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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    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: 1-34534
 ATHENS BANCSHARES CORPORATION
  Tennessee
    
    27-0920126(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)106 Washington Avenue, Athens, Tennessee
    
    37303(Address of principal executive offices)
    
    (Zip Code)
 (423) 745-1111
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, par value $0.01 per share
    
    Nasdaq Stock Market, LLC
 None
 Yes o No þ
 Yes o No þ
 þ o
 o o
 þ
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-accelerated Filer o
    
    Smaller Reporting Company þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE
 Portions
of the 2010 Annual Report to Stockholders and of the Proxy Statement
for the 2011 Annual Meeting of Stockholders are
incorporated by reference in Parts II and III, respectively, of this Form 10-K.




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INDEX
 PagePart IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    19Item 2. Properties
    
    
    20Item 3. Legal Proceedings
    
    
    21Item 4. [Removed and Reserved]
    
    
    21Part IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    21Item 6. Selected Financial Data
    
    
    22Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    24Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    44Item 8. Financial Statements and Supplementary Data
    
    
    44Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    44Item 9A. Controls and Procedures
    
    
    45Item 9B. Other Information
    
    
    45Part IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    46Item 11. Executive Compensation
    
    
    46Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    46Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    47Item 14. Principal Accounting Fees and Services
    
    
    47Part IVItem 15. Exhibits and Financial Statement Schedules
    
    
    47SIGNATURESExhibit 21.0Exhibit 23.0Exhibit 31.1Exhibit 31.2Exhibit 32.0




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This annual report contains forward-looking statements that are based on assumptions and may
describe future plans, strategies and expectations of Athens Bancshares Corporation. These
forward-looking statements are generally identified by use of the words believe, expect,
intend, anticipate, estimate, project or similar expressions. Athens Bancshares
Corporations ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the operations of
Athens Bancshares Corporation and its subsidiary include, but are not limited to, changes in
interest rates, national and regional economic conditions, legislative and regulatory changes,
monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and
the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in Athens Bancshares
Corporations market area, changes in real estate market values in Athens Bancshares Corporations
market area, changes in relevant accounting principles and guidelines and inability of third party
service providers to perform. Additional factors that may affect our results are discussed in Item
1A to this Annual Report on Form 10-K titled Risk Factors below.
 These risks and uncertainties should be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements. Except as required by applicable law or
regulation, Athens Bancshares Corporation does not undertake, and specifically disclaims any
obligation, to release publicly the result of any revisions that may be made to any forward-looking
statements to reflect events or circumstances after the date of the statements or to reflect the
occurrence of anticipated or unanticipated events.
 Unless the context indicates otherwise, all references in this annual report to Company,
we, us and our refer to Athens Bancshares Corporation and its subsidiaries.
 
 PART I
 
 Item 1.
    
    BUSINESS
 General
      1




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Market Area
  Competition
    Lending Activities
  One-to Four-Family Residential Loans. Item 1A. Risk Factors  Our concentration in non-owner
occupied real estate loans may expose us to increased credit risk.
    2




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Non-residential Real Estate Loans.
   Construction Loans.
   3




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Land and Land Development Loans.
 Multi-Family Real Estate Loans.
 Consumer Loans.
  Commercial Business Loans.
  4




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Loan Underwriting
 Adjustable-Rate Loans.
 Non-Owner Occupied Residential Real Estate Loans.
 Non-residential and Multi-Family Real Estate Loans.
 Construction, Land and Land Development Loans.
  5




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Consumer Loans.
 Commercial Business Loans.
 Loan Approval Procedures and Authority.
 Loans to One Borrower.
 Loan Commitments.
 Investment Activities
   6




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Deposit Activities and Other Sources of Funds
  Deposit Accounts.
 Borrowings.
 Personnel
   7




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REGULATION AND SUPERVISION
 General
     Holding Company Regulation
 General.
   8




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Activities Restrictions.
   Capital.
 Source of Strength.
 Dividends.
 Acquisition of the Company .
  9




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Federal Savings Association Regulation
 Business Activities. e.g.
  Capital Requirements .
    Prompt Corrective Regulatory Action.
  10




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Insurance of Deposit Accounts.
       11




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Loans to One Borrower.
 QTL Test .
  Limitation on Capital Distributions. i.e.
 Standards for Safety and Soundness.
  12




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Transactions with Related Parties. e.g
  Enforcement.
  Assessments.
   13




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Federal Home Loan Bank System
   Federal Reserve System
  Regulatory Restructuring Legislation
  FEDERAL AND STATE INCOME TAXATION
 Federal Income Taxation
 General.
   14




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Bad Debt Reserves.
 Distributions.
  State Taxation
 Tennessee.
  
 ITEM 1A.
    
    RISK FACTORS
 Our concentration in non-owner occupied real estate loans may expose us to increased credit risk.
 Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations  Risk Management.
  15




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Our construction loan and land and land development loan portfolios may expose us to increased
credit risk.
 Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations  Risk
Management.
 Our consumer loan portfolio includes consumer loans secured by rapidly depreciable assets and may
expose us to increased credit risk.
  Significant loan losses could require us to increase our allowance for loan losses through a charge
to earnings.
   16




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A continuation of recent turmoil in the financial markets could have an adverse effect on our
financial position or results of operations.
  The current economic recession could result in increases in our level of non-performing loans
and/or reduce demand for our products and services, which would lead to lower revenue, higher loan
losses and lower earnings.
   17




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Increased and/or special Federal Deposit Insurance Corporation assessments will hurt our earnings.
  Changing interest rates may decrease our earnings and asset value.
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations Risk Management  Interest Rate Risk Management.
 Strong competition within our primary market area could negatively impact our profits and slow
growth.
 Item 1. Business  Market Area Item 1. Business  Competition
  18




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We operate in a highly regulated environment and we may be adversely affected by changes in laws
and regulations.
 Item 1. Business  Regulation and Supervision.
 Recently enacted legislative reforms and future regulatory reforms required by such legislation
could have a significant impact on our business, financial condition and results of operations.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
   19




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ITEM 2.
    
    PROPERTIES
  Net Book ValueYear
    
    Owned/
    
    atLocation
    
    Opened
    
    Leased
    
    December 31, 2010(In thousands)Main Office:Athens Main Office
106 Washington Avenue
Athens, Tennessee 37303
    
    1962
    
    Owned
    
    $
    1,109Branch Offices:Athens Decatur Pike Office
1103 Decatur Pike
Athens, Tennessee 37303
    
    1980
    
    Owned
    
    
    180Cleveland Ocoee Street Office
3855 North Ocoee Street
Cleveland, Tennessee 37312
    
    2007
    
    Leased (1)
    
    
    Cleveland 25th Street Office
950 25th Street
Cleveland, Tennessee 37311
    
    2007
    
    Leased (2)
    
    
    Etowah Office
523 Tennessee Avenue
Etowah, Tennessee 37331
    
    1977
    
    Owned
    
    
    655Madisonville Office
4785 New Highway 68
Madisonville, Tennessee 37875
    
    2005
    
    Owned
    
    
    884Sweetwater Office
800 Highway 68
Sweetwater, Tennessee 37874
    
    1995
    
    Owned
    
    
    208Other Offices:Athens Lending Center
106 Hornsby Street
Athens, Tennessee 37303
    
    1998
    
    Owned
    
    
    493Southland Finance Company
516 South Congress Parkway
Athens, Tennessee 37303
    
    1996
    
    Leased (3)
    
    
    Valley Title Services, LLC
d/b/a Sweetwater Valley Title
202 N. White Street
Athens, Tennessee 37303
    
    2007
    
    Leased (4)
    
    
    Valley Title Services, LLC
d/b/a Title Company of Monroe County
New Highway 68
Sweetwater, Tennessee 37874
    
    2007
    
    Leased (3)
    
    
    Valley Title Services, LLC 

205 Decatur Pike
Athens, Tennessee 37303
    
    2007
    
    Owned
    
    
    216Storage Facility
718 South Jackson Street
Athens, Tennessee 37303
    
    2010
    
    Owned
    
    
    173
 
 (1)
    
    Lease expires in February 2012.(2)
    
    Lease expires in December 2017.(3)
    
    Property is leased on a month-to-month basis.(4)
    
    Lease expires in December 2011.  20




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Item 3.
    
    LEGAL PROCEEDINGS
  
 Item 4.
    
    [REMOVED AND RESERVED]
 
 PART II
 
 Item 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market for Common Equity and Related Stockholder Matters
   High
    
    
    Low
    
    
    
    
    
    
    Market priceSale
    
    
    Sale
    
    
    Dividends
    
    
    end of period2010:First Quarter
    
    $
    11.85
    
    
    $
    10.70
    
    
    $
    
    
    
    $
    10.75Second Quarter
    
    
    11.35
    
    
    
    10.50
    
    
    
    
    
    
    
    11.00Third Quarter
    
    
    11.36
    
    
    
    10.58
    
    
    
    0.05
    
    
    
    11.20Fourth Quarter
    
    
    12.59
    
    
    
    10.85
    
    
    
    0.05
    
    
    
    12.59
 Purchase of Equity Securities
   21




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Item 6.
    
    SELECTED FINANCIAL DATA
  At December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Total assets
    
    $
    278,015
    
    
    $
    276,458
    
    
    $
    251,000
    
    
    $
    230,505
    
    
    $
    212,383Cash and cash equivalents
    
    
    14,316
    
    
    
    40,707
    
    
    
    4,547
    
    
    
    9,284
    
    
    
    8,989Securities available-for-sale
    
    
    41,538
    
    
    
    23,585
    
    
    
    30,509
    
    
    
    22,967
    
    
    
    21,440Securities held-to-maturity
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    14
    
    
    
    25Investments, at cost
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    4,746
    
    
    
    6,076Loans receivable, net
    
    
    199,386
    
    
    
    191,404
    
    
    
    196,520
    
    
    
    178,603
    
    
    
    157,013Deposits
    
    
    215,687
    
    
    
    236,064
    
    
    
    206,493
    
    
    
    197,344
    
    
    
    171,214Securities sold under agreements to
repurchase
    
    
    795
    
    
    
    899
    
    
    
    912
    
    
    
    1,151
    
    
    
    1,681Advances from Federal Home Loan Bank
    
    
    8,214
    
    
    
    10,324
    
    
    
    16,310
    
    
    
    5,532
    
    
    
    15,630Stockholders equity (total equity
before December 31, 2010)
    
    
    49,577
    
    
    
    25,722
    
    
    
    24,212
    
    
    
    23,271
    
    
    
    21,879For the Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Operating Data:Interest income
    
    $
    14,529
    
    
    $
    14,668
    
    
    $
    15,580
    
    
    $
    15,457
    
    
    $
    12,775Interest expense
    
    
    4,360
    
    
    
    5,657
    
    
    
    7,133
    
    
    
    7,101
    
    
    
    5,277Net interest income
    
    
    10,169
    
    
    
    9,011
    
    
    
    8,447
    
    
    
    8,356
    
    
    
    7,498Provision for loan losses
    
    
    1,711
    
    
    
    1,024
    
    
    
    761
    
    
    
    443
    
    
    
    704Net interest income after provision for loan
losses
    
    
    8,458
    
    
    
    7,987
    
    
    
    7,686
    
    
    
    7,913
    
    
    
    6,794Non-interest income
    
    
    4,406
    
    
    
    4,670
    
    
    
    4,161
    
    
    
    4,030
    
    
    
    2,682Non-interest expense
    
    
    12,027
    
    
    
    10,668
    
    
    
    10,251
    
    
    
    10,431
    
    
    
    8,244Income before income taxes
    
    
    837
    
    
    
    1,989
    
    
    
    1,596
    
    
    
    1,512
    
    
    
    1,232Income taxes (benefit)
    
    
    (6
    )
    
    
    644
    
    
    
    487
    
    
    
    392
    
    
    
    348Net income
    
    $
    843
    
    
    $
    1,345
    
    
    $
    1,109
    
    
    $
    1,120
    
    
    $
    884Net income per share  basic
    
    $
    0.34
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ANet income per share  diluted
    
    $
    0.34
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ACash dividends declared per share
    
    $
    0.10
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  22




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At or for the Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Performance Ratios (1):Return on average assets
    
    
    0.30
    %
    
    
    0.54
    %
    
    
    0.45
    %
    
    
    0.50
    %
    
    
    0.44
    %Return on average equity
    
    
    1.71
    
    
    
    5.29
    
    
    
    4.72
    
    
    
    5.02
    
    
    
    4.07Interest rate spread (1)
    
    
    3.59
    
    
    
    3.67
    
    
    
    3.51
    
    
    
    3.79
    
    
    
    3.79Net interest margin (2)
    
    
    3.92
    
    
    
    3.89
    
    
    
    3.74
    
    
    
    4.05
    
    
    
    4.07Other expenses to average assets
    
    
    3.77
    
    
    
    4.28
    
    
    
    4.18
    
    
    
    4.64
    
    
    
    4.13Efficiency ratio (3)
    
    
    82.52
    
    
    
    77.98
    
    
    
    81.30
    
    
    
    84.22
    
    
    
    80.98Dividend payout ratio (4)
    
    
    29.41
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aAverage interest-earning assets to
average interest-bearing liabilities
    
    
    119.59
    
    
    
    109.18
    
    
    
    107.20
    
    
    
    107.67
    
    
    
    109.99Average equity to average assets
    
    
    17.67
    
    
    
    10.20
    
    
    
    9.58
    
    
    
    9.92
    
    
    
    10.87Capital Ratios (Bank only):Total capital (to risk-weighted assets)
    
    
    20.8
    %
    
    
    15.3
    %
    
    
    14.0
    %
    
    
    14.8
    %
    
    
    15.6
    %Tier 1 capital (to risk-weighted assets)
    
    
    19.6
    
    
    
    14.1
    
    
    
    12.8
    
    
    
    13.5
    
    
    
    14.4Tier 1 capital (to adjusted total assets)
    
    
    13.5
    
    
    
    9.1
    
    
    
    9.4
    
    
    
    9.8
    
    
    
    10.3Asset Quality Ratios:Allowance for loan losses as a percent of
total loans
    
    
    1.94
    %
    
    
    1.75
    %
    
    
    1.52
    %
    
    
    1.37
    %
    
    
    1.58
    %Allowance for loan losses as a percent of
non-performing loans
    
    
    194.46
    
    
    
    169.54
    
    
    
    73.87
    
    
    
    704.52
    
    
    
    1,457.43Net charge-offs to average outstanding
loans during the period
    
    
    0.59
    
    
    
    0.36
    
    
    
    0.12
    
    
    
    0.29
    
    
    
    0.13Non-performing loans as a percent
of total loans
    
    
    1.00
    
    
    
    1.03
    
    
    
    2.08
    
    
    
    0.20
    
    
    
    0.11Non-performing assets as a percent
of total assets
    
    
    1.13
    
    
    
    1.01
    
    
    
    1.76
    
    
    
    0.17
    
    
    
    0.11Total non-performing assets and troubled
debt restructurings as a percent of total
assets
    
    
    3.31
    
    
    
    2.28
    
    
    
    1.87
    
    
    
    0.27
    
    
    
    0.21Other Data:Number of offices
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    7
    
    
    
    5Number of deposit accounts
    
    
    16,144
    
    
    
    15,837
    
    
    
    15,296
    
    
    
    14,769
    
    
    
    13,482Number of loans
    
    
    3,534
    
    
    
    3,696
    
    
    
    3,297
    
    
    
    3,442
    
    
    
    3,292
 
 (1)
    
    Represents the difference between the weighted average yield on average interest-earning
assets and the weighted average cost on average interest-bearing liabilities. Tax exempt
income is reported on a tax equivalent basis using a federal marginal tax rate of 34.0%.(2)
    
    Represents net interest income as a percent of average interest-earning assets. Tax exempt
income is reported on a tax equivalent basis using a federal marginal tax rate of 34.0%.(3)
    
    Represents other expenses divided by the sum of net interest income and other income.(4)
    
    Dividends declared per share divided by net income per share.  23




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Item 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 Operating Strategy
  
    
    remaining a community-oriented financial institution;
 
    
    continuing our historical focus on residential mortgage lending;
 
    
    expanding our commercial real estate and multi-family lending activities;
 
    
    emphasizing lower cost core deposits to maintain low funding costs; and
 
    
    expanding our market share within our primary market area.
 Overview
 Income.
 Allowance for Loan Losses.
 Expenses.
 Critical Accounting Policies
  Allowance for Loan Losses.
  24




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Fair Value of Investments.
 Deferred Compensation and Executive Benefit Plans.
 Balance Sheet Analysis
 Assets.
 Loans.
     25




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At December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in thousands)
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentReal estate mortgage:Residential one- to four-family
    
    $
    79,374
    
    
    
    38.93
    %
    
    $
    79,573
    
    
    
    40.75
    %
    
    $
    75,297
    
    
    
    37.62
    %
    
    $
    71,629
    
    
    
    39.38
    %
    
    $
    65,586
    
    
    
    40.89
    %Non-residential
    
    
    43,734
    
    
    
    21.45
    
    
    
    37,905
    
    
    
    19.41
    
    
    
    32,295
    
    
    
    16.14
    
    
    
    33,710
    
    
    
    18.53
    
    
    
    30,699
    
    
    
    19.14Multi-family
    
    
    20,851
    
    
    
    10.23
    
    
    
    14,625
    
    
    
    7.49
    
    
    
    11,255
    
    
    
    5.62
    
    
    
    6,841
    
    
    
    3.76
    
    
    
    3,925
    
    
    
    2.45Residential construction
    
    
    3,680
    
    
    
    1.80
    
    
    
    5,489
    
    
    
    2.81
    
    
    
    13,059
    
    
    
    6.52
    
    
    
    10,296
    
    
    
    5.66
    
    
    
    8,262
    
    
    
    5.15Multi-family construction
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    0.32
    
    
    
    3,865
    
    
    
    1.93
    
    
    
    1,252
    
    
    
    0.69
    
    
    
    
    
    
    
    Non-residential construction
    
    
    1,499
    
    
    
    0.74
    
    
    
    2,709
    
    
    
    1.39
    
    
    
    11,390
    
    
    
    5.69
    
    
    
    8,011
    
    
    
    4.40
    
    
    
    6,077
    
    
    
    3.79Land
    
    
    14,658
    
    
    
    7.19
    
    
    
    14,690
    
    
    
    7.52
    
    
    
    10,893
    
    
    
    5.44
    
    
    
    12,095
    
    
    
    6.65
    
    
    
    8,559
    
    
    
    5.34Total
    
    
    163,796
    
    
    
    80.34
    
    
    
    155,615
    
    
    
    79.69
    
    
    
    158,054
    
    
    
    78.96
    
    
    
    143,834
    
    
    
    79.07
    
    
    
    123,108
    
    
    
    76.76Commercial business
    
    
    12,766
    
    
    
    6.26
    
    
    
    12,001
    
    
    
    6.15
    
    
    
    14,565
    
    
    
    7.28
    
    
    
    9,940
    
    
    
    5.46
    
    
    
    14,027
    
    
    
    8.75Consumer:Home equity loans and lines
of credit
    
    
    16,887
    
    
    
    8.28
    
    
    
    16,552
    
    
    
    8.48
    
    
    
    14,671
    
    
    
    7.33
    
    
    
    13,130
    
    
    
    7.22
    
    
    
    10,227
    
    
    
    6.38Auto loans
    
    
    4,394
    
    
    
    2.15
    
    
    
    4,725
    
    
    
    2.42
    
    
    
    4,905
    
    
    
    2.45
    
    
    
    5,133
    
    
    
    2.82
    
    
    
    4,710
    
    
    
    2.94Loans secured by deposits
    
    
    1,728
    
    
    
    0.85
    
    
    
    1,367
    
    
    
    0.70
    
    
    
    1,546
    
    
    
    0.77
    
    
    
    2,331
    
    
    
    1.28
    
    
    
    1,203
    
    
    
    0.75Consumer finance loans
    
    
    1,992
    
    
    
    0.98
    
    
    
    1,970
    
    
    
    1.01
    
    
    
    2,600
    
    
    
    1.30
    
    
    
    3,367
    
    
    
    1.85
    
    
    
    3,505
    
    
    
    2.19Other
    
    
    2,333
    
    
    
    1.14
    
    
    
    3,023
    
    
    
    1.55
    
    
    
    3,815
    
    
    
    1.91
    
    
    
    4,179
    
    
    
    2.30
    
    
    
    3,593
    
    
    
    2.23Total
    
    
    27,334
    
    
    
    13.40
    
    
    
    27,637
    
    
    
    14.16
    
    
    
    27,537
    
    
    
    13.76
    
    
    
    28,140
    
    
    
    15.47
    
    
    
    23,238
    
    
    
    14.49Total loans
    
    
    203,896
    
    
    
    100
    %
    
    
    195,253
    
    
    
    100
    %
    
    
    200,156
    
    
    
    100.00
    %
    
    
    181,914
    
    
    
    100
    %
    
    
    160,373
    
    
    
    100.00
    %Less: unearned interest and fees
    
    
    (324
    )
    
    
    
    
    
    
    (271
    )
    
    
    
    
    
    
    (361
    )
    
    
    
    
    
    
    (544
    )
    
    
    
    
    
    
    (588
    )Less: net deferred loan origination
fees
    
    
    (221
    )
    
    
    
    
    
    
    (165
    )
    
    
    
    
    
    
    (192
    )
    
    
    
    
    
    
    (231
    )
    
    
    
    
    
    
    (198
    )Less: allowance for loan losses
    
    
    (3,965
    )
    
    
    
    
    
    
    (3,413
    )
    
    
    
    
    
    
    (3,083
    )
    
    
    
    
    
    
    (2,536
    )
    
    
    
    
    
    
    (2,574
    )Loans receivable, net
    
    
    199,386
    
    
    
    
    
    
    $
    191,404
    
    
    
    
    
    
    $
    196,520
    
    
    
    
    
    
    $
    178,603
    
    
    
    
    
    
    $
    157,013
  26




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##### Table of Contents



Loan Maturity
  At December 31, 2010Residential
    
    
    Non-residential
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    Total(Dollars in thousands)
    
    Real Estate
    
    
    Real Estate (1)
    
    
    Construction (2)
    
    
    Land
    
    
    Business
    
    
    Consumer
    
    
    LoansAmounts due in:One year or less
    
    $
    6,151
    
    
    $
    15,590
    
    
    $
    3,623
    
    
    $
    7,310
    
    
    $
    4,051
    
    
    $
    4,630
    
    
    $
    41,355More than one year
through two years
    
    
    2,680
    
    
    
    10,236
    
    
    
    
    
    
    
    1,426
    
    
    
    1,459
    
    
    
    3,759
    
    
    
    19,560More than two years
through three years
    
    
    5,696
    
    
    
    21,683
    
    
    
    
    
    
    
    510
    
    
    
    4,637
    
    
    
    3,539
    
    
    
    36,065More than three years
through five years
    
    
    10,208
    
    
    
    3,933
    
    
    
    
    
    
    
    2,670
    
    
    
    668
    
    
    
    3,582
    
    
    
    21,061More than five years
through ten years
    
    
    6,548
    
    
    
    5,632
    
    
    
    
    
    
    
    376
    
    
    
    1,951
    
    
    
    2,834
    
    
    
    17,341More than ten years
through fifteen years
    
    
    6,629
    
    
    
    3,270
    
    
    
    
    
    
    
    701
    
    
    
    
    
    
    
    8,732
    
    
    
    19,332More than fifteen years
    
    
    41,462
    
    
    
    4,241
    
    
    
    1,556
    
    
    
    1,665
    
    
    
    
    
    
    
    258
    
    
    
    49,182Total
    
    $
    79,374
    
    
    $
    64,585
    
    
    $
    5,179
    
    
    $
    14,658
    
    
    $
    12,766
    
    
    $
    27,334
    
    
    $
    203,896
 
 (1)
    
    Includes multi-family real estate loans.(2)
    
    Includes residential real estate construction loans, non-residential real estate
construction loans and multi-family real estate construction loans. Fixed vs. Adjustable Rate Loans
  Floating or(In thousands)
    
    Fixed Rates
    
    
    Adjustable Rates
    
    
    TotalResidential real estate
    
    $
    13,583
    
    
    $
    59,495
    
    
    $
    73,078Non-residential real estate
    
    
    18,429
    
    
    
    30,510
    
    
    
    48,939Construction
    
    
    
    
    
    
    1,540
    
    
    
    1,540Land
    
    
    1,434
    
    
    
    5,915
    
    
    
    7,349Commercial business
    
    
    7,088
    
    
    
    1,627
    
    
    
    8,715Consumer
    
    
    7,982
    
    
    
    14,425
    
    
    
    22,407Total
    
    $
    48,516
    
    
    $
    113,512
    
    
    $
    162,028
   27




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##### Table of Contents



Loan Activity
  Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Total loans at beginning of period
    
    $
    194,817
    
    
    $
    199,603
    
    
    $
    181,139Loans originated:Residential real estate
    
    
    57,456
    
    
    
    66,650
    
    
    
    30,813Non-residential real estate
    
    
    18,990
    
    
    
    12,281
    
    
    
    10,163Land
    
    
    2,219
    
    
    
    6,529
    
    
    
    4,046Construction
    
    
    8,783
    
    
    
    10,286
    
    
    
    23,562Commercial business
    
    
    8,227
    
    
    
    5,834
    
    
    
    14,087Consumer
    
    
    18,398
    
    
    
    18,782
    
    
    
    22,650Total loans originated
    
    
    114,073
    
    
    
    120,362
    
    
    
    105,321Loans purchased:Residential real estate
    
    
    38
    
    
    
    
    
    
    
    Non-residential real estate
    
    
    530
    
    
    
    
    
    
    
    1,009Construction
    
    
    
    
    
    
    
    
    
    
    Commercial business
    
    
    1,383
    
    
    
    
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    Total loans purchased
    
    
    1,951
    
    
    
    
    
    
    
    1,009Deduct:Loan principal repayments
    
    
    82,103
    
    
    
    77,574
    
    
    
    77,131Loan sales
    
    
    25,387
    
    
    
    47,574
    
    
    
    10,735Total repayments and sales
    
    
    107,490
    
    
    
    125,148
    
    
    
    87,866Net loan activity
    
    
    8,534
    
    
    
    (4,786
    )
    
    
    18,464Total loans at end of period
    
    $
    203,351
    
    
    $
    194,817
    
    
    $
    199,603
  Securities
    28




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##### Table of Contents



At December 31,2010
    
    
    2009
    
    
    2008Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair(In thousands)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueU.S. government agencies and corporations
    
    $
    29,389
    
    
    $
    29,339
    
    
    $
    8,612
    
    
    $
    8,603
    
    
    $
    10,545
    
    
    $
    10,649States and political subdivisions
    
    
    5,674
    
    
    
    5,528
    
    
    
    4,532
    
    
    
    4,449
    
    
    
    5,544
    
    
    
    5,276Mortgage-backed and related securities
    
    
    6,269
    
    
    
    6,671
    
    
    
    10,080
    
    
    
    10,533
    
    
    
    14,332
    
    
    
    14,589Total securities available for sale and held to maturity
    
    
    41,332
    
    
    
    41,538
    
    
    
    23,224
    
    
    
    23,585
    
    
    
    30,421
    
    
    
    30,514Federal Home Loan Bank of Cincinnati common stock
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899Total investments, at cost
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899Total
    
    $
    44,231
    
    
    $
    44,437
    
    
    $
    26,123
    
    
    $
    26,484
    
    
    $
    33,320
    
    
    $
    33,413
  Year EndedDecember 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Mortgage-backed and related securities:Mortgage-backed and related securities, beginning of period (1)
    
    $
    10,534
    
    
    $
    14,589
    
    
    $
    12,621Purchases
    
    
    
    
    
    
    
    
    
    
    4,527Sales
    
    
    
    
    
    
    
    
    
    
    Repayments and prepayments
    
    
    (3,806
    )
    
    
    (4,203
    )
    
    
    (2,727
    )Increase (decrease) in net unrealized gain
    
    
    (57
    )
    
    
    148
    
    
    
    168Net increase (decrease) in mortgage-backed
securities
    
    
    (3,863
    )
    
    
    (4,055
    )
    
    
    1,968Mortgage-backed and related securities,
end of period (1)
    
    
    6,671
    
    
    
    10,534
    
    
    $
    14,589Investment securities:Investment securities, beginning of period (1)
    
    
    13,051
    
    
    
    15,925
    
    
    $
    12,320Purchases
    
    
    24,115
    
    
    
    5,000
    
    
    
    12,051Sales
    
    
    
    
    
    
    
    
    
    
    (2,160
    )Maturities
    
    
    (2,231
    )
    
    
    (8,039
    )
    
    
    (6,254
    )Increase (decrease) in net unrealized gain
    
    
    (68
    )
    
    
    165
    
    
    
    (32
    )Net increase (decrease) in investment securities
    
    
    21,816
    
    
    
    (2,874
    )
    
    
    3,605Investment securities, end of period (1)
    
    $
    34,867
    
    
    $
    13,051
    
    
    $
    15,925
 
 (1)
    
    At fair value.  29




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##### Table of Contents



More than
    
    
    More thanOne Year
    
    
    One Year to
    
    
    Five Years to
    
    
    More thanor Less
    
    
    Five Years
    
    
    Ten Years
    
    
    Ten Years
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedCarrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average(Dollars in thousands)
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    YieldU.S. government agencies
and corporations
    
    $
    7,056
    
    
    
    1.64
    %
    
    $
    20,257
    
    
    
    2.72
    %
    
    $
    2,026
    
    
    
    5.00
    %
    
    $
    
    
    
    
    
    %
    
    $
    29,339
    
    
    
    2.62
    %States and political subdivisions
    
    
    301
    
    
    
    5.53
    
    
    
    458
    
    
    
    5.53
    
    
    
    1,154
    
    
    
    5.07
    
    
    
    3,615
    
    
    
    5.52
    
    
    
    5,528
    
    
    
    5.43
    %Mortgage-backed and related securities
    
    
    2,118
    
    
    
    5.32
    
    
    
    3,499
    
    
    
    5.12
    
    
    
    809
    
    
    
    4.57
    
    
    
    245
    
    
    
    3.22
    
    
    
    6,671
    
    
    
    5.05
    %Federal Home Loan Bank of Cincinnati
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,899
    
    
    
    4.00
    
    
    
    2,899
    
    
    
    4.00Total
    
    $
    9,475
    
    
    
    2.59
    %
    
    $
    24,214
    
    
    
    3.12
    %
    
    $
    3,989
    
    
    
    4.93
    %
    
    $
    6,759
    
    
    
    4.79
    %
    
    $
    44,437
    
    
    
    3.42
    %
  30




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##### Table of Contents



Bank Owned Life Insurance.
 Deposits.
  At December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Non-interest-bearing accounts
    
    $
    10,808
    
    
    $
    7,320
    
    
    $
    7,289Demand and NOW accounts
    
    
    45,396
    
    
    
    72,539
    
    
    
    38,408Money market accounts
    
    
    49,761
    
    
    
    41,715
    
    
    
    22,130Passbook savings accounts
    
    
    12,633
    
    
    
    11,002
    
    
    
    10,505Certificates of deposit
    
    
    97,089
    
    
    
    103,488
    
    
    
    128,161Total
    
    $
    215,687
    
    
    $
    236,064
    
    
    $
    206,493
     Maturity Period
    
    Amount(In thousands)Three months or less
    
    $
    5,769Over three through six months
    
    
    1,704Over six through twelve months
    
    
    6,018Over twelve months
    
    
    28,275Total
    
    $
    41,766
  31




---



##### Table of Contents



At December 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    20080.00 - 1.00%
    
    $
    20,546
    
    
    $
    2,157
    
    
    $
    5481.01 - 2.00%
    
    
    12,501
    
    
    
    34,667
    
    
    
    9,1092.01 - 3.00%
    
    
    22,027
    
    
    
    16,806
    
    
    
    13,1223.01 - 4.00%
    
    
    20,004
    
    
    
    11,402
    
    
    
    37,1464.01 - 5.00%
    
    
    9,589
    
    
    
    20,332
    
    
    
    41,3445.01 - 6.00%
    
    
    12,347
    
    
    
    18,049
    
    
    
    26,7626.01 - 7.00%
    
    
    
    
    
    
    
    
    
    
    557.01 - 8.00%
    
    
    75
    
    
    
    75
    
    
    
    75Total
    
    $
    97,089
    
    
    $
    103,488
    
    
    $
    128,161
  Amount Due
    
    
    
    
    
    
    Percent ofMore Than
    
    
    More Than
    
    
    
    
    
    
    
    
    
    
    Total TimeLess Than
    
    
    One Year to
    
    
    Two Years to
    
    
    More Than
    
    
    
    
    
    
    Deposit(Dollars in thousands)
    
    One Year
    
    
    Two Years
    
    
    Three Years
    
    
    Three Years
    
    
    Total
    
    
    Accounts0.00 - 1.00%
    
    $
    17,313
    
    
    $
    3,057
    
    
    $
    126
    
    
    $
    50
    
    
    $
    20,546
    
    
    
    21.16
    %1.01 - 2.00%
    
    
    8,696
    
    
    
    2,076
    
    
    
    1,157
    
    
    
    572
    
    
    
    12,501
    
    
    
    12.882.01 - 3.00%
    
    
    2,398
    
    
    
    2,845
    
    
    
    9,142
    
    
    
    7,642
    
    
    
    22,027
    
    
    
    22.693.01 - 4.00%
    
    
    1,737
    
    
    
    444
    
    
    
    4,152
    
    
    
    13,671
    
    
    
    20,004
    
    
    
    20.604.01 - 5.00%
    
    
    4,875
    
    
    
    2,788
    
    
    
    1,651
    
    
    
    275
    
    
    
    9,589
    
    
    
    9.885.01 - 6.00%
    
    
    5,582
    
    
    
    6,439
    
    
    
    326
    
    
    
    
    
    
    
    12,347
    
    
    
    12.726.01 - 7.00%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.01 - 8.00%
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    0.07Total
    
    $
    40,676
    
    
    $
    17,649
    
    
    $
    16,554
    
    
    $
    22,210
    
    
    
    97,089
    
    
    
    100.00
    %
  Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Beginning balance
    
    $
    236,064
    
    
    $
    206,493
    
    
    $
    197,344Increase (decrease) before interest credited
    
    
    (21,104
    )
    
    
    28,479
    
    
    
    4,161Interest credited
    
    
    727
    
    
    
    1,092
    
    
    
    4,988Net increase (decrease) in deposits
    
    
    (20,377
    )
    
    
    29,571
    
    
    
    9,149Ending balance
    
    $
    215,687
    
    
    $
    236,064
    
    
    $
    206,493
  32




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##### Table of Contents



Borrowings.
 Year Ended December 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    2008Maximum balance outstanding at any month-end during period:Federal Home Loan Bank advances
    
    $
    10,315
    
    
    $
    14,422
    
    
    $
    16,310Securities sold under agreements to repurchase
    
    
    1,377
    
    
    
    1,292
    
    
    
    2,098Average balance outstanding during period:Federal Home Loan bank advances
    
    $
    8,457
    
    
    $
    10,955
    
    
    $
    9,690Securities sold under agreements to repurchase
    
    
    2,140
    
    
    
    1,052
    
    
    
    1,400Weighted average interest rate during period:Federal Home Loan bank advances
    
    
    4.32
    %
    
    
    3.89
    %
    
    
    3.78
    %Securities sold under agreements to repurchase
    
    
    0.19
    %
    
    
    0.76
    %
    
    
    1.62
    %Balance outstanding at end of period:Federal Home Loan bank advances
    
    $
    8,214
    
    
    $
    10,324
    
    
    $
    16,310Securities sold under agreements to repurchase
    
    
    795
    
    
    
    899
    
    
    
    912Weighted average interest rate at end of period:Federal Home Loan bank advances
    
    
    4.35
    %
    
    
    4.06
    %
    
    
    3.25
    %Securities sold under agreements to repurchase
    
    
    0.10
    %
    
    
    0.49
    %
    
    
    0.99
    %
 Results of Operations for the Years Ended December 31, 2010 and 2009
 Overview.
 Net Interest Income.
 Provision for Loan Losses.
  33




---



##### Table of Contents



Average Balances and Yields
  Year Ended December 31,2010
    
    
    2009
    
    
    2008Interest
    
    
    
    
    
    
    
    
    
    
    Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    and
    
    
    Yield/
    
    
    Average
    
    
    and
    
    
    Yield/
    
    
    Average
    
    
    and
    
    
    Yield/(Dollars in thousands)
    
    Balance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    CostAssets:Interest-bearing deposits at other
financial institutions
    
    $
    21,591
    
    
    $
    65
    
    
    
    0.30
    %
    
    $
    7,705
    
    
    $
    49
    
    
    
    0.64
    %
    
    $
    5,125
    
    
    $
    133
    
    
    
    2.60
    %Loans
    
    
    195,525
    
    
    
    13,166
    
    
    
    6.73
    
    
    
    192,804
    
    
    
    13,369
    
    
    
    6.93
    
    
    
    185,292
    
    
    
    13,824
    
    
    
    7.46Investment securities
    
    
    27,658
    
    
    
    881
    
    
    
    3.19
    
    
    
    15,035
    
    
    
    625
    
    
    
    4.16
    
    
    
    18,667
    
    
    
    832
    
    
    
    4.46Mortgage-backed and related securities
    
    
    8,369
    
    
    
    401
    
    
    
    4.79
    
    
    
    11,919
    
    
    
    615
    
    
    
    5.16
    
    
    
    14,382
    
    
    
    725
    
    
    
    5.04Other interest-earning assets
    
    
    6,361
    
    
    
    16
    
    
    
    0.25
    
    
    
    3,897
    
    
    
    10
    
    
    
    0.26
    
    
    
    2,662
    
    
    
    66
    
    
    
    2.47Total interest-earning assets
    
    
    259,504
    
    
    
    14,529
    
    
    
    5.60
    
    
    
    231,360
    
    
    
    14,668
    
    
    
    6.34
    
    
    
    226,128
    
    
    
    15,580
    
    
    
    6.89Non-interest-earning assets
    
    
    19,886
    
    
    
    
    
    
    
    
    
    
    
    17,843
    
    
    
    
    
    
    
    
    
    
    
    19,377Total assets
    
    $
    279,390
    
    
    
    
    
    
    
    
    
    
    $
    249,203
    
    
    
    
    
    
    
    
    
    
    $
    245,505Liabilities and equity:Demand and NOW accounts
    
    $
    46,322
    
    
    $
    339
    
    
    
    0.73
    %
    
    $
    43,469
    
    
    $
    362
    
    
    
    0.83
    %
    
    $
    40,821
    
    
    $
    517
    
    
    
    1.27
    %Money market accounts
    
    
    46,142
    
    
    
    524
    
    
    
    1.14
    
    
    
    29,456
    
    
    
    537
    
    
    
    1.82
    
    
    
    20,726
    
    
    
    541
    
    
    
    2.61Passbook savings accounts
    
    
    11,587
    
    
    
    29
    
    
    
    0.25
    
    
    
    11,190
    
    
    
    48
    
    
    
    0.43
    
    
    
    11,350
    
    
    
    82
    
    
    
    0.72Certificates of deposit
    
    
    102,349
    
    
    
    3,099
    
    
    
    3.03
    
    
    
    115,786
    
    
    
    4,276
    
    
    
    3.69
    
    
    
    126,950
    
    
    
    5,604
    
    
    
    4.41Total interest-bearing deposits
    
    
    206,400
    
    
    
    3,991
    
    
    
    1.93
    
    
    
    199,901
    
    
    
    5,223
    
    
    
    2.61
    
    
    
    199,847
    
    
    
    6,744
    
    
    
    3.37Federal Home Loan Bank advances
    
    
    8,457
    
    
    
    365
    
    
    
    4.32
    
    
    
    10,960
    
    
    
    426
    
    
    
    3.89
    
    
    
    9,690
    
    
    
    366
    
    
    
    3.78Securities sold under agreements
to repurchase
    
    
    2,140
    
    
    
    4
    
    
    
    0.19
    
    
    
    1,046
    
    
    
    8
    
    
    
    0.76
    
    
    
    1,400
    
    
    
    23
    
    
    
    1.62Total interest-bearing liabilities
    
    
    216,997
    
    
    
    4,360
    
    
    
    2.01
    
    
    
    211,907
    
    
    
    5,657
    
    
    
    2.67
    
    
    
    210,937
    
    
    
    7,133
    
    
    
    3.38Non-interest-bearing deposits
    
    
    9,374
    
    
    
    
    
    
    
    
    
    
    
    8,340
    
    
    
    
    
    
    
    
    
    
    
    7,710Other non-interest-bearing liabilities
    
    
    3,637
    
    
    
    
    
    
    
    
    
    
    
    3,526
    
    
    
    
    
    
    
    
    
    
    
    3,347Total liabilities
    
    
    230,008
    
    
    
    
    
    
    
    
    
    
    
    223,773
    
    
    
    
    
    
    
    
    
    
    
    221,994Total equity
    
    
    49,382
    
    
    
    
    
    
    
    
    
    
    
    25,430
    
    
    
    
    
    
    
    
    
    
    
    23,511Total liabilities and equity
    
    $
    279,390
    
    
    
    
    
    
    
    
    
    
    $
    249,203
    
    
    
    
    
    
    
    
    
    
    $
    245,505Net interest income
    
    
    
    
    
    $
    10,169
    
    
    
    
    
    
    
    
    
    
    $
    9,011
    
    
    
    
    
    
    
    
    
    
    $
    8,447Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.59
    
    
    
    
    
    
    
    
    
    
    
    3.67
    
    
    
    
    
    
    
    
    
    
    
    3.51Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.92
    
    
    
    
    
    
    
    
    
    
    
    3.89
    
    
    
    
    
    
    
    
    
    
    
    3.74Average interest-earning assets to average
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    119.59
    %
    
    
    
    
    
    
    
    
    
    
    109.18
    %
    
    
    
    
    
    
    
    
    
    
    107.20
    %
  34




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##### Table of Contents



Rate/Volume Analysis.
 Year Ended December 31, 2010
    
    
    Year Ended December 31, 2009Compared to
    
    
    Compared toYear Ended December 31, 2009
    
    
    Year Ended December 31, 2008Increase (Decrease)
    
    
    
    
    
    
    Increase (Decrease)Due to
    
    
    
    
    
    
    Due to(In thousands)
    
    Volume
    
    
    Rate
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    NetInterest income:Interest-bearing deposits at other financial institutions
    
    $
    89
    
    
    $
    (73
    )
    
    $
    16
    
    
    $
    67
    
    
    $
    (151
    )
    
    $
    (84
    )Loans receivable
    
    
    189
    
    
    
    (392
    )
    
    
    (203
    )
    
    
    560
    
    
    
    (1,015
    )
    
    
    (455
    )Investment securities
    
    
    525
    
    
    
    (269
    )
    
    
    256
    
    
    
    (162
    )
    
    
    (45
    )
    
    
    (207
    )Mortgage-backed and related securities
    
    
    (183
    )
    
    
    (31
    )
    
    
    (214
    )
    
    
    (124
    )
    
    
    14
    
    
    
    (110
    )Other interest-earning assets
    
    
    6
    
    
    
    
    
    
    
    6
    
    
    
    31
    
    
    
    (87
    )
    
    
    (56
    )Total interest-earning assets
    
    
    626
    
    
    
    (765
    )
    
    
    (139
    )
    
    
    372
    
    
    
    (1,284
    )
    
    
    (912
    )Interest expense:Deposits
    
    
    (167
    )
    
    
    (1,065
    )
    
    
    (1,232
    )
    
    
    (232
    )
    
    
    (1,289
    )
    
    
    (1,521
    )Federal Home Loan Bank advances
    
    
    (97
    )
    
    
    36
    
    
    
    (61
    )
    
    
    48
    
    
    
    12
    
    
    
    60Securities sold under agreement to
repurchase
    
    
    8
    
    
    
    (12
    )
    
    
    (4
    )
    
    
    (6
    )
    
    
    (9
    )
    
    
    (15
    )Total interest-bearing liabilities
    
    
    (256
    )
    
    
    (1,041
    )
    
    
    (1,297
    )
    
    
    (190
    )
    
    
    (1,286
    )
    
    
    (1,476
    )Net increase in interest income
    
    $
    882
    
    
    $
    276
    
    
    $
    1,158
    
    
    $
    562
    
    
    $
    2
    
    
    $
    564
 Non-interest Income.
 Non-interest Expense.
 Income Tax Expense.
  35




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##### Table of Contents



Total Comprehensive Income.
 Risk Management
 Overview.
 Credit Risk Management.
  Analysis of Non-performing and Classified Assets.
   36




---



##### Table of Contents



At December 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Non-accrual loans:Residential real estate
    
    $
    569
    
    
    $
    1,377
    
    
    $
    688
    
    
    $
    149
    
    
    $
    93Non-residential real estate
    
    
    273
    
    
    
    410
    
    
    
    2,882
    
    
    
    
    
    
    
    Construction
    
    
    974
    
    
    
    0
    
    
    
    270
    
    
    
    144
    
    
    
    Commercial business
    
    
    38
    
    
    
    36
    
    
    
    280
    
    
    
    
    
    
    
    Consumer
    
    
    58
    
    
    
    174
    
    
    
    19
    
    
    
    23
    
    
    
    44Total
    
    
    1,912
    
    
    
    1,997
    
    
    
    4,139
    
    
    
    316
    
    
    
    137Accruing loans past due 90 days or more:Residential real estate
    
    
    64
    
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    27Non-residential real estate
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    9
    
    
    
    15
    
    
    
    30
    
    
    
    43
    
    
    
    16Total
    
    
    127
    
    
    
    16
    
    
    
    33
    
    
    
    43
    
    
    
    43Total of non-accrual and 90 days or
more past due loans
    
    
    2,039
    
    
    
    2,013
    
    
    
    4,172
    
    
    
    359
    
    
    
    180Real estate owned
    
    
    1,087
    
    
    
    779
    
    
    
    230
    
    
    
    
    
    
    
    Other non-performing assets
    
    
    16
    
    
    
    10
    
    
    
    26
    
    
    
    36
    
    
    
    48Total non-performing assets
    
    
    3,142
    
    
    
    2,802
    
    
    
    4,428
    
    
    
    395
    
    
    
    228Troubled debt restructurings
    
    
    6,057
    
    
    
    3,515
    
    
    
    267
    
    
    
    219
    
    
    
    210Troubled debt restructurings and
total non-performing assets
    
    $
    9,199
    
    
    $
    6,317
    
    
    $
    4,695
    
    
    $
    614
    
    
    $
    438Total non-performing loans to total loans
    
    
    1.00
    %
    
    
    1.03
    %
    
    
    2.08
    %
    
    
    0.20
    %
    
    
    0.11
    %Total non-performing loans to total assets
    
    
    0.73
    %
    
    
    0.73
    %
    
    
    1.66
    %
    
    
    0.16
    %
    
    
    0.08
    %Total non-performing assets and troubled
debt restructurings to total assets
    
    
    3.31
    %
    
    
    2.28
    %
    
    
    1.87
    %
    
    
    0.27
    %
    
    
    0.21
    %
     37




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##### Table of Contents



At December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Special mention assets
    
    $
    2,527
    
    
    $
    4,070
    
    
    $
    2,299Substandard assets
    
    
    10,556
    
    
    
    7,732
    
    
    
    6,514Doubtful assets
    
    
    
    
    
    
    
    
    
    
    Loss assets
    
    
    275
    
    
    
    144
    
    
    
    34Total classified assets
    
    $
    13,358
    
    
    $
    11,946
    
    
    $
    8,847
  Delinquencies.
 At December 31,201030-89 Days
    
    
    90 Days or MoreNumber
    
    
    Principal
    
    
    Number
    
    
    Principalof
    
    
    Balance
    
    
    of
    
    
    Balance(Dollars n thousands)
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of LoansResidential real estate
    
    
    14
    
    
    $
    689
    
    
    
    1
    
    
    $
    64Non-residential real estate
    
    
    2
    
    
    
    132
    
    
    
    1
    
    
    
    54Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business
    
    
    1
    
    
    
    7
    
    
    
    
    
    
    
    Consumer
    
    
    33
    
    
    
    164
    
    
    
    4
    
    
    
    9Total
    
    
    50
    
    
    $
    992
    
    
    
    6
    
    
    $
    127
 At December 31,2009
    
    
    200830-89 Days
    
    
    90 Days or More
    
    
    30-89 Days
    
    
    90 Days or MoreNumber
    
    
    Principal
    
    
    Number
    
    
    Principal
    
    
    Number
    
    
    Principal
    
    
    Number
    
    
    Principalof
    
    
    Balance
    
    
    of
    
    
    Balance
    
    
    of
    
    
    Balance
    
    
    of
    
    
    Balance(Dollars in thousands)
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of LoansResidential real estate
    
    
    11
    
    
    $
    1,085
    
    
    
    1
    
    
    $
    1
    
    
    
    10
    
    
    $
    537
    
    
    
    2
    
    
    $
    3Non-residential real estate
    
    
    1
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    176
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business
    
    
    3
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    20
    
    
    
    
    
    
    
    Consumer
    
    
    55
    
    
    
    227
    
    
    
    4
    
    
    
    15
    
    
    
    69
    
    
    
    273
    
    
    
    8
    
    
    
    30Total
    
    
    70
    
    
    $
    1,426
    
    
    
    5
    
    
    $
    16
    
    
    
    82
    
    
    $
    1,006
    
    
    
    10
    
    
    $
    33
  38




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##### Table of Contents



Analysis and Determination of the Allowance for Loan Losses
  General Valuation Allowance.
 Specific Valuation Allowance. 
  .
 Unallocated Valuation Allowance.
  39




---



##### Table of Contents



At December 31,2010
    
    
    2009% of
    
    
    
    
    
    
    
    
    
    
    % of% of
    
    
    Loans in
    
    
    
    
    
    
    % of
    
    
    Loans inAllowance
    
    
    Category
    
    
    
    
    
    
    Allowance
    
    
    Categoryto Total
    
    
    to Total
    
    
    
    
    
    
    to Total
    
    
    to Total(Dollars in thousands)
    
    Amount
    
    
    Allowance
    
    
    Loans
    
    
    Amount
    
    
    Allowance
    
    
    LoansResidential real estate (1)
    
    $
    1,064
    
    
    
    26.83
    %
    
    
    49.09
    %
    
    $
    986
    
    
    
    28.90
    %
    
    
    52.11
    %Non-residential real estate (1)
    
    
    2,033
    
    
    
    51.27
    
    
    
    39.67
    
    
    
    1,279
    
    
    
    37.47
    
    
    
    36.18Commercial business
    
    
    524
    
    
    
    13.22
    
    
    
    6.27
    
    
    
    605
    
    
    
    17.73
    
    
    
    6.16Consumer
    
    
    319
    
    
    
    8.05
    
    
    
    4.97
    
    
    
    512
    
    
    
    15.00
    
    
    
    5.55Total
    
    
    3,940
    
    
    
    99.37
    %
    
    
    100.00
    %
    
    
    3,382
    
    
    
    99.10
    %
    
    
    100.00
    %Unallocated
    
    
    25
    
    
    
    0.63
    
    
    
    
    
    
    
    31
    
    
    
    0.90Total allowance for loan losses
    
    $
    3,965
    
    
    
    
    
    
    
    
    
    
    $
    3,413
    
    
    
    100.00
    %
 At December 31,2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    
    
    
    
    % of% of
    
    
    Loans in
    
    
    
    
    
    
    % of
    
    
    Loans in
    
    
    
    
    
    
    % of
    
    
    Loans inAllowance
    
    
    Category
    
    
    
    
    
    
    Allowance
    
    
    Category
    
    
    
    
    
    
    Allowance
    
    
    Categoryto Total
    
    
    to Total
    
    
    
    
    
    
    to Total
    
    
    to Total
    
    
    
    
    
    
    to Total
    
    
    to Total(Dollars in thousands)
    
    Amount
    
    
    Allowance
    
    
    Loans
    
    
    Amount
    
    
    Allowance
    
    
    Loans
    
    
    Amount
    
    
    Allowance
    
    
    LoansResidential real estate (1)
    
    $
    906
    
    
    
    29.39
    %
    
    
    51.58
    %
    
    $
    989
    
    
    
    39.00
    %
    
    
    52.41
    %
    
    $
    220
    
    
    
    8.53
    %
    
    
    52.61
    %Non-residential real estate (1)
    
    
    1,221
    
    
    
    39.61
    
    
    
    34.89
    
    
    
    777
    
    
    
    30.62
    
    
    
    34.13
    
    
    
    504
    
    
    
    19.58
    
    
    
    30.83Commercial business
    
    
    545
    
    
    
    17.69
    
    
    
    7.30
    
    
    
    278
    
    
    
    10.96
    
    
    
    5.48
    
    
    
    1,060
    
    
    
    41.19
    
    
    
    8.78Consumer
    
    
    398
    
    
    
    12.90
    
    
    
    6.23
    
    
    
    413
    
    
    
    16.30
    
    
    
    7.98
    
    
    
    369
    
    
    
    14.34
    
    
    
    7.78Total
    
    
    3,070
    
    
    
    99.59
    
    
    
    100.00
    %
    
    
    2,457
    
    
    
    96.88
    
    
    
    100.00
    %
    
    
    2,153
    
    
    
    83.64
    
    
    
    100.00
    %Unallocated
    
    
    13
    
    
    
    0.41
    
    
    
    
    
    
    
    79
    
    
    
    3.12
    
    
    
    
    
    
    
    421
    
    
    
    16.36Total allowance for loan losses
    
    $
    3,083
    
    
    
    100.00
    %
    
    
    
    
    
    $
    2,536
    
    
    
    100.00
    %
    
    
    
    
    
    $
    2,574
    
    
    
    100.00
    %
 
 (1)
    
    Includes construction loans.   40




---



##### Table of Contents



Analysis of Loan Loss Experience.
 Year Ended December 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Allowance for loan losses at beginning of period
    
    $
    3,413
    
    
    $
    3,083
    
    
    $
    2,536
    
    
    $
    2,574
    
    
    $
    2,059Provision for loan losses
    
    
    1,711
    
    
    
    1,024
    
    
    
    761
    
    
    
    443
    
    
    
    704Charge offs:Residential real estate
    
    
    545
    
    
    
    60
    
    
    
    30
    
    
    
    20
    
    
    
    1Non-residential real estate
    
    
    198
    
    
    
    196
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    Commercial business
    
    
    119
    
    
    
    228
    
    
    
    5
    
    
    
    244
    
    
    
    10Consumer
    
    
    411
    
    
    
    274
    
    
    
    258
    
    
    
    265
    
    
    
    234Total charge-offs
    
    
    1,273
    
    
    
    758
    
    
    
    324
    
    
    
    529
    
    
    
    245Recoveries:Residential real estate
    
    
    1
    
    
    
    20
    
    
    
    2
    
    
    
    
    
    
    
    Non-residential real estate
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    79
    
    
    
    43
    
    
    
    108
    
    
    
    48
    
    
    
    56Total recoveries
    
    
    114
    
    
    
    64
    
    
    
    110
    
    
    
    48
    
    
    
    56Net charge-offs (recoveries)
    
    
    1,159
    
    
    
    694
    
    
    
    214
    
    
    
    481
    
    
    
    189Allowance for loan losses at end of period
    
    $
    3,965
    
    
    $
    3,413
    
    
    $
    3,083
    
    
    $
    2,536
    
    
    $
    2,574Allowance for loan losses to non-performing
loans
    
    
    194.46
    %
    
    
    169.54
    %
    
    
    73.87
    %
    
    
    704.52
    %
    
    
    1,457.43
    %Allowance for loan losses to total loans
outstanding at the end of the period
    
    
    1.94
    %
    
    
    1.75
    %
    
    
    1.52
    %
    
    
    1.37
    %
    
    
    1.58
    %Net charge-offs (recoveries) to average
loans outstanding during the period
    
    
    0.59
    %
    
    
    0.36
    %
    
    
    0.12
    %
    
    
    0.29
    %
    
    
    0.13
    %
 Interest Rate Risk Management.
  Net Portfolio Value Analysis.
  41




---



##### Table of Contents



Net Portfolio Value
    
    
    Net Portfolio Value as % ofBasis Point (bp)
    
    (Dollars in thousands)
    
    
    Portfolio Value of AssetsChange in Rates
    
    $ Amount
    
    
    $ Change
    
    
    % Change
    
    
    NPV Ratio
    
    
    Change300bp
    
    $
    49,921
    
    
    $
    2,012
    
    
    
    4
    %
    
    
    17.35
    %
    
    93
    bp200
    
    
    49,582
    
    
    
    1,674
    
    
    
    3
    
    
    
    17.14
    %
    
    
    72100
    
    
    49,079
    
    
    
    1,171
    
    
    
    2
    
    
    
    16.88
    %
    
    
    460
    
    
    47,908
    
    
    
    
    
    
    
    
    
    
    
    16.42
    %
    
    
    (100)
    
    
    46,559
    
    
    
    (1,349
    )
    
    
    (3
    )
    
    
    15.93
    %
    
    
    (49
    )
  Liquidity Management.
     42




---



##### Table of Contents



Payments due by periodLess than
    
    
    One to
    
    
    Three to
    
    
    More ThanContractual Obligations
    
    Total
    
    
    One Year
    
    
    Three Years
    
    
    Five Years
    
    
    Five Years(In thousands)Deferred director fee arrangements
    
    $
    737
    
    
    $
    68
    
    
    $
    181
    
    
    $
    182
    
    
    $
    306Deferred compensation arrangements
    
    
    929
    
    
    
    35
    
    
    
    71
    
    
    
    70
    
    
    
    753Operating lease obligations
    
    
    450
    
    
    
    204
    
    
    
    116
    
    
    
    90
    
    
    
    40Federal Home Loan Bank advances
    
    
    8,214
    
    
    
    5,125
    
    
    
    3,089
    
    
    
    
    
    
    
    Total
    
    $
    10,330
    
    
    $
    5,432
    
    
    $
    3,457
    
    
    $
    342
    
    
    $
    1,099
  Financing and Investing Activities
  Year Ended December 31,(In thousands)
    
    2010
    
    
    2009
    
    
    2008Investing activities:Loan purchases
    
    $
    1,951
    
    
    $
    
    
    
    $
    1,009Loan originations
    
    
    114,073
    
    
    
    120,362
    
    
    
    105,321Loan principal repayments
    
    
    82,103
    
    
    
    77,574
    
    
    
    77,131Loan sales
    
    
    25,387
    
    
    
    47,574
    
    
    
    10,735Proceeds from calls, maturities and principal repayments of investment securities
    
    
    2,231
    
    
    
    8,039
    
    
    
    6,254Proceeds from calls, maturities and principal repayments of mortgage-backed and related
Securities
    
    
    3,806
    
    
    
    4,203
    
    
    
    2,727Proceeds from sales of investment securities available- for-sale
    
    
    
    
    
    
    
    
    
    
    2,160Proceeds from sales of mortgage-backed
and related securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    Purchases of investment securities
    
    
    24,115
    
    
    
    5,000
    
    
    
    12,051Purchases of mortgage-backed
and related securities
    
    
    
    
    
    
    
    
    
    
    4,527Financing activities:Increase (decrease) in deposits
    
    $
    (20,377
    )
    
    $
    29,571
    
    
    $
    9,149Increase (decrease) in Federal Home Loan Bank
advances
    
    
    (2,110
    )
    
    
    (5,986
    )
    
    
    10,778Increase (decrease) in securities sold under
agreements to repurchase
    
    
    (105
    )
    
    
    (12
    )
    
    
    (239
    )
  43




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##### Table of Contents



Capital Management. Item 1. Business Regulation and
Supervision  Regulation of Federal Savings AssociationsCapital Requirements
 Off-Balance Sheet Arrangements.
  Impact of Recent Accounting Pronouncements
  Effect of Inflation and Changing Prices
  
 Item 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operation.
 
 Item 8.
    
    FINANCIAL STATEMENTS
  
 Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
   44




---



##### Table of Contents



Item 9A.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
  Internal
Control  Integrated Framework
    
 Item 9B.
    
    OTHER INFORMATION
 None.
  45




---



##### Table of Contents



PART III
 
 Item 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Board of Directors
  Executive Officers
  Name
    
    PositionJeffrey L. Cunningham
    
    President and Chief Executive Officer of both
Athens Bancshares Corporation and Athens
Federal Community BankMichael R. Hutsell
    
    Treasurer and Chief Financial Officer of Athens
Bancshares Corporation; and Vice President,
Chief Operating Officer and Chief Financial
Officer of Athens Federal Community BankJay Leggett, Jr.
    
    City PresidentCleveland of Athens Federal
Community BankRoss A. Millsaps
    
    Vice President and Chief Credit Officer of
Athens Federal Community Bank
  Michael R. Hutsell
 Jay Leggett, Jr.
 Ross A. Millsaps
 Code of Ethics
  
 Item 11.
    
    EXECUTIVE COMPENSATION
  
 Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 (a)
    
    Security Ownership of Certain Beneficial Owners.Information required by this item is incorporated herein by reference to the section
captioned Stock Ownership in the Companys Proxy Statement for the 2011 Annual
Meeting of Shareholders.
  46




---



##### Table of Contents



(b)
    
    Security Ownership of ManagementInformation required by this item is incorporated herein by reference to the section
captioned Stock Ownership in the Companys Proxy Statement for the 2011 Annual
Meeting of Shareholders.(c)
    
    Changes in ControlManagement of the Company knows of no arrangements, including any pledge by any
person or securities of the Company, the operation of which may at a subsequent date
result in a change in control of the registrant.(d)
    
    Equity Compensation Plan Information
 Equity Compensation Plan Information as of December 31, 2010
 Number of securitiesremaining available forfuture issuance underNumber of securities to
    
    
    Weighted-average
    
    
    equity compensationbe issued upon exercise
    
    
    exercise price of
    
    
    plans (excludingof outstanding options,
    
    
    outstanding options,
    
    
    securities reflected inwarrants and rights
    
    
    warrants and rights
    
    
    column (a))Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    236,062
    
    
    $
    11.50
    
    
    
    152,753Equity compensation
plans not approved
by security holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    236,062
    
    
    
    11.50
    
    
    
    152,753
  
 Item 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 Item 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (1)
    
    The financial statements required in response to this item are incorporated by
reference from Item 8 of this Annual Report on Form 10-K.(2)
    
    All financial statement schedules are omitted because they are not required or
applicable, or the required information is shown in the consolidated financial
statements or the notes thereto.
  47




---



##### Table of Contents



(3)
    
    Exhibits
 No.

    
    Description3.1
    
    
    Amended and Restated Charter of Athens Bancshares Corporation (1)3.2
    
    
    Amended and Restated Bylaws of Athens Bancshares Corporation (2)4.1
    
    
    Specimen Stock Certificate of Athens Bancshares Corporation (3)10.1
    
    
    Employment Agreement between Athens Federal Community Bank and Jeffrey L.
Cunningham* (4)10.2
    
    
    Employment Agreement between Athens Federal Community Bank and Michael R. Hutsell*
(4)10.3
    
    

Employment Agreement between Athens Federal Community Bank and Jay Leggett, Jr* (5)10.4
    
    
    Employment Agreement between Athens Bancshares Corporation and Jeffrey L. Cunningham* (4)10.5
    
    
    Employment Agreement between Athens Bancshares Corporation and Michael R. Hutsell* (4)10.6
    
    
    Supplemental Executive Retirement Plan Agreement between Athens Federal Community
Bank and Jeffrey L. Cunningham* (4)10.7
    
    
    Supplemental Executive Retirement Plan Agreement between Athens Federal Community
Bank and Michael R. Hutsell*(5)10.8
    
    
    Supplemental Executive Retirement Plan Agreement between Athens Federal
Community Bank and Jay Leggett, Jr*(5)10.9
    
    
    2010 Equity Incentive Plan (6)21.0
    
    
    Subsidiaries23.0
    
    
    Consent of Hazlett, Lewis & Bieter, PLLC31.1
    
    
    Rule 13a-14(a)/15d-14(a) Certificate of Chief Executive Officer31.2
    
    
    Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer32.0
    
    
    Section 1350 Certificate of Chief Executive Officer and Chief Financial Officer
 
 *
    
    Management contract or compensatory plan, contract or arrangement(1)
    
    Incorporated herein by reference to the exhibit to the Companys Current Report on
Form 8-K filed with the Securities and Exchange Commission on December 10, 2009.(2)
    
    Incorporated herein by reference to the exhibit to the Companys Current Report on
Form 8-K filed with the Securities and Exchange Commission on November 23, 2009.(3)
    
    Incorporated herein by reference to the exhibits to the Companys Registration
Statement on Form S-1 (File No. 333-144454), as amended, initially filed with the Securities
and Exchange Commission on September 17, 2009.(4)
    
    Incorporated herein by reference to the exhibits to the Companys Current Report on
Form 8-K filed with the Securities and Exchange Commission on April 6, 2010.(5)
    
    Incorporated herein by reference to the exhibits of the Companys Current Report on
Form 8-K filed with the Securities and Exchange Commission on July 27, 2010.(6)
    
    Incorporated herein by reference to the Companys Definitive Proxy Statement filed
with the Securities and Exchange Commission on June 7, 2010.  48




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     /s/ HAZLETT, LEWIS & BIETER, PLLC
 
  F-1




---



##### Table of Contents



ATHENS
BANCSHARES CORPORATION AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
December 31, 2010 and 2009
 2010
    
    
    2009ASSETSCash and due from banks
    
    $
    2,422,881
    
    
    $
    2,496,157Federal funds sold
    
    
    4,825,000
    
    
    
    6,400,000Interest-bearing deposits in banks
    
    
    7,068,418
    
    
    
    31,811,177Total cash and cash equivalents
    
    
    14,316,299
    
    
    
    40,707,334Interest-bearing time deposits in banks
    
    
    747,000
    
    
    
    1,279,000Securities available for sale
    
    
    41,537,586
    
    
    
    23,584,627Securities held to maturity (fair value approximates $26 and
$61 at December 31, 2010 and December 31, 2009,
respectively)
    
    
    25
    
    
    
    61Federal Home Loan Bank stock, at cost
    
    
    2,898,800
    
    
    
    2,898,800Loans, net of allowance for loan losses of $3,965,395 and
$3,412,963 at December 31, 2010 and December 31,
2009, respectively
    
    
    199,386,478
    
    
    
    191,403,719Premises and equipment, net
    
    
    4,701,660
    
    
    
    4,794,831Accrued interest receivable
    
    
    1,111,043
    
    
    
    988,232Cash surrender value of bank owned life insurance
    
    
    8,924,120
    
    
    
    6,468,054Foreclosed real estate
    
    
    1,102,527
    
    
    
    779,642Other assets
    
    
    3,289,029
    
    
    
    3,553,898Total assets
    
    $
    278,014,567
    
    
    $
    276,458,198LIABILITIES AND EQUITYLIABILITIESDeposits:Noninterest-bearing
    
    $
    10,808,127
    
    
    $
    7,320,547Interest-bearing
    
    
    204,879,217
    
    
    
    228,743,341Total deposits
    
    
    215,687,344
    
    
    
    236,063,888Accrued interest payable
    
    
    224,890
    
    
    
    263,006Securities sold under agreements to repurchase
    
    
    794,732
    
    
    
    899,421Federal Home Loan Bank advances
    
    
    8,213,861
    
    
    
    10,324,189Accrued expenses and other liabilities
    
    
    3,516,545
    
    
    
    3,185,558Total liabilities
    
    
    228,437,372
    
    
    
    250,736,062COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITYPreferred stock, $0.01 par value; authorized 10,000,000; none issued
    
    
    
    
    
    
    Common stock, $0.01 par value; 50,000,000 shares authorized;
2,777,250 shares issued and 2,475,082 outstanding at December 31, 2010
    
    
    27,773
    
    
    
    Additional paid-in capital
    
    
    26,494,832
    
    
    
    Common stock acquired by benefit plans:Restricted stock
    
    
    (1,085,423
    )
    
    
    Unallocated common stock held by:Employee Stock Ownership Plan Trust
    
    
    (2,073,680
    )
    
    
    Retained earnings
    
    
    26,086,719
    
    
    
    25,498,921Accumulated other comprehensive income
    
    
    126,974
    
    
    
    223,215Total stockholders equity
    
    
    49,577,195
    
    
    
    25,722,136Total liabilities and stockholders equity
    
    $
    278,014,567
    
    
    $
    276,458,198
   F-2




---



##### Table of Contents



ATHENS
BANCSHARES CORPORATION AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2010 and 2009
 2010
    
    
    2009Interest and dividend income:Loans, including fees
    
    $
    13,166,064
    
    
    $
    13,368,827Dividends
    
    
    131,935
    
    
    
    142,465Securities and interest-bearing deposits in other banks
    
    
    1,230,922
    
    
    
    1,156,578Total interest income
    
    
    14,528,921
    
    
    
    14,667,870Interest expense:Deposits
    
    
    3,991,269
    
    
    
    5,223,431Federal funds purchased and securities sold under
agreements to repurchase
    
    
    3,759
    
    
    
    8,176Federal Home Loan Bank advances
    
    
    365,278
    
    
    
    425,805Total interest expense
    
    
    4,360,306
    
    
    
    5,657,412Net interest income
    
    
    10,168,615
    
    
    
    9,010,458Provision for loan losses
    
    
    1,711,030
    
    
    
    1,023,540Net interest income after provision for loan losses
    
    
    8,457,585
    
    
    
    7,986,918Noninterest income:Customer service fees
    
    
    1,797,547
    
    
    
    1,712,016Other charges and fees
    
    
    1,455,116
    
    
    
    1,762,052Investment sales commissions
    
    
    282,790
    
    
    
    252,394Increase in cash surrender value of life insurance
    
    
    320,163
    
    
    
    258,767Other noninterest income
    
    
    550,269
    
    
    
    684,890Total noninterest income
    
    
    4,405,885
    
    
    
    4,670,119Noninterest expenses:Salaries and employee benefits
    
    
    6,078,328
    
    
    
    5,919,339Occupancy and equipment
    
    
    1,382,186
    
    
    
    1,478,239Federal deposit insurance premiums
    
    
    319,531
    
    
    
    391,155Data processing
    
    
    646,080
    
    
    
    592,511Advertising
    
    
    184,695
    
    
    
    144,140Other operating expenses
    
    
    3,415,952
    
    
    
    2,142,315Total noninterest expenses
    
    
    12,026,772
    
    
    
    10,667,699Income before income taxes
    
    
    836,698
    
    
    
    1,989,338Income tax (benefit) expense
    
    
    (6,607
    )
    
    
    644,260Net income
    
    $
    843,305
    
    
    $
    1,345,078Earnings per common share:Basic
    
    $
    0.34
    
    
    
    N/ADiluted
    
    $
    0.34
    
    
    
    N/ADividends per common share
    
    $
    0.10
    
    
    
    N/A
   F-3




---



##### Table of Contents



ATHENS  BANCSHARES  CORPORATION  AND  SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
Years Ended December 31, 2010 and 2009
 Common
    
    
    AccumulatedAdditional
    
    
    
    
    
    
    Stock
    
    
    OtherComprehensive
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Acquired By
    
    
    ComprehensiveIncome (Loss)
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Benefit Plans
    
    
    Income
    
    
    TotalBalance, December 31, 2008
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    24,153,843
    
    
    $
    
    
    
    $
    58,054
    
    
    $
    24,211,897Comprehensive income:Net income
    
    $
    1,345,078
    
    
    
    
    
    
    
    
    
    
    
    1,345,078
    
    
    
    
    
    
    
    
    
    
    
    1,345,078Other comprehensive income, net
of tax:Change in unrealized gains
(losses) on securities
available for sale, net of
tax effect of $101,233
    
    
    165,161
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165,161
    
    
    
    165,161Total comprehensive income
    
    $
    1,510,239Balance, December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,498,921
    
    
    
    
    
    
    
    223,215
    
    
    
    25,722,136Comprehensive income:Net income
    
    $
    843,305
    
    
    
    
    
    
    
    
    
    
    
    843,305
    
    
    
    
    
    
    
    
    
    
    
    843,305Other comprehensive income, net
of tax:Change in unrealized gains
(losses) on securities
available for sale, net of
tax effect of $(58,986)
    
    
    (96,241
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (96,241
    )
    
    
    (96,241
    )Total comprehensive income
    
    $
    747,064Dividends  $.10 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (255,507
    )
    
    
    
    
    
    
    
    
    
    
    (255,507
    )Issuance of common stock, net of
expense of $1,258,300
    
    
    
    
    
    
    27,773
    
    
    
    26,479,427
    
    
    
    
    
    
    
    (2,221,800
    )
    
    
    
    
    
    
    24,285,400Shares released by ESOP trust
    
    
    
    
    
    
    
    
    
    
    15,405
    
    
    
    
    
    
    
    148,120
    
    
    
    
    
    
    
    163,525Purchase of restricted stock plan shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,085,423
    )
    
    
    
    
    
    
    (1,085,423
    )Balance, December 31, 2010
    
    
    
    
    
    $
    27,773
    
    
    $
    26,494,832
    
    
    $
    26,086,719
    
    
    $
    (3,159,103
    )
    
    $
    126,974
    
    
    $
    49,577,195
   F-4




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##### Table of Contents



ATHENS  BANCSHARES  CORPORATION  AND  SUBSIDIARY
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
Years Ended December 31, 2010 and 2009
 2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    843,305
    
    
    $
    1,345,078Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    551,196
    
    
    
    654,230Amortization of securities and other assets
    
    
    316,951
    
    
    
    199,334Provision for loan losses
    
    
    1,711,030
    
    
    
    1,023,540Deferred income taxes
    
    
    (713,470
    )
    
    
    (236,293
    )Other gains and losses, net
    
    
    (74,905
    )
    
    
    15,257ESOP compensation expense
    
    
    163,525
    
    
    
    Net change in:Cash surrender value of life insurance
    
    
    (256,066
    )
    
    
    (222,264
    )Loans held for sale
    
    
    115,350
    
    
    
    (381,250
    )Accrued interest receivable
    
    
    (122,811
    )
    
    
    161,781Accrued interest payable
    
    
    (38,116
    )
    
    
    (155,175
    )Prepaid FDIC assessment
    
    
    284,248
    
    
    
    (1,063,792
    )Other assets and liabilities
    
    
    1,008,097
    
    
    
    (293,270
    )Net cash provided by operating activities
    
    
    3,788,334
    
    
    
    1,047,176CASH FLOWS FROM INVESTING ACTIVITIES:Net change in interest-bearing time deposits in banks
    
    
    532,000
    
    
    
    602,000Securities available for sale:Purchases
    
    
    (24,390,964
    )
    
    
    (5,148,500
    )Maturities, prepayments and calls
    
    
    6,041,794
    
    
    
    12,278,487Securities held to maturity:Principal repayments received
    
    
    36
    
    
    
    4,900Loan originations and principal collections, net
    
    
    (11,736,081
    )
    
    
    875,969Purchases of premises and equipment
    
    
    (458,025
    )
    
    
    (105,697
    )Proceeds from sale of foreclosed real estate
    
    
    1,678,962
    
    
    
    3,033,271Purchase of bank owned life insurance
    
    
    (2,200,000
    )
    
    
    Net cash (used in) provided by investing activities
    
    
    (30,532,278
    )
    
    
    11,540,430CASH FLOWS FROM FINANCING ACTIVITIES:Net (decrease) increase in deposits
    
    
    (20,376,544
    )
    
    
    29,570,570Net decrease in securities sold under agreements to repurchase
    
    
    (104,689
    )
    
    
    (12,237
    )Proceeds from Federal Home Loan Bank advances
    
    
    
    
    
    
    7,150,000Repayment of Federal Home Loan Bank advances
    
    
    (2,110,328
    )
    
    
    (13,136,083
    )Proceeds from issuance of common stock
    
    
    24,285,400
    
    
    
    Dividends paid
    
    
    (255,507
    )
    
    
    Stock purchased by restricted stock trust
    
    
    (1,085,423
    )
    
    
    Net cash provided by financing activities
    
    
    352,909
    
    
    
    23,572,250NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS
    
    
    (26,391,035
    )
    
    
    36,159,856CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    40,707,334
    
    
    
    4,547,478CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    14,316,299
    
    
    $
    40,707,334SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:Interest paid on deposits and borrowed funds
    
    $
    4,398,422
    
    
    $
    5,812,587Income taxes paid
    
    
    765,477
    
    
    
    1,023,136SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING ACTIVITIES:Acquisition of real estate acquired through foreclosure
    
    $
    1,913,659
    
    
    $
    3,597,679
   F-5




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1.
Summary of Significant Accounting Policies
   Mutual to Stock Conversion and Change in Corporate Form
  Principles of consolidation
  Nature of operations
   F-6




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Use of estimates
  Cash and cash equivalents
  Interest-bearing time deposits in banks
  Securities
     F-7




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Loans
       Allowance for loan losses
   F-8




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Allowance for loan losses
     Significant group concentrations of credit risk
    F-9




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Servicing
  Transfers and Servicing
  Foreclosed real estate
  Premises and equipment
  Federal Home Loan Bank stock
   F-10




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Cash surrender value of bank owned life insurance
  Income taxes
   Advertising costs
  Variable interest entities
   F-11




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Securities sold under agreements to repurchase
  Segment reporting
 Segment Reporting
 Transfers of financial assets
    F-12




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Stock option plan
 Compensation  Stock Compensation
 Earnings per share
  Comprehensive income
  Recent accounting pronouncements
 Fair Value Measurements and Disclosures Topic 820, Improving Disclosures
about Fair Value Measurements
  F-13




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 1. Summary of Significant Accounting Policies(Continued)
 Recent accounting pronouncements )
 Disclosures about the Credit Quality of Financing Receivables and the Allowance for
Credit Losses Receivables
  Subsequent events
  Reclassifications
  Note 2. Cash and Cash Equivalents
 Restrictions on cash and due from banks
   F-14




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 3. Securities
  December 31, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available for Sale:Securities of U.S.
Government agencies
and corporations
    
    $
    29,389,077
    
    
    $
    206,789
    
    
    $
    (257,160
    )
    
    $
    29,338,706Mortgage-backed and
related securities (1)
    
    
    6,269,479
    
    
    
    402,284
    
    
    
    (624
    )
    
    
    6,671,139State and municipal
securities
    
    
    5,674,233
    
    
    
    443
    
    
    
    (146,935
    )
    
    
    5,527,741$
    41,332,789
    
    
    $
    609,516
    
    
    $
    (404,719
    )
    
    $
    41,537,586Securities Held to Maturity:Mortgage-backed and
related securities (1)
    
    $
    25
    
    
    $
    1
    
    
    $
    
    
    
    $
    26
 December 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available for Sale:Securities of U.S.
Government agencies
and corporations
    
    $
    8,612,168
    
    
    $
    81,170
    
    
    $
    (90,912
    )
    
    $
    8,602,426Mortgage-backed and
related securities (1)
    
    
    10,079,939
    
    
    
    455,459
    
    
    
    (1,912
    )
    
    
    10,533,486State and municipal
securities
    
    
    4,532,497
    
    
    
    11,325
    
    
    
    (95,107
    )
    
    
    4,448,715$
    23,224,604
    
    
    $
    547,954
    
    
    $
    (187,931
    )
    
    $
    23,584,627Securities Held to Maturity:Mortgage-backed and
related securities (1)
    
    $
    61
    
    
    $
    
    
    
    $
    
    
    
    $
    61
 
 (1)
    
    Collateralized by residential mortgages and guaranteed by U.S. Government
sponsored entities.  F-15




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 3. Securities(Continued)
  December 31, 2010Securities Available for Sale
    
    
    Securities Held to MaturityAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    7,376,700
    
    
    $
    7,356,405
    
    
    $
    
    
    
    $
    Due after one year through
five years
    
    
    20,774,132
    
    
    
    20,715,338
    
    
    
    
    
    
    
    Due five years to ten years
    
    
    3,217,241
    
    
    
    3,179,863
    
    
    
    
    
    
    
    Due after ten years
    
    
    3,695,237
    
    
    
    3,614,841
    
    
    
    
    
    
    
    Mortgage-backed securities
    
    
    6,269,479
    
    
    
    6,671,139
    
    
    
    25
    
    
    
    26Total
    
    $
    41,332,789
    
    
    $
    41,537,586
    
    
    $
    25
    
    
    $
    26
    December 31, 2010Less than 12 Months
    
    
    12 Months or Greater
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(dollars in thousands)Securities Available for Sale:Securities of U.S.
Government agencies
and corporations
    
    $
    12,803
    
    
    $
    (257
    )
    
    $
    
    
    
    $
    
    
    
    $
    12,803
    
    
    $
    (257
    )Mortgage-backed and
related securities
    
    
    46
    
    
    
    (1
    )
    
    
    53
    
    
    
    
    
    
    
    99
    
    
    
    (1
    )State and municipal
securities
    
    
    4,896
    
    
    
    (102
    )
    
    
    332
    
    
    
    (45
    )
    
    
    5,228
    
    
    
    (147
    )$
    17,745
    
    
    $
    (360
    )
    
    $
    385
    
    
    $
    (45
    )
    
    $
    18,130
    
    
    $
    (405
    )
  F-16




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 3. Securities(Continued)
 December 31, 2009Less than 12 Months
    
    
    12 Months or Greater
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(dollars in thousands)Securities Available for Sale:Securities of U.S.
Government agencies
and corporations
    
    $
    5,045
    
    
    $
    (91
    )
    
    $
    
    
    
    $
    
    
    
    $
    5,045
    
    
    $
    (91
    )Mortgage-backed and
related securities
    
    
    722
    
    
    
    (1
    )
    
    
    299
    
    
    
    (1
    )
    
    
    1,021
    
    
    
    (2
    )State and municipal
securities
    
    
    3,263
    
    
    
    (26
    )
    
    
    874
    
    
    
    (69
    )
    
    
    4,137
    
    
    
    (95
    )$
    9,030
    
    
    $
    (118
    )
    
    $
    1,173
    
    
    $
    (70
    )
    
    $
    10,203
    
    
    $
    (188
    )
 Investment  Debt and Equity Securities
    F-17




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 4. Loans and Allowance for Loan Losses
   2010
    
    
    2009Mortgage loans on real estate:Residential 1-4 family
    
    $
    79,373,610
    
    
    $
    79,572,745Residential multifamily (5 or more units)
    
    
    20,851,097
    
    
    
    14,624,421Commercial
    
    
    43,733,879
    
    
    
    37,905,281Construction and land
    
    
    19,837,210
    
    
    
    23,512,087163,795,796
    
    
    
    155,614,534Commercial loans
    
    
    12,765,618
    
    
    
    12,001,374Consumer and equity lines of credit
    
    
    27,335,361
    
    
    
    27,637,172Total loans
    
    
    203,896,775
    
    
    
    195,253,080Less: Allowance for loan losses
    
    
    (3,965,395
    )
    
    
    (3,412,963
    )Unearned interest and fees
    
    
    (323,515
    )
    
    
    (271,072
    )Net deferred loan origination fees
    
    
    (221,387
    )
    
    
    (165,326
    )Loans, net
    
    $
    199,386,478
    
    
    $
    191,403,719
  Years Ended December 31,2010
    
    
    2009Beginning balance
    
    $
    3,412,963
    
    
    $
    3,082,602Provision for loan losses
    
    
    1,711,030
    
    
    
    1,023,540Loans charged-off
    
    
    (1,272,953
    )
    
    
    (758,193
    )Recoveries
    
    
    114,355
    
    
    
    65,014Ending balance
    
    $
    3,965,395
    
    
    $
    3,412,963
   F-18




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 4. Loans and Allowance for Loan Losses(Continued)
  CommercialReal EstateResidential
    
    
    and Multi-
    
    
    Construction
    
    
    ConsumerCommercial
    
    
    1-4 Family
    
    
    Family
    
    
    and Land
    
    
    and Other
    
    
    Unallocated
    
    
    TotalSpecified reserves-impaired loans
    
    $
    317,562
    
    
    $
    321,604
    
    
    $
    492,369
    
    
    $
    534,737
    
    
    $
    93,462
    
    
    $
    
    
    
    $
    1,759,734General reserves
    
    
    206,428
    
    
    
    742,610
    
    
    
    807,249
    
    
    
    198,709
    
    
    
    225,809
    
    
    
    24,856
    
    
    
    2,205,661Total reserves
    
    $
    523,990
    
    
    $
    1,064,214
    
    
    $
    1,299,618
    
    
    $
    733,446
    
    
    $
    319,271
    
    
    $
    24,856
    
    
    $
    3,965,395Loans individually
evaluated for
impairment
    
    $
    2,641,736
    
    
    $
    2,445,307
    
    
    $
    2,648,507
    
    
    $
    1,701,657
    
    
    $
    241,627
    
    
    
    
    
    
    $
    9,678,834Loans collectively
evaluated for
impairment
    
    
    10,123,882
    
    
    
    76,928,303
    
    
    
    61,936,469
    
    
    
    18,135,553
    
    
    
    27,093,734
    
    
    
    
    
    
    
    194,217,941Total
    
    $
    12,765,618
    
    
    $
    79,373,610
    
    
    $
    64,584,976
    
    
    $
    19,837,210
    
    
    $
    27,335,361
    
    
    
    
    
    
    $
    203,896,775
  CommercialReal EstateResidential
    
    
    and Multi-
    
    
    Construction
    
    
    ConsumerCommercial
    
    
    1-4 Family
    
    
    Family
    
    
    and Land
    
    
    and Other
    
    
    TotalLoans individually
evaluated for
impairment:Without a valuation
allowance
    
    $
    29,662
    
    
    $
    807,6l6
    
    
    $
    729,037
    
    
    $
    154,035
    
    
    $
    
    
    
    $
    1,720,350With a valuation
allowance
    
    
    2,612,074
    
    
    
    1,637,691
    
    
    
    1,919,470
    
    
    
    1,547,622
    
    
    
    241,627
    
    
    
    7,958,484Total impaired
loans
    
    $
    2,641,736
    
    
    $
    2,445,307
    
    
    $
    2,648,507
    
    
    $
    1,701,657
    
    
    $
    241,627
    
    
    $
    9,678,834Valuation
allowance
related to
impaired
loans
    
    $
    317,562
    
    
    $
    321,604
    
    
    $
    492,369
    
    
    $
    534,737
    
    
    $
    93,462
    
    
    $
    1,759,734
  Impaired loans without a valuation allowance
    
    $
    2,090,046Impaired loans with a valuation allowance
    
    
    5,735,999Total impaired loans
    
    $
    7,826,045Valuation allowance related to impaired loans
    
    $
    1,037,069
  F-19




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 4. Loans and Allowance for Loan Losses(Continued)
 Years Ended December 312010
    
    
    2009Average investment in impaired loans
    
    $
    9,022,095
    
    
    $
    4,480,879Interest income recognized on impaired
loans
    
    $
    600,000
    
    
    $
    310,000Interest income recognized on a cash basis
on impaired loans
    
    $
    600,000
    
    
    $
    310,000
   RecordedInvestment ≥Greater Than
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9030-89 Days
    
    
    90 Days
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    Days andPast Due
    
    
    Past Due
    
    
    Past Due
    
    
    Current Loans
    
    
    Total Loans
    
    
    AccruingResidential 1-4 family
    
    $
    689,195
    
    
    $
    632,421
    
    
    $
    1,321,616
    
    
    $
    78,051,994
    
    
    $
    79,373,610
    
    
    $
    63,740Commercial real estate and
multifamily
    
    
    131,849
    
    
    
    326,635
    
    
    
    458,484
    
    
    
    64,126,492
    
    
    
    64,584,976
    
    
    
    53,515Construction and land
    
    
    
    
    
    
    974,445
    
    
    
    974,445
    
    
    
    18,862,765
    
    
    
    19,837,210
    
    
    
    Commercial
    
    
    6,618
    
    
    
    38,000
    
    
    
    44,618
    
    
    
    12,721,000
    
    
    
    12,765,618
    
    
    
    Consumer and other
    
    
    164,427
    
    
    
    67,509
    
    
    
    231,936
    
    
    
    27,103,425
    
    
    
    27,335,361
    
    
    
    9,490Total
    
    $
    992,089
    
    
    $
    2,039,010
    
    
    $
    3,031,099
    
    
    $
    200,865,676
    
    
    $
    203,896,775
    
    
    $
    126,745
  Total non-accrual loans
    
    $
    1,996,455Total loans past-due ninety days or more and
still accruing
    
    $
    15,644
    F-20




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 4. Loans and Allowance for Loan Losses
 The following table outlines the amount of each loan classification and the amount
categorized into each risk rating class as of December 31, 2010:
 December 31, 2010SpecialPass
    
    
    Mention
    
    
    Substandard
    
    
    Doubtful
    
    
    Loss
    
    
    TotalResidential 1-4 family
    
    $
    74,953,467
    
    
    $
    1,974,836
    
    
    $
    2,445,307
    
    
    $
    
    
    
    $
    
    
    
    $
    79,373,610Commercial real estate and
multifamily
    
    
    61,936,469
    
    
    
    
    
    
    
    2,648,507
    
    
    
    
    
    
    
    
    
    
    
    64,584,976Construction and land
    
    
    17,714,246
    
    
    
    421,307
    
    
    
    1,701,657
    
    
    
    
    
    
    
    
    
    
    
    19,837,210Commercial
    
    
    10,104,402
    
    
    
    19,481
    
    
    
    2,431,504
    
    
    
    
    
    
    
    210,231
    
    
    
    12,765,618Consumer and other
    
    
    26,982,454
    
    
    
    111,279
    
    
    
    226,622
    
    
    
    
    
    
    
    15,006
    
    
    
    27,335,361Total
    
    $
    191,691,038
    
    
    $
    2,526,903
    
    
    $
    9,453,597
    
    
    $
    
    
    
    $
    225,237
    
    
    $
    203,896,775
 Note 5. Premises and Equipment
 A summary of the Companys premises and equipment is as follows:
 December 31,2010
    
    
    2009Land
    
    $
    1,075,880
    
    
    $
    1,060,880Buildings
    
    
    5,420,219
    
    
    
    5,181,517Leasehold improvements
    
    
    92,127
    
    
    
    88,987Equipment
    
    
    4,738,938
    
    
    
    4,585,384Automobiles
    
    
    22,494
    
    
    
    22,494Construction in progress
    
    
    47,629
    
    
    
    11,397,287
    
    
    
    10,939,262Less accumulated depreciation
    
    
    (6,695,627
    )
    
    
    (6,144,431
    )$
    4,701,660
    
    
    $
    4,794,831
 Depreciation expense amounted to $551,196 and $654,230 for the years ended December 31,
2010 and 2009, respectively.
 Note 6. Deposits
 The aggregate amount of time deposits in denominations of $100,000 or more were
$41,766,429 and $40,273,857 at December 31, 2010 and 2009, respectively. Deposit
accounts are federally insured up to $250,000 per depositor.
 At December 31, 2010, the scheduled maturities of time deposits are as follows:
 2011
    
    $
    40,675,9732012
    
    
    17,648,4822013
    
    
    16,554,6312014
    
    
    5,032,5202015
    
    
    17,177,062$
    97,088,668
  F-21




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 6. Deposits
 Deposit interest expense for the years ended December 31, 2010 and 2009 is as follows:
 December 31,2010
    
    
    2009Demand deposit and NOW accounts
    
    $
    338,610
    
    
    $
    361,611Money market accounts
    
    
    524,306
    
    
    
    537,376Savings accounts
    
    
    29,466
    
    
    
    48,266IRA accounts
    
    
    1,084,952
    
    
    
    1,339,559Certificates of deposit
    
    
    2,013,935
    
    
    
    2,936,619$
    3,991,269
    
    
    $
    5,223,431
 Note 7. Securities Sold Under Agreements to Repurchase
 Securities sold under agreements to repurchase averaged approximately $2,140,000 and
$1,046,000 for the years ended December 31, 2010 and 2009, respectively.
 Note 8. Federal Home Loan Bank Advances
 The schedule of advances from the Federal Home Loan Bank (FHLB) at December 31, 2010
and 2009, are as follows:
 Interest
    
    
    FinalDate of Advance
    
    Rate
    
    
    Maturity Date
    
    
    2010
    
    
    2009September 6, 2002
    
    
    3.93
    %
    
    October 1, 2012
    
    $
    213,861
    
    
    $
    324,189November 30, 2006
    
    
    4.39
    %
    
    November 30, 2011
    
    
    5,000,000
    
    
    
    5,000,000February 5, 2008
    
    
    2.85
    %
    
    February 5, 2010
    
    
    
    
    
    
    2,000,000July 11, 2008
    
    
    4.37
    %
    
    July 11, 2013
    
    
    1,500,000
    
    
    
    1,500,000July 31, 2008
    
    
    4.28
    %
    
    September 6, 2013
    
    
    1,500,000
    
    
    
    1,500,000$
    8,213,861
    
    
    $
    10,324,189
 Pursuant to collateral agreements with the FHLB, the advances and letters of
credit described below are secured by the Banks FHLB stock and qualifying first
mortgage loans, totaling approximately $29,104,000 and $33,745,000 as of December 31,
2010 and 2009, respectively.
 The Bank also has a Standby Letter of Credit for Public Unit Deposit Collateralization
Line with the FHLB which provides an alternative for the Bank instead of pledging
securities to public depositors up to a maximum credit line of approximately
$18,000,000. This line of credit is also secured by the same collateral described
above. The FHLB issues irrevocable letters of credit on behalf of the Bank to certain
public entities which are depositors of the Bank. Letters of credit outstanding as of
December 31, 2010 and 2009, were $12,750,000 and $14,350,000, respectively.
  F-22




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 8. Federal Home Loan Bank Advances
 At December 31, 2010, the scheduled maturities of the FHLB advances are as follows:
 2011
    
    $
    5,124,5092012
    
    
    89,3522013
    
    
    3,000,000$
    8,213,861
 Note 9 Minimum Regulatory Capital Requirements
 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 affect on the Bank and the consolidated
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 the Banks assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices. The
Banks capital amounts and classification 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 table below) of total and
Tier I capital (as defined in the regulations) to risk-weighted assets (as defined),
and of Tier I capital (as defined) to average assets (as defined). Management
believes, as of December 31, 2010 and December 31, 2009, that the Bank met all capital
adequacy requirements to which it was subject.
 As of December 31, 2010, the most recent notification from the OTS categorized the Bank
as well capitalized under the regulatory framework for prompt corrective action. There
are no conditions or events since that notification that management believes have
changed the institutions prompt corrective action category.
 The Banks actual capital amounts and ratios are presented in the following table.
Dollar amounts are presented in thousands.
 To be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2010:Total capital
(to risk-weighted assets)
    
    $
    39,659
    
    
    
    20.78
    %
    
    $
    15,266
    
    
    
    8.00
    %
    
    $
    19,082
    
    
    
    10.00
    %Tier I capital
(to risk-weighted assets)
    
    
    37,453
    
    
    
    19.63
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    11,449
    
    
    
    6.00
    %Tier I capital
(to adjusted total assets)
    
    
    37,453
    
    
    
    13.53
    %
    
    
    11,070
    
    
    
    4.00
    %
    
    
    13,838
    
    
    
    5.00
    %Tangible capital
(to adjusted total assets)
    
    
    37,453
    
    
    
    13.53
    %
    
    
    4,151
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/A
  F-23




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 9 Minimum Regulatory Capital Requirements
 To be WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2009:Total capital
(to risk-weighted assets)
    
    $
    27,223
    
    
    
    15.33
    %
    
    $
    14,202
    
    
    
    8.00
    %
    
    $
    17,753
    
    
    
    10.00
    %Tier I capital
(to risk-weighted assets)
    
    
    25,002
    
    
    
    14.08
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    10,652
    
    
    
    6.00
    %Tier I capital
(to adjusted total assets)
    
    
    25,002
    
    
    
    9.07
    %
    
    
    11,020
    
    
    
    4.00
    %
    
    
    13,776
    
    
    
    5.00
    %Tangible capital
(to adjusted total assets)
    
    
    25,002
    
    
    
    9.07
    %
    
    
    4,133
    
    
    
    1.50
    %
    
    
    N/A
    
    
    
    N/A
 Note 10. Income Taxes
 Net deferred tax assets consist of the following components as of December 31, 2010 and
December 31, 2009:
 December 31,2010
    
    
    2009Deferred tax assets:Allowance for loan losses
    
    $
    766,610
    
    
    $
    555,084Deferred compensation
    
    
    683,449
    
    
    
    637,177Executive benefit plan
    
    
    145,739
    
    
    
    159,746Other
    
    
    529,391
    
    
    
    114,9012,125,189
    
    
    
    1,466,908Deferred tax liabilities:FHLB stock dividends
    
    
    375,510
    
    
    
    375,510Depreciable assets
    
    
    165,285
    
    
    
    214,657Other
    
    
    442,334
    
    
    
    507,136983,129
    
    
    
    1,097,303Net deferred tax assets
    
    $
    1,142,060
    
    
    $
    369,605
 The provision for income taxes charged to income for the years ended December 31, 2010
and 2009, consists of the following:
 Years EndedDecember 31,2010
    
    
    2009Current tax expense
    
    $
    706,863
    
    
    $
    880,553Deferred benefit
    
    
    (713,470
    )
    
    
    (236,293
    )(Benefit) provision for income taxes
    
    $
    (6,607
    )
    
    $
    644,260
  F-24




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 10. Income Taxes
 The income tax (benefit) provision is less than the expected tax provision computed by
multiplying income before income taxes by the statutory federal income tax rates. The
reasons for this difference are as follows:
 Years Ended December 31,2010
    
    
    %
    
    
    2009
    
    
    %Expected tax at statutory rates
    
    $
    284,500
    
    
    
    34.00
    %
    
    $
    676,400
    
    
    
    34.00
    %Tax-exempt earnings on
life insurance policies
    
    
    (122,600
    )
    
    
    (14.65
    )
    
    
    (99,100
    )
    
    
    (4.98
    )Tax-exempt interest
    
    
    (76,500
    )
    
    
    (9.14
    )
    
    
    (82,650
    )
    
    
    (4.15
    )State income taxes, net of federal
income tax benefit
    
    
    35,900
    
    
    
    4.29
    
    
    
    85,350
    
    
    
    4.29Other
    
    
    (127,907
    )
    
    
    (15.29
    )
    
    
    64,260
    
    
    
    3.23(Benefit) provision for income taxes
    
    $
    (6,607
    )
    
    
    (.79
    )%
    
    $
    644,260
    
    
    
    32.39
    %
 Note 11. Employee Benefits
 401(k)Plan
 The Bank has adopted a 401(k) plan covering substantially all employees. Employees are
allowed to contribute up to 75% of earnings and, in addition, the Bank will match a
portion of the employees contributions. The expenses incurred by the Bank for the plan
totaled $318,988 and $305,935 for the years ended December 31, 2010 and 2009,
respectively.
 2010 Equity Incentive Plan
 The Athens Bancshares Corporation 2010 Equity Incentive Plan (the 2010 Plan) was
approved by the stockholders at the annual meeting of stockholders held on July 14,
2010. Under the terms of the 2010 Plan, the Company may grant restricted stock awards
and stock options to its employees, officers, and directors. The purpose of the 2010
Plan is to promote the success of the Company by linking the personal interests of its
employees, officers, and directors to the interest of the Companys shareholders, and by
providing participants with an incentive for remarkable performance. All of the
Companys employees, officers and directors are eligible to participate in the 2010
Plan.
 Under terms of the 2010 Plan, the Company is authorized to issue up to 277,725 stock
options. The Company granted stock options to its directors, officers, and employees on
December 15, 2010.
  F-25




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 11. Employee Benefits
 2010 Equity Incentive Plan(Continued)
 Both incentive stock options and non-qualified stock options were granted under the 2010
Plan. The exercise price for each option was equal to the market price of the Companys
stock on the date of grant and the maximum term of each option is ten years. The
vesting period for all options is five years from the date of grant. The Company
recognizes compensation expense over the vesting period, based on the
grant-date fair value of the options granted. The fair value of each option granted is
estimated on the date of grant using the Black-Scholes option-pricing model. No
compensation expense was recognized for stock options in 2010. At December 31, 2010,
the total remaining compensation cost to be recognized on non-vested options is
approximately $271,000.
 A summary of the activity in the 2010 Plan as of December 31, 2010, is presented in the
following table:
 Year Ended December 31, 2010Average
    
    
    AggregateExercise
    
    
    IntrinsicShares
    
    
    Price
    
    
    Value(1)Outstanding at beginning of year
    
    
    
    
    
    
    N/AGranted
    
    
    236,062
    
    
    $
    11.50Exercised
    
    
    
    
    
    
    N/AForfeited
    
    
    
    
    
    
    N/AOutstanding at end of year
    
    
    236,062
    
    
    
    11.50
    
    
    $
    233,701Options exercisable at year-end
    
    
    
    
    
    
    N/A
    
    
    
    Weighted-average fair value of options granted
during the year
    
    $
    1.27
 (1)
    
    The aggregate intrinsic value of a stock option in the table above
represents the total pre-tax intrinsic value (the amount by which the current
market value of the underlying stock exceeds the exercise price of the option) that
would have been received by the option holders had all option holders exercised
their options on December 31, 2010. This amount changes based on changes in the
market value of the Companys stock. Other information regarding options outstanding and exercisable as of December
31, 2010, is as follows:
 Options Outstanding
    
    
    Options ExercisableWeighted-AverageWeighted-
    
    
    Remaining
    
    
    
    
    
    
    Weighted-Number
    
    
    Average
    
    
    Contractual
    
    
    Number
    
    
    AverageExercise
    
    of
    
    
    Exercise
    
    
    Life
    
    
    of
    
    
    ExercisePrice
    
    Shares
    
    
    Price
    
    
    In Years
    
    
    Shares
    
    
    Price$11.50
    
    
    236,062
    
    
    $
    11.50
    
    
    
    10.0
    
    
    
    
    
    
    $
    
  F-26




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 11. Employee Benefits
 2010 Equity Incentive Plan(Continued)
 Information pertaining to non-vested options for the year ended December 31, 2010, is as
follows:
 Weighted AverageNumber of Shares
    
    
    Grant Date Fair ValueNon-vested options, December 31, 2009
    
    
    
    
    
    $
    Granted
    
    
    236,062
    
    
    
    1.27Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Non-vested options, December 31, 2010
    
    
    236,062
    
    
    $
    1.27
 The weighted-average assumptions used to determine the fair value of options granted are
detailed in the table below:
 2010Risk-free interest rate
    
    
    3.18
    %Dividend yield
    
    
    2.00
    %Expected volatility
    
    
    7.23
    %Expected life
    
    8.00 Years
 The expected volatility is based upon historical volatility. The risk-free interest
rates for periods within the contractual life of the awards are based on the U.S.
Treasury yield curve in effect at the time of the grant. The expected life is based on
industry trends and managements expectations. The dividend yield assumption is based
on the Companys history and expectation of dividend payouts.
 Employee Stock Ownership Plan (ESOP)
 The Company sponsors a leveraged ESOP that covers substantially all employees who meet
certain age and eligibility requirements. As part of the initial public offering, the
ESOP purchased 222,180 shares, or approximately 8% of the 2,777,250 shares issued with
the proceeds of a 15 year loan from the Company which is payable in annual installments
and bears interest at 3.25%.
 The Bank has committed to make contributions to the ESOP sufficient to support the debt
service of the loan. The loan is secured by the unallocated shares, which are held in a
suspense account, and are allocated among the participants as the loan is repaid. Cash
dividends paid on allocated shares are distributed to the participants and cash
dividends paid on unallocated shares are used to repay the outstanding debt of the ESOP.
  F-27




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 11. Employee Benefits
 Employee Stock Ownership Plan (ESOP)(Continued)
 ESOP shares are held by the plan trustee in a suspense account until allocated to
participant accounts. Shares released from the suspense account are allocated to
participants on the basis of their relative compensation in the year of allocation.
Participants become vested in the allocated shares upon four years of employment with
the Company. Any forfeited shares are allocated to other participants in the same
proportion as contributions.
 As ESOP shares are allocated to participants, the Company recognizes compensation
expense equal to the fair value of the earned ESOP shares. Total compensation expense
for the year ended December 31, 2010 was $163,525. A detail of ESOP shares as of
December 31, 2010, is as follows:
 2010Allocated shares
    
    
    14,812Unallocated shares
    
    
    207,368Total ESOP shares
    
    
    222,180Fair value of unreleased shares at
December 31, 2010
    
    $
    2,590,026
 Executive Benefit Plans
 The Bank has adopted a noncontributory executive salary continuation agreement and an
executive salary continuation plan for its former president. The following is a summary
of the plans funded status:
 December 31,2010
    
    
    2009Projected benefit obligation at beginning of period
    
    $
    417,200
    
    
    $
    449,863Service cost and net periodic benefit cost
    
    
    23,077
    
    
    
    26,996Payments to former president
    
    
    (59,659
    )
    
    
    (59,659
    )Net benefit liability at end of period
    
    $
    380,618
    
    
    $
    417,200
 The weighted-average discount rate used in determining the present value of the benefit
liability is 6%.
 Also, the Company has employment agreements with three of its executive officers for
post-retirement compensation and other related benefits. As of December 31, 2010 and
December 31, 2009, the net present value liability of these benefits was approximately
$568,000 and $341,000, respectively. The expenses incurred by the Bank for these
executive benefits totaled $226,944 and $172,592 for the years ended December 31, 2010
and 2009, respectively.
  F-28




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 12. Deferred Compensation
 The Bank has established deferred compensation plans for the benefit of its board of
directors. Under the plans, any director electing to defer directors fees will be
entitled to receive the accumulated benefits, including interest earned, over a period
of five to fifteen years following retirement. The Bank recognizes the liability for
these benefits over the service period. As of December 31, 2010 and December 31, 2009,
the liability for these benefits was $736,789 and $888,142, respectively. The expenses
incurred by the Bank for these plans totaled $19,413 and $21,991 for the years ended
December 31, 2010 and 2009, respectively. The Bank, utilizing bank owned life
insurance, has insured the lives of certain directors who participate in the deferred
compensation plans to assist in the funding of the deferred compensation liability. The
Bank is the owner and beneficiary of the insurance policies.
 Note 13. Fair Value Disclosures
 The Company uses fair value measurements to record fair value adjustments to certain
assets and liabilities and to determine fair value disclosures. In accordance with
ASC Topic 820, Fair Value Measurements and Disclosures,the fair value of a financial
instrument is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
Fair value is best determined based upon quoted market prices. In cases where quoted
market prices are not available, fair values are based on estimates using present value
or other valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash flows.
Accordingly, the fair value estimates may not be realized in an immediate settlement of
the instrument.
 ASC Topic 820 provides a consistent definition of fair value, which focuses on exit
price in an orderly transaction between market participants at the measurement date
under current market conditions. If there has been a significant decrease in the volume
and level of activity for the asset or liability, a change in valuation technique or the
use of multiple valuation techniques may be appropriate. In such instances, determining
the price at which willing market participants would transact at the measurement date
under current market conditions depends on the facts and circumstances and requires the
use of significant judgment. The fair value is a reasonable point within the range that
is most representative of fair value under current market conditions.
 ASC Topic 820 also establishes a three-tier fair value which requires an entity to
maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value, as follows:
 Level 1  Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the Bank has the ability to access.
 Level 2  Significant other observable inputs other than Level 1 prices, such as quoted
prices for similar assets or liabilities in active markets, quoted prices in markets
that are not active and other inputs that are observable or can be corroborated by
observable market data.
 Level 3  Significant unobservable inputs that reflect a companys own assumptions
about the assumptions that market participants would use in pricing an asset or
liability.
  F-29




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 13. Fair Value Disclosures
 A financial instruments categorization within the valuation hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. There have
been no changes in the methodologies used at December 31, 2010 and 2009.
 The following methods and assumptions were used by the Company in estimating fair value
disclosures for financial instruments:
 Cash, cash equivalents, and interest-bearing time deposits in banks:
 The carrying amounts of cash, cash equivalents, and interest-bearing time deposits in
banks approximate fair values based on the short-term nature of the assets.
 Securities:
 Fair values are estimated using pricing models and discounted cash flows that consider
standard input factors such as observable market data, benchmark yields, interest rate
volatilities, broker/dealer quotes, and credit spreads. Securities classified as
available for sale are reported at fair value utilizing Level 2 inputs.
 Federal Home Loan Bank stock, at cost:
 The carrying value of FHLB stock approximates fair value based on the redemption
provisions of the FHLB.
 Loans:
 For variable-rate loans that reprice frequently and with no significant change in credit
risk, fair values are based on carrying values. Fair value for fixed-rate loans are
estimated using discounted cash flow analyses, using market interest rates for
comparable loans. The Company does not record loans at fair value on a recurring basis.
However, from time to time, a loan is considered impaired and an allowance for loan
losses is established. Loans for which it is probable that payment of interest and
principal will not be made in accordance with the contractual terms of the loan
agreement are considered impaired. Once a loan is identified as individually impaired,
management measures impairment in accordance with ASC Topic 310, Receivables. The fair
value of impaired loans is estimated using several methods including collateral value,
liquidation value and discounted cash flows. Those impaired loans not requiring an
allowance represent loans for which the fair value of the expected repayments or
collateral exceed the recorded investments in such loans. At December 31, 2010,
substantially all of the total impaired loans were evaluated based on the fair value of
collateral. In accordance with ASC Topic 310, impaired loans where an allowance is
established based on the fair value of collateral require classification in the fair
value hierarchy. When the fair value of the collateral is based on the observable
market price or a current, independent appraised value, the Company records the impaired
loan as nonrecurring Level 2. The Company records the impaired loan as nonrecurring
Level 3 when management has become aware of events that have significantly impacted the
condition or marketability of the collateral since the most recent appraisal. In this
case, management will reduce the appraisal value based on factors determined by their
judgment and collective knowledge of the collateral and market conditions.
  F-30




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 13. Fair Value Disclosures
 Cash surrender value of bank owned life insurance:
 The carrying amounts of cash surrender value of bank owned life insurance approximate
their fair value. The carrying amount is based on information received from the
insurance carriers indicating the financial performance of the policies and the amount
the Company would receive should the policies be surrendered. The Company reflects
these assets within Level 2 of the valuation hierarchy.
 Foreclosed real estate:
 Foreclosed real estate consisting of properties obtained through foreclosure or in
satisfaction of loans is initially recorded at fair value, determined on the basis of
current appraisals, comparable sales, and other estimates of value obtained principally
from independent sources, adjusted for estimated selling costs. At the time of
foreclosure, any excess of the loan balance over the fair value of the real estate held
as collateral is treated as a charge against the allowance for loan losses. Gains or
losses on sale and any subsequent adjustments to the fair value are recorded as a
component of foreclosed real estate expense. Foreclosed real estate is included in
Level 2 of the valuation hierarchy.
 Deposits:
 The fair value of deposits with no stated maturity, such as noninterest-bearing demand
deposits and NOW, money market, and savings accounts, is equal to the amount payable on
demand at the reporting date. The fair value of time deposits is based on the
discounted value of contractual cash flows. The discount rate is estimated using the
rates currently offered for deposits of similar remaining maturities.
 Securities sold under agreements to repurchase:
 The estimated fair value of these liabilities, which are extremely short term,
approximates their carrying value.
 Federal Home Loan Bank advances:
 Rates currently available to the Bank for debt with similar terms and remaining
maturities are used to estimate the fair value of existing debt.
 Accrued interest:
 The carrying amounts of accrued interest approximate fair value.
 Commitments to extend credit, letters of credit and lines of credit:
 The fair value of commitments is estimated using the fees currently charged to enter
into similar agreements, taking into account the remaining terms of the agreements and
the present creditworthiness of the counterparties. For fixed-rate loan commitments,
fair value also considers the difference between current levels of interest rates and
the committed rates.
  F-31




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 13. Fair Value Disclosures
 The tables below present the recorded amount of assets and liabilities measured at fair
value on a recurring basis:
 Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    OtherBalance as of
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Securities available
for sale:Securities of U.S.
Government agencies
and corporations
    
    $
    29,338,706
    
    
    $
    
    
    
    $
    29,338,706
    
    
    $
    Mortgage-backed
securities
    
    
    6,671,139
    
    
    
    
    
    
    
    6,671,139
    
    
    
    State and municipal
securities
    
    
    5,527,741
    
    
    
    
    
    
    
    5,527,741
    
    
    
    Total securities
available for sale
    
    $
    41,537,586
    
    
    
    
    
    
    $
    41,537,586
    
    
    
    Cash surrender value
of bank owned life
insurance
    
    $
    8,924,120
    
    
    $
    
    
    
    $
    8,924,120
    
    
    $
    
 Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    OtherBalance as of
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Securities available
for sale:Securities of U.S.
Government agencies
and corporations
    
    $
    8,602,426
    
    
    $
    
    
    
    $
    8,602,426
    
    
    $
    Mortgage-backed
securities
    
    
    10,533,486
    
    
    
    
    
    
    
    10,533,486
    
    
    
    State and municipal
securities
    
    
    4,448,715
    
    
    
    
    
    
    
    4,448,715
    
    
    
    Total securities
available for sale
    
    $
    23,584,627
    
    
    $
    
    
    
    $
    23,584,627
    
    
    $
    Cash surrender value
of bank owned life
insurance
    
    $
    6,468,054
    
    
    $
    
    
    
    $
    6,468,054
    
    
    $
    
 The Company has no assets or liabilities whose fair values are measured on a
recurring basis using Level 3 inputs.
  F-32




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 13.
    
    Fair Value Disclosures(Continued)
 The tables below present information about assets and liabilities for which a
nonrecurring change in fair value was recorded:
 Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    OtherBalance as of
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired loans
    
    $
    6,198,750
    
    
    $
    
    
    
    $
    6,126,747
    
    
    $
    72,003Foreclosed real estate
    
    
    1,102,527
    
    
    
    
    
    
    
    1,102,527
    
    
    
    
 Quoted Prices in
    
    
    Significant
    
    
    SignificantActive Markets
    
    
    Other
    
    
    OtherBalance as of
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired loans
    
    $
    4,698,930
    
    
    $
    
    
    
    $
    4,687,430
    
    
    $
    11,500Foreclosed real estate
    
    
    779,642
    
    
    
    
    
    
    
    779,642
    
    
    
    
 The carrying amount and estimated fair value of the Banks financial instruments
at December 31, 2010 and 2009, are as follows (in thousands):
 2010
    
    
    2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assets:Cash and cash equivalents
    
    $
    14,316
    
    
    $
    14,316
    
    
    $
    40,707
    
    
    $
    40,707Interest-bearing time deposits in banks
    
    
    747
    
    
    
    747
    
    
    
    1,279
    
    
    
    1,279Securities
    
    
    41,538
    
    
    
    41,538
    
    
    
    23,585
    
    
    
    23,585Federal Home Loan Bank stock, at cost
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899
    
    
    
    2,899Loans, net
    
    
    199,386
    
    
    
    201,211
    
    
    
    191,404
    
    
    
    193,362Cash surrender value of bank
owned life insurance
    
    
    8,924
    
    
    
    8,924
    
    
    
    6,468
    
    
    
    6,468Accrued interest receivable
    
    
    1,111
    
    
    
    1,111
    
    
    
    988
    
    
    
    988Financial liabilities:Deposits
    
    
    215,687
    
    
    
    223,788
    
    
    
    236,064
    
    
    
    242,097Securities sold under agreements
to repurchase
    
    
    795
    
    
    
    795
    
    
    
    899
    
    
    
    899Federal Home Loan Bank advances
    
    
    8,214
    
    
    
    8,486
    
    
    
    10,324
    
    
    
    10,553Accrued interest payable
    
    
    225
    
    
    
    225
    
    
    
    263
    
    
    
    263Unrecognized financial
instruments (net of contract amount):Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letter of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  F-33




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 14. Related Party Transactions
 In the ordinary course of business, the Bank grants loans to principal officers and
directors and their affiliates. The Bank is prohibited from making loans or extensions
of credit to executive officers and directors at different rates or terms than those
offered to the general public. Notwithstanding this rule, federal regulations permit
the Bank to make loans to executive officers at reduced interest rates if the loan is
made under a benefit program generally available to all other employees and does not
give preference to any executive officer over any other employee. All Bank employees
are provided a reduction in their interest rate of approximately 1.00%. Other than a
reduced interest rate, the loans are made on substantially the same terms as those
prevailing at the time for comparable transactions with other persons. Directors do not
participate in this benefit program. Loans to directors are substantially on the same
rates and terms offered to the general public. Further, in managements opinion, these
loans did not involve more than normal risk of collectability or present other
unfavorable features.
 Activity for the years ended December 31, 2010 and 2009, consisted of the following:
 2010
    
    
    2009Beginning balance
    
    $
    1,179,130
    
    
    $
    1,066,209New loans
    
    
    1,016,453
    
    
    
    2,106,042Repayments
    
    
    (592,368
    )
    
    
    (1,993,121
    )Ending balance
    
    $
    1,603,215
    
    
    $
    1,179,130
 The Bank held related party deposits of $5,394,935 and $5,337,406 at December 31, 2010
and 2009, respectively.
 Note 15. Financial Instruments With Off-Balance Sheet Risk
 The Company is party to 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 extend credit and standby letters of credit. These
instruments involve, to varying degrees, elements of credit and interest rate risk in
excess of the amount recorded in the accompanying consolidated balance sheets. Such
financial instruments are recorded when they are funded.
 The Companys exposure to credit loss in the event of nonperformance by the counterparty
to the financial instruments for commitments to extend credit and standby letters of
credit is represented by the contractual amount of those instruments. The Company uses
the same credit policies in making such commitments as it does for instruments that are
included in the balance sheet.
  F-34




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 15. Financial Instruments With Off-Balance Sheet Risk
 At December 31, 2010 and 2009, commitments under standby letters of credit were
approximately $2,494,000 and $2,571,000, respectively. Undisbursed loan commitments
aggregated approximately $21,130,000 and $14,248,000 at December 31, 2010 and 2009,
respectively. Approximately $1,879,000 of the $21,130,000 and $479,000 of the
$14,248,000 undisbursed loan commitments at December 31, 2010 and December 31, 2009,
respectively, represented fixed rate loan commitments for which the interest rates
committed ranged from 2.05% to 18.00% at December 31, 2010 and 3.98% to 21.00% at
December 31, 2009.
 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.
Since many of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The Company
evaluates each customers creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon extension of credit, is
based on managements credit evaluation. Collateral held varies but may include
accounts receivable, inventory, property and equipment, and income-producing commercial
properties.
 Standby letters of credit are conditional commitments issued by the Company to guarantee
the performance of a customer to a third party. Standby letters of credit generally
have fixed expiration dates or other termination clauses and may require payment of a
fee. The credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. The Companys policy for
obtaining collateral, and the nature of such collateral, is essentially the same as that
involved in making commitments to extend credit.
 The Company has not been required to perform on any financial guarantees during any of
the periods presented. The Company has not incurred any losses on its commitments for
the years ended December 31, 2010 and 2009.
 Note 16. Earnings Per Common Share
 Earnings per common share have been computed based on the following:
 2010Net income
    
    $
    843,305Average number of common shares outstanding
    
    
    2,511,543Effect of dilutive stock options
    
    
    206Average number of common shares outstanding used
to calculate diluted earnings per common share
    
    
    2,511,749
  F-35




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 17. Quarterly Data (Unaudited)
 Years Ended December 31,2010
    
    
    2009Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterInterest income
    
    $
    3,695,757
    
    
    $
    3,647,510
    
    
    $
    3,629,285
    
    
    $
    3,556,369
    
    
    $
    3,547,950
    
    
    $
    3,608,877
    
    
    $
    3,719,076
    
    
    $
    3,791,967Interest expense
    
    
    963,361
    
    
    
    1,097,356
    
    
    
    1,144,009
    
    
    
    1,155,580
    
    
    
    1,286,428
    
    
    
    1,367,696
    
    
    
    1,450,273
    
    
    
    1,553,015Net interest
income
    
    
    2,732,396
    
    
    
    2,550,154
    
    
    
    2,485,276
    
    
    
    2,400,789
    
    
    
    2,261,522
    
    
    
    2,241,181
    
    
    
    2,268,803
    
    
    
    2,238,952Provision for loan
losses
    
    
    603,419
    
    
    
    423,925
    
    
    
    473,910
    
    
    
    209,776
    
    
    
    477,537
    
    
    
    428,270
    
    
    
    48,059
    
    
    
    69,674Net interest
income after
provision for
loan losses
    
    
    2,128,977
    
    
    
    2,126,229
    
    
    
    2,011,366
    
    
    
    2,191,013
    
    
    
    1,783,985
    
    
    
    1,812,911
    
    
    
    2,220,744
    
    
    
    2,169,278Noninterest income
    
    
    1,190,152
    
    
    
    1,103,729
    
    
    
    1,167,943
    
    
    
    944,061
    
    
    
    1,104,898
    
    
    
    1,076,823
    
    
    
    1,271,053
    
    
    
    1,217,345Noninterest
expenses
    
    
    2,666,885
    
    
    
    2,743,625
    
    
    
    2,765,271
    
    
    
    3,850,991
    
    
    
    2,648,619
    
    
    
    2,629,979
    
    
    
    2,790,488
    
    
    
    2,598,613Income (loss)
before income
taxes
    
    
    652,244
    
    
    
    486,333
    
    
    
    414,038
    
    
    
    (715,917
    )
    
    
    240,264
    
    
    
    259,755
    
    
    
    701,309
    
    
    
    788,010Income taxes
    
    
    52,099
    
    
    
    136,985
    
    
    
    114,281
    
    
    
    (309,972
    )
    
    
    186,451
    
    
    
    52,119
    
    
    
    118,425
    
    
    
    287,265Net income (loss)
    
    $
    600,145
    
    
    $
    349,348
    
    
    $
    299,757
    
    
    $
    (405,945
    )
    
    $
    53,813
    
    
    $
    207,636
    
    
    $
    582,884
    
    
    $
    500,745Earnings (loss) per
common share:Basic
    
    $
    0.24
    
    
    $
    0.13
    
    
    $
    0.11
    
    
    $
    (0.15
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ADiluted
    
    $
    0.24
    
    
    $
    0.13
    
    
    $
    0.11
    
    
    $
    (0.15
    )
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
  F-36




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 18. Condensed Financial Statements of Parent Company
 Financial information pertaining only to Athens Bancshares Corporation is as follows:
 Balance Sheet
 December 31, 2010AssetsCash and due from banks
    
    $
    8,982,678Investment in wholly owned subsidiary
    
    
    38,001,035Other assets
    
    
    2,625,188Total assets
    
    $
    49,608,901Liabilities and Stockholders EquityAccrued expenses
    
    $
    31,706Total liabilities
    
    
    31,706Stockholders EquityPreferred stock, $0.01 par value; authorized 10,000,000;
none issued
    
    
    Common stock, $0.01 par value; 50,000,000 shares
authorized; 2,777,250 shares issued and 2,475,082
outstanding at December 31, 2010
    
    
    27,773Additional paid-in capital
    
    
    26,494,832Common stock acquired by benefit plans:Restricted stock
    
    
    (1,085,423
    )Unallocated common stock held by:Employee Stock Ownership Plan Trust
    
    
    (2,073,680
    )Retained earnings
    
    
    26,086,719Accumulated other comprehensive income
    
    
    126,974Total stockholders equity
    
    
    49,577,195Total liabilities and stockholders equity
    
    $
    49,608,901
  F-37




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##### Table of Contents



ATHENS BANCSHARES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010 and 2009
 Note 18. Condensed Financial Statements of Parent Company
 Statement of Income
 Year Ended December 31, 2010IncomeInterest income
    
    $
    103,657Equity in undistributed earnings of subsidiary
    
    
    1,657,597Total income
    
    
    1,761,254Operating expenses
    
    
    1,439,739Income before income taxes
    
    
    321,515Applicable income tax (benefit)
    
    
    (521,790
    )Net income
    
    $
    843,305Statement of Cash FlowsCash flows from operating activities:Net income
    
    $
    843,305Adjustments to reconcile net income to net
cash used in operating activities:Equity in undistributed income of subsidiary
    
    
    (1,657,597
    )Increase in other assets and liabilities
    
    
    (393,900
    )Net cash used in operating activities
    
    
    (1,208,192
    )Cash flows from investing activities:Capital contribution to subsidiary
    
    
    (12,753,600
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    24,285,400Dividends paid
    
    
    (255,507
    )Stock purchased by restricted stock trust
    
    
    (1,085,423
    )Net cash provided by financing activities
    
    
    22,944,470Net increase in cash and cash equivalents
    
    
    8,982,678Cash and cash equivalents at beginning of period
    
    
    Cash and cash equivalents at end of period
    
    $
    8,982,678
  F-38




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##### Table of Contents



SIGNATURES
  ATHENS BANCSHARES CORPORATIONDate: March 18, 2011
    By:
    /s/ Jeffrey L. CunninghamJeffrey L. CunninghamPresident, Chief Executive Officer and Director  Name
    
    Title
    
    Date/s/ Jeffrey L. Cunningham

Jeffrey L. Cunningham
    
    President, Chief Executive Officer
and Director
(principal executive officer)
    
    March 18, 2011/s/ Michael R. Hutsell

Michael R. Hutsell
    
    Treasurer and Chief Financial Officer
(principal accounting and financial officer)
    
    March 18, 2011/s/ Dr. James L. Carter, Jr.

Dr. James L. Carter, Jr.
    
    Director
    
    March 18, 2011/s/ Elaine M. Cathcart

Elaine M. Cathcart
    
    Director
    
    March 18, 2011/s/ G. Scott Hannah
    
    Director
    
    March 18, 2011G. Scott Hannah/s/ G. Timothy Howard

G. Timothy Howard
    
    Director
    
    March 18, 2011/s/ Myra NanDora Jenne

Myra NanDora Jenne
    
    Director
    
    March 18, 2011/s/ M. Darrell Murray
    
    Director
    
    March 18, 2011M. Darrell Murray/s/ Lyn B. Thompson

Lyn B. Thompson
    
    Director
    
    March 18, 2011/s/ Larry D. Wallace
    
    Director
    
    March 18, 2011Larry D. Wallace