| Maryland                                                       | 36-4678532                        |
|----------------------------------------------------------------|-----------------------------------|
| (State or other jurisdiction of incorporation of organization) | (IRS Employer Identification No.) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Page Number   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
| PART I                                                                             FINANCIAL INFORMATION  |          |
| Item 1.     Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                       |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Condensed Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010                                                                                                                                                                                                                                                                                                                                                                                                                    |  2       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Condensed Consolidated Statements of Earnings for the Three-Month Periods Ended March 31, 2011 and 2010 (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                             |  3       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Condensed Consolidated Statements of Retained Earnings for the Three-Month Periods Ended March 31, 2011 and 2010 (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                    |   4 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Condensed Consolidated Statements of Cash Flows For the Three-Month Periods Ended March 31, 2011 and 2010 (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                           |  5       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Notes to Condensed Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 6-17          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 2.     Management's Discussion and Analysis of Financial Conditionand Results of Operations                                                                                                                                                                                                                                                                                                                                                                                       |  18-25   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 4.     Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 26            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| PART II  OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 1.     Legal Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 27            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 1A.   Risk Factors                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 27            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 2.     Unregistered Sales of Equity Securities and Use                          of Proceeds                                                                                                                                                                                                                                                          |  27      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 3.     Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                                                                                                                                                                            | 27            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 4.     Submission of Matters to a Vote of Security                          Holders                                                                                                                                                                                                                                                             |  27      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 5.     Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 27            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| Item 6.     Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 27            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| SIGNATURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 28            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
| EXHIBIT INDEX                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |

|                                                          |   | At March 31,2011 |    |   | At December 31,2010 |   |
|---------------------------------------------------------------|--------|------------------|---------|--------|---------------------|--------|
|                                                          |   | (Unaudited)      |    |   |                |   |
| Assets                                                        |   |             |    |   |                |   |
|                                                          |   |             |    |   |                |   |
| Cash and due from banks                                       |   | $                | 1,729   |   |                |   | 1,036 |   |
| Interest-bearing deposits with banks                          |   |             | 3,668   |   |                |   | 1,709 |   |
| Federal funds sold                                            |   |             | 27,613  |   |                |   | 16,579 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Cash and cash equivalents                                     |   |             | 33,010  |   |                |   | 19,324 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Securities held to maturity (fair value of $2,880 and $3,241) |   |             | 2,682   |   |                |   | 3,027 |   |
| Loans, net of allowance for loan losses of $1,705 and $1,621  |   |             | 114,465 |   |                |   | 118,060 |   |
| Premises and equipment, net                                   |   |             | 3,871   |   |                |   | 3,979 |   |
| Federal Home Loan Bank stock, at cost                         |   |             | 298     |   |                |   | 298 |   |
| Deferred income taxes                                         |   |             | 2,223   |   |                |   | 2,228 |   |
| Accrued interest receivable                                   |   |             | 504     |   |                |   | 551 |   |
| Foreclosed real estate                                        |   |             | 599     |   |                |   | 596 |   |
| Other assets                                                  |   |             | 1,973   |   |                |   | 1,861 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Total assets                                                  |   | $                | 159,625 |   |                |   | 149,924 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Liabilities and Retained Earnings                             |   |             |    |   |                |   |   |   |
|                                                          |   |             |    |   |                |   |   |   |
| Liabilities:                                                  |   |             |    |   |                |   |   |   |
| Noninterest-bearing deposit accounts                          |   |             | 22,630  |   |                |   | 19,985 |   |
| Money-market deposit accounts                                 |   |             | 23,793  |   |                |   | 23,562 |   |
| Savings accounts                                              |   |             | 44,626  |   |                |   | 33,098 |   |
| Time deposits                                                 |   |             | 52,102  |   |                |   | 57,112 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Total deposits                                                |   |             | 143,151 |   |                |   | 133,757 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Official checks                                               |   |             | 807     |   |                |   | 520 |   |
| Advances by borrowers for taxes and insurance                 |   |             | 197     |   |                |   | 112 |   |
| Other liabilities                                             |   |             | 423     |   |                |   | 496 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Total liabilities                                             |   |             | 144,578 |   |                |   | 134,885 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Retained earnings                                             |   |             | 15,047  |   |                |   | 15,039 |   |
|                                                          |   |             |    |   |                |   |   |   |
| Total liabilities and retained earnings                       |   | $                | 159,625 |   |                |   | 149,924 |   |

|                                                |   | Three Months Ended |   |
|-----------------------------------------------------|--------|--------------------|--------|
|                                                |   | March 31,          |   |
|                                                |   | 2011               |   |   | 2010 |   |
| Interest income:                                    |   |               |   |   |   |   |
| Loans                                               |   | $                  | 1,707  |   |   |   | 1,964 |   |
| Mortgage-backed securities                          |   |               | 38     |   |   |   | 54 |   |
| Other                                               |   |               | 10     |   |   |   | 1 |   |
|                                                |   |               |   |   |   |   |   |   |
| Total interest income                               |   |               | 1,755  |   |   |   | 2,019 |   |
|                                                |   |               |   |   |   |   |   |   |
| Interest expense-                                   |   |               |   |   |   |   |   |   |
| Deposit accounts                                    |   |               | 303    |   |   |   | 501 |   |
|                                                |   |               |   |   |   |   |   |   |
| Net interest income                                 |   |               | 1,452  |   |   |   | 1,518 |   |
|                                                |   |               |   |   |   |   |   |   |
| Provision for loan losses                           |   |               | 225    |   |   |   | 300 |   |
|                                                |   |               |   |   |   |   |   |   |
| Net interest income after provision for loan losses |   |               | 1,227  |   |   |   | 1,218 |   |
|                                                |   |               |   |   |   |   |   |   |
| Noninterest income:                                 |   |               |   |   |   |   |   |   |
| Fees and service charges on deposit accounts        |   |               | 560    |   |   |   | 542 |   |
| Fees and charges on loans                           |   |               | 21     |   |   |   | 20 |   |
|                                                |   |               |   |   |   |   |   |   |
| Total noninterest income                            |   |               | 581    |   |   |   | 562 |   |
|                                                |   |               |   |   |   |   |   |   |
| Noninterest expenses:                               |   |               |   |   |   |   |   |   |
| Salaries and employee benefits                      |   |               | 892    |   |   |   | 839 |   |
| Occupancy and equipment                             |   |               | 269    |   |   |   | 296 |   |
| Data processing services                            |   |               | 179    |   |   |   | 160 |   |
| Professional fees                                   |   |               | 139    |   |   |   | 119 |   |
| Federal Deposit Insurance Corporation insurance     |   |               | 46     |   |   |   | 58 |   |
| Advertising and promotion                           |   |               | 14     |   |   |   | 19 |   |
| Stationary and supplies                             |   |               | 17     |   |   |   | 9 |   |
| Other                                               |   |               | 239    |   |   |   | 257 |   |
|                                                |   |               |   |   |   |   |   |   |
| Total noninterest expenses                          |   |               | 1,795  |   |   |   | 1,757 |   |
|                                                |   |               |   |   |   |   |   |   |
| Earnings before income taxes                        |   |               | 13     |   |   |   | 23 |   |
|                                                |   |               |   |   |   |   |   |   |
| Income taxes                                        |   |               | 5      |   |   |   | 9 |   |
|                                                |   |               |   |   |   |   |   |   |
| Net earnings                                        |   | $                  | 8      |   |   |   | 14 |   |
|                                                |   |               |   |   |   |   |   |   |

|                                     |   | March 31,  |   |
|------------------------------------------|--------|-----------------|--------|
|                                     |   | 2011            |   |   | 2010 |   |
|                                     |   |            |   |   |   |   |
| Retained earnings at beginning of period |   | $               | 15,039 |   |   |   | 14,653 |   |
|                                     |   |            |   |   |   |   |   |   |
| Net earnings                             |   |            | 8      |   |   |   | 14 |   |
|                                     |   |            |   |   |   |   |   |   |
| Retained earnings at end of period       |   | $               | 15,047 |   |   |   | 14,667 |   |
|                                     |   |            |   |   |   |   |   |   |
|                                     |   |            |   |   |   |   |   |   |
|                                     |   |            |   |   |   |   |   |   |

|                                                                         |   | Three Months Ended March 31,  |   |
|------------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                         |   | 2011                               |   |   | 2010 |   |
| Cash flows from operating activities:                                        |   |                               |   |   |   |   |
| Net earnings                                                                 |   | $                                  | 8      |   |   |   | 14 |   |
| Adjustments to reconcile net earnings to net cash from operating activities: |   |                               |   |   |   |   |   |   |
| Depreciation                                                                 |   |                               | 122    |   |   |   | 148 |   |
| Provision for loan losses                                                    |   |                               | 225    |   |   |   | 300 |   |
| Deferred income taxes                                                        |   |                               | 5      |   |   |   | 9 |   |
| Accretion of discounts on securities                                         |   |                               | (3     | ) |   |   | (3 | ) |
| Net amortization of deferred loan fees and costs                             |   |                               | 2      |   |   |   | 7 |   |
| Decrease in accrued interest receivable                                      |   |                               | 47     |   |   |   | 13 |   |
| (Increase) decrease in other assets                                          |   |                               | (112   | ) |   |   | 278 |   |
| Increase (decrease) in official checks                                       |   |                               | 287    |   |   |   | (225 | ) |
| Net increase in advances by borrowers for taxes and insurance                |   |                               | 85     |   |   |   | 106 |   |
| (Decrease) increase in other liabilities                                     |   |                               | (73    | ) |   |   | 80 |   |
| Capital expenditures for foreclosed real estate                              |   |                               | (3     | ) |   |   | - |   |
|                                                                         |   |                               |   |   |   |   |   |   |
| Net cash provided by operating activities                                    |   |                               | 589    |   |   |   | 727 |   |
|  Cash flows from investing activities:                                  |   |                               |   |   |   |   |   |   |
| Net repayment of held-to-maturity securities                                 |   |                               | 348    |   |   |   | 326 |   |
| Net decrease in loans                                                        |   |                               | 3,368  |   |   |   | 1,481 |   |
| Net purchases of premises and equipment                                      |   |                               | (14    | ) |   |   | - |   |
|                                                                         |   |                               |   |   |   |   |   |   |
| Net cash provided by investing activities                                    |   |                               | 3,702  |   |   |   | 1,807 |   |
|                                                                         |   |                               |   |   |   |   |   |   |
| Cash flows from financing activity-                                          |   |                               |   |   |   |   |   |   |
| Net decrease in deposits                                                     |   |                               | 9,394  |   |   |   | (4,803 | ) |
|                                                                         |   |                               |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents                             |   |                               | 13,686 |   |   |   | (2,269 | ) |
|                                                                         |   |                               |   |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                             |   |                               | 19,324 |   |   |   | 11,147 |   |
|                                                                         |   |                               |   |   |   |   |   |   |
| Cash and cash equivalents at end of period                                   |   | $                                  | 33,010 |   |   |   | 8,878 |   |
|                                                                         |   |                               |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information-                            |   |                               |   |   |   |   |   |   |
| Cash paid during the period for:                                             |   |                               |   |   |   |   |   |   |
| Income taxes                                                                 |   | $                                  | -      |   |   |   | - |   |
|                                                                         |   |                               |   |   |   |   |   |   |
| Interest                                                                     |   | $                                  | 303    |   |   |   | 501 |   |
|                                                                         |   |                               |   |   |   |   |   |   |
| Noncash transaction-                                                         |   |                               |   |   |   |   |   |   |
| Transfer from loans to foreclosed real estate                                |   | $                                  | -      |   |   |   | 56 |   |
|                                                                         |   |                               |   |   |   |   |   |   |

|   | Sunshine Financial, Inc. ("Sunshine Financial" or the "Holding Company"), a Maryland corporation, is the holding company for Sunshine Savings Bank (the "Bank") and owns all the outstanding common stock of the Bank.  The Bank completed its reorganization from the mutual to stock holding company form of organization on April 5, 2011. A total of 1,234,454 shares of common stock were sold in the subscription and community offerings at a price of $10.00 per share.  In accordance with the Plan of Conversion and Reorganization (the "Plan"), the Holding Company has succeeded to all rights and obligations of Sunshine Savings MHC and the old Sunshine Financial, Inc. ("Old Sunshine").  See Note 12 for details of the conversion.  The transaction was accounted as a reorganization of entities under common control at historical cost and, the financial data for periods presented include the results of the Bank.  The unaudited, condensed consolidated financial statements include the consolidated results of operations of Old Sunshine and its subsidiary, the Bank.  These condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and Article 8-03 of Regulation S-X and do not include all disclosures required by generally accepted accounting principles for a complete presentation of the Company's financial condition and results of operations. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The Holding Company's only business is the operation of the Bank.  The Bank through its four banking offices provides a variety of retail community banking services to individuals and businesses primarily in Leon County, Florida. The Bank's deposits are insured up to the applicable limits by the Federal Deposit Insurance Corporation. The Bank's subsidiary is Sunshine Member Insurance Services, Inc. ("SMSI"), which was established to sell automobile warranty and credit life and disability insurance products associated with loan products. Collectively the entities are referred to the "Company." |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | In the opinion of management, the information reflects all adjustments (consisting only of normal recurring adjustments) which are necessary in order to make the financial statements not misleading and for a fair representation of the results of operations for such periods.  The results for the three- month period ended March 31, 2011 should not be considered as indicative of results for a full year. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (continued) |
|--------|-------------|

|   | In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements (Topic 820), which amends the guidance for fair value measurements and disclosures.  The guidance in ASU 2010-06 requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and to describe the reasons for the transfers. Furthermore, ASU 2010-06 requires a reporting entity to present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using significant unobservable inputs; clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value; and amends guidance on employers' disclosures about postretirement benefit plan assets to require that disclosures be provided by classes of assets instead of by major categories of assets.  The ASU was effective for interim and annual reporting periods beginning January 1, 2010, except for the disclosures about purchases, sales, issuances, and settlements in the rollforward of activity in Level 3 fair value measurements. Those disclosures were effective January 1, 2011 and for interim periods thereafter. In the period of initial adoption, entities will not be required to provide the amended disclosures for any previous periods presented for comparative purposes.  The adoption of this guidance did not have a material impact on the Company's financial statements. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | In July 2010, the FASB issued ASU No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The new disclosures will require significantly more information about credit quality in a financial institution's loan portfolio. This statement addresses only disclosures and does not change recognition or measurement of the allowance.  For public entities, the disclosures as of the end of a reporting period was effective for interim and annual reporting periods ending on December 31, 2010. The disclosures about activity that occurs during a reporting period was effective for interim and annual reporting periods beginning on or after January 1, 2011.  For nonpublic entities, the disclosures are effective for annual reporting periods ending on or after December 15, 2011.  The adoption of the ASU did not have a material impact on the Company's financial statements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | In January 2011, the FASB issued ASU No. 2011-01, Receivables (Topic 310) Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. The amendments in this Update delay the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring is effective as outlined in ASU No. 2011-02. The adoption of the ASU is not expected to have a material impact on the Company's financial statements. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (continued) |
|--------|-------------|

|   | In April 2011, the FASB issued ASU No. 2011-02, Receivables (Topic 310) A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring. This amends the guidance for troubled debt restructurings.  The guidance clarifies the guidance on a creditor's evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. For public entities, the amendments are effective for first interim or annual period beginning on or after June 15, 2011 and should be applied retrospectively to the beginning of the annual period of adoption. For nonpublic entities, the amendments are effective for annual periods ending on or after December 15, 2012, including interim periods within those annual periods. The adoption of the ASU is not expected to have a material impact on the Company's financial statements. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Securities have been classified as held to maturity according to management intent.  The carrying amount of securities and their fair values are as follows (in thousands): |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       |   |      |   |   | Gross      |   |   | Gross      |   |   |   |   |
|----------------------------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                       |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|                       |   | Cost      |   |   | Gains      |   |   | Losses     |   |   | Value  |   |
| At March 31, 2011-         |   |      |   |   |       |   |   |       |   |   |   |   |
| Mortgage-backed securities |   | $         | 2,682  |   |       |   | 198    |       |   |   | -      |   |   |   | 2,880 |   |
|                       |   |      |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| At December 31, 2010-      |   |      |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Mortgage-backed securities |   | $         | 3,027  |   |       |   | 214    |       |   |   | -      |   |   |   | 3,241 |   |

|   | There were no sales of securities during the three months ended March 31, 2011 or the three months ended March 31, 2010, respectively. There were no securities pledged at March 31, 2011 or December 31, 2010. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | March 31,   |    |   | December 31, |   |
|-----------------------------|--------|-------------|---------|--------|--------------|--------|
|                        |   | 2011        |    |   | 2010         |   |
|                        |   | (Unaudited) |    |   |         |   |
| Real estate loans:          |   |        |    |   |         |   |
| One-to-four-family          |   | $           | 77,343  |   |         |   | 78,891 |   |
| Lot loans                   |   |        | 9,580   |   |         |   | 9,900 |   |
| Construction or development |   |        | 207     |   |         |   | 349 |   |
|                        |   |        |    |   |         |   |   |   |
| Total real estate loans     |   |        | 87,130  |   |         |   | 89,140 |   |
|                        |   |        |    |   |         |   |   |   |
| Consumer loans:             |   |        |    |   |         |   |   |   |
| Home equity                 |   |        | 15,026  |   |         |   | 15,613 |   |
| Automobile                  |   |        | 2,545   |   |         |   | 2,979 |   |
| Credit cards and unsecured  |   |        | 8,409   |   |         |   | 8,945 |   |
| Deposit account             |   |        | 812     |   |         |   | 820 |   |
| Other                       |   |        | 2,070   |   |         |   | 2,205 |   |
|                        |   |        |    |   |         |   |   |   |
| Total consumer loans        |   |        | 28,862  |   |         |   | 30,562 |   |
|                        |   |        |    |   |         |   |   |   |
| Total loans                 |   |        | 115,992 |   |         |   | 119,702 |   |
|                        |   |        |    |   |         |   |   |   |
| Less:                       |   |        |    |   |         |   |   |   |
| Loans in process            |   |        | (219    | )      |         |   | (18 | ) |
| Deferred fees and discounts |   |        | 41      |   |         |   | 39 |   |
| Allowance for losses        |   |        | 1,705   |   |         |   | 1,621 |   |
|                        |   |        |    |   |         |   |   |   |
| Total loans, net            |   | $           | 114,465 |   |         |   | 118,060 |   |

|   | The Company grants real estate and consumer loans to customers primarily in the State of Florida with the majority of such loans in the Tallahassee, Florida area.  Therefore, the Company's exposure to credit risk could be significantly affected by changes in the economy and real estate market in the Tallahassee, Florida area. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (continued) |
|--------|-------------|

|                                                                                                   |   | For the Three Months Ending March 31, |   |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                        |   | 2011                                  |   |
|                                                                                                        |   | One-toFourFamily                      |   |   | LotLoans |   |   | ConstructionorDevelopment |   |   | HomeEquity |   |   | Automobile |   |   | CreditCards andUnsecured |   |   | DepositAccounts |   |   | Other |   |   | Total |   |   | 2010Total |   |
|                                                                                                        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Beginning balance                                                                                           |   | $                                     | 623    |   |   |   | 59 |   |   |   | 2 |   |   |   | 252 |   |   |   | 39 |   |   |   | 503 |   |   |   | - |   |   |   | 143 |   |   |   | 1,621 |   |   |   | 1,410 |   |
| Provision for loan loss                                                                                     |   |                                  | 118    |   |   |   | - |   |   |   | - |   |   |   | 104 |   |   |   | - |   |   |   | (14 | ) |   |   | - |   |   |   | 17 |   |   |   | 225 |   |   |   | 300 |   |
| Charge-offs                                                                                                 |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | (38 | ) |   |   | (2 | ) |   |   | (109 | ) |   |   | - |   |   |   | (16 | ) |   |   | (165 | ) |   |   | (273 | ) |
| Recoveries                                                                                                  |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | 18 |   |   |   | - |   |   |   | 2 |   |   |   | 24 |   |   |   | 62 |   |
|                                                                                                        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance                                                                                              |   | $                                     | 741    |   |   |   | 59 |   |   |   | 2 |   |   |   | 318 |   |   |   | 42 |   |   |   | 398 |   |   |   | - |   |   |   | 145 |   |   |   | 1,705 |   |   |   | 1,499 |   |
| Individually evaluated for    impairment:                                               |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Recorded investment                                                                 |   | $                                     | 3,258  |   |   |   | 142 |   |   |   | - |   |   |   | 333 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,733 |   |   |   |   |   |
|     Balance in allowance        for loan losses |   | $                                     | 607    |   |   |   | 46 |   |   |   | - |   |   |   | 193 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 846 |   |   |   |   |   |
|                                                                                                        |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Collectively evaluated for    impairment:                                               |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Recorded investment                                                                 |   | $                                     | 74,085 |   |   |   | 9,438 |   |   |   | 207 |   |   |   | 14,693 |   |   |   | 2,545 |   |   |   | 8,409 |   |   |   | 812 |   |   |   | 2,070 |   |   |   | 112,259 |   |   |   |   |   |
|     Balance in allowance        for loan losses |   | $                                     | 134    |   |   |   | 13 |   |   |   | 2 |   |   |   | 125 |   |   |   | 42 |   |   |   | 398 |   |   |   | - |   |   |   | 145 |   |   |   | 859 |   |   |   |   |   |

| Credit Risk                             |   | One to |   |   |   |   |   | Construction |   |   |   |   |   |       |   |   | Credit    |   |   |     |   |   |   |   |   |   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------------|--------|--------|--------|--------|--------|------------|--------|--------|-----------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Profile by Internally                   |   | Four   |   |   | Lot    |   |   | or           |   |   | Home   |   |   |       |   |   | Cards and |   |   | Deposit  |   |   |   |   |   |   |   |
| Assigned Grade:                         |   | Family |   |   | Loans  |   |   | Development  |   |   | Equity |   |   | Automobile |   |   | Unsecured |   |   | Accounts |   |   | Other  |   |   | Total  |   |
| At March 31, 2011:                      |   |   |   |   |   |   |   |         |   |   |   |   |   |       |   |   |      |   |   |     |   |   |   |   |   |   |   |
|   Grade:                      |   |   |   |   |   |   |   |         |   |   |   |   |   |       |   |   |      |   |   |     |   |   |   |   |   |   |   |
|     Pass            |   | $      | 73,798 |   |   |   | 9,438  |         |   |   | 207    |   |   |       | 14,172 |   |      |   | 2,499  |     |   |   | 8,404  |   |   |   | 812    |   |   |   | 2,070 |   |   |   | 111,400 |   |
|     Special mention |   |   | -      |   |   |   | -      |         |   |   | -      |   |   |       | 261    |   |      |   | 2      |     |   |   | 4      |   |   |   | -      |   |   |   | - |   |   |   | 267 |   |
|     Substandard     |   |   | 2,938  |   |   |   | 96     |         |   |   | -      |   |   |       | 400    |   |      |   | 28     |     |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | 3,462 |   |
|     Doubtful        |   |   | -      |   |   |   | -      |         |   |   | -      |   |   |       | -      |   |      |   | 16     |     |   |   | 1      |   |   |   | -      |   |   |   | - |   |   |   | 17 |   |
|     Loss            |   |   | 607    |   |   |   | 46     |         |   |   | -      |   |   |       | 193    |   |      |   | -      |     |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | 846 |   |
|                                    |   |   |   |   |   |   |   |         |   |   |   |   |   |       |   |   |      |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total                       |   | $      | 77,343 |   |   |   | 9,580  |         |   |   | 207    |   |   |       | 15,026 |   |      |   | 2,545  |     |   |   | 8,409  |   |   |   | 812    |   |   |   | 2,070 |   |   |   | 115,992 |   |
|                                    |   |   |   |   |   |   |   |         |   |   |   |   |   |       |   |   |      |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2010:                   |   |   |   |   |   |   |   |         |   |   |   |   |   |       |   |   |      |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Grade:                      |   |   |   |   |   |   |   |         |   |   |   |   |   |       |   |   |      |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Pass            |   |   | 74,664 |   |   |   | 9,758  |         |   |   | 349    |   |   |       | 14,843 |   |      |   | 2,926  |     |   |   | 8,904  |   |   |   | 820    |   |   |   | 2,168 |   |   |   | 114,432 |   |
|     Special mention |   |   | 1,504  |   |   |   | -      |         |   |   | -      |   |   |       | 451    |   |      |   | 7      |     |   |   | 33     |   |   |   | -      |   |   |   | - |   |   |   | 1,995 |   |
|     Substandard     |   |   | 2,288  |   |   |   | 51     |         |   |   | -      |   |   |       | 126    |   |      |   | 43     |     |   |   | 7      |   |   |   | -      |   |   |   | 37 |   |   |   | 2,552 |   |
|     Doubtful        |   |   | -      |   |   |   | -      |         |   |   | -      |   |   |       | -      |   |      |   | 3      |     |   |   | 1      |   |   |   | -      |   |   |   | - |   |   |   | 4 |   |
|     Loss            |   |   | 435    |   |   |   | 91     |         |   |   | -      |   |   |       | 193    |   |      |   | -      |     |   |   | -      |   |   |   | -      |   |   |   | - |   |   |   | 719 |   |
|                                    |   |   |   |   |   |   |   |         |   |   |   |   |   |       |   |   |      |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total                       |   | $      | 78,891 |   |   |   | 9,900  |         |   |   | 349    |   |   |       | 15,613 |   |      |   | 2,979  |     |   |   | 8,945  |   |   |   | 820    |   |   |   | 2,205 |   |   |   | 119,702 |   |

|   | (continued) |
|--------|-------------|

|   | Internally assigned loan grades are defined as follows: |
|--------|---------------------------------------------------------|

|   | Pass – A Pass loan's primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | Special Mention – A Special Mention loan has potential weaknesses that deserve management's close attention.  If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company's credit position at some future date.  Special Mention loans are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Substandard – A Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Doubtful – A loan classified Doubtful has all the weaknesses inherent in one classified Substandard with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loss – A loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted.  This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The following summarizes the amount of impaired loans (in thousands): |
|--------|-----------------------------------------------------------------------|

|                                  |   | With No RelatedAllowance Recorded |   |   | With an Allowance Recorded |   |   | Total            |   |
|--------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------|--------|--------|------------------|--------|
|                                       |   | RecordedInvestment                |   |   | UnpaidPrincipalBalance     |   |   | RelatedAllowance |   |   | RecordedInvestment |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |   | RecordedInvestment |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |
| At March 31, 2011:                         |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Real estate loans:             |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     One-to-four family |   | $                                 | 861    |   |                       |   | 861    |             |   |   | - |   |   |   | 1,789 |   |   |   | 2,396 |   |   |   | 607 |   |   |   | 2,650 |   |   |   | 3,257 |   |   |   | 607 |   |
|     Lot loans          |   |                              | -      |   |                       |   | -      |             |   |   | - |   |   |   | 96 |   |   |   | 142 |   |   |   | 46 |   |   |   | 96 |   |   |   | 142 |   |   |   | 46 |   |
|     Consumer loans-    |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Home equity        |   |                              | 64     |   |                       |   | 64     |             |   |   | - |   |   |   | 76 |   |   |   | 269 |   |   |   | 193 |   |   |   | 140 |   |   |   | 333 |   |   |   | 193 |   |
|                                       |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | $                                 | 925    |   |                       |   | 925    |             |   |   | - |   |   |   | 1,961 |   |   |   | 2,807 |   |   |   | 846 |   |   |   | 2,886 |   |   |   | 3,732 |   |   |   | 846 |   |
|                                       |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2010:                      |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Real estate loans:             |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     One-to-four family |   |                              | 401    |   |                       |   | 401    |             |   |   | - |   |   |   | 1,429 |   |   |   | 1,864 |   |   |   | 435 |   |   |   | 1,830 |   |   |   | 2,265 |   |   |   | 435 |   |
|     Lot loans          |   |                              | -      |   |                       |   | -      |             |   |   | - |   |   |   | 51 |   |   |   | 142 |   |   |   | 91 |   |   |   | 51 |   |   |   | 142 |   |   |   | 91 |   |
|     Consumer loans-    |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Home equity        |   |                              | 82     |   |                       |   | 82     |             |   |   | - |   |   |   | - |   |   |   | 193 |   |   |   | 193 |   |   |   | 82 |   |   |   | 275 |   |   |   | 193 |   |
|                                       |   |                              |   |   |                       |   |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | $                                 | 483    |   |                       |   | 483    |             |   |   | - |   |   |   | 1,480 |   |   |   | 2,199 |   |   |   | 719 |   |   |   | 1,963 |   |   |   | 2,682 |   |   |   | 719 |   |

|   | At March 31, 2011 and December 31, 2010, the Company's loan portfolio included primarily large groups of smaller balance homogeneous loans.  The Company considers individual single family home loans which are in the process of foreclosure for impairment. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands): |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|                                              |   | Three Months |   |   |         |   |
|---------------------------------------------------|--------|--------------|--------|--------|--------------|--------|
|                                              |   | Ended        |   |   | Year Ended   |   |
|                                              |   | March 31,    |   |   | December 31, |   |
|                                              |   | 2011         |   |   | 2010         |   |
|                                              |   | (Unaudited)  |   |   |         |   |
|                                              |   |         |   |   |         |   |
| Interest income recognized on impaired loans      |   | $            | -      |   |         |   | - |   |
|                                              |   |         |   |   |         |   |   |   |
| Interest income received on impaired loans        |   | $            | -      |   |         |   | 2 |   |
|                                              |   |         |   |   |         |   |   |   |
| Average net recorded investment in impaired loans |   | $            | 2,872  |   |         |   | 644 |   |

|   | Age analysis of past-due loans is as follows (in thousands): |
|--------|--------------------------------------------------------------|

|                                                                   |   | Accruing Loans |   |   |     |   |   |     |   |
|-----------------------------------------------------------------------------|--------|----------------|--------|--------|----------|--------|--------|----------|--------|
|                                                                        |   |           |   |   |     |   |   | Greater  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |           | 30-59  |   |     |   | 60-89  |     |   | Than 90 |   |   | Total |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   | Days           |   |   | Days     |   |   | Days     |   |   | Past |   |   |   |   |   | Nonaccrual |   |   | Total |   |
|                                                                        |   | Past Due       |   |   | Past Due |   |   | Past Due |   |   | Due |   |   | Current |   |   | Loans |   |   | Loans |   |
| At March 31, 2011:                                                          |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Real estate loans:                                  |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         One-to-four family          |   | $              | 1,613  |   |     |   | -      |     |   |   | - |   |   |   | 1,613 |   |   |   | 71,896 |   |   |   | 3,834 |   |   |   | 77,343 |   |
|         Lot loans                   |   |           | -      |   |     |   | -      |     |   |   | - |   |   |   | - |   |   |   | 9,438 |   |   |   | 142 |   |   |   | 9,580 |   |
|         Construction or development |   |           | -      |   |     |   | -      |     |   |   | - |   |   |   | - |   |   |   | 207 |   |   |   | - |   |   |   | 207 |   |
|     Consumer loans:                                     |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Home equity                 |   |           | 140    |   |     |   | 202    |     |   |   | - |   |   |   | 342 |   |   |   | 14,033 |   |   |   | 651 |   |   |   | 15,026 |   |
|         Automobile                  |   |           | 10     |   |     |   | 2      |     |   |   | - |   |   |   | 12 |   |   |   | 2,480 |   |   |   | 53 |   |   |   | 2,545 |   |
|         Credit cards and unsecured  |   |           | 82     |   |     |   | -      |     |   |   | - |   |   |   | 82 |   |   |   | 8,314 |   |   |   | 13 |   |   |   | 8,409 |   |
|         Deposit account             |   |           | -      |   |     |   | -      |     |   |   | - |   |   |   | - |   |   |   | 812 |   |   |   | - |   |   |   | 812 |   |
|         Other                       |   |           | 99     |   |     |   | -      |     |   |   | - |   |   |   | 99 |   |   |   | 1,971 |   |   |   | - |   |   |   | 2,070 |   |
|                                                                        |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                                               |   | $              | 1,944  |   |     |   | 204    |     |   |   | - |   |   |   | 2,148 |   |   |   | 109,151 |   |   |   | 4,693 |   |   |   | 115,992 |   |
|                                                                        |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2010:                                                       |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Real estate loans:                                  |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         One-to-four family          |   |           | 1,292  |   |     |   | 316    |     |   |   | - |   |   |   | 1,608 |   |   |   | 73,310 |   |   |   | 3,973 |   |   |   | 78,891 |   |
|         Lot loans                   |   |           | 54     |   |     |   | -      |     |   |   | - |   |   |   | 54 |   |   |   | 9,704 |   |   |   | 142 |   |   |   | 9,900 |   |
|         Construction or development |   |           | -      |   |     |   | -      |     |   |   | - |   |   |   | - |   |   |   | 349 |   |   |   | - |   |   |   | 349 |   |
|     Consumer loans:                                     |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Home equity                 |   |           | 444    |   |     |   | 146    |     |   |   | - |   |   |   | 590 |   |   |   | 14,307 |   |   |   | 716 |   |   |   | 15,613 |   |
|         Automobile                  |   |           | 35     |   |     |   | 6      |     |   |   | - |   |   |   | 41 |   |   |   | 2,886 |   |   |   | 52 |   |   |   | 2,979 |   |
|         Credit cards and unsecured  |   |           | 52     |   |     |   | 23     |     |   |   | - |   |   |   | 75 |   |   |   | 8,829 |   |   |   | 41 |   |   |   | 8,945 |   |
|         Deposit account             |   |           | -      |   |     |   | -      |     |   |   | - |   |   |   | - |   |   |   | 820 |   |   |   | - |   |   |   | 820 |   |
|         Other                       |   |           | 35     |   |     |   | -      |     |   |   | - |   |   |   | 35 |   |   |   | 2,133 |   |   |   | 37 |   |   |   | 2,205 |   |
|                                                                        |   |           |   |   |     |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                                               |   | $              | 1,912  |   |     |   | 491    |     |   |   | - |   |   |   | 2,403 |   |   |   | 112,338 |   |   |   | 4,961 |   |   |   | 119,702 |   |

|   | (continued) |
|--------|-------------|

|   | At March 31, 2011 and December 31, 2010, there were no loans past due ninety days or more but still accruing. |
|--------|---------------------------------------------------------------------------------------------------------------|

|   | Expenses applicable to foreclosed assets are included in other noninterest expense and include operating expenses of $11,000 and $19,000 for the three months ended March 31, 2011 and 2010, respectively.  There were no write-downs or sales of foreclosed real estate during the three months ended March 31, 2011 and 2010. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company also has an unsecured federal funds line of credit for $1.0 million with a correspondent bank and a $15.2 million line with the Federal Home Loan Bank of Atlanta collateralized by a blanket lien on qualifying loans. At March 31, 2011 and December 31, 2010, the Company had no outstanding balances on these lines. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company is a 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 are unused lines of credit and commitments to extend credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the balance sheets.  The contract amounts of these instruments reflect the extent of involvement the Company has in these financial instruments. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for unused lines of credit and commitments to extend credit is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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 some 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 credit worthiness 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 of the counterparty. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Unused lines of credit and commitments to extend credit typically result in loans with a market interest rate when funded.  A summary of the amounts of the Company's financial instruments, with off-balance-sheet risk follows at March 31, 2011 (in thousands): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | Contract |   |
|-------------------------------------------------------|--------|----------|--------|
|                                                  |   | Amount   |   |
| Unused lines of credit (rates range from              |   |     |   |
|     3.25% to 18.00%)              |   | $        | 14,761 |   |
|                                                  |   |     |   |   |
| Commitments to extend credit (all fixed rates         |   |     |   |   |
|     ranging from 3.00% to 11.90%) |   | $        | 246    |   |

|   | The estimated fair values of the Company's financial instruments are as follows (in thousands): |
|--------|-------------------------------------------------------------------------------------------------|

|                                                 |   | At March 31, 2011 |    |   | At December 31, 2010 |   |
|------------------------------------------------------|--------|-------------------|---------|--------|----------------------|--------|
|                                                 |   | Carrying          |    |   | Fair                 |   |   | Carrying |   |   | Fair |   |
|                                                 |   | Amount            |    |   | Value                |   |   | Amount |   |   | Value |   |
| Financial assets:                                    |   |              |    |   |                 |   |   |   |   |   |   |   |
|     Cash and cash equivalents    |   | $                 | 33,010  |   |                 |   | 33,010 |   |   |   | 19,324 |   |   |   | 19,324 |   |
|     Securities held to maturity  |   |              | 2,682   |   |                 |   | 2,880 |   |   |   | 3,027 |   |   |   | 3,241 |   |
|     Loans                        |   |              | 114,465 |   |                 |   | 114,027 |   |   |   | 118,060 |   |   |   | 119,072 |   |
|     Federal Home Loan Bank stock |   |              | 298     |   |                 |   | 298 |   |   |   | 298 |   |   |   | 298 |   |
|     Accrued interest receivable  |   |              | 504     |   |                 |   | 504 |   |   |   | 551 |   |   |   | 551 |   |
|                                                 |   |              |    |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                               |   |              |    |   |                 |   |   |   |   |   |   |   |   |   |   |   |
|     Deposits                     |   |              | 133,135 |   |                 |   | 129,151 |   |   |   | 133,757 |   |   |   | 131,056 |   |
|                                                 |   |              |    |   |                 |   |   |   |   |   |   |   |   |   |   |   |
| Off-balance-sheet financial instruments              |   |              | -       |   |                 |   | - |   |   |   | - |   |   |   | - |   |

|   | The Company has a 401(k) plan for its employees who meet certain age and length-of-service requirements. Eligible employees can contribute up to $16,500 of their compensation to the plan on a pre-tax basis. Employer matching contributions are made at 100 percent of employee contribution up to five percent. Employer contributions made to the 401(k) plan were approximately $33,000 and $15,000 for the three-months ended March 31, 2011 and 2010, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (continued) |
|--------|-------------|

|   | Impaired collateral-dependent loans are carried at fair value when the current collateral value is lower than the carrying value of the loan.  Those impaired collateral-dependent loans which are measured at fair value on a nonrecurring basis are as follows (in thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|             |   |  FairValue |   |   |   Level 1 |   |   |   Level 2 |   |   |   Level 3 |   |   |  TotalLosses |   |   | LossesRecordedDuring thePeriod |   |
|-----------------------|--------|-----------------|--------|--------|---------------------|--------|--------|---------------------|--------|--------|---------------------|--------|--------|-------------------|--------|--------|--------------------------------|--------|
| At March 31, 2011:    |   |            |   |   |                |   |   |                |   |   |                |   |   |              |   |   |                           |   |
| One-to-four family    |   | $               | 1,789  |   |                |   | -      |                |   |   | -                   |   |   |              | 1,789  |   |                           |   | 607 |   |   |   | 127 |   |
| Lot loans             |   |            | 96     |   |                |   | -      |                |   |   | -                   |   |   |              | 96     |   |                           |   | 45 |   |   |   | - |   |
| Home equity           |   |            | 76     |   |                |   | -      |                |   |   | -                   |   |   |              | 76     |   |                           |   | 194 |   |   |   | 1 |   |
|                  |   |            |   |   |                |   |   |                |   |   |                |   |   |              |   |   |                           |   |   |   |   |   |   |   |
| Total                 |   | $               | 1,961  |   |                |   | -      |                |   |   | -                   |   |   |              | 1,961  |   |                           |   | 846 |   |   |   | 128 |   |
|                  |   |            |   |   |                |   |   |                |   |   |                |   |   |              |   |   |                           |   |   |   |   |   |   |   |
| At December 31, 2010: |   |            |   |   |                |   |   |                |   |   |                |   |   |              |   |   |                           |   |   |   |   |   |   |   |
| One-to-four family    |   |            | 1,429  |   |                |   | -      |                |   |   | -                   |   |   |              | 1,429  |   |                           |   | 435 |   |   |   | 435 |   |
| Lot loans             |   |            | 51     |   |                |   | -      |                |   |   | -                   |   |   |              | 51     |   |                           |   | 91 |   |   |   | 91 |   |
|                  |   |            |   |   |                |   |   |                |   |   |                |   |   |              |   |   |                           |   |   |   |   |   |   |   |
| Total                 |   | $               | 1,480  |   |                |   | -      |                |   |   | -                   |   |   |              | 1,480  |   |                           |   | 526 |   |   |   | 526 |   |

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

|   | Foreclosed real estate is recorded at fair value less estimated costs to sell.  Foreclosed real estate which is measured at fair value on a nonrecurring basis is summarized below (in thousands): |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   |   |   |   | Quoted Prices |   |   |        |   |   |         |   |   |   |   |   |       |   |
|------------------------------------------------|--------|--------|--------|--------|---------------|--------|--------|-------------|--------|--------|--------------|--------|--------|--------|--------|--------|------------|--------|
|                                           |   |   |   |   | In Active     |   |   | Significant |   |   |         |   |   |   |   |   |       |   |
|                                           |   |   |   |   | Markets for   |   |   | Other       |   |   | Significant  |   |   |   |   |   | Losses     |   |
|                                           |   |   |   |   | Identical     |   |   | Observable  |   |   | Unobservable |   |   |   |   |   | Recorded   |   |
|                                           |   | Fair   |   |   | Assets        |   |   | Inputs      |   |   | Inputs       |   |   | Total  |   |   | During the |   |
|                                           |   | Value  |   |   | (Level 1)     |   |   | (Level 2)   |   |   | (Level 3)    |   |   | Losses |   |   | Period     |   |
| At March 31, 2011-                             |   |   |   |   |          |   |   |        |   |   |         |   |   |   |   |   |       |   |
|     Foreclosed real estate |   | $      | 599    |   |          |   | -      |        |   |   | -            |   |   |   | 599    |   |       |   | 40 |   |   |   | - |   |
|                                           |   |   |   |   |          |   |   |        |   |   |         |   |   |   |   |   |       |   |   |   |   |   |   |   |
| At December 31, 2010-                          |   |   |   |   |          |   |   |        |   |   |         |   |   |   |   |   |       |   |   |   |   |   |   |   |
|     Foreclosed real estate |   | $      | 596    |   |          |   | -      |        |   |   | -            |   |   |   | 596    |   |       |   | 40 |   |   |   | 5 |   |

|   | The Bank is subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of 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 (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined).  Management believes, as of March 31, 2011, that the Bank meets all capital adequacy requirements to which it is subject. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At March 31, 2011, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table.  There are no conditions or events since that notification that management believes have changed the institution's category. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Bank's actual regulatory capital amounts and percentages are presented in the table ($ in thousands). |
|--------|-----------------------------------------------------------------------------------------------------------|

|                                                       |   | Actual |   |   | MinimumFor Capital AdequacyPurposes |   |   | MinimumTo Be WellCapitalized UnderPrompt and CorrectiveAction Provisions |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|-------------------------------------|--------|--------|--------------------------------------------------------------------------|--------|
|                                                            |   | Amount |   |   | %                                   |   |   | Amount                                                                   |   |   | % |   |   | Amount |   |   | % |   |
| At March 31, 2011:                                              |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |
|     Total Capital to Risk-                  |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |
|         Weighted Assets |   | $      | 12,848 |   |                                |   | 13.29  | %                                                                        |   | $ | 7,732 |   |   |   | 8.00 | % |   | $ | 9,665 |   |   |   | 10.00 | % |
|     Tier I Capital to Risk-                 |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Weighted Assets |   |   | 13,707 |   |                                |   | 14.18  |                                                                     |   |   | 3,866 |   |   |   | 4.00 |   |   |   | 5,799 |   |   |   | 6.00 |   |
|     Tier I Capital                          |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         to Total Assets |   |   | 13,707 |   |                                |   | 8.21   |                                                                     |   |   | 4,697 |   |   |   | 3.00 |   |   |   | 7,829 |   |   |   | 5.00 |   |
|                                                            |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| At December 31, 2010:                                           |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total Capital to Risk-                  |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Weighted Assets |   |   | 13,989 |   |                                |   | 14.38  |                                                                     |   |   | 7,785 |   |   |   | 8.00 |   |   |   | 9,731 |   |   |   | 10.00 |   |
|     Tier I Capital to Risk-                 |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Weighted Assets |   |   | 13,087 |   |                                |   | 13.45  |                                                                     |   |   | 3,893 |   |   |   | 4.00 |   |   |   | 5,839 |   |   |   | 6.00 |   |
|     Tier I Capital                          |   |   |   |   |                                |   |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         to Total Assets |   |   | 13,087 |   |                                |   | 8.87   |                                                                     |   |   | 4,427 |   |   |   | 3.00 |   |   |   | 7,379 |   |   |   | 5.00 |   |

|   | On April 5, 2011, in accordance with a Plan of Conversion and Reorganization (the “Plan”) adopted by its Board of Directors and approved by its members, the Bank converted from a mutual holding company to a stock holding company form of organization, with the Bank becoming a wholly owned subsidiary of the Holding Company.  The conversion and reorganization was accomplished through the sale and issuance of 1,234,454 shares of common stock at a price of $10.00 per share, through which the Holding Company received proceeds of approximately $11.5 million, net of offering expenses of approximately $847,000.  In connection with the conversion and reorganization, the Board of Directors adopted an employee stock ownership plan (ESOP) which subscribed for 8% of the shares sold in the offering, or 98,756 shares of common stock. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | Effective April 5, 2011, upon closing of the stock offering, the Holding Company established a stock ownership plan which acquired 8% of the total number of shares of common stock sold during the offering.  A total of 98,756 shares were acquired for proceeds of $988,000 and will be distributed over a 10 year period.  The employee stock ownership plan borrowed the funds to purchase the shares from the Holding Company, which funded the loan from net proceeds of the offering.  The loan will accrue interest at the prime rate as published in the Wall Street Journal, which is currently 3.25%. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item 2. | Management's Discussion and Analysis of |
|---------|-----------------------------------------|

|   | Financial Condition and Results of Operations |
|--------|-----------------------------------------------|

| ·   | statements of our goals, intentions and expectations; |
|--------------------|-------------------------------------------------------|

| ·   | statements regarding our business plans, prospects, growth and operating strategies; |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | statements regarding the asset quality of our loan and investment portfolios; and |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | estimates of our risks and future costs and benefits. |
|--------------------|-------------------------------------------------------|

| ·   | the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes in general economic conditions, either nationally or in our market area; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market area; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | results of examinations of us by the OTS or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | legislative or regulatory changes that adversely affect our business including the effect of the Dodd-Frank Act, changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our ability to attract and retain deposits; |
|--------------------|---------------------------------------------|

| ·   | further increases in premiums for deposit insurance; |
|--------------------|------------------------------------------------------|

| ·   | our ability to control operating costs and expenses; |
|--------------------|------------------------------------------------------|

| ·   | the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | difficulties in reducing risks associated with the loans on our balance sheet; |
|--------------------|--------------------------------------------------------------------------------|

| ·   | staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | computer systems on which we depend could fail or experience a security breach; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | our ability to retain key members of our senior management team; |
|--------------------|------------------------------------------------------------------|

| ·   | costs and effects of litigation, including settlements and judgments; |
|--------------------|-----------------------------------------------------------------------|

| ·   | our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we may in the future acquire into our operations and out ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increased competitive pressures among financial services companies; |
|--------------------|---------------------------------------------------------------------|

| ·   | changes in consumer spending, borrowing and savings habits; |
|--------------------|-------------------------------------------------------------|

| ·   | the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | our ability to pay dividends on our common stock; |
|--------------------|---------------------------------------------------|

| ·   | adverse changes in the securities markets; |
|--------------------|--------------------------------------------|

| ·   | inability of key third-party providers to perform their obligations to us; |
|--------------------|----------------------------------------------------------------------------|

| ·   | changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods including relating to fair value accounting and loan loss reserve requirements; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described elsewhere in this prospectus. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                          |   | Three Months Ended March 31, |    |
|------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                               |   | 2011                         |    |   | 2010 |   |
|                                                                               |   | AverageBalance               |    |   | InterestandDividends |   |   | AverageYield/Rate |   |   | AverageBalance |   |   | InterestandDividend |   |   | AverageYield/Rate |   |
| Interest-earning assets:                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Loans receivable (1)                                       |   | $                            | 116,216 |   |   | $ | 1,707 |   |   |   | 5.88 | % |   | $ | 129,677 |   |   | $ | 1,964 |   |   |   | 6.06 | % |
|     Investments held to maturity                               |   |                         | 2,866   |   |   |   | 38 |   |   |   | 5.22 |   |   |   | 4,199 |   |   |   | 54 |   |   |   | 5.11 |   |
|     Other interest-earning assets (2)                          |   |                         | 18,360  |   |   |   | 10 |   |   |   | 0.22 |   |   |   | 3,727 |   |   |   | 1 |   |   |   | 0.21 |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total interest-earning assets      |   |                         | 137,442 |   |   |   | 1,755 |   |   |   | 5.11 |   |   |   | 137,603 |   |   |   | 2,019 |   |   |   | 5.87 |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning assets                                                         |   |                         | 10,724  |   |   |   |   |   |   |   |   |   |   |   | 13,562 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total assets                       |   | $                            | 148,166 |   |   |   |   |   |   |   |   |   |   | $ | 151,165 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                      |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     MMDA and statement savings                                 |   |                         | 59,098  |   |   |   | 111 |   |   |   | 0.75 |   |   |   | 53,699 |   |   |   | 168 |   |   |   | 1.25 |   |
|     Time deposits                                              |   |                         | 55,074  |   |   |   | 192 |   |   |   | 1.40 |   |   |   | 63,197 |   |   |   | 333 |   |   |   | 2.10 |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total interest-bearing liabilities |   |                         | 114,172 |   |   |   | 303 |   |   |   | 1.06 |   |   |   | 116,896 |   |   |   | 501 |   |   |   | 1.71 |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing liabilities                                                    |   |                         | 18,954  |   |   |   |   |   |   |   |   |   |   |   | 19,062 |   |   |   |   |   |   |   |   |   |
| Equity                                                                             |   |                         | 15,040  |   |   |   |   |   |   |   |   |   |   |   | 15,207 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Total liabilities and equity       |   | $                            | 148,166 |   |   |   |   |   |   |   |   |   |   | $ | 151,165 |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                                |   |                         |    |   |   | $ | 1,452 |   |   |   |   |   |   |   |   |   |   | $ | 1,518 |   |   |   |   |   |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest rate spread (3)                                                       |   |                         |    |   |   |   |   |   |   |   | 4.05 | % |   |   |   |   |   |   |   |   |   |   | 4.16 | % |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin (4)                                                            |   |                         |    |   |   |   |   |   |   |   | 4.22 | % |   |   |   |   |   |   |   |   |   |   | 4.41 | % |
|                                                                               |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of average interest-earning assets                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     to average interest-bearing liabilities                    |   |                         | 1.20    |   |   |   |   |   |   |   |   |   |   |   | 1.18 |   |   |   |   |   |   |   |   |   |

| (1) | Includes nonaccrual loans.                                                                                                                                |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Other interest-earnings assets including federal funds sold, Federal Home Loan Bank stock and interest-bearing deposits.                                  |
| (3) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities. |
| (4) | Net interest margin is net interest income divided by average interest-earning assets (annualized).                                                       |

|   | PART II.  OTHER INFORMATION |
|--------|---------------------------------------|

|                          |   | SUNSHINE FINANICAL, INC.         |
|-------------------------------|--------|---------------------------------------|
|                          |   |                                  |
|                          |   |                                  |
| Date:  May 16, 2011 | By:    | /s/ Louis O. Davis, Jr.               |
|                          |   | Louis O. Davis, Jr.                   |
|                          |   | President and Chief Executive Officer |
|                          |   | (Duly Authorized Officer)             |
|                          |   |                                  |
| Date:  May 16, 2011 | By:    | /s/ Scott A. Swain                    |
|                          |   | Scott A, Swain                        |
|                          |   | Senior Vice President, Treasurer and  |
|                          |   | Chief Financial Officer               |
|                          |   | (Principal Financial Officer)         |

|  Exhibits: |
|-----------------|
| 2.0             | Plan of Conversion and Reorganization (incorporated herein by reference to Exhibit 2.0 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
|            |   |
| 3.1             | Articles of Incorporation of Sunshine Financial, Inc. (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
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| 3.2             | Bylaws of Sunshine Financial, Inc. (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
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| 4.0             | Form of Common Stock Certificate of Sunshine Financial, Inc. (incorporated herein by reference to Exhibit 4.0 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
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| 10.1            | Employment Agreement by and between Sunshine Savings Bank and Louis O Davis, Jr. (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
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| 10.2            | Form of Change of Control Agreement by and between Sunshine Financial, Inc. and Louis O. Davis Jr. (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
|            |   |
| 10.3            | Form of Change of Control Agreement by and between Sunshine Financial, Inc. and each of Brian P. Baggett and Scott A. Swain(incorporated herein by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
|            |   |
| 10.4            | Employee Severance Policy(incorporated herein by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
|            |   |
| 10.5            | Director Fee Arrangements(incorporated herein by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1, as amended (File No. 333-169555)) |
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| 31.1            | Rule 13a-14(a) Certification of the Chief Executive Officer |
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| 31.2            | Rule 13a-14(a) Certification of the Chief Financial Officer |
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| 32.0            | Section 1350 Certification |