allocation of Allowance for Loan Losses. For additional information with respect to non-performing loans and delinquent loans, see Non-performing and Problem
AssetsNon-performing Assets and Non-performing and Problem AssetsNon-performing AssetsDelinquent Loans.



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Allocation of Allowance for Loan Losses.The following table sets forth the
allowance for loan losses allocated by loan category and the percent of loans in each category to total loans at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any
particular category.



|                                      |  |                         |       |  |                     |  |       |                         |  |   |                     |  |  |                         |       |   |                     |   |       |                         |  |  |                     |   |  |                         |     |  |                     |  |       |   |  |   |     |  |  |  |       |  
|------------------------------------- |  | ----------------------- | ----- |  | ------------------- |  | ----- | ----------------------- |  | - | ------------------- |  |  | ----------------------- | ----- | - | ------------------- | - | ----- | ----------------------- |  |  | ------------------- | - |  | ----------------------- | --- |  | ------------------- |  | ----- | - |  | - | --- |  |  |  | ----- | -
|                                      |  | At June 30,             |      
|                                      |  | 2011                    |       |  | 2010                |  |       | 2009                    |  |   | 2008                |  |  | 2007                    |      
|                                      |  | Allowancefor LoanLosses |       |  | PercentofTotalLoans |  |       | Allowancefor LoanLosses |  |   | PercentofTotalLoans |  |  | Allowancefor LoanLosses |       |   | PercentofTotalLoans |   |       | Allowancefor LoanLosses |  |  | PercentofTotalLoans |   |  | Allowancefor LoanLosses |     |  | PercentofTotalLoans | 
|                                      |  | (dollars in thousands)  |      
|Real estate loans:                    |  |                         |       |  |                     |  |       |                         |  |   |                     |  |  |                         |       |   |                     |   |       |                         |  |  |                     |   |  |                         |     |  |                     |  |       |   |  |   |     |  |  |  |       |  
|One-to four family residential        |  | $                       | 528   |  |                     |  | 34.5  | %                       |  | $ | 449                 |  |  |                         | 44.5  | % |                     | $ | 185   |                         |  |  | 53.3                | % |  | $                       | 238 |  |                     |  | 62.0  | % |  | $ | 118 |  |  |  | 66.0  | %
|Commercial real estate                |  |                         | 706   |  |                     |  | 38.6  |                         |  |   | 820                 |  |  |                         | 30.7  |   |                     |   | 319   |                         |  |  | 22.8                |   |  |                         | 31  |  |                     |  | 22.5  |   |  |   | 47  |  |  |  | 20.3  |  
|Construction                          |  |                         | 2     |  |                     |  | 0.4   |                         |  |   | 2                   |  |  |                         | 0.4   |   |                     |   | 285   |                         |  |  | 1.7                 |   |  |                         | 63  |  |                     |  | 1.1   |   |  |   | 63  |  |  |  | 0.1   |  
|Home equity loans and lines of credit |  |                         | 440   |  |                     |  | 13.8  |                         |  |   | 175                 |  |  |                         | 15.0  |   |                     |   | 18    |                         |  |  | 14.3                |   |  |                         | 42  |  |                     |  | 12.4  |   |  |   | 56  |  |  |  | 12.1  |  
|Commercial business loans             |  |                         | 383   |  |                     |  | 12.7  |                         |  |   | 127                 |  |  |                         | 9.4   |   |                     |   | 360   |                         |  |  | 7.9                 |   |  |                         | 92  |  |                     |  | 1.9   |   |  |   | 236 |  |  |  | 1.5   |  
|Consumer loans                        |  |                         |      |  |                     |  |      |                         |  |   |                    |  |  |                         |      |   |                     |   |      |                         |  |  |                    |   |  |                         | 5   |  |                     |  | 0.1   |   |  |   | 2   |  |  |  |      |  
|                                      |  |                         |       |  |                     |  |       |                         |  |   |                     |  |  |                         |       |   |                     |   |       |                         |  |  |                     |   |  |                         |     |  |                     |  |       |   |  |   |     |  |  |  |       |  
|Total allocated allowance             |  |                         | 2,059 |  |                     |  | 100.0 |                         |  |   | 1,573               |  |  |                         | 100.0 |   |                     |   | 1,167 |                         |  |  | 100.0               |   |  |                         | 471 |  |                     |  | 100.0 |   |  |   | 522 |  |  |  | 100.0 |  
|Unallocated                           |  |                         | 187   |  |                     |  |      |                         |  |   | 164                 |  |  |                         |      |   |                     |   |      |                         |  |  |                    |   |  |                         | 12  |  |                     |  |      |   |  |   | 87  |  |  |  |      |  
|                                      |  |                         |       |  |                     |  |       |                         |  |   |                     |  |  |                         |       |   |                     |   |       |                         |  |  |                     |   |  |                         |     |  |                     |  |       |   |  |   |     |  |  |  |       |  
|Total                                 |  | $                       | 2,246 |  |                     |  | 100.0 | %                       |  | $ | 1,737               |  |  |                         | 100.0 | % |                     | $ | 1,167 |                         |  |  | 100.0               | % |  | $                       | 483 |  |                     |  | 100.0 | % |  | $ | 609 |  |  |  | 100.0 | %
|                                      |  |                         |       |  |                     |  |       |                         |  |   |                     |  |  |                         |       |   |                     |   |       |                         |  |  |                     |   |  |                         |     |  |                     |  |       |   |  |   |     |  |  |  |       |  

The primary driver of the level of the allowance for loan losses is the Companys determination of
the level of risk in the loan portfolios. This risk is attributable to several factors, as discussed in Allowance for Loan Losses. The Company determined there is lower risk in the residential loan portfolio; which consists of
conventionally underwritten mortgages that generally conform to Fannie Mae and Freddie Mac guidelines. The Company believes more risky portions of the loan portfolio include commercial real estate, commercial business, construction loans, and home
equity loans and lines of credit. Commercial real estate loans comprise the largest component of total loans. Commercial real estate loans increased to 38.6% of the loan portfolio at June 30, 2011 from 30.7% of the total loan portfolio at
June 30, 2010. Commercial business loans increased to 12.7% of total loans from 9.4% of the total loans at June 30, 2011 and 2010, respectively. The increases in both portfolios are a continuation of Managements strategic plan to
grow the commercial portfolios. The allowance for loan losses associated with the commercial real estate loan portfolio decreased to $706 thousand from $820 thousand for the years ended June 30, 2011 and 2010, respectively, as a result of the
recovery of a portion of the specific allowance related to one commercial real estate loan whose recently appraised value at June 30, 2011 was at a level sufficient to make the recovery. While home equity loans and lines of credit decreased to
13.8% from 15.0% of total loans at June 30, 2011 and 2010 respectively, the allowance for loan losses increased due to the negative impact on the historical factors used to calculate the allowance for loan losses as a result of the charge-offs
in the home equity loans and lines of credit portfolio as discussed in Comparison of Operating Results for the Fiscal Years Ended June 30, 2011 and 2010Provision for Loan Losses. Management has increased the origination of
one- to four-family residential loans, primarily 10, 15, and 20 year maturities. Management evaluated and modified some of the qualitative factors associated with the one- to four-family residential loan portfolio based on the increased origination
discussed. Additionally, the allowance for loan losses also increased due to the negative impact on the historical factors used to calculate the allowance for loan losses as a result of the charge-offs in the one- to four family residential loan
portfolio as discussed in Comparison of Operating Results for the Fiscal Years Ended June 30, 2011 and 2010Provision for Loan Losses. These increases were partially offset due to the fact that two loan relationships with
not-for-profit entities that have collateral value well in excess of the loan value were moved to substandard. Based on the value of the collateral, no specific allowances are required for these two loans.



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Management of Market Risk

General.The Companys most significant form of market risk is interest rate risk because, as a financial institution,
the majority of the Companys assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of the Companys operations is to manage interest rate risk and limit the exposure of the net interest income to
changes in market interest rates. The Companys Board of Directors has established an Asset/Liability Management Committee, which is responsible for evaluating the interest rate risk inherent in the Companys assets and liabilities, for
determining the level of risk that is appropriate, given the Companys business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of
Directors.

Historically, the Bank operated as a traditional thrift institution. Therefore, the significant majority of the
Banks assets consist of longer-term, fixed rate residential mortgage loans and mortgage backed securities, which were funded primarily with checking and savings accounts and short-term borrowings. In recent years, in an effort to decrease the
Banks exposure to interest rate risk, the Bank sold long term (primarily 30 year), one- to four-family residential real estate loans and shifted the Banks focus to originating more commercial real estate loans and commercial business
loans, which generally have shorter maturities than one- to four-family residential mortgage loans, and are usually originated with adjustable interest rates.

In addition to the above strategies with respect to the Banks lending activities, the Bank used the following strategies to reduce interest rate risk:



| |  |  | increasing personal and business checking accounts, which are less rate-sensitive than certificates of deposit and which provide a stable, low-cost
source of funds;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | repaying short-term borrowings; and
| | - |  | -----------------------------------



| |  |  | maintaining relatively high levels of capital.
| | - |  | ----------------------------------------------

In addition, changes in interest rates can affect the fair values of financial instruments. For additional information, see Note 20 in the accompanying Notes to the Consolidated Financial Statements.

Net Portfolio Value

The table below sets forth, as of June 30, 2011, the Banks internal calculation of the estimated changes in Net Portfolio Value (NPV), the difference between the present value of an
institutions assets and liabilities, that would result from the designated instantaneous changes in the interest rate yield curve.



|                                |  |                    |        |  |                                   |   |        |                         |  |  |                                                       |   |  |                                                                                 |       |   |  |  |       |  
|------------------------------- |  | ------------------ | ------ |  | --------------------------------- | - | ------ | ----------------------- |  |  | ----------------------------------------------------- | - |  | ------------------------------------------------------------------------------- | ----- | - |  |  | ----- | -
|Change inInterest Rates(bp) (1) |  | Estimated NPV 
(2) |        |  | EstimatedIncrease(Decrease) inNPV |   |        | PercentageChange in NPV |  |  | NPV Ratio as aPercent ofPresent Valueof Assets (3)(4) |   |  | Increase(Decrease) inNPV Ratio as aPercent
ofPresent Value ofAssets (bp) (3)(4) |      
|+300                            |  | $                  | 86,037 |  |                                   | $ | (6,462 | )                       |  |  | -7.0                                                  | % |  |                                                                                 | 22.03 | % |  |  | (1.06 | )
|+200                            |  | $                  | 88,728 |  |                                   | $ | (3,771 | )                       |  |  | -4.1                                                  | % |  |                                                                                 | 22.50 | % |  |  | (0.59 | )
|+100                            |  | $                  | 91,206 |  |                                   | $ | (1,293 | )                       |  |  | -1.4                                                  | % |  |                                                                                 | 22.92 | % |  |  | (0.17 | )
|0                               |  | $                  | 92,499 |  |                                   | $ |       |                         |  |  | 0.0                                                   | % |  |                                                                                 | 23.09 | % |  |  |      |  
|-100                            |  | $                  | 92,786 |  |                                   | $ | (287   | )                       |  |  | -0.3                                                  | % |  |                                                                                 | 23.09 | % |  |  |      |  



|(1) | Assumes an instantaneous uniform change in interest rates at all maturities.
|--- | ----------------------------------------------------------------------------

|(2) | NPV is the difference between the present value of an institutions assets and liabilities.
|--- | -------------------------------------------------------------------------------------------

|(3) | Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
|--- | ------------------------------------------------------------------------------------------------------------------

|(4) | NPV Ratio represents NPV divided by the present value of assets.
|--- | ----------------------------------------------------------------



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Certain shortcomings are inherent in the methodologies used in determining interest rate
risk through changes in net portfolio value. Modeling changes in net portfolio value require making certain assumptions that may or may not reflect the manner in which actual yields and costs, or loan repayments and deposit decay, respond to changes
in market interest rates. In this regard, the net portfolio value tables presented assume that the composition of interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and
assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value tables provide an indication of
the Banks interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from
actual results.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations. The Banks primary sources of funds consist of deposit
inflows, loan repayments, advances from the Federal Home Loan Bank of Atlanta, borrowings from the Federal Reserve Bank of Richmond, repurchase agreements, and maturities, principal repayments, and the sale of available-for-sale securities. While
maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition. The Banks
Asset/Liability Management Committee, under the direction of the Companys Chief Financial Officer, is responsible for establishing and monitoring liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting
the borrowing needs and deposit withdrawals of the Banks customers, as well as, unanticipated contingencies. Management believes that the Bank has enough sources of liquidity to satisfy short- and long-term liquidity needs as of June 30,
2011.

The Bank regularly monitors and adjusts the investments in liquid assets based upon the assessment of:



| | (i) | expected loan demand;
| | --- | ---------------------



| | (ii) | expected deposit flows and borrowing maturities;
| | ---- | ------------------------------------------------



| | (iii) | yields available on interest-earning deposits and securities; and
| | ----- | -----------------------------------------------------------------



| | (iv) | the objectives of the Banks asset/liability management program.
| | ---- | ----------------------------------------------------------------

Excess liquid assets are invested generally in interest-earning deposits and short-term securities and are also used to pay off short-term borrowings.

The most liquid assets are cash and cash equivalents. The level of these assets is dependent on the operating, financing, lending, and
investing activities during any given period. At June 30, 2011, cash and cash equivalents totaled $38.0 million as compared to $36.0 million at June 30, 2010.

Cash flows are derived from operating activities, investing activities, and financing activities as reported in the Companys Consolidated Statements of Cash Flows included in the Companys
Consolidated Financial Statements.

At June 30, 2011, the Bank had $56.4 million in loan commitments outstanding. At
June 30, 2011 unfunded commitments under lines of credit, including letters of credit, were $46.5 million and commitments to grant loans were $9.9 million. Certificates of deposit due within one year of June 30, 2011 totaled $53.0 million.
If these deposits do not remain with the Bank, the Bank may be required to seek other sources of funds, including loan sales, brokered deposits, repurchase agreements, Federal Home Loan Bank advances, and Federal Reserve Bank borrowings. However,
recently, the Bank has held cash in excess of funding needs because of increased prepayments on longer-term, one- to four-family residential real estate loans, resulting from refinancings with other financial institutions, and repayments on the
Banks securities investments, which has enabled the Bank to lower deposit pricing and allow higher-cost brokered certificates of deposit to run off. Depending on market



51



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##### Table of Contents

conditions, the Bank may be required to pay higher rates on such deposits or other borrowings than it currently pays on certificates of deposit due on or before June 30, 2012. Management
believes, however, based on historical experience and current market interest rates that the Bank will retain, upon maturity, a large portion of the certificates of deposit with maturities of one year or less as of June 30, 2011.

The Banks primary investing activity is loan origination. During the fiscal years ended June 30, 2011 and 2010, the Bank
originated $48.0 million and $55.1 million of loans, respectively. During these years, the Bank purchased $14.8 million and $22.7 million of securities, respectively.

Financing activities consist primarily of activity in deposit accounts and Federal Home Loan Bank advances. The Bank experienced a net increase in deposits of $23.6 million for the year ended
June 30, 2011 compared to a net decrease in total deposits of $11.1 million for the fiscal year ended June 30, 2010. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by the Bank and
the Banks local competition, and by other factors.

Liquidity management is both a daily and long-term function of
business management. If the Bank requires funds beyond the Banks ability to generate funds internally, borrowing agreements exist with the Federal Home Loan Bank of Atlanta and the Federal Reserve Bank, which provide an additional source of
funds. The Bank also utilizes securities sold under agreements to repurchase as another borrowing source. Federal Home Loan Bank advances decreased by $7.2 million for the fiscal year ended June 30, 2011, compared to a decrease of $19.6 million
for the fiscal year ended June 30, 2010. At June 30, 2011, the Bank had the ability to borrow up to an additional $39.5 million from the Federal Home Loan Bank of Atlanta and the ability to borrow from the Federal Reserve Bank based upon
pledging of securities; the Bank has less than $1 million in securities pledged to the Federal Reserve Discount Window. Securities sold under agreements to repurchase decreased $4.7 million for the fiscal year ended June 30, 2011, compared to
an increase of $1.5 million for the fiscal year ended June 30, 2010.

The Bank is subject to various regulatory capital
requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad
risk categories. At June 30, 2011, The Bank exceeded all regulatory capital requirements. The Bank is considered well capitalized under regulatory guidelines. See Supervision and Regulation, Federal Banking
Regulation, Capital Requirements, and Note 15 of the accompanying Notes to the Consolidated Financial Statements.

On May 19, 2011, the Company announced that its Board of Directors had adopted a stock repurchase program. Under the repurchase program, the Company may repurchase up to 462,875 shares of its common
stock, or approximately 10% of the current outstanding shares.

The repurchase program permits shares to be repurchased in
open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. The repurchase program may be suspended, terminated, or
modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate.

The net proceeds from the stock offering have significantly increased the Companys liquidity and capital resources. Over time, the
initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including the funding of loans. The Companys financial condition and results of operations will be enhanced by the net
proceeds from the stock offering, resulting in increased net interest-earning assets and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the stock offering, the return on equity will be adversely
affected following the stock offering.



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Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments.As a financial services provider, the Bank routinely is a party to various financial
instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent the Companys potential future cash requirements, a significant portion of commitments to
extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans made by the Bank. In addition, the Bank enters into commitments to sell mortgage loans. For additional
information, see Note 13 of the accompanying Notes to the Consolidated Financial Statements.

Contractual
Obligations. In the ordinary course of the Companys operations, the Bank enters into certain contractual obligations. Such obligations include operating leases for premises and equipment, agreements with respect to borrowed funds and
deposit liabilities and agreements with respect to investments. The following table summarizes the Companys significant fixed and determinable contractual obligations and other funding needs by payment date at June 30, 2011. The payment
amounts represent those amounts due to the recipient and do not include any unamortized premiums or discounts or other similar carrying amount adjustments.



|                             |  |                 |        |  |                                 |   |        |                                   |  |   |                     |  |  |       |        |  |  |   |         | 
|---------------------------- |  | --------------- | ------ |  | ------------------------------- | - | ------ | --------------------------------- |  | - | ------------------- |  |  | ----- | ------ |  |  | - | ------- | 
|Contractual Obligations      |  | One yearor less |        |  | More thanone year tothree years |   |        | More thanthree years tofive years |  |   | More thanfive years |  |  | Total |       
|                             |  | (in thousands)  |       
|Long-term debt               |  | $               | 2,500  |  |                                 | $ | 8,000  |                                   |  | $ | 4,118               |  |  | $     | 15,000 |  |  | $ | 29,618  | 
|Operating leases             |  |                 | 337    |  |                                 |   | 664    |                                   |  |   | 668                 |  |  |       | 1,607  |  |  |   | 3,276   | 
|Certificates of deposit      |  |                 | 53,046 |  |                                 |   | 13,021 |                                   |  |   | 954                 |  |  |       |       |  |  |   | 67,021  | 
|Other long-term liabilities  |  |                 |       |  |                                 |   | 5,000  |                                   |  |   |                    |  |  |       |       |  |  |   | 5,000   | 
|                             |  |                 |        |  |                                 |   |        |                                   |  |   |                     |  |  |       |        |  |  |   |         | 
|Total                        |  | $               | 55,883 |  |                                 | $ | 26,685 |                                   |  | $ | 5,740               |  |  | $     | 16,607 |  |  | $ | 104,915 | 
|                             |  |                 |        |  |                                 |   |        |                                   |  |   |                     |  |  |       |        |  |  |   |         | 
|Commitments to extend credit |  | $               | 56,432 |  |                                 | $ |       |                                   |  | $ |                    |  |  | $     |       |  |  | $ | 56,432  | 
|                             |  |                 |        |  |                                 |   |        |                                   |  |   |                     |  |  |       |        |  |  |   |         | 

Impact of Inflation and Changing Prices

The Companys consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP. U.S. GAAP
generally requires the measurement of financial position and operating results in terms of historical dollars without consideration of changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected
in the increased cost of the Companys operations. Unlike industrial companies, the Companys assets and liabilities are primarily monetary in nature. As a result, changes in market interest rates have a greater impact on performance than
the effects of inflation.



|ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Information required by this item is included in Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation, above.



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##### Table of Contents

|ITEM 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF

OBA FINANCIAL SERVICES,
INC.



|                                                                                                                     |  |  |    | 
|-------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|Report of Independent Registered Public Accounting Firm                                                              |  |  | 55 | 
|                                                                                                                     | 
|Consolidated Statements of Condition at June 30, 2011 and 2010                                                       |  |  | 56 | 
|                                                                                                                     | 
|Consolidated Statements of Operations for the years ended June 30, 2011 and 2010                                     |  |  | 57 | 
|                                                                                                                     | 
|Consolidated Statements of Stockholders Equity and Comprehensive Income for the years ended June 30, 2011
 and 2010 |  |  | 58 | 
|                                                                                                                     | 
|Consolidated Statements of Cash Flows for the years ended June 30, 2011 and 2010                                     |  |  | 59 | 
|                                                                                                                     | 
|Notes to Consolidated Financial Statements                                                                           |  |  | 60 | 



54



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Report of Independent Registered Public Accounting Firm

To the Board of Directors

OBA
Financial Services, Inc.

Germantown, Maryland

We have audited the accompanying consolidated statements of condition of OBA Financial Services, Inc. and subsidiary (the Company) as of June 30, 2011 and 2010 and the related
consolidated statements of operations, stockholders equity and comprehensive income, and cash flows for the years then ended. The Companys management is responsible for these consolidated financial statements. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial position of OBA Financial Services, Inc. and subsidiary as of June 30, 2011 and 2010, and the results of their operations and their cash flows for the years then ended,
in conformity with accounting principles generally accepted in the United States of America.

/s/ ParenteBeard LLC

Harrisburg, Pennsylvania

September 28,
2011



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OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Condition



|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------ | - | ------- | -
|(In thousands, except share data)                                                                                                                                    |  | June 30,2011 |         |   | June 30,2010 |  
|Assets:                                                                                                                                                              |  |              |         |   |              |   |         |  
|Cash and due from banks                                                                                                                                              |  | $            | 32,535  |   |              | $ | 16,946  |  
|Federal funds sold                                                                                                                                                   |  |              | 5,433   |   |              |   | 19,100  |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Cash and cash equivalents                                                                                                                                            |  |              | 37,968  |   |              |   | 36,046  |  
|Interest bearing deposits with other banks                                                                                                                           |  |              | 7,058   |   |              |   | 5,072   |  
|Securities available for sale                                                                                                                                        |  |              | 35,828  |   |              |   | 29,346  |  
|Securities held to maturity (fair value of $3,795 and $4,809)                                                                                                        |  |              | 3,623   |   |              |   | 4,637   |  
|Federal Home Loan Bank stock, at cost                                                                                                                                |  |              | 2,987   |   |              |   | 3,883   |  
|Loans                                                                                                                                                                |  |              | 281,866 |   |              |   | 277,835 |  
|Less: allowance for loan losses                                                                                                                                      |  |              | 2,246   |   |              |   | 1,737   |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Net loans                                                                                                                                                            |  |              | 279,620 |   |              |   | 276,098 |  
|Premises and equipment, net                                                                                                                                          |  |              | 6,285   |   |              |   | 6,231   |  
|Bank owned life insurance                                                                                                                                            |  |              | 8,601   |   |              |   | 8,297   |  
|Other assets                                                                                                                                                         |  |              | 4,475   |   |              |   | 4,485   |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Total assets                                                                                                                                                         |  | $            | 386,445 |   |              | $ | 374,095 |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Liabilities:                                                                                                                                                         |  |              |         |   |              |   |         |  
|Deposits:                                                                                                                                                            |  |              |         |   |              |   |         |  
|Noninterest-bearing                                                                                                                                                  |  | $            | 29,468  |   |              | $ | 23,499  |  
|Interest-bearing                                                                                                                                                     |  |              | 227,563 |   |              |   | 209,942 |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Total deposits                                                                                                                                                       |  |              | 257,031 |   |              |   | 233,441 |  
|Securities sold under agreements to repurchase                                                                                                                       |  |              | 15,566  |   |              |   | 20,292  |  
|Federal Home Loan Bank advances                                                                                                                                      |  |              | 29,618  |   |              |   | 36,834  |  
|Advance payments from borrowers for taxes and insurance                                                                                                              |  |              | 1,921   |   |              |   | 2,262   |  
|Other liabilities                                                                                                                                                    |  |              | 1,449   |   |              |   | 1,044   |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Total liabilities                                                                                                                                                    |  |              | 305,585 |   |              |   | 293,873 |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Stockholders Equity:                                                                                                                                                |  |              |         |   |              |   |         |  
|Preferred stock (par value $.01); authorized 50,000,000 shares; no shares issued or outstanding                                                                      |  |              |        |   |              |   |        |  
|Common stock (par value $.01); authorized 100,000,000 shares; issued and outstanding 4,602,050 and 4,628,750 shares at
June 30, 2011 and June 30, 2010, respectively |  |              | 46      |   |              |   | 46      |  
|Additional paid-in capital                                                                                                                                           |  |              | 44,419  |   |              |   | 44,759  |  
|Unearned ESOP shares                                                                                                                                                 |  |              | (3,425  | ) |              |   | (3,610  | )
|Retained earnings                                                                                                                                                    |  |              | 39,141  |   |              |   | 38,284  |  
|Accumulated other comprehensive income                                                                                                                               |  |              | 679     |   |              |   | 743     |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Total stockholders equity                                                                                                                                           |  |              | 80,860  |   |              |   | 80,222  |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  
|Total liabilities and stockholders equity                                                                                                                           |  | $            | 386,445 |   |              | $ | 374,095 |  
|                                                                                                                                                                     |  |              |         |   |              |   |         |  

See notes to consolidated financial statements.



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OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Operations



|                                                                                   |  |                      |           |  |      |   |           |  
|---------------------------------------------------------------------------------- |  | -------------------- | --------- |  | ---- | - | --------- | -
|                                                                                   |  | Years Ended June 30, |          
|(In thousands, except per share data)                                              |  | 2011                 |           |  | 2010 |  
|Interest and Dividend Income:                                                      |  |                      |           |  |      |   |           |  
|Loans receivable, including fees                                                   |  | $                    | 15,063    |  |      | $ | 14,636    |  
|Investment securities:                                                             |  |                      |           |  |      |   |           |  
|Interesttaxable                                                                   |  |                      | 1,092     |  |      |   | 1,293     |  
|Dividends                                                                          |  |                      | 28        |  |      |   | 18        |  
|Federal funds sold                                                                 |  |                      | 65        |  |      |   | 103       |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Total interest and dividend income                                                 |  |                      | 16,248    |  |      |   | 16,050    |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Interest Expense:                                                                  |  |                      |           |  |      |   |           |  
|Deposits                                                                           |  |                      | 2,623     |  |      |   | 3,593     |  
|Federal Home Loan Bank advances                                                    |  |                      | 1,333     |  |      |   | 2,087     |  
|Securities sold under agreements to repurchase                                     |  |                      | 245       |  |      |   | 241       |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Total interest expense                                                             |  |                      | 4,201     |  |      |   | 5,921     |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Net interest income                                                                |  |                      | 12,047    |  |      |   | 10,129    |  
|Less provision for loan losses                                                     |  |                      | 739       |  |      |   | 1,278     |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Net interest income after provision for loan losses                                |  |                      | 11,308    |  |      |   | 8,851     |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Non-Interest Income (Loss):                                                        |  |                      |           |  |      |   |           |  
|Customer service fees                                                              |  |                      | 409       |  |      |   | 468       |  
|Loan servicing fees                                                                |  |                      | 41        |  |      |   | 49        |  
|Bank owned life insurance income                                                   |  |                      | 305       |  |      |   | 342       |  
|Impairment losses on investment securities:                                        |  |                      |           |  |      |   |           |  
|Other-than-temporary impairment losses                                             |  |                      |          |  |      |   | (512      | )
|Non-credit losses previously recognized in other comprehensive income before taxes |  |                      |          |  |      |   | (1,370    | )
|                                                                                   |  |                      |           |  |      |   |           |  
|Net impairment losses recognized in income                                         |  |                      |          |  |      |   | (1,882    | )
|Other gains                                                                        |  |                      | 91        |  |      |   | 63        |  
|Other non-interest income                                                          |  |                      | 121       |  |      |   | 91        |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Total non-interest income (loss)                                                   |  |                      | 967       |  |      |   | (869      | )
|                                                                                   |  |                      |           |  |      |   |           |  
|Non-Interest Expense:                                                              |  |                      |           |  |      |   |           |  
|Salaries and employee benefits                                                     |  |                      | 5,955     |  |      |   | 5,009     |  
|Occupancy and equipment                                                            |  |                      | 1,722     |  |      |   | 1,492     |  
|Data processing                                                                    |  |                      | 720       |  |      |   | 677       |  
|Directors fees                                                                    |  |                      | 331       |  |      |   | 310       |  
|FDIC assessments                                                                   |  |                      | 258       |  |      |   | 380       |  
|Other non-interest expense                                                         |  |                      | 2,049     |  |      |   | 1,463     |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Total non-interest expense                                                         |  |                      | 11,035    |  |      |   | 9,331     |  
|                                                                                   |  |                      |           |  |      |   |           |  
|Income (loss) before income taxes                                                  |  |                      | 1,240     |  |      |   | (1,349    | )
|Income tax expense (benefit)                                                       |  |                      | 383       |  |      |   | (639      | )
|                                                                                   |  |                      |           |  |      |   |           |  
|Net income (loss)                                                                  |  | $                    | 857       |  |      | $ | (710      | )
|                                                                                   |  |                      |           |  |      |   |           |  
|Basic/diluted earnings (loss) per share (1)                                        |  | $                    | 0.20      |  |      | $ | (0.17     | )
|                                                                                   |  |                      |           |  |      |   |           |  
|Basic/diluted weighted average shares outstanding (1)                              |  |                      | 4,273,799 |  |      |   | 4,261,124 |  
|                                                                                   |  |                      |           |  |      |   |           |  



|(1) | Fiscal year 2010 calculated from the effective date of January 21, 2010 to the period end.
|--- | ------------------------------------------------------------------------------------------

See notes to consolidated financial statements.



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OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)

Years Ended June 30, 2011 and 2010



|                                                                                                                                   |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | -- |  | ------------------------ | - | ------ | ------------------ |  | - | ---------------- | - |  | ------------------------------------------ | ------ | - | ----- | - | ----- | - |  | - | ------ | -
|(In thousands, except share data)                                                                                                  |  | CommonStock |    |  | AdditionalPaid-inCapital |   |        | UnearnedESOPShares |  |   | RetainedEarnings |   |  | AccumulatedOtherComprehensiveIncome (Loss) |        |   | Total |  
|Balances, July 1, 2009                                                                                                             |  | $           |   |  |                          | $ |       |                    |  | $ |                 |   |  | $                                          | 38,994 |   |       | $ | (492  | ) |  | $ | 38,502 |  
|Comprehensive income:                                                                                                              |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Net loss                                                                                                                           |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            | (710   | ) |       |   |       |   |  |   | (710   | )
|Other comprehensive income (loss), net of tax:                                                                                     |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Unrealized losses on debt securities for which a portion of impairment has been recognized in income, net of tax benefit of
($199) |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   | (313  | ) |  |   | (313   | )
|Net unrealized gains on other available for sale securities, net of tax of $256                                                    |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   | 402   |   |  |   | 402    |  
|Reclassification adjustment for other-than-temporary impairment losses included in income, net of tax of $734                      |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   | 1,148 |   |  |   | 1,148  |  
|Reclassification adjustment for gain on sales of investments, net of tax benefit of ($1)                                           |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   | (2    | ) |  |   | (2     | )
|                                                                                                                                   |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Total comprehensive income                                                                                                         |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   | 525    |  
|Issuance of 4,628,750 shares of common stock net of offering costs                                                                 |  |             | 46 |  |                          |   | 44,752 |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   | 44,798 |  
|Purchase of 370,300 ESOP shares                                                                                                    |  |             |    |  |                          |   |        |                    |  |   | (3,703           | ) |  |                                            |        |   |       |   |       |   |  |   | (3,703 | )
|ESOP shares committed to be released (9,258 shares)                                                                                |  |             |    |  |                          |   | 7      |                    |  |   | 93               |   |  |                                            |        |   |       |   |       |   |  |   | 100    |  
|                                                                                                                                   |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Balances, June 30, 2010                                                                                                            |  | $           | 46 |  |                          | $ | 44,759 |                    |  | $ | (3,610           | ) |  | $                                          | 38,284 |   |       | $ | 743   |   |  | $ | 80,222 |  
|Comprehensive income:                                                                                                              |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Net income                                                                                                                         |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            | 857    |   |       |   |       |   |  |   | 857    |  
|Other comprehensive income (loss), net of tax:                                                                                     |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Net unrealized losses on other available for sale securities, net of tax benefit of ($39)                                          |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   | (64   | ) |  |   | (64    | )
|                                                                                                                                   |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Total comprehensive income                                                                                                         |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   | 793    |  
|                                                                                                                                   |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|ESOP shares committed to be released (18,515 shares)                                                                               |  |             |    |  |                          |   | 56     |                    |  |   | 185              |   |  |                                            |        |   |       |   |       |   |  |   | 241    |  
|Purchase and retirement of 26,700 shares of Company stock                                                                          |  |             |    |  |                          |   | (396   | )                  |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   | (396   | )
|                                                                                                                                   |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  
|Balances, June 30, 2011                                                                                                            |  | $           | 46 |  |                          | $ | 44,419 |                    |  | $ | (3,425           | ) |  | $                                          | 39,141 |   |       | $ | 679   |   |  | $ | 80,860 |  
|                                                                                                                                   |  |             |    |  |                          |   |        |                    |  |   |                  |   |  |                                            |        |   |       |   |       |   |  |   |        |  

See notes to consolidated financial statements.



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OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Cash Flows



|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                                                                                         |  | For the Years EndedJune
30, |        
|(in thousands)                                                                                                                                                                                                                                                                           |  | 2011                        |         |   | 2010 |  
|Operating Activities:                                                                                                                                                                                                                                                                    |  |                             |         |   |      |   |         |  
|Net income (loss)                                                                                                                                                                                                                                                                        |  | $                           | 857     |   |      | $ | (710    | )
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:                                                                                                                                                                                                 |  |                             |         |   |      |   |         |  
|Provision for loan losses                                                                                                                                                                                                                                                                |  |                             | 739     |   |      |   | 1,278   |  
|Depreciation and amortization of premises and equipment                                                                                                                                                                                                                                  |  |                             | 648     |   |      |   | 540     |  
|Net amortization (accretion) of securities premiums and discounts                                                                                                                                                                                                                        |  |                             | 151     |   |      |   | (7      | )
|Net gains on sale of investment securities                                                                                                                                                                                                                                               |  |                             |        |   |      |   | (3      | )
|Impairment losses on investment securities                                                                                                                                                                                                                                               |  |                             |        |   |      |   | 1,882   |  
|Proceeds from sales of loans held for sale                                                                                                                                                                                                                                               |  |                             | 3,527   |   |      |   | 3,527   |  
|Originated loans held for sale                                                                                                                                                                                                                                                           |  |                             | (3,428  | ) |      |   | (3,467  | )
|Net gains on sales of loans                                                                                                                                                                                                                                                              |  |                             | (99     | ) |      |   | (60     | )
|Amortization of net deferred loan (fees) costs                                                                                                                                                                                                                                           |  |                             | (28     | ) |      |   | 6       |  
|Write-down of foreclosed assets                                                                                                                                                                                                                                                          |  |                             | 88      |   |      |   |        |  
|Net gain on sale of deposits and branch assets                                                                                                                                                                                                                                           |  |                             | (80     | ) |      |   |        |  
|Bank owned life insurance income                                                                                                                                                                                                                                                         |  |                             | (305    | ) |      |   | (342    | )
|ESOP expense                                                                                                                                                                                                                                                                             |  |                             | 241     |   |      |   | 100     |  
|Amortization of mortgage servicing rights                                                                                                                                                                                                                                                |  |                             | 9       |   |      |   | 4       |  
|Amortization of brokered deposit premiums                                                                                                                                                                                                                                                |  |                             | 28      |   |      |   | 29      |  
|Deferred income tax (benefit) expense                                                                                                                                                                                                                                                    |  |                             | (164    | ) |      |   | 157     |  
|Changes in other assets and liabilities, net                                                                                                                                                                                                                                             |  |                             | 527     |   |      |   | (2,528  | )
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Total adjustments                                                                                                                                                                                                                                                                        |  |                             | 1,854   |   |      |   | 1,116   |  
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Net cash provided by operating activities                                                                                                                                                                                                                                                |  |                             | 2,711   |   |      |   | 406     |  
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Investing Activities:                                                                                                                                                                                                                                                                    |  |                             |         |   |      |   |         |  
|Principal collections and maturities of securities available for sale                                                                                                                                                                                                                    |  |                             | 8,094   |   |      |   | 6,885   |  
|Principal collections and maturities of securities held to maturity                                                                                                                                                                                                                      |  |                             | 1,004   |   |      |   | 5,340   |  
|Proceeds from sales of securities available for sale                                                                                                                                                                                                                                     |  |                             |        |   |      |   | 2,579   |  
|Purchases of securities available for sale                                                                                                                                                                                                                                               |  |                             | (14,820 | ) |      |   | (12,743 | )
|Purchases of securities held to maturity                                                                                                                                                                                                                                                 |  |                             |        |   |      |   | (9,983  | )
|Redemption of Federal Home Loan Bank Stock, net                                                                                                                                                                                                                                          |  |                             | 896     |   |      |   |        |  
|Increase in interest bearing deposits with other Banks, net                                                                                                                                                                                                                              |  |                             | (1,986  | ) |      |   | (5,072  | )
|Loan purchases                                                                                                                                                                                                                                                                           |  |                             | (4,121  | ) |      |   |        |  
|Loan originations less principal collections                                                                                                                                                                                                                                             |  |                             | (112    | ) |      |   | 6,077   |  
|Purchases of premises and equipment                                                                                                                                                                                                                                                      |  |                             | (871    | ) |      |   | (385    | )
|Purchases of bank-owned life insurance                                                                                                                                                                                                                                                   |  |                             |        |   |      |   | (2,500  | )
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Net cash used in investing activities                                                                                                                                                                                                                                                    |  |                             | (11,916 | ) |      |   | (9,802  | )
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Financing Activities:                                                                                                                                                                                                                                                                    |  |                             |         |   |      |   |         |  
|Sale of deposits                                                                                                                                                                                                                                                                         |  |                             | (10,421 | ) |      |   | (11,095 | )
|Increase in other deposits                                                                                                                                                                                                                                                               |  |                             | 34,227  |   |      |   |        |  
|(Decrease) increase in securities sold under agreements to repurchase                                                                                                                                                                                                                    |  |                             | (4,726  | ) |      |   | 1,513   |  
|Proceeds from FHLB Advances                                                                                                                                                                                                                                                              |  |                             | 15,000  |   |      |   | 4,300   |  
|Repayment of FHLB advances                                                                                                                                                                                                                                                               |  |                             | (22,216 | ) |      |   | (23,866 | )
|Net decrease in advance payments from borrowers for taxes and insurance                                                                                                                                                                                                                  |  |                             | (341    | ) |      |   | (162    | )
|Proceeds from issuance of common stock, net of costs                                                                                                                                                                                                                                     |  |                             |        |   |      |   | 41,095  |  
|Purchase and retirement of Company stock                                                                                                                                                                                                                                                 |  |                             | (396    | ) |      |   |        |  
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Net cash provided by financing activities                                                                                                                                                                                                                                                |  |                             | 11,127  |   |      |   | 11,785  |  
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Increase in cash and cash equivalents                                                                                                                                                                                                                                                    |  |                             | 1,922   |   |      |   | 2,389   |  
|Cash and cash equivalents at beginning of period                                                                                                                                                                                                                                         |  |                             | 36,046  |   |      |   | 33,657  |  
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                                                                                                                                                                                                                               |  | $                           | 37,968  |   |      | $ | 36,046  |  
|                                                                                                                                                                                                                                                                                         |  |                             |         |   |      |   |         |  
|Supplemental Disclosures:                                                                                                                                                                                                                                                                |  |                             |         |   |      |   |         |  
|Interest paid                                                                                                                                                                                                                                                                            |  | $                           | 4,166   |   |      | $ | 6,108   |  
|Income taxes paid                                                                                                                                                                                                                                                                        |  |                             | 568     |   |      |   | 81      |  
|Non cash financing activities:                                                                                                                                                                                                                                                           |  |                             |         |   |      |   |         |  
|During January 2010, the Company loaned $3.7 million to the Employee Stock Ownership Plan, which was used to acquire 370,300
shares of the Companys stock. The loan is secured by the shares purchased and is shown as Unearned ESOP shares in the Consolidated Statement of Condition. |  |                             |         |   |      |   |         |  

See notes to consolidated financial statements.



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OBA Financial Services, Inc. and Subsidiary

Notes to the Consolidated Financial Statements

Note 1Organization and Nature of Operations

In December 2007, OBA
Bank (the Bank) reorganized into a three-tier mutual holding company structure. As part of the reorganization, the Bank converted from a mutual savings bank into a federally chartered stock savings bank and formed OBA Bancorp, Inc., a
federally chartered mid-tier stock holding company, and OBA Bancorp, MHC, a federally chartered mutual holding company. The Bank became a wholly-owned subsidiary of OBA Bancorp, Inc. and OBA Bancorp, Inc. became a wholly-owned subsidiary of OBA
Bancorp, MHC.

On January 21, 2010, OBA Bancorp, MHC completed its plan of conversion and reorganization from a mutual
holding company to a stock holding company. In accordance with the plan, OBA Bancorp, MHC and OBA Bancorp, Inc. ceased to exist as separate legal entities and a stock holding company, OBA Financial Services, Inc. (of which OBA Bank became a wholly
owned subsidiary) sold and issued shares of capital stock to eligible depositors of OBA Bank. A total of 4,628,750 shares were issued in the conversion at $10 per share, raising $46.3 million of gross proceeds. Approximately $1.5 million in stock
offering costs were offset against the gross proceeds. OBA Financial Services, Inc.s common stock began trading on the NASDAQ Capital Market under the symbol OBAF on January 22, 2010.

In accordance with Office of Thrift Supervision (OTS) regulations, at the time of the conversion from a mutual holding
company to a stock holding company, the Bank substantially restricted retained earnings by establishing a liquidation account. The liquidation account is maintained for the benefit of eligible account holders who keep their accounts at the Bank
after conversion. The liquidation account is reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holders interest in the liquidation
account. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances
then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

The Bank is a community-oriented savings institution, providing a variety of financial services to individuals and small businesses through its offices in Montgomery and Howard Counties, Maryland. Its
primary deposits are demand and time certificate accounts and its primary lending products are residential and commercial mortgage loans.

Note 2Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements
include the accounts of OBA Financial Services, Inc. and OBA Bank. These entities are collectively referred to as the (Company) in the following notes to consolidated financial statements. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America (U.S. GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Statement of Condition and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. Material estimates that are particularly sensitive to change in the near term relates to the determination of the allowance for loan losses and other than temporary impairment
of investment securities.



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Significant Group Concentrations of Credit Risk

Most of the Companys activities are with customers located within the Washington, D.C. metropolitan region of the country. Note 5
discusses the types of securities in which the Company has invested. Note 6 discusses the types of lending engaged in by the Company. The Company does not have any significant concentrations in any one industry or customer.

Cash and Cash Equivalents

For the purposes of the statements of cash flows, cash and cash equivalents include cash on hand, balances due from banks and federal funds sold, all of which mature within 90 days. The Company may invest
in certain debt securities with original maturities of 90 days or less which are generally used to secure securities sold under agreements to repurchase. Such securities are classified as investments in the accompanying Statements of Condition.

Securities

Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and recorded at amortized cost. Securities not classified as held to
maturity including equity securities with readily determinable fair values, are classified as available for sale and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive
income.

When the fair value of a held to maturity or available for sale security is less than its amortized cost basis, an
assessment is made at the statement of financial condition date as to whether other-than-temporary impairment (OTTI) is present.

The Company considers numerous factors when determining whether a potential OTTI exists and the period over which the debt security is expected to recover. The principal factors considered are
(1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issuer (and guarantor, if any) and adverse conditions specifically related to the security,
industry or geographic area, (3) failure of the issuer of the security to make scheduled interest or principal payments, (4) changes to the rating of the security by a rating agency, and (5) the presence of credit enhancements, if
any, including the guarantee of the federal government or any of its agencies.

For debt securities, OTTI is considered to
have occurred if (1) the Company intends to sell the security, (2) it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis, or (3) if the present value of expected cash
flows is not sufficient to recover the entire amortized cost basis. In determining the present value of expected cash flows, the Company discounts the expected cash flows at the effective interest rate implicit in the security at the date of
acquisition or, for debt securities that are beneficial interests in securitized financial assets, at the current rate used to accrete the beneficial interest. In estimating cash flows expected to be collected, the Company uses available information
with respect to security prepayment speeds, expected default rates and severity, whether subordinated interests, if any, are capable of absorbing estimated losses and the value of any underlying collateral.

In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the
intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

For debt securities, credit-related OTTI is recognized in income while noncredit-related OTTI on securities not expected to be sold is recognized in other comprehensive income / (loss) (OCI).
Credit related OTTI is measured as the difference between the present value of an impaired securitys expected cash flows and its amortized cost basis. Noncredit-related OTTI is measured as the difference between the fair value of the security



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and its amortized cost less any credit-related losses recognized. For securities classified as held to maturity, the amount of OTTI recognized in OCI is accreted to the credit-adjusted expected
cash flow amounts of the securities over future periods. For equity securities, the entire amount of OTTI is recognized in income.

Interest and dividend income is recognized when earned. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on
the sale of securities are recorded on the trade date and are determined using the specific identification method.

Federal Home Loan Bank Stock

Federal law requires a member institution of the Federal Home Loan Bank (FHLB) to hold stock of its district FHLB according to a predefined formula. FHLB stock represents the required
investment in the common stock of the FHLB of Atlanta and is carried at cost. FHLB stock ownership is restricted and the stock can be sold only to the FHLB or to another member institution at its par value per share.

The Company evaluates the FHLB stock for impairment. The Companys determination of whether this investment is impaired is based on
an assessment of the ultimate recoverability of its cost rather than by recognizing temporary declines in value. The determination of whether a decline in value affects the ultimate recoverability of its cost is influenced by criteria such as
(1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or
regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

For additional information, see Note 4 of these Notes to the Consolidated Financial Statements.

Loans Held for Sale

Loans held for sale are stated at the lower of aggregate cost or fair value. Net fees and costs of originating loans held for sale are deferred and are included in the basis for determining the gain or
loss on sales of loans. There were no loans held for sale at June 30, 2011 and 2010.

Loans Receivable

The Company grants mortgage, commercial and consumer loans to customers. A substantial portion of the loan portfolio
is represented by mortgage loans in the Maryland, Virginia, and Washington, D.C. areas. The ability of the Companys debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area.

Loans that the Company has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported
at their outstanding unpaid principal balances net of the allowance for loan losses, and net deferred costs on originated loans. Interest income is accrued on the unpaid principal balance as earned. Direct loan origination costs, net of certain
origination fees, are deferred and recognized as an adjustment of the related loan yield using the interest method over the contractual term of the loan, adjusted for actual prepayments. Net unamortized costs on loans paid in full are recognized as
a component of interest income.

The accrual of interest on mortgage and commercial loans is discontinued at the time the loan
is 90 days past due. Consumer loans are typically charged-off no later than 180 days past due. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection
of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on
non-accrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method



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until the loan returns to accrual. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when the
uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance
for loan losses is evaluated on a regular basis and is based upon periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the
borrowers ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information
becomes available.

The allowance consists of specific, general, and unallocated components. Specific allowances are
established for impaired loans. The amount of impairment provided for as a specific allowance is represented by the deficiency, if any, between the estimated fair value of the loan based on the expected cash flows, the loans observable market
price, if any, or the underlying collateral, if the loan is collateral dependent, and the carrying value of the loan. Impaired loans for which the estimated fair value of the loan exceeds the carrying value of the loan do not require a specific
allowance.

A loan is considered impaired when, based on current information and events, it is probable that the Company will
be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered in determining impairment include payment status, collateral value, and the probability of
collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The Company determines the significance of payment delays and payment
shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior payment record, and the amount of
the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loans effective interest rate, the loans obtainable market
price, or the fair value of the collateral if the loan is collateral dependent. Large groups of homogeneous loans are collectively evaluated for impairment. Generally, the Company does not separately identify individual consumer and residential
loans for impairment disclosures unless the loan has been subject to a troubled debt restructure.

General allowances are
established for loan losses on a portfolio basis for loans that do not meet the definition of impaired. The portfolio is grouped into similar risk characteristics, primarily loan type. The Company applies an estimated loss rate to each loan group.
The loss rates applied are based upon its loss experience adjusted, as appropriate, for environmental factors.

The
unallocated component represents the margin of imprecision inherent in the underlying assumptions used in estimating specific and general allowances.

The Company maintains the allowance for loan losses at a level considered adequate to provide for losses inherent in the loan portfolio. While the Company utilizes available information to recognize
losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions, particularly in the Washington, D.C. area including surrounding counties in the states of Maryland and Virginia. In
addition, regulatory agencies, as an integral part of their examination process, periodically review the Companys allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance for loan losses based on
their judgments about information available to them at the time of their examination.



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Actual loan losses may be significantly more than the allowance for loan losses the Company
has established, which could have a material negative effect on its consolidated financial statements.

Servicing

Servicing assets are recognized when rights are acquired through sale of financial assets. For sales of mortgage
loans, a portion of the cost of originating the loan is allocated to the servicing right based on relative fair value. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a
valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income. Capitalized servicing rights are
reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost.

Servicing fee income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal; or a fixed amount per loan and are recorded as income
when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.

Off-Balance
Sheet Credit Related Financial Instruments

In the ordinary course of business, the Company has entered into
off-balance sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial instruments are recorded when they are funded.

Real Estate Owned

Assets acquired through, or in lieu of, loan
foreclosures are held for sale and are initially recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by the Company and the
assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets. Foreclosed assets amounted to $105
thousand at June 30, 2011 and $193 thousand at June 30, 2010 and are included in other assets.

Premises and
Equipment

Land is carried at cost. Buildings, leasehold improvements and equipment are carried at cost, less
accumulated depreciation and amortization computed on the straight-line method over the estimated useful lives of the assets or the expected terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise
of such options is reasonably assured. Estimated useful lives are 20 to 40 years for buildings, 5 to 10 years for leasehold improvements and 5 years for equipment.

Common Stock Repurchase Program

In 2011, the Company adopted a
common stock repurchase program in which shares repurchased reduce the amount of shares issued and outstanding. The repurchased shares may be reissued in connection with share-based compensations plans and for general corporate purposes. Under this
plan, the Company approved the repurchase of a specific amount of shares without any specific expiration date.



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Bank Owned Life Insurance

The Company invests in bank owned life insurance (BOLI) as a source of funding for employee benefit expenses. BOLI involves
the purchasing of life insurance by the Company on a chosen group of employees. The Company is the owner and beneficiary of the life insurance policies, and as such, the investment is carried at the cash surrender value of the underlying policies.
Income from the increase in cash surrender value of the policies is included in noninterest income in the consolidated statements of operations.

Transfers of Financial Assets

Transfers of financial assets are
accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of
conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before
their maturity.

Advertising Costs

Advertising costs are expensed as incurred. For the years ended June 30, 2011 and 2010, advertising expense was $225 thousand and $79 thousand, respectively.

Income Taxes

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects
of the temporary differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the
deferred tax assets will not be realized. The liability method gives current recognition to changes in tax rates and laws.

OBA Financial Services, Inc. has entered into a tax sharing agreement with OBA Bank. The agreement provides that OBA Financial Services,
Inc. will file a consolidated federal tax return and that the tax liability shall be apportioned among the entities as would be computed if each entity had filed a separate return. According to Maryland tax law, OBA Financial Services, Inc. and OBA
Bank file separate Maryland state tax returns.

Reclassifications

Certain amounts in the 2010 financial statements have been reclassified to conform with the 2011 presentation.

Comprehensive Income

U.S. GAAP requires that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for
sale securities, are reported as a separate component of the equity section of the consolidated statement of condition, such items, along with net income, are components of comprehensive income.



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The components of other comprehensive income / (loss) and related tax effects are as
follows:



|                                                                                                     |  |                      |      |   |      |   |       |  
|---------------------------------------------------------------------------------------------------- |  | -------------------- | ---- | - | ---- | - | ----- | -
|                                                                                                     |  | Years Ended June 30, |     
|                                                                                                     |  | 2011                 |      |   | 2010 |  
|                                                                                                     |  | (In thousands)       |     
|Unrealized losses on debt securities for which a portion of impairment has been recognized in income |  | $                    |     |   |      | $ | (512  | )
|Unrealized gains (losses) on other available for sale securities                                     |  |                      | (103 | ) |      |   | 658   |  
|Reclassification adjustment for OTTI losses included in income                                       |  |                      |     |   |      |   | 1,882 |  
|Reclassification adjustment for gain on sale of investments                                          |  |                      |     |   |      |   | (3    | )
|                                                                                                     |  |                      |      |   |      |   |       |  
|Net unrealized gains (losses)                                                                        |  |                      | (103 | ) |      |   | 2,025 |  
|Tax effect                                                                                           |  |                      | (39  | ) |      |   | 790   |  
|                                                                                                     |  |                      |      |   |      |   |       |  
|Other comprehesive income (loss)                                                                     |  | $                    | (64  | ) |      | $ | 1,235 |  
|                                                                                                     |  |                      |      |   |      |   |       |  

Accumulated other comprehensive income consists of the following:



|                                                  |  |                |       |   |      |   |       |  
|------------------------------------------------- |  | -------------- | ----- | - | ---- | - | ----- | -
|                                                  |  | June 30,       |      
|                                                  |  | 2011           |       |   | 2010 |  
|                                                  |  | (In thousands) |      
|Unrealized gains on available for sale securities |  | $              | 1,114 |   |      | $ | 1,217 |  
|Tax effect                                        |  |                | (435  | ) |      |   | (474  | )
|                                                  |  |                |       |   |      |   |       |  
|Total                                             |  | $              | 679   |   |      | $ | 743   |  
|                                                  |  |                |       |   |      |   |       |  

Recent Accounting Pronouncements

Accounting Standards Update 2010-06

In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Fair Value Measurement and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.

This Update requires new disclosures and clarifies some existing disclosure requirements about fair value measurements as set
forth in Codification Subtopic 820-10.

ASU 2010-06 is effective for fiscal years beginning after December 15, 2009 and
for interim periods within those fiscal years except the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years. This update did not and is not expected to have a material impact on the Companys consolidated financial statements.

Accounting Standards Update 2011-02

In April 2011, The FASB issued this Update to clarify the accounting principles applied to loan modifications, as defined by FASB Accounting Standards Codification (ASC) Subtopic 310-40,
ReceivablesTroubled Debt Restructurings by Creditors. The Update clarifies guidance on a creditors evaluation of whether or not a concession has been granted, with an emphasis on evaluating all aspects of the modification rather
than a focus on specific criteria, such as the effective interest rate test, to determine a concession. For public entities, the amendments in the Update are effective for the first interim or annual periods beginning on or after June 15, 2011,
and should be applied retrospectively to the beginning of the annual period of adoption. The entity should



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also disclose information required by ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, which had previously been deferred by
ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, for interim and annual periods beginning on or after June 15, 2011. This update is not expected to have a material
impact on the Companys consolidated financial statements.

Accounting Standards Update 2011-03

In April 2011, the FASB issued Accounting Standards Update 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective
Control for Repurchase Agreements.

The amendments in ASU 2011-03 improve the accounting for repurchase agreements and
other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity.

The effective date is the first interim or annual period beginning on or after December 15, 2011. Early application is not
permitted. This update is not expected to have an impact on the Companys Financial Statements.

Accounting Standards
Update ASU 2011-04

In May 2011, the FASB issued Accounting Standards Update 2011-04, Fair Value Measurement (Topic
820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.

The
amendments improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and IFRSs.

The effective date is the first interim or annual period beginning on or after December 15, 2011. Early application is not permitted. This update is not expected to have an impact on the
Companys Financial Statements.

Accounting Standards Update ASU 2011-05

In June 2011, the FASB issued Accounting Standards Update 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive
Income.

The amendments improve the comparability, consistency and transparency of financial reporting to increase the
prominence of items reported on other comprehensive income.

The effective date is the first interim or annual period
beginning on or after December 15, 2011. Early application is permitted. This update is not expected to have an impact on the Companys Financial Statements.

Note 3Restrictions on Cash and Amounts Due From Banks

The Company is
required to maintain average reserve balances on hand or with the Federal Reserve Bank. At June 30, 2011 and 2010, these reserve balances amounted to $5.3 million and $4.1 million, respectively.

Note 4Federal Home Loan Bank Stock

The FHLB of Atlanta, during the years ended 2008, 2009, and 2010, experienced higher levels of OTTI in its investment portfolio, primarily on private label mortgage-backed securities, which had adversely
impacted its operating results and capital and raised concerns about whether its capital levels could be reduced below regulatory requirements.



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As of June 30, 2011, the FHLB of Atlanta was in compliance with all of its regulatory
capital requirements. Total regulatory capital-to-assets ratio was 6.76%, exceeding the minimum 4.00% requirement and its risk-based capital was $7.9 billion, which is $5.7 billion in excess of the $2.2 billion required.

The Company believes the FHLB of Atlantas operating results and capital levels will continue to improve as conditions in the
housing industry and economy improve. In addition, the Company believes that the FHLB of Atlanta has met all payment commitments required by law or regulation and that there has been no significant legislative and regulatory changes impacting its
customer base.

The Company has the intent and ability to hold the FHLB of Atlanta stock for the amount of time necessary to
recover its investment and, based on its evaluation. There was no impairment recorded on FHLB stock in 2011 or 2010.

Note
5Securities

The amortized cost and fair value of securities available for sale, with gross unrealized gains and
losses follows:



|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|----------------------------------------- |  | ------------- | ------ |  | -------------------- | - | ----- | --------------------- |  | - | --------- | - |  | - | ------ | 
|                                          |  | AmortizedCost |        |  | GrossUnrealizedGains |   |       | GrossUnrealizedLosses |  |   | FairValue |  
|June 30, 2011                             |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Securities available for sale:            |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Debt Securities:                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Residential mortgage-backed securities(1) |  | $             | 34,547 |  |                      | $ | 1,116 |                       |  | $ |          |   |  | $ | 35,663 | 
|Trust preferred securities                |  |               | 117    |  |                      |   |      |                       |  |   | (2        | ) |  |   | 115    | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total debt securities available for sale  |  |               | 34,664 |  |                      |   | 1,116 |                       |  |   | (2        | ) |  |   | 35,778 | 
|Equity Securities                         |  |               | 50     |  |                      |   |      |                       |  |   |          |   |  |   | 50     | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total securities available for sale       |  |               | 34,714 |  |                      |   | 1,116 |                       |  |   | (2        | ) |  |   | 35,828 | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Securities held to maturity:              |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Debt Securities:                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Residential mortgage-backed securities(1) |  |               | 3,623  |  |                      |   | 172   |                       |  |   |          |   |  |   | 3,795  | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total debt securities held to maturity    |  |               | 3,623  |  |                      |   | 172   |                       |  |   |          |   |  |   | 3,795  | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total investment securities               |  | $             | 38,337 |  |                      | $ | 1,288 |                       |  | $ | (2        | ) |  | $ | 39,623 | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|June 30, 2010                             |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Securities available for sale:            |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Debt Securities:                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Residential mortgage-backed securities(1) |  | $             | 27,944 |  |                      | $ | 1,243 |                       |  | $ |          |   |  | $ | 29,187 | 
|Trust preferred securities                |  |               | 135    |  |                      |   |      |                       |  |   | (26       | ) |  |   | 109    | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total debt securities available for sale  |  |               | 28,079 |  |                      |   | 1,243 |                       |  |   | (26       | ) |  |   | 29,296 | 
|Equity Securities                         |  |               | 50     |  |                      |   |      |                       |  |   |          |   |  |   | 50     | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total securities available for sale       |  |               | 28,129 |  |                      |   | 1,243 |                       |  |   | (26       | ) |  |   | 29,346 | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Securities held to maturity:              |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Debt Securities:                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Residential mortgage-backed securities(1) |  |               | 4,637  |  |                      |   | 172   |                       |  |   |          |   |  |   | 4,809  | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total debt securities held to maturity    |  |               | 4,637  |  |                      |   | 172   |                       |  |   |          |   |  |   | 4,809  | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 
|Total investment securities               |  | $             | 32,766 |  |                      | $ | 1,415 |                       |  | $ | (26       | ) |  | $ | 34,155 | 
|                                          |  |               |        |  |                      |   |       |                       |  |   |           |   |  |   |        | 



|(1) | All residential mortgage-backed securities were issued by United States government agencies including the Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation or Government National Mortgage Association. The Company had no private label residential mortgage-backed securities at June 30, 2011 and 2010 or during the years then ended.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The amortized cost and fair value of debt securities by contractual payment dates at
June 30, 2011 follows:



|                                       |  |                    |        |  |                  |   |        |               |  |   |           |  |  |   |       | 
|-------------------------------------- |  | ------------------ | ------ |  | ---------------- | - | ------ | ------------- |  | - | --------- |  |  | - | ----- | 
|                                       |  | Available for sale |        |  | Held to Maturity |  
|                                       |  | AmortizedCost      |        |  | FairValue        |   |        | AmortizedCost |  |   | FairValue | 
|                                       |  | (In thousands)     |       
|Due after ten years                    |  | $                  | 117    |  |                  | $ | 115    |               |  | $ |          |  |  | $ |      | 
|Residential mortgage-backed securities |  |                    | 34,547 |  |                  |   | 35,663 |               |  |   | 3,623     |  |  |   | 3,795 | 
|                                       |  |                    |        |  |                  |   |        |               |  |   |           |  |  |   |       | 
|Total                                  |  | $                  | 34,664 |  |                  | $ | 35,778 |               |  | $ | 3,623     |  |  | $ | 3,795 | 
|                                       |  |                    |        |  |                  |   |        |               |  |   |           |  |  |   |       | 

Residential mortgage-backed securities have been aggregated as they have no single maturity date.

At June 30, 2011 and 2010, the carrying amount of securities pledged to secure repurchase agreements was $17.5 million
and $22.3 million, respectively.

During the year ended June 30, 2010, the Company re-evaluated its intent with regard to
the two bank and bank holding company backed pooled trust preferred securities. Due to the continued deterioration in the financial condition of some issuers, lack of improvement in the securities liquidity, the amount of managements
time and related costs of monitoring, valuing, and accounting for the securities and tax related considerations, the Company decided to sell the securities. As a result of this decision, the Company recorded an other-than-temporary impairment charge
of $1.9 million for the year ended June 30, 2010. The other-than-temporary impairment charge was based on the amount of the amortized cost of the securities in excess of the subsequent sale proceeds of $97 thousand.

The Company received proceeds of $2.6 million for the sale of securities available for sale in the fiscal year ended June 30, 2010,
resulting in gross realized gains of $3 thousand. In addition to the aforementioned sale of pooled trust preferred securities, the Company sold one U.S. government-sponsored mortgage-backed security. There were no sales of securities in the year
ended June 30, 2011.

Information pertaining to securities with gross unrealized losses at June 30, 2011 and 2010,
aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:



|                           |  |                       |   |  |                   |   |   |                       |  |   |           |  |  |                       |     |  |           |   |    |  |  |   |     | 
|-------------------------- |  | --------------------- | - |  | ----------------- | - | - | --------------------- |  | - | --------- |  |  | --------------------- | --- |  | --------- | - | -- |  |  | - | --- | 
|                           |  | Less than 12 Months   |   |  | 12 Months or More |   |   | Total                 | 
|                           |  | GrossUnrealizedLosses |   |  | FairValue         |   |   | GrossUnrealizedLosses |  |   | FairValue |  |  | GrossUnrealizedLosses |     |  | FairValue |  
|                           |  | (In thousands)        |  
|June 30, 2011              |  |                       |   |  |                   |   |   |                       |  |   |           |  |  |                       |     |  |           |   |    |  |  |   |     | 
|Trust preferred securities |  | $                     |  |  |                   | $ |  |                       |  | $ | 2         |  |  | $                     | 115 |  |           | $ | 2  |  |  | $ | 115 | 
|June 30, 2010              |  |                       |   |  |                   |   |   |                       |  |   |           |  |  |                       |     |  |           |   |    |  |  |   |     | 
|Trust preferred securities |  | $                     |  |  |                   | $ |  |                       |  | $ | 26        |  |  | $                     | 109 |  |           | $ | 26 |  |  | $ | 109 | 

At June 30, 2011, the Companys sole trust preferred security is a variable rate pool of trust
preferred securities issued by insurance companies or their holding companies. This position and the related unrealized loss in the trust preferred security is not material to the Companys consolidated financial position or results of
operations. The decline in the fair value of this security has been caused by (1) collateral deterioration due to failures and credit concerns across the financial services sector, (2) the widening of credit spreads for asset-backed
securities, and (3) general illiquidity and, as a result, inactivity in the market for these securities. The unrealized loss in the table above was not recognized in income as the Company believes the present value of expected cash flows is
sufficient to recover the entire amortized cost basis.



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The following table presents a summary of cumulative credit losses related to
other-than-temporary impairment charges recognized in income for trust preferred securities:



|                                                  |  |                      |   |  |      |   |        |  
|------------------------------------------------- |  | -------------------- | - |  | ---- | - | ------ | -
|                                                  |  | Years Ended June 30, |  
|(In thousands)                                    |  | 2011                 |   |  | 2010 |  
|Beginning balance of cumulative credit losses     |  | $                    |  |  |      | $ | 1,020  |  
|Additions to credit losses recorded on securities |  |                      |  |  |      |   | 550    |  
|Reduction for securities sold                     |  |                      |  |  |      |   | (1,570 | )
|                                                  |  |                      |   |  |      |   |        |  
|Ending balance of cumulative credit losses        |  | $                    |  |  |      | $ |       |  
|                                                  |  |                      |   |  |      |   |        |  

Note 6Credit Quality of Loans and Provision and Allowance for Loan Losses

A summary of the balances of loans receivable follows:



|                                          |  |                |         |   |      |   |         |  
|----------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                          |  | June 30,       |        
|                                          |  | 2011           |         |   | 2010 |  
|                                          |  | (In thousands) |        
|Commerical business loans                 |  | $              | 36,041  |   |      | $ | 26,448  |  
|Commercial real estate                    |  |                | 108,756 |   |      |   | 85,423  |  
|Construction                              |  |                | 1,180   |   |      |   | 1,071   |  
|One-to four family residential            |  |                | 97,285  |   |      |   | 123,452 |  
|Home equity loans and lines of credit     |  |                | 38,329  |   |      |   | 41,105  |  
|                                          |  |                |         |   |      |   |         |  
|Loans                                     |  |                | 281,591 |   |      |   | 277,499 |  
|Net deferred commerical loan (fees) costs |  |                | (181    | ) |      |   | (214    | )
|Net deferred home equity costs            |  |                | 456     |   |      |   | 550     |  
|                                          |  |                |         |   |      |   |         |  
|Loans net of deferred (fees) costs        |  |                | 281,866 |   |      |   | 277,835 |  
|Allowance for loan losses                 |  |                | (2,246  | ) |      |   | (1,737  | )
|                                          |  |                |         |   |      |   |         |  
|Total loans, net                          |  | $              | 279,620 |   |      | $ | 276,098 |  
|                                          |  |                |         |   |      |   |         |  

Various Company policies, consistent with regulatory guidelines, provide for the classification of loans
and other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the
collateral pledged, if any. Substandard assets include those assets characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses
inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets,
or portions of assets, classified as losses are those considered uncollectible and of such little value that their continuance as an asset is not warranted. Assets that do not expose the Company to risk sufficient to warrant classification in one of
the aforementioned categories, but which possess potential weaknesses that deserve close attention, are required to be designated as Special Mention.

The Company maintains an allowance for loan losses at an amount estimated to equal all credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the statement of
condition date. The Companys determination as to the classification of assets is subject to review by the Companys principal federal regulator, the OCC. The Company regularly reviews the loan portfolio to determine whether any assets
require classification in accordance with applicable regulations.

Management evaluates the allowance for loan losses based
upon the combined total of the specific, general, and unallocated components as discussed below. Generally, when the loan portfolio increases, absent other factors, the allowance for loan loss methodology results in a higher dollar amount of
estimated probable losses



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than would be the case without the increase. Generally, when the loan portfolio decreases, absent other factors, the allowance for loan loss methodology results in a lower dollar amount of
estimated probable losses than would be the case without the decrease.

Commercial real estate loans generally have greater
credit risks compared to one- to four-family residential mortgage loans, as they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by
income-producing properties typically depends on the successful operation of the related business and thus may be subject to a greater extent to adverse conditions in the real estate market and in the general economy.

Commercial business loans generally have greater credit risks compared to one- to four-family residential mortgage loans, as they
typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on commercial business loans typically depends on the successful operation of the related business and thus
may be subject to a greater extent to adverse conditions in the real estate market and in the general economy.

Generally, the
Company underwrites commercial real estate loans at a loan-to-value ratio of 75% or less and residential real estate loans are underwritten at a loan-to-value ratio not exceeding 80%. In the event that a loan becomes past due, management will
conduct visual inspections of collateral properties and/or review publicly available information, such as online databases, to ascertain property values. The Company may request a formal third party appraisal for various reasons including, but not
limited to, age of previous appraisal, changes in market condition, and changes in borrowers financial condition. For loans initially determined to be impaired loans, the Company utilizes the ascertained or appraised property value in
determining the appropriate specific allowance for loan losses attributable to a loan. In addition, changes in the appraised value of properties securing specific loans can result in an increase or decrease in the general allowance for loan losses
as an adjustment to the historical loss experience due to qualitative and environmental factors.

The loan portfolio is
evaluated on a quarterly basis and the allowance is adjusted accordingly. While the best information available is used to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information
used in making the evaluations. In addition, as an integral part of their examination process, the OCC will periodically review the allowance for loan losses. The OCC may require the Company to recognize additions to the allowance based on their
analysis of information available to them at the time of their examination.

The following table presents the classes of the
loan portfolio summarized by loan rating within the Companys internal risk rating system as of June 30, 2011:



|                                      |  |      |         |  |                |   |       |             |  |   |          |  |  |       |   |  |  |   |         | 
|------------------------------------- |  | ---- | ------- |  | -------------- | - | ----- | ----------- |  | - | -------- |  |  | ----- | - |  |  | - | ------- | 
|(In thousands)                        |  | Pass |         |  | SpecialMention |   |       | Substandard |  |   | Doubtful |  |  | Total |  
|Commerical business loans             |  | $    | 33,199  |  |                | $ | 1,788 |             |  | $ | 1,054    |  |  | $     |  |  |  | $ | 36,041  | 
|Commercial real estate                |  |      | 98,084  |  |                |   | 3,687 |             |  |   | 6,985    |  |  |       |  |  |  |   | 108,756 | 
|Construction                          |  |      | 1,180   |  |                |   |      |             |  |   |         |  |  |       |  |  |  |   | 1,180   | 
|One-to four family residential        |  |      | 96,588  |  |                |   |      |             |  |   | 697      |  |  |       |  |  |  |   | 97,285  | 
|Home equity loans and lines of credit |  |      | 38,329  |  |                |   |      |             |  |   |         |  |  |       |  |  |  |   | 38,329  | 
|                                      |  |      |         |  |                |   |       |             |  |   |          |  |  |       |   |  |  |   |         | 
|Total                                 |  | $    | 267,380 |  |                | $ | 5,475 |             |  | $ | 8,736    |  |  | $     |  |  |  | $ | 281,591 | 
|                                      |  |      |         |  |                |   |       |             |  |   |          |  |  |       |   |  |  |   |         | 



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The performance and credit quality of the loan portfolio is also monitored by the analyzing
of the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due and non-accrual status as of June 30, 2011:



|                                      |  |                    |     |  |                    |   |     |                         |  |   |               |  |  |         |       |  |                      |   |         |                       |  |   |         |  |  |   |       | 
|------------------------------------- |  | ------------------ | --- |  | ------------------ | - | --- | ----------------------- |  | - | ------------- |  |  | ------- | ----- |  | -------------------- | - | ------- | --------------------- |  | - | ------- |  |  | - | ----- | 
|(In thousands)                        |  | 30-59 DaysPast Due |     |  | 60-89 DaysPast Due |   |     | 90 Daysand OverPast Due |  |   | TotalPast Due |  |  | Current |       |  | TotalLoansReceivable |   |         | TotalNon-AccrualLoans | 
|Commerical business loans             |  | $                  |    |  |                    | $ |    |                         |  | $ |              |  |  | $       |      |  |                      | $ | 36,041  |                       |  | $ | 36,041  |  |  | $ |      | 
|Commercial real estate                |  |                    |    |  |                    |   | 327 |                         |  |   | 2,094         |  |  |         | 2,421 |  |                      |   | 106,335 |                       |  |   | 108,756 |  |  |   | 5,292 | 
|Construction                          |  |                    |    |  |                    |   |    |                         |  |   |              |  |  |         |      |  |                      |   | 1,180   |                       |  |   | 1,180   |  |  |   |      | 
|One-to four family residential        |  |                    |    |  |                    |   |    |                         |  |   |              |  |  |         |      |  |                      |   | 97,285  |                       |  |   | 97,285  |  |  |   |      | 
|Home equity loans and lines of credit |  |                    | 198 |  |                    |   | 75  |                         |  |   |              |  |  |         | 273   |  |                      |   | 38,056  |                       |  |   | 38,329  |  |  |   |      | 
|                                      |  |                    |     |  |                    |   |     |                         |  |   |               |  |  |         |       |  |                      |   |         |                       |  |   |         |  |  |   |       | 
|Total                                 |  | $                  | 198 |  |                    | $ | 402 |                         |  | $ | 2,094         |  |  | $       | 2,694 |  |                      | $ | 278,897 |                       |  | $ | 281,591 |  |  | $ | 5,292 | 
|                                      |  |                    |     |  |                    |   |     |                         |  |   |               |  |  |         |       |  |                      |   |         |                       |  |   |         |  |  |   |       | 

The Company had $5.3 million and $446 thousand in nonaccrual loans at June 30, 2011 and 2010,
respectively. The Company had $2.7 million in loans that were past due at June 30, 2011. At June 30, 2011, the Company had $2.1 million past due 90 days or more and $600 thousand past due 30 to 89 days. The Company had no loans past due 90
days or more on which interest was still accruing as of June 30, 2011 and 2010. Interest recognized using the cash basis on nonaccrual loans during the years ended June 30, 2011 and 2010 was $106 thousand and $12 thousand, respectively.
Interest of $121 thousand and $49 thousand was not recognized as interest income due to non-accrual status of loans during the years ended June 30, 2011 and 2010, respectively.

An analysis of the allowance for loan losses follows:



|                             |  |                      |       |   |      |   |       |  
|---------------------------- |  | -------------------- | ----- | - | ---- | - | ----- | -
|                             |  | Years Ended June 30, |      
|                             |  | 2011                 |       |   | 2010 |  
|                             |  | (In thousands)       |      
|Balance at beginning of year |  | $                    | 1,737 |   |      | $ | 1,167 |  
|Provision for loan losses    |  |                      | 739   |   |      |   | 1,278 |  
|Loans charged-off            |  |                      | (260  | ) |      |   | (708  | )
|Recoveries                   |  |                      | 30    |   |      |   |      |  
|                             |  |                      |       |   |      |   |       |  
|Balance at end of year       |  | $                    | 2,246 |   |      | $ | 1,737 |  
|                             |  |                      |       |   |      |   |       |  



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The following table sets forth the activity in and allocation of the allowance for loan
losses by loan portfolio class as of and for the year ended June 30, 2011.



|                                           |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|------------------------------------------ |  | ------------------------ | ------ |  | --------------------- | - | ------- | ------------ |  | - | ---------------------------- |  |  | ----------------------------------- | ------ | - | ----------- | - | ------ | ----------- |  | - | --- |  |  | - | ------- | -
|(In thousands)                             |  | Commercialbusiness loans |        |  | Commercialreal estate |   |         | Construction |  |   | One-to fourfamilyresidential |  |  | Home equityloans and linesof credit |        |   | Unallocated |   |        | Total loans | 
|Allowance for loan losses:                 |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Beginning Balance                          |  | $                        | 127    |  |                       | $ | 820     |              |  | $ | 2                            |  |  | $                                   | 449    |   |             | $ | 175    |             |  | $ | 164 |  |  | $ | 1,737   |  
|Charge-offs                                |  |                          |       |  |                       |   | (166    | )            |  |   |                             |  |  |                                     | (15    | ) |             |   | (79    | )           |  |   |    |  |  |   | (260    | )
|Recoveries                                 |  |                          |       |  |                       |   |        |              |  |   |                             |  |  |                                     |       |   |             |   | 30     |             |  |   |    |  |  |   | 30      |  
|Provisions                                 |  |                          | 256    |  |                       |   | 52      |              |  |   |                             |  |  |                                     | 94     |   |             |   | 314    |             |  |   | 23  |  |  |   | 739     |  
|                                           |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Ending balance                             |  | $                        | 383    |  |                       | $ | 706     |              |  | $ | 2                            |  |  | $                                   | 528    |   |             | $ | 440    |             |  | $ | 187 |  |  | $ | 2,246   |  
|                                           |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Allowance for Loan Losses:                 |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Ending allowance balance related to loans: |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Individually evaluated for impairment      |  | $                        |       |  |                       | $ |        |              |  | $ |                             |  |  | $                                   | 90     |   |             | $ |       |             |  | $ |    |  |  | $ | 90      |  
|Collectively evaluated for impairment      |  |                          | 383    |  |                       |   | 706     |              |  |   | 2                            |  |  |                                     | 438    |   |             |   | 440    |             |  |   | 187 |  |  |   | 2,156   |  
|                                           |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Total ending allowance balance             |  | $                        | 383    |  |                       | $ | 706     |              |  | $ | 2                            |  |  | $                                   | 528    |   |             | $ | 440    |             |  | $ | 187 |  |  | $ | 2,246   |  
|                                           |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Loans receivable:                          |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Ending loan balance                        |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Individually evaluated for impairment      |  | $                        |       |  |                       | $ | 6,985   |              |  | $ |                             |  |  | $                                   | 697    |   |             | $ |       |             |  |   |     |  |  | $ | 7,682   |  
|Collectively evaluated for impairment      |  |                          | 36,041 |  |                       |   | 101,771 |              |  |   | 1,180                        |  |  |                                     | 96,588 |   |             |   | 38,329 |             |  |   |     |  |  |   | 273,909 |  
|                                           |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  
|Total ending loan balance                  |  | $                        | 36,041 |  |                       | $ | 108,756 |              |  | $ | 1,180                        |  |  | $                                   | 97,285 |   |             | $ | 38,329 |             |  |   |     |  |  | $ | 281,591 |  
|                                           |  |                          |        |  |                       |   |         |              |  |   |                              |  |  |                                     |        |   |             |   |        |             |  |   |     |  |  |   |         |  



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The following table summarizes information in regards to impaired loans by loan portfolio
class for the year ended June 30, 2011:



|                                    |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|----------------------------------- |  | --------------------------- | ----- |  | ---------------------- | - | ----- | ---------------- |  | - | ------------------------- |  |  | ------------------------ | ----- |  |  | - | --- | 
|(In thousands)                      |  | As of the end of the period |       |  | For the year ended     |  
|                                    |  | RecordedInvestment          |       |  | UnpaidPrincipalBalance |   |       | RelatedAllowance |  |   | AverageRecordedInvestment |  |  | InterestIncomeRecognized |      
|With No Related Allowance Recorded: |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Commercial real estate              |  | $                           | 6,985 |  |                        | $ | 7,067 |                  |  | $ |                          |  |  | $                        | 4,452 |  |  | $ | 197 | 
|One-to four family residential      |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|                                    |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Total with no allowance recorded    |  | $                           | 6,985 |  |                        | $ | 7,067 |                  |  | $ |                          |  |  | $                        | 4,452 |  |  | $ | 197 | 
|                                    |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|With an Allowance Recorded:         |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Commercial real estate              |  | $                           |      |  |                        | $ |      |                  |  | $ |                          |  |  | $                        |      |  |  | $ |    | 
|One-to four family residential      |  |                             | 697   |  |                        |   | 697   |                  |  |   | 90                        |  |  |                          | 693   |  |  |   | 82  | 
|                                    |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Total with allowance recorded       |  | $                           | 697   |  |                        | $ | 697   |                  |  | $ | 90                        |  |  | $                        | 693   |  |  | $ | 82  | 
|                                    |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Total:                              |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Commercial real estate              |  | $                           | 6,985 |  |                        | $ | 7,067 |                  |  | $ |                          |  |  | $                        | 4,452 |  |  | $ | 197 | 
|One-to four family residential      |  |                             | 697   |  |                        |   | 697   |                  |  |   | 90                        |  |  |                          | 693   |  |  |   | 82  | 
|                                    |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 
|Total                               |  | $                           | 7,682 |  |                        | $ | 7,764 |                  |  | $ | 90                        |  |  | $                        | 5,145 |  |  | $ | 279 | 
|                                    |  |                             |       |  |                        |   |       |                  |  |   |                           |  |  |                          |       |  |  |   |     | 

For the periods ended June 30, 2011 and 2010, total impaired loans were $7.7 million and $2.6
million, respectively. As of June 30, 2011 and 2010, there were $7.0 million and $0 impaired loans without a valuation allowance recorded, respectively. As of June 30, 2011 and 2010, there were $697 thousand and $2.6 million of impaired
loans with a valuation allowance recorded, respectively. The valuation allowance recorded for those impaired loans was $90 thousand and $614 thousand as of June 30, 2011 and 2010, respectively. The average investment in impaired loans for the
periods ended June 30, 2011 and 2010 was $5.1 million and $2.3 million, respectively.

Note 7Servicing

Loans serviced for others and advances from borrowers for taxes and insurance related to those loans are not included in the accompanying
statement of condition. The unpaid principal balances of loans serviced for others were $17.4 million and $19.6 million at June 30, 2011 and 2010, respectively. Advances from borrowers for taxes and insurance related to loans serviced for
others amounted to $472 thousand and $496 thousand, respectively, at June 30, 2011 and 2010.

The following summarizes
the activity pertaining to mortgage servicing rights:



|                                  |  |                      |    |   |      |   |    |  
|--------------------------------- |  | -------------------- | -- | - | ---- | - | -- | -
|                                  |  | Years Ended June 30, |   
|                                  |  | 2011                 |    |   | 2010 |  
|                                  |  | (In thousands)       |   
|Balance at beginning of year      |  | $                    | 63 |   |      | $ | 42 |  
|Amounts capitalized on loans sold |  |                      | 34 |   |      |   | 25 |  
|Amortization                      |  |                      | (9 | ) |      |   | (4 | )
|                                  |  |                      |    |   |      |   |    |  
|Balance at end of year            |  | $                    | 88 |   |      | $ | 63 |  
|                                  |  |                      |    |   |      |   |    |  

At June 30, 2011 and 2010, the Company had no valuation allowances related to mortgage servicing
rights.



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Note 8Premises and Equipment

A summary of the cost and accumulated depreciation and amortization of premises and equipment follows:



|                                                |  |                |        |   |      |   |        |  
|----------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | -
|                                                |  | June 30,       |       
|                                                |  | 2011           |        |   | 2010 |  
|                                                |  | (In thousands) |       
|Premises:                                       |  |                |        |   |      |   |        |  
|Land                                            |  | $              | 971    |   |      | $ | 971    |  
|Office buildings                                |  |                | 5,551  |   |      |   | 5,551  |  
|Leasehold improvements                          |  |                | 1,146  |   |      |   | 1,151  |  
|Equipment                                       |  |                | 2,201  |   |      |   | 1,911  |  
|Leasehold improvements and equipment in process |  |                | 286    |   |      |   | 91     |  
|                                                |  |                |        |   |      |   |        |  
|Total premises and equipment                    |  |                | 10,155 |   |      |   | 9,675  |  
|Accumulated depreciation and amortization       |  |                | (3,870 | ) |      |   | (3,444 | )
|                                                |  |                |        |   |      |   |        |  
|Total premises and equipment, net               |  | $              | 6,285  |   |      | $ | 6,231  |  
|                                                |  |                |        |   |      |   |        |  

Pursuant to the terms of non-cancelable lease agreements in effect at June 30, 2011, pertaining to
premises and equipment, future minimum rent commitments under various operating leases are as follows (in thousands):



|                      |  |   |       | 
|--------------------- |  | - | ----- | 
|Years ending June 30: |  |   |       | 
|2012                  |  | $ | 337   | 
|2013                  |  |   | 350   | 
|2014                  |  |   | 314   | 
|2015                  |  |   | 329   | 
|2016                  |  |   | 339   | 
|Thereafter            |  |   | 1,607 | 
|                      |  |   |       | 
|Total                 |  | $ | 3,276 | 
|                      |  |   |       | 

The leases contain options to extend for a period of five years. The cost of such rentals is not included
above. Total rent expense for the years ended June 30, 2011 and 2010 amounted to $412 thousand and $341 thousand, respectively.

The Company leases portions of its Germantown, Maryland office building to unrelated parties. Future minimum rental income for these non-cancelable leases is as follows (in thousands):



|                      |  |   |     | 
|--------------------- |  | - | --- | 
|Years ending June 30: |  |   |     | 
|2012                  |  | $ | 109 | 
|2013                  |  |   | 69  | 
|2014                  |  |   | 58  | 
|2015                  |  |   | 20  | 
|2016                  |  |   | 20  | 
|Thereafter            |  |   | 70  | 
|                      |  |   |     | 
|Total                 |  | $ | 346 | 
|                      |  |   |     | 

Rental income from the leases for the years ended June 30, 2011 and 2010 was $81 thousand and $58
thousand, respectively.



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Note 9Deposits

Deposits were comprised of the following:



|                             |  |                |         |  |      |   |         | 
|---------------------------- |  | -------------- | ------- |  | ---- | - | ------- | 
|                             |  | June 30,       |        
|                             |  | 2011           |         |  | 2010 |  
|                             |  | (In thousands) |        
|Non-interest bearing demand  |  | $              | 29,468  |  |      | $ | 23,499  | 
|Interest bearing checking    |  |                | 57,314  |  |      |   | 63,145  | 
|Money market depoits         |  |                | 97,519  |  |      |   | 65,515  | 
|Savings                      |  |                | 5,709   |  |      |   | 6,232   | 
|Time certificates of deposit |  |                | 67,021  |  |      |   | 75,050  | 
|                             |  |                |         |  |      |   |         | 
|Total deposits               |  | $              | 257,031 |  |      | $ | 233,441 | 
|                             |  |                |         |  |      |   |         | 

The aggregate amount of time certificates of deposit in denominations of $100 thousand or more at
June 30, 2011 and 2010 was $30.6 million and $31.2 million, respectively. Accounts in the Bank are insured by the FDIC, generally up to a maximum of $250 thousand per separately insured depositor.

At June 30, 2011, the scheduled maturities of time deposits are as follows (in thousands):



|                      |  |   |        | 
|--------------------- |  | - | ------ | 
|Years ending June 30: |  |   |        | 
|2012                  |  | $ | 53,046 | 
|2013                  |  |   | 8,665  | 
|2014                  |  |   | 4,356  | 
|2015                  |  |   | 157    | 
|2016                  |  |   | 797    | 
|                      |  |   |        | 
|Total                 |  | $ | 67,021 | 
|                      |  |   |        | 

A summary of interest expense on deposits is as follows:



|                             |  |                      |       |  |      |   |       | 
|---------------------------- |  | -------------------- | ----- |  | ---- | - | ----- | 
|                             |  | Years Ended June 30, |      
|                             |  | 2011                 |       |  | 2010 |  
|                             |  | (In thousands)       |      
|Interest bearing checking    |  | $                    | 342   |  |      | $ | 418   | 
|Money markets deposits       |  |                      | 537   |  |      |   | 546   | 
|Savings and escrow           |  |                      | 31    |  |      |   | 34    | 
|Time certificates of deposit |  |                      | 1,713 |  |      |   | 2,595 | 
|                             |  |                      |       |  |      |   |       | 
|Balance at end of year       |  | $                    | 2,623 |  |      | $ | 3,593 | 
|                             |  |                      |       |  |      |   |       | 



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Note 10Federal Home Loan Bank Advances

The Company has a credit line with the Federal Home Loan Bank of Atlanta, with a maximum borrowing limit of 35% of the Banks total
assets, as determined on a quarterly basis. The maximum borrowing availability is also limited to 70% of the unpaid principal balance of qualifying one to four family first residential mortgage loans. The Federal Home Loan Bank of Atlanta has a
blanket floating lien on the Companys residential mortgage loan portfolio and Federal Home Loan Bank stock as collateral for the outstanding advances.

At June 30, 2011, the contractual maturities of advances are as follows (in thousands):



|                      |  |   |        | 
|--------------------- |  | - | ------ | 
|Years ending June 30: |  |   |        | 
|2012                  |  | $ | 2,500  | 
|2013                  |  |   | 8,000  | 
|2014                  |  |   |       | 
|2015                  |  |   | 4,118  | 
|2016                  |  |   |       | 
|Thereafter            |  |   | 15,000 | 
|                      |  |   |        | 
|Total                 |  | $ | 29,618 | 
|                      |  |   |        | 

At June 30, 2011 and 2010, interest rates on advances ranged from 0.83% to 5.15% and from 2.52% to
5.62%, respectively. At June 30, 2011 and 2010, the weighted average interest rate on advances was 3.90% and 4.17%, respectively.

At June 30, 2011, the Company had available additional unused Federal Home Loan Bank advances of approximately $39.5 million.

Note 11Securities Sold Under Agreements to Repurchase

Securities
sold under agreements to repurchase are classified as secured borrowings and are reflected at the amount of cash received in connection with the transaction. The repurchase agreements are secured by designated investment securities of the Company.
The investment securities related to the repurchase agreements are under the control of the Company.

On March 17, 2008,
the Company sold securities under an agreement to repurchase for $5.0 million, which is outstanding at June 30, 2011 and 2010. The stated repurchase date is March 17, 2013. At June 30, 2011 and 2010, the interest rate in effect was
3.23%. The repurchase agreement contains margin requirements which may require the Company to deliver additional securities or cash to the buyer should the repurchase obligation exceed 90% of the market value of the securities sold.

Other repurchase agreements generally mature within one business day from the transaction date and have a weighted average interest rate
of 0.58% and 0.65% at June 30, 2011 and 2010, respectively.

The total balance of repurchase agreements at June 30,
2011 and 2010 was $15.6 million and $20.3 million, respectively. The average balance of repurchase agreements at June 30, 2011 and 2010 was $17.3 million and $18.5 million, respectively. The maximum balance of repurchase agreements at any month
end for the years ended June 30, 2011 and 2010 is $23.4 million and $24.0 million respectively.



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Note 12Income Taxes

Income tax expense (benefit) consisted of the following components:



|                     |  |                      |      |   |      |   |      |  
|-------------------- |  | -------------------- | ---- | - | ---- | - | ---- | -
|                     |  | Years Ended June 30, |     
|                     |  | 2011                 |      |   | 2010 |  
|                     |  | (In thousands)       |     
|Federal:             |  |                      |      |   |      |   |      |  
|Current (refundable) |  | $                    | 503  |   |      | $ | (720 | )
|Deferred (benefit)   |  |                      | (144 | ) |      |   | 216  |  
|                     |  |                      |      |   |      |   |      |  
|Total Federal        |  |                      | 359  |   |      |   | (504 | )
|                     |  |                      |      |   |      |   |      |  
|State:               |  |                      |      |   |      |   |      |  
|Current (refundable) |  |                      | 44   |   |      |   | (76  | )
|Deferred benefit     |  |                      | (20  | ) |      |   | (59  | )
|                     |  |                      |      |   |      |   |      |  
|Total State          |  |                      | 24   |   |      |   | (135 | )
|                     |  |                      |      |   |      |   |      |  
|Total income taxes   |  | $                    | 383  |   |      | $ | (639 | )
|                     |  |                      |      |   |      |   |      |  

A reconciliation of the statutory income tax at a rate of 34% to the income tax expense (benefit)
included in the statements of operations is as follows:



|                                     |  |                      |      |   |      |  |      |  
|------------------------------------ |  | -------------------- | ---- | - | ---- |  | ---- | -
|                                     |  | Years Ended June 30, |     
|                                     |  | 2011                 |      |   | 2010 | 
|Federal income tax                   |  |                      | 34.0 | % |      |  | 34.0 | %
|Bank owned life insurance income     |  |                      | (8.3 | ) |      |  | 8.7  |  
|State tax, net of federal tax effect |  |                      | 1.3  |   |      |  | 6.6  |  
|Other                                |  |                      | 3.9  |   |      |  | (1.9 | )
|                                     |  |                      |      |   |      |  |      |  
|Effective income tax rate            |  |                      | 30.9 | % |      |  | 47.4 | %
|                                     |  |                      |      |   |      |  |      |  

The components of the net deferred tax asset are as follows:



|                                                  |  |                |       |   |      |   |      |  
|------------------------------------------------- |  | -------------- | ----- | - | ---- | - | ---- | -
|                                                  |  | June 30,       |      
|                                                  |  | 2011           |       |   | 2010 |  
|                                                  |  | (In thousands) |      
|Deferred tax assets:                              |  |                |       |   |      |   |      |  
|Allowance for loan losses                         |  | $              | 877   |   |      | $ | 679  |  
|Other                                             |  |                | 239   |   |      |   | 199  |  
|                                                  |  |                |       |   |      |   |      |  
|Total deferred tax assets                         |  |                | 1,116 |   |      |   | 878  |  
|                                                  |  |                |       |   |      |   |      |  
|Deferred tax liabilities:                         |  |                |       |   |      |   |      |  
|Unrealized gains on available for sale securities |  |                | (435  | ) |      |   | (475 | )
|Depreciation                                      |  |                | (327  | ) |      |   | (243 | )
|Other                                             |  |                | (94   | ) |      |   | (104 | )
|                                                  |  |                |       |   |      |   |      |  
|Total deferred tax liabilities                    |  |                | (856  | ) |      |   | (822 | )
|                                                  |  |                |       |   |      |   |      |  
|Net deferred tax asset                            |  | $              | 260   |   |      | $ | 56   |  
|                                                  |  |                |       |   |      |   |      |  

In assessing whether the Company will be able to realize the deferred tax assets, the Company considers
whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.



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Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company believes it is more
likely than not the benefits of these deductible differences will be realized. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced. There was no
valuation allowance for deferred tax assets as of June 30, 2011 and 2010.

As of June 30, 2011, the Company did not
have any uncertain tax positions. Interest and penalties associated with tax liabilities would be classified as additional income taxes in the statement of operations. As of June 30, 2011, tax years ended June 30, 2008 through
June 30, 2011 remain open and are subject to Federal and State taxing authority examination.

Note 13Off Balance Sheet
Activities

The Company is a party to credit related financial instruments with off-balance-sheet risk in the normal course
of business to meet the financing needs of its customers. These financial instruments include commitments to grant loans, unfunded commitments under lines of credit and letters of credit. Such commitments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the statement of condition.

The Companys exposure
to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments.

The following financial instruments were outstanding whose contract amounts represent credit risk:



|                                           |  |                |        |  |      |   |        | 
|------------------------------------------ |  | -------------- | ------ |  | ---- | - | ------ | 
|                                           |  | June 30,       |       
|                                           |  | 2011           |        |  | 2010 |  
|                                           |  | (In thousands) |       
|Commitments to grant loans                 |  | $              | 9,852  |  |      | $ | 21,733 | 
|Unfunded commitments under lines of credit |  |                | 46,109 |  |      |   | 48,675 | 
|Letters of credit                          |  |                | 471    |  |      |   | 664    | 
|                                           |  |                |        |  |      |   |        | 
|Total                                      |  | $              | 56,432 |  |      | $ | 71,072 | 
|                                           |  |                |        |  |      |   |        | 

Fixed and variable rate commitments to grant loans were $4.2 million and $5.7 million, respectively, at
June 30, 2011.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments may expire without being drawn upon. Therefore, the total commitment amounts do
not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on managements credit evaluation of the customer. Collateral consists primarily of real estate.

Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to support public and private borrowing arrangements and similar transactions. The terms of the letters of credit vary and may have renewal features. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending loans to customers. The Company holds collateral supporting those commitments for which collateral is deemed necessary. Management believes that the proceeds obtained through a liquidation of
such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. The current amount of the liability at June 30, 2011 and 2010 for guarantees under letters of credit
issued is not material.



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The Company has not been required to perform on any financial guarantees and has not
incurred any losses on its commitments, during the past two years.

Note 14Legal Contingencies

Various legal claims arise from time to time in the normal course of business which, in the opinion of Management, will not have a
material effect on the Companys consolidated financial statements.

Note 15Regulatory Matters and Capital Requirements

Federal banking regulations place certain restrictions on dividends paid to OBA Financial Services, Inc. by the Bank, and
loans or advances made by the Bank to OBA Financial Services, Inc. The total amount of dividends which may be paid at any date is generally limited to retained net income of the Bank for the current and preceding two years. Loans and advances are
limited to 10% of the Banks capital and surplus on a secured basis.

Based on the Banks retained net income, at
June 30, 2011, the Banks retained earnings available for the payment of dividends was $0. Funds available for loans or advances amounted to approximately $6.1 million at June 30, 2011.

In addition, the payment of dividends by the Bank would be prohibited if the effect thereof would cause the Banks capital to be
reduced below minimum capital requirements or if the dividends would reduce equity capital below the required liquidation account amount previously discussed in Note 1.

OBA Financial Services, Inc. ability to pay dividends is dependent on the Banks ability to pay dividends to OBA Financial Services, Inc.

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Companys financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting
practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital to risk
weighted assets, core capital to adjusted tangible assets and tangible capital to tangible assets. Management believes, as of June 30, 2011, the Bank met all capital adequacy requirements to which it is subject.



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As of June 30, 2011, the most recent notification from the Banks regulators
categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum ratios as set forth in the following table. There are no conditions or
events since the notification that management believes have changed the Banks category. The Banks actual capital amounts and ratios as of June 30, 2011 and 2010 are presented in the table below.



|                                               |  |        |        |  |                              |  |       |                                                               |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|---------------------------------------------- |  | ------ | ------ |  | ---------------------------- |  | ----- | ------------------------------------------------------------- |  | - | ------ |  |  | ------ | ---- | - | ----- | - | ------ |  |  |  | ----- | -
|                                               |  | Actual |        |  | For Capital AdequacyPurposes |  |       | To be WellCapitalized underPrompt CorrectiveAction Provisions | 
|                                               |  | Amount |        |  | Ratio                        |  |       | Amount                                                        |  |   | Ratio  |  |  | Amount |      |   | Ratio |  
|As of June 30, 2011:                           |  |        |        |  |                              |  |       |                                                               |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Total capital (to risk weighted assets)        |  | $      | 60,639 |  |                              |  | 24.40 | %                                                             |  | $ | 19,885 |  |  |        | 8.00 | % |       | $ | 24,856 |  |  |  | 10.00 | %
|Tier 1 capital (to risk weighted assets)       |  |        | 58,393 |  |                              |  | 23.49 |                                                               |  |   | 9,942  |  |  |        | 4.00 |   |       |   | 14,913 |  |  |  | 6.00  |  
|Core capital (to adjusted tangible assets)     |  |        | 58,393 |  |                              |  | 15.15 |                                                               |  |   | 15,413 |  |  |        | 4.00 |   |       |   | 19,267 |  |  |  | 5.00  |  
|Tangible capital (to adjusted tangible assets) |  |        | 58,393 |  |                              |  | 15.15 |                                                               |  |   | 7,707  |  |  |        | 2.00 |   |       |   | NA     |  |  |  | NA    |  
|As of June 30, 2010:                           |  |        |        |  |                              |  |       |                                                               |  |   |        |  |  |        |      |   |       |   |        |  |  |  |       |  
|Total capital (to risk weighted assets)        |  | $      | 58,995 |  |                              |  | 25.44 | %                                                             |  | $ | 18,549 |  |  |        | 8.00 | % |       | $ | 23,186 |  |  |  | 10.00 | %
|Tier 1 capital (to risk weighted assets)       |  |        | 57,258 |  |                              |  | 24.69 |                                                               |  |   | 9,274  |  |  |        | 4.00 |   |       |   | 13,912 |  |  |  | 6.00  |  
|Core capital (to adjusted tangible assets)     |  |        | 57,258 |  |                              |  | 15.36 |                                                               |  |   | 14,915 |  |  |        | 4.00 |   |       |   | 18,644 |  |  |  | 5.00  |  
|Tangible capital (to adjusted tangible assets) |  |        | 57,258 |  |                              |  | 15.36 |                                                               |  |   | 7,458  |  |  |        | 2.00 |   |       |   | NA     |  |  |  | NA    |  

The following table presents a reconciliation of the Companys consolidated equity as determined
using U.S. GAAP and the Banks regulatory capital amounts:



|                                                             |  |                |         |   |      |   |         |  
|------------------------------------------------------------ |  | -------------- | ------- | - | ---- | - | ------- | -
|                                                             |  | June 30,       |        
|                                                             |  | 2011           |         |   | 2010 |  
|                                                             |  | (In thousands) |        
|Consolidated GAAP equity                                     |  | $              | 80,860  |   |      | $ | 80,222  |  
|Consolidated equity in excess of Bank equity                 |  |                | (21,788 | ) |      |   | (22,219 | )
|                                                             |  |                |         |   |      |   |         |  
|Bank GAAP equity                                             |  |                | 59,072  |   |      |   | 58,003  |  
|Accumulated other comprehensive (income) loss, net of tax    |  |                | (679    | ) |      |   | (743    | )
|Intangible asset                                             |  |                |        |   |      |   | (2      | )
|                                                             |  |                |         |   |      |   |         |  
|Tangible capital, core capital and Tier I risk-based capital |  |                | 58,393  |   |      |   | 57,258  |  
|Allowance for loan losses                                    |  |                | 2,246   |   |      |   | 1,737   |  
|                                                             |  |                |         |   |      |   |         |  
|Total risk-based capital                                     |  | $              | 60,639  |   |      | $ | 58,995  |  
|                                                             |  |                |         |   |      |   |         |  

Note 16Employee Benefit Plan

The Company has a 401(k) Plan in which substantially all employees participate. Employees may contribute up to 15% of their compensation subject to certain limits based on federal tax laws. The Company
makes matching contributions equal to 3% of all eligible employees compensation under the Plans safe harbor provisions. The Company may also make additional discretionary contributions up to 15% of an employees annual compensation.
Company contributions vest to the employee over a five-year period. Company contributions are reduced by any forfeitures. For the years ended June 30, 2011 and 2010, expense attributable to the Plan amounted to $110 thousand and $122 thousand,
respectively.



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Note 17Employee Stock Ownership Plan

Effective January 1, 2010, the Company adopted an Employee Stock Ownership Plan (ESOP) for eligible employees. The ESOP
borrowed $3.7 million from the Company and used those funds to acquire 370,300 shares or 8% of the total number of shares issued by the Company in its initial public offering. The shares were acquired at a price of $10.00 per share.

The loan is secured by the shares purchased with the loan proceeds and will be repaid by the ESOP over the 20-year term of the loan with
funds from OBA Banks contributions to the ESOP and dividends payable on stock, if any. The interest rate on the ESOP loan is an adjustable rate equal to the lowest Prime rate, as published in The Wall Street Journal. The interest rate will
adjust annually and will be the Prime rate on the first business day of the calendar year.

Shares purchased by the ESOP will
be held by a trustee in an unallocated suspense account, and shares will be released annually from the suspense account on a pro-rata basis as principal and interest payments are made by the ESOP to the Company. The trustee will allocate the shares
released among participants on the basis of each participants proportional share of compensation relative to all participants. As shares are committed to be released from the suspense account, OBA Bank reports compensation expense based on the
average fair value of shares committed to be released with a corresponding credit to stockholders equity. Compensation expense recognized for the years ended June 30, 2011and June 30, 2010 amounted to $241 thousand and $100 thousand,
respectively.

Shares held by the ESOP trust at June 30, 2011 and 2010 were as follows:



|                                               |  |          |         |  |      |   |         | 
|---------------------------------------------- |  | -------- | ------- |  | ---- | - | ------- | 
|                                               |  | June 30, |        
|                                               |  | 2011     |         |  | 2010 |  
|Allocated shares                               |  |          | 27,773  |  |      |   | 9,258   | 
|Unallocated shares                             |  |          | 342,527 |  |      |   | 361,042 | 
|                                               |  |          |         |  |      |   |         | 
|Total ESOP shares                              |  |          | 370,300 |  |      |   | 370,300 | 
|                                               |  |          |         |  |      |   |         | 
|Fair value of unallocated shares, in thousands |  | $        | 5,069   |  |      | $ | 4,018   | 
|                                               |  |          |         |  |      |   |         | 

Note 18Earnings Per Share

Basic earnings per share are computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Unallocated ESOP shares are
excluded from this calculation. For the years ended June 30, 2011 and 2010, the Company had no common stock equivalents outstanding. Earnings per common share for fiscal years 2011 and 2010 are determined as follows:



|                                              |  |          |           |  |      |   |           |  
|--------------------------------------------- |  | -------- | --------- |  | ---- | - | --------- | -
|                                              |  | June 30, |          
|                                              |  | 2011     |           |  | 2010 |  
|(Dollars in thousands, except per share data) |  |          |           |  |      |  
|Basic/diluted:                                |  |          |           |  |      |   |           |  
|Net Income (loss)                             |  | $        | 857       |  |      | $ | (710      | )
|                                              |  |          |           |  |      |   |           |  
|Basic/diluted shares:                         |  |          |           |  |      |   |           |  
|Weighted average common shares outstanding(1) |  |          | 4,273,799 |  |      |   | 4,261,124 |  
|                                              |  |          |           |  |      |   |           |  
|Net income (loss) per share, basic/diluted    |  | $        | 0.20      |  |      | $ | (0.17     | )
|                                              |  |          |           |  |      |   |           |  



|(1) | Fiscal year 2010 calculated from the effective date of January 21, 2010 to the period end.
|--- | ------------------------------------------------------------------------------------------



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Note 19Related Party Transactions

In the ordinary course of business, the Company has granted loans to executive officers and directors and their affiliates amounting to
$166 thousand and $226 thousand at June 30, 2011 and 2010, respectively. During the year ended June 30, 2011, there were no principal additions and total principal payments were $60 thousand.

Deposits from related parties held by the Company at June 30, 2011 and 2010 amounted to $739 thousand and $752 thousand,
respectively.

Note 20Fair Value

Management uses its best judgment in estimating the fair value of the Companys assets and liabilities; however, there are inherent weaknesses in any estimation technique. Therefore, for
substantially all assets and liabilities, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured
as of their respective year-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these assets and liabilities subsequent to the
respective reporting dates may be different than the amounts reported at each year-end. A fair value hierarchy that prioritizes the inputs to valuation methods is used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:



|         |  |                                                                                                                                                                                 
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1: |  | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.                                       
|         | 
|Level 2: |  | Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or
liability.           
|         | 
|Level 3: |  | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market
activity).

An assets or liabilitys level within the fair value hierarchy is based on the lowest level of
input that is significant to the fair value measurement.

For assets measured at fair value on a recurring basis, the fair
value measurements by level within the fair value hierarchy used at June 30, 2011 and 2010 are as follows:



|                                       |  |              |        |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |     | 
|-------------------------------------- |  | ------------ | ------ |  | --------------------------------------------------------- | - | - | ----------------------------------------- |  | - | -------------------------------------- |  |  | - | --- | 
|(In thousands)                         |  |              |        |  |                                                           |   |   |                                           |  |   |                                        | 
|Description                            |  | June 30,2011 |        |  | (Level 1)Quoted Pricesin
ActiveMarkets forIdenticalAssets |   |   | (Level 2)SignificantOtherObservableInputs |  |   | (Level 3)SignificantUnobservableInputs | 
|Residential mortgage-backed securities |  | $            | 35,663 |  |                                                           | $ |  |                                           |  | $ | 35,663                                 |  |  | $ |    | 
|Trust preferred securities             |  |              | 115    |  |                                                           |   |  |                                           |  |   |                                       |  |  |   | 115 | 
|Equity securities                      |  |              | 50     |  |                                                           |   |  |                                           |  |   | 50                                     |  |  |   |    | 
|                                       |  |              |        |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |     | 
|Securities available for sale          |  | $            | 35,828 |  |                                                           | $ |  |                                           |  | $ | 35,713                                 |  |  | $ | 115 | 
|                                       |  |              |        |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |     | 



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|                                       |  |              |        |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |     | 
|-------------------------------------- |  | ------------ | ------ |  | --------------------------------------------------------- | - | - | ----------------------------------------- |  | - | -------------------------------------- |  |  | - | --- | 
|                                       |  |              |        | 
|Description                            |  | June 30,2010 |        |  | (Level 1)Quoted Pricesin ActiveMarkets forIdenticalAssets |   |   | (Level 2)SignificantOtherObservableInputs |  |   | (Level 3)SignificantUnobservableInputs | 
|Residential mortgage-backed securities |  | $            | 29,187 |  |                                                           | $ |  |                                           |  | $ | 29,187                                 |  |  | $ |    | 
|Trust preferred securities             |  |              | 109    |  |                                                           |   |  |                                           |  |   |                                       |  |  |   | 109 | 
|Equity securities                      |  |              | 50     |  |                                                           |   |  |                                           |  |   | 50                                     |  |  |   |    | 
|                                       |  |              |        |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |     | 
|Securities available for sale          |  | $            | 29,346 |  |                                                           | $ |  |                                           |  | $ | 29,237                                 |  |  | $ | 109 | 
|                                       |  |              |        |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |     | 

The following table presents a reconciliation of the securities available for sale measured at fair value
on a recurring basis using significant unobservable inputs (Level 3):



|                                                                               |  |                              |     |   |      |   |        |  
|------------------------------------------------------------------------------ |  | ---------------------------- | --- | - | ---- | - | ------ | -
|                                                                               |  | For the Years Ended June 30, |    
|(In thousands)                                                                 |  | 2011                         |     |   | 2010 |  
|Beginning balance                                                              |  | $                            | 109 |   |      | $ | 677    |  
|Principal repayments                                                           |  |                              | (17 | ) |      |   | (27    | )
|Sale of securities                                                             |  |                              |    |   |      |   | (97    | )
|Unrealized losses included in non-interest income (loss)                       |  |                              |    |   |      |   | (1,882 | )
|Portion of unrealized losses previously included in other comprehensive income |  |                              |    |   |      |   | 1,370  |  
|Unrealized gains included in other comprehensive income (loss)                 |  |                              | 23  |   |      |   | 68     |  
|                                                                               |  |                              |     |   |      |   |        |  
|Ending balance                                                                 |  | $                            | 115 |   |      | $ | 109    |  
|                                                                               |  |                              |     |   |      |   |        |  

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within
the fair value hierarchy used at June 30, 2011 and 2010 are as follows:



|                  |  |              |       |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |       | 
|----------------- |  | ------------ | ----- |  | --------------------------------------------------------- | - | - | ----------------------------------------- |  | - | -------------------------------------- |  |  | - | ----- | 
|(In thousands)    |  |              |       |  |                                                           |   |   |                                           |  |   |                                        | 
|Description       |  | June 30,2011 |       |  | (Level 1)Quoted Pricesin
ActiveMarkets forIdenticalAssets |   |   | (Level 2)SignificantOtherObservableInputs |  |   | (Level 3)SignificantUnobservableInputs | 
|Impaired loans    |  | $            | 607   |  |                                                           | $ |  |                                           |  | $ |                                       |  |  | $ | 607   | 
|                  |  |              |       |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |       | 
|Real estate owned |  | $            | 105   |  |                                                           | $ |  |                                           |  | $ |                                       |  |  | $ | 105   | 
|                  |  |              |       |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |       | 
|                  |  |              |       | 
|Description       |  | June 30,2010 |       |  | (Level 1)Quoted Pricesin ActiveMarkets forIdenticalAssets |   |   | (Level 2)SignificantOtherObservableInputs |  |   | (Level 3)SignificantUnobservableInputs | 
|Impaired loans    |  | $            | 1,993 |  |                                                           | $ |  |                                           |  | $ |                                       |  |  | $ | 1,993 | 
|                  |  |              |       |  |                                                           |   |   |                                           |  |   |                                        |  |  |   |       | 

The methods and assumptions used to estimate the fair values included in the above tables are included in
the disclosures that follow.



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The following information should not be interpreted as an estimate of the fair value of the
entire Company since a fair value calculation is only provided for a limited portion of the Companys assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons
between the Companys disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of certain Company assets and liabilities at June 30, 2011 and 2010:

Cash and Cash Equivalents (Carried at Cost)

The carrying amounts of cash and short-term instruments approximate fair value.

Interest-Bearing Deposits in Banks (Carried at Cost)

The carrying amounts of interest-bearing deposits approximate fair value based on the short term nature of the assets.

Securities Available for Sale (Carried at Fair Value)

The fair values of securities available for sale, excluding trust preferred securities, are determined by obtaining quoted market prices
on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific
securities but rather by relying on the securities relationship to other benchmark quoted prices.

The market for pooled
trust preferred securities is inactive. A significant widening of the bid/ask spreads in the markets in which these securities trade was followed by a significant decrease in the volume of trades relative to historical levels. The new issue market
is also inactive and no new pooled trust preferred securities have been issued since 2007. Since there were limited observable market-based Level 1 and Level 2 inputs for trust preferred securities, the fair value of these securities was estimated
using primarily unobservable Level 3 inputs. Fair value estimates for trust preferred securities were based on discounting expected cash flows using a risk-adjusted discount rate. The Company develops the risk-adjusted discount rate by considering
the time value of money (risk-free rate) adjusted for an estimated risk premium for bearing the uncertainty in future cash flows and, given current adverse market conditions, a liquidity adjustment based on an estimate of the premium that a market
participant would require assuming an orderly transaction.

Securities Held to Maturity (Carried at Amortized Cost)

The fair values of securities held to maturity are determined by obtaining quoted market prices on nationally
recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but
rather by relying on the securities relationship to other benchmark quoted prices.

Federal Home Loan Bank Stock
(Carried at Cost)

The carrying amount of Federal Home Loan Bank stock approximates fair value, and considers the
limited marketability of such securities.

Loans Receivable (Carried at Cost)

The fair values of loans are estimated using discounted cash flow analyses, using market rates at the statement of condition date that
reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that
reprice frequently and with no significant change in credit risk, fair values are based on carrying values.



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Impaired Loans (Generally Carried at Fair Value)

Impaired loans are those which the Company has measured impairment generally based on the fair value of the loans collateral. Fair
value of real estate collateral is generally determined based upon independent third-party appraisals of the properties, which consider sales prices of similar properties in the proximate vicinity or by discounting expected cash flows from the
properties by an appropriate risk adjusted discount rate. Fair value of collateral other than real estate is based on an estimate of the liquidation proceeds. Impaired loans are included as Level 3 fair values, based upon the lowest level of input
that is significant to the fair value measurements. The fair value consists of the loan balances net of a valuation allowance.

Foreclosed Assets (Carried at Lower of Cost or Fair Value Less Estimated Selling Costs)

Fair values of foreclosed assets are based on independent third party appraisals of the properties or discounted cash flows based upon the
expected sales proceeds upon disposition of the assets. These values were generally determined based on the sales prices of similar properties in the proximate vicinity. These assets are included as Level 3 fair values, based upon the lowest
level of input that is significant to the fair value measurements.

Mortgage Servicing Rights (Carried at Lower of Cost
or Fair Value)

At origination, the Company estimates the fair value of mortgage servicing rights at 1% of the
principal balances of loans sold and amortizes that amount over the estimated period of servicing revenues or charges the entire amount to income upon prepayment of the related loan. Due to the small size of the balance of mortgage servicing rights
at June 30, 2011 and 2010, the Company did not perform any further analysis or estimate of their fair values. Therefore, the Company has disclosed that the carrying amounts of mortgage servicing rights approximate fair value.

Deposit Liabilities (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on
demand at the reporting date (i.e., their carrying amounts). Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a
schedule of aggregated expected monthly maturities.

Federal Home Loan Bank Advances (Carried at Cost)

Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB
advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Securities Sold Under Agreements to Repurchase (Carried at Cost)

The carrying amounts of securities sold under agreements to repurchase approximate fair value for short-term obligations. The fair values
for longer term repurchase agreements are based on current market interest rates for similar transactions.

Accrued
Interest Receivable and Payable (Carried at Cost)

The carrying amounts of accrued interest approximate fair value.

Off-Balance-Sheet Credit-Related Instruments (Disclosures at Cost)

Fair values for off-balance-sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in
the market to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties credit standing. The fair value of these instruments is not material.



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The estimated fair values of the Companys financial instruments were as follows:



|                                               |  |                |         |  |               |   |         |                |  |   |           |  |  |   |         | 
|---------------------------------------------- |  | -------------- | ------- |  | ------------- | - | ------- | -------------- |  | - | --------- |  |  | - | ------- | 
|                                               |  | June 30, 2011  |         |  | June 30, 2010 |  
|                                               |  | CarryingAmount |         |  | FairValue     |   |         | CarryingAmount |  |   | FairValue | 
|                                               |  | (In thousands) |        
|Financial assets:                              |  |                |         |  |               |   |         |                |  |   |           |  |  |   |         | 
|Cash and cash equivalents                      |  | $              | 37,968  |  |               | $ | 37,968  |                |  | $ | 36,046    |  |  | $ | 36,046  | 
|Interest bearing deposits with other banks     |  |                | 7,058   |  |               |   | 7,058   |                |  |   | 5,072     |  |  |   | 5,072   | 
|Securities available for sale                  |  |                | 35,828  |  |               |   | 35,828  |                |  |   | 29,346    |  |  |   | 29,346  | 
|Securities held to maturity                    |  |                | 3,623   |  |               |   | 3,795   |                |  |   | 4,637     |  |  |   | 4,809   | 
|Federal Home Loan Bank stock                   |  |                | 2,987   |  |               |   | 2,987   |                |  |   | 3,883     |  |  |   | 3,883   | 
|Loans receivable, net                          |  |                | 279,620 |  |               |   | 288,282 |                |  |   | 276,098   |  |  |   | 283,876 | 
|Accrued interest receivable                    |  |                | 1,208   |  |               |   | 1,208   |                |  |   | 1,206     |  |  |   | 1,206   | 
|Mortgage servicing rights                      |  |                | 88      |  |               |   | 88      |                |  |   | 63        |  |  |   | 63      | 
|Financial liabilities:                         |  |                |         |  |               |   |         |                |  |   |           |  |  |   |         | 
|Deposits                                       |  |                | 257,031 |  |               |   | 257,981 |                |  |   | 233,441   |  |  |   | 235,186 | 
|Securities sold under agreements to repurchase |  |                | 15,566  |  |               |   | 15,780  |                |  |   | 20,292    |  |  |   | 20,539  | 
|Federal Home Loan Bank Advances                |  |                | 29,618  |  |               |   | 32,241  |                |  |   | 36,834    |  |  |   | 39,929  | 
|Accrued interest payable                       |  |                | 276     |  |               |   | 276     |                |  |   | 241       |  |  |   | 241     | 
|Off-Balance sheet financial instruments        |  |                |        |  |               |   |        |                |  |   |          |  |  |   |        | 

Note 21Parent Company Only Financial Information

Presented below are the condensed balance sheets, statements of operations and statements of cash flows for OBA Financial Services, Inc.

CONDENSED BALANCE SHEETS



|                                           |  |                |        |   |              |   |        |  
|------------------------------------------ |  | -------------- | ------ | - | ------------ | - | ------ | -
|                                           |  | June 30,2011   |        |   | June 30,2010 |  
|                                           |  | (In thousands) |       
|Assets:                                    |  |                |        |   |              |   |        |  
|Cash and due from bank                     |  | $              | 18,004 |   |              | $ | 18,400 |  
|Note receivable ESOP                       |  |                | 3,562  |   |              |   | 3,703  |  
|Investment in bank subsidiary              |  |                | 59,072 |   |              |   | 58,003 |  
|Other assets                               |  |                | 222    |   |              |   | 116    |  
|                                           |  |                |        |   |              |   |        |  
|Total assets                               |  | $              | 80,860 |   |              | $ | 80,222 |  
|                                           |  |                |        |   |              |   |        |  
|Stockholders Equity:                      |  |                |        |   |              |   |        |  
|Common stock                               |  | $              | 46     |   |              | $ | 46     |  
|Additional paid-in capital                 |  |                | 44,419 |   |              |   | 44,759 |  
|Unearned ESOP shares                       |  |                | (3,425 | ) |              |   | (3,610 | )
|Retained earnings                          |  |                | 39,141 |   |              |   | 38,284 |  
|Accumulated other comprehensive income     |  |                | 679    |   |              |   | 743    |  
|                                           |  |                |        |   |              |   |        |  
|Total stockholders equity                 |  |                | 80,860 |   |              |   | 80,222 |  
|                                           |  |                |        |   |              |   |        |  
|Total liabilities and stockholders equity |  | $              | 80,860 |   |              | $ | 80,222 |  
|                                           |  |                |        |   |              |   |        |  



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CONDENSED STATEMENTS OF OPERATIONS



|                                                                                                     |  |                      |     |   |      |   |      |  
|---------------------------------------------------------------------------------------------------- |  | -------------------- | --- | - | ---- | - | ---- | -
|                                                                                                     |  | Years Ended June 30, |    
|                                                                                                     |  | 2011                 |     |   | 2010 |  
|                                                                                                     |  | (In thousands)       |    
|Interest income on note receivable                                                                   |  | $                    | 120 |   |      | $ | 52   |  
|Dividends from bank subsidiary                                                                       |  |                      |    |   |      |   |     |  
|                                                                                                     |  |                      |     |   |      |   |      |  
|Total income                                                                                         |  |                      | 120 |   |      |   | 52   |  
|                                                                                                     |  |                      |     |   |      |   |      |  
|Operating expenses                                                                                   |  |                      | 154 |   |      |   | 10   |  
|                                                                                                     |  |                      |     |   |      |   |      |  
|Income (loss) before income tax expense (benefit) and equity in net income (loss) of bank subsidiary |  |                      | (34 | ) |      |   | 42   |  
|Income tax expense (benefit)                                                                         |  |                      |    |   |      |   | 16   |  
|                                                                                                     |  |                      |     |   |      |   |      |  
|Income (loss) before equity in net income (loss) of bank subsidiary                                  |  |                      | (34 | ) |      |   | 26   |  
|Equity in net income (loss) of bank subsidiary                                                       |  |                      | 891 |   |      |   | (736 | )
|                                                                                                     |  |                      |     |   |      |   |      |  
|Net income (loss)                                                                                    |  | $                    | 857 |   |      | $ | (710 | )
|                                                                                                     |  |                      |     |   |      |   |      |  

CONDENSED STATEMENTS OF CASH FLOWS



|                                                                                     |  |                      |        |   |      |   |         |  
|------------------------------------------------------------------------------------ |  | -------------------- | ------ | - | ---- | - | ------- | -
|                                                                                     |  | Years Ended June 30, |       
|                                                                                     |  | 2011                 |        |   | 2010 |  
|                                                                                     |  | (In thousands)       |       
|Operating activities:                                                                |  |                      |        |   |      |   |         |  
|Net income (loss)                                                                    |  | $                    | 857    |   |      | $ | (710    | )
|                                                                                     |  |                      |        |   |      |   |         |  
|Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |                      |        |   |      |   |         |  
|Equity in net income (loss) of subsidiary                                            |  |                      | (891   | ) |      |   | 736     |  
|Increase in other assets                                                             |  |                      | (107   | ) |      |   | (109    | )
|                                                                                     |  |                      |        |   |      |   |         |  
|Total adjustments                                                                    |  |                      | (998   | ) |      |   | 627     |  
|                                                                                     |  |                      |        |   |      |   |         |  
|Net cash used in operating activities                                                |  |                      | (141   | ) |      |   | (83     | )
|                                                                                     |  |                      |        |   |      |   |         |  
|Investing activities:                                                                |  |                      |        |   |      |   |         |  
|Investment in bank subsidiary                                                        |  |                      |       |   |      |   | (22,627 | )
|ESOP loan principal collections                                                      |  |                      | 141    |   |      |   |        |  
|                                                                                     |  |                      |        |   |      |   |         |  
|Net cash provided by (used in) investing activities                                  |  |                      | 141    |   |      |   | (22,627 | )
|                                                                                     |  |                      |        |   |      |   |         |  
|Financing activities:                                                                |  |                      |        |   |      |   |         |  
|Proceeds from issuance of common stock, net of costs                                 |  |                      |       |   |      |   | 41,095  |  
|Purchases of Company stock                                                           |  |                      | (396   | ) |      |   |        |  
|                                                                                     |  |                      |        |   |      |   |         |  
|Net cash provided by (used in) financing activities                                  |  |                      | (396   | ) |      |   | 41,095  |  
|                                                                                     |  |                      |        |   |      |   |         |  
|Increase (decrease) in cash equivalents                                              |  |                      | (396   | ) |      |   | 18,385  |  
|Cash and cash equivalents at beginning of year                                       |  |                      | 18,400 |   |      |   | 15      |  
|                                                                                     |  |                      |        |   |      |   |         |  
|Cash and cash equivalents at end of year                                             |  | $                    | 18,004 |   |      | $ | 18,400  |  
|                                                                                     |  |                      |        |   |      |   |         |  

Supplemental disclosure of non cash financing activities:

During January 2010, the Company loaned $3.7 million to the Employee Stock Ownership Plan, which was used to acquire 370,300 shares of the
Companys stock. The loan is secured by the shares purchased and is shown as unearned ESOP shares in the consolidated statement of condition.



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Note 22 Subsequent Events

Equity Incentive Plan.In May 2011, the Companys stockholders approved the OBA Financial Services, Inc. 2011 Equity
Incentive Plan. Stockholders approved the issuance of a total of 648,025 shares under the plan. Grants under the plan were issued on July 21, 2011. A total of 75,000 stock options and 69,629 shares of restricted stock were granted to directors.
In addition, a total of 185,150 stock options and 166,636 shares of restricted stock were granted to officers, including 111,090 performance-based shares of restricted stock. The performance measures are annual increases in tangible book
value per share, as calculated in each individuals award agreement.

Arundel Mills branch lease.The Bank
entered into a lease agreement to open its sixth branch located in Anne Arundel County, Maryland. The lease expiration date is November 30, 2021. The branch is expected to open in the fall of 2011.



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|ITEM 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

None.



|ITEM 9A. | Controls and Procedures
|-------- | -----------------------

(a) An evaluation was performed under the supervision and with the participation of the Companys management, including the President
and Chief Executive Officer and the Senior Vice President and Treasurer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities
and Exchange Act of 1934, as amended) as of June 30, 2011. Based on that evaluation, the Companys management, including the Chairman of the Board, President and Chief Executive Officer and the Senior Vice President and Treasurer,
concluded that the Companys disclosure controls and procedures were effective.

During the quarter ended June 30,
2011, there have been no changes in the Companys internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

(b) Managements annual report on internal control over financial reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.

The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Companys internal control over financial
reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Companys assets that could have a material effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

Management, including the principal
executive officer and principal financial officer, assessed the effectiveness of the Companys internal control over financial reporting as of June 30, 2011, based on the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on such assessment, management believes that, as of June 30, 2011, the Companys internal control over financial reporting is
effective, based on those criteria.

This annual report does not include an attestation report of the Companys
independent registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys independent registered public accounting firm pursuant to
provisions of the Dodd-Frank Act that permit the Company to provide only managements report in this annual report.



|ITEM 9B. | Other Information
|-------- | -----------------

None.



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PART III



|ITEM 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

OBA Financial Services, Inc. has adopted a Code of Ethics that applies to OBA Financial Services, Inc.s principal executive officer, principal financial officer, principal accounting officer or
controller or persons performing similar functions. The Code of Ethics can be accessed on OBA Financial Services, Inc.s website at www.obabank.com.

Information concerning directors and executive officers of OBA Financial Services, Inc. is incorporated herein by reference from the Companys definitive Proxy Statement for the 2011 Annual Meeting
of Stockholders (the Proxy Statement), specifically the section captioned Proposal IElection of Directors.



|ITEM 11. | Executive Compensation
|-------- | ----------------------

Information concerning executive compensation is incorporated herein by reference from the Proxy Statement, specifically the section
captioned Proposal IElection of Directors.



|ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

Information concerning security ownership of certain owners and management is incorporated herein by reference from the Proxy Statement,
specifically the sections captioned Voting Securities and Principal Holders Thereof and Proposal IElection of Directors.



|ITEM 13. | Certain Relationships and Related Transactions, and Director Independence
|-------- | -------------------------------------------------------------------------

Information concerning relationships and transactions is incorporated herein by reference from the Proxy Statement, specifically the sections captioned Proposal IElection of Directors
and Transactions with Certain Related Persons.



|ITEM 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

Information concerning principal accountant fees and services is incorporated herein by reference from the Companys Proxy Statement, specifically the section captioned Proposal
IIRatification of Appointment of Independent Registered Public Accounting Firm.



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PART IV



|ITEM 15. | Exhibits
|-------- | --------



|     |  |                                                                                                                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Articles of Incorporation of OBA Financial Services, Inc.*                                                                                                                                  
|     | 
|3.2  |  | Amended and Restated Bylaws of OBA Financial Services, Inc.***                                                                                                                              
|     | 
|3.3  |  | Articles of Amendment to Articles of Incorporation of OBA Financial Services, Inc.*                                                                                                         
|     | 
|4    |  | Form of Common Stock Certificate of OBA Financial Services, Inc.*                                                                                                                           
|     | 
|10.1 |  | Employment Agreement between OBA Bancorp, Inc., OBA Bank and Charles E. Weller*                                                                                                             
|     | 
|10.2 |  | Change in Control Agreement between OBA Bank and David A. Miller**                                                                                                                          
|     | 
|10.3 |  | OBA Bank Employee Stock Ownership Plan*                                                                                                                                                     
|     | 
|10.4 |  | Form of Split Dollar Insurance Agreement*                                                                                                                                                   
|     | 
|10.5 |  | Incentive Compensation Program2009 to 2010*                                                                                                                                                
|     | 
|10.6 |  | Incentive Compensation Program2010 to 2011*                                                                                                                                                
|     | 
|10.7 |  | Employment Agreement between OBA Financial Services, Inc. and Charles E. Weller****                                                                                                         
|     | 
|10.8 |  | OBA Financial Services, Inc. 2011 Equity Incentive Plan*****                                                                                                                                
|     | 
|16   |  | Letter Regarding Change in Certifying Accountant*                                                                                                                                           
|     | 
|21   |  | Subsidiaries of Registrant*                                                                                                                                                                 
|     | 
|23   |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                    
|     | 
|31.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
|     | 
|32   |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002               



|* | Incorporated by reference to the Registration Statement on Form S-1 (file no. 333-161898), initially filed September 14, 2009.
|- | ------------------------------------------------------------------------------------------------------------------------------

|** | Incorporated by reference to the Current Report on Form 8-K (file no. 1-34593), filed March 19, 2010.
|-- | -----------------------------------------------------------------------------------------------------

|*** | Incorporated by reference to the Current Report on Form 8-K (file no. 1-34593), filed June 23, 2010.
|--- | ----------------------------------------------------------------------------------------------------

|**** | Incorporated by reference to the Current Report on Form 8-K (file no. 1-34593), filed September 1, 2010.
|---- | --------------------------------------------------------------------------------------------------------

|***** | Incorporated by reference to Appendix A to the Proxy Statement for the Special Meeting of Stockholders (file no. 1-34593), filed April 11, 2011.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.



OBA FINANCIAL SERVICES, INC.By:

/s/    CHARLES E.
WELLERCharles E. WellerPresident and Chief Executive Officer(Duly Authorized Representative)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|                                                   |  |                                                                                                |  |                   
|-------------------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | ------------------
|Signatures                                         |  | Title                                                                                          |  | Date              
|                                                   |  |                                                                                               
|/s/    CHARLES E.
WELLER Charles E. Weller         |  | President and Chief Executive Officer (Principal Executive Officer)                            |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    DAVID A.
MILLER David A. Miller             |  | Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    JAMES C.
BEADLES James C. Beadles           |  | Chairman of the Board                                                                          |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    DONALD E.
STOVER Donald E. Stover           |  | Director and Corporate Secretary                                                               |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    WILLIAM R. BELEW,
JR. William R. Belew, Jr. |  | Director                                                                                       |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    DR. PAUL J.
HANGES Dr. Paul J. Hanges       |  | Director                                                                                       |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    EVELYN JACKSON,
M.D. Evelyn Jackson, M.D.   |  | Director                                                                                       |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    DONALD L.
MALLOREY Donald L. Mallorey       |  | Director                                                                                       |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    MICHAEL L.
REED Michael L. Reed             |  | Director                                                                                       |  | September 28, 2011
|                                                   |  |                                                                                               
|/s/    STACIE W.
ROGERS Stacie W. Rogers           |  | Director                                                                                       |  | September 28, 2011



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