----

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

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

| PSB Holdings, Inc.                                     |
|--------------------------------------------------------|
| (Exact name of registrant as specified in its charter) |

| United States                                                  |   | 42-1597948                        |
|----------------------------------------------------------------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer Identification No.) |

| 40 Main Street, Putnam, Connecticut  06260 |
|------------------------------------------------------|
| (Address of principal executive offices)             |
| (Zip Code)                                           |

| (860) 928-6501                                                                     |
|------------------------------------------------------------------------------------|
| (Issuer’s telephone number)                                                  |
|                                                                               |
| N/A                                                                                |
| (Former name, former address and former fiscal year, if changed since last report) |

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

----

| PSB Holdings, Inc. |
|--------------------|
|               |
| Table of Contents  |

| Part I.    | FINANCIAL INFORMATION                                                                                                                     |     |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------|----------|
|       |                                                                                                                                      | Page No. |
| Item 1.    | Financial Statements                                                                                                                      |     |
|       |                                                                                                                                      |     |
|       | Condensed Consolidated Balance Sheets at December 31, 2010 (Unaudited) andJune 30, 2010 (Audited)                                         | 1        |
|       |                                                                                                                                      |     |
|       | Condensed Consolidated Statements of Income for the Three and Six Months EndedDecember 31, 2010 and 2009 (Unaudited)                      | 2        |
|       |                                                                                                                                      |     |
|       | Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Months EndedDecember 31, 2010 and 2009 (Unaudited) | 3        |
|       |                                                                                                                                      |     |
|       | Condensed Consolidated Statements of Cash Flows for the Six Months EndedDecember 31, 2010 and 2009 (Unaudited)                            | 4        |
|       |                                                                                                                                      |     |
|       | Notes to Consolidated Financial Statements (Unaudited)                                                                                    | 5        |
|       |                                                                                                                                      |     |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                               | 26       |
|       |                                                                                                                                      |     |
| Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                                                                                | 41       |
|       |                                                                                                                                      |     |
| Item 4.    | Controls and Procedures                                                                                                                   | 41       |
|       |                                                                                                                                      |     |
| Part II.   | OTHER INFORMATION                                                                                                                         |     |
|       |                                                                                                                                      |     |
| Item 1.    | Legal Proceedings                                                                                                                         | 42       |
|       |                                                                                                                                      |     |
| Item 1A.   | Risk Factors                                                                                                                              | 42       |
|       |                                                                                                                                      |     |
| Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                                                                               | 42       |
|       |                                                                                                                                      |     |
| Item 3.    | Defaults Upon Senior Securities                                                                                                           | 42       |
|       |                                                                                                                                      |     |
| Item 4.    | [Reserved]                                                                                                                                | 42       |
|       |                                                                                                                                      |     |
| Item 5.    | Other Information                                                                                                                         | 42       |
|       |                                                                                                                                      |     |
| Item 6.    | Exhibits                                                                                                                                  | 42       |
|       |                                                                                                                                      |     |
| SIGNATURES | 43                                                                                                                                        |

----

----

|                                                                                                                                                      |   | December 31,                     |    |   | June 30,  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|-----------|--------|
|                                                                                                                                                      |   | 2010                             |    |   | 2010      |   |
|                                                                                                                                                      |   | (Unaudited)                      |    |   | (Audited) |   |
|                                                                                                                                                      |   | (in thousands except share data) |    |
| ASSETS                                                                                                                                                    |   |                             |    |   |      |   |
| Cash and due from depository institutions                                                                                                                 |   | $                                | 7,181   |   |      | $      | 21,711 |   |
| Interest-bearing demand deposits with other banks                                                                                                         |   |                             | 219     |   |      |   | 1,580 |   |
| Total cash and cash equivalents                                                                                                                           |   |                             | 7,400   |   |      |   | 23,291 |   |
| Securities available for sale (at fair value)                                                                                                             |   |                             | 66,460  |   |      |   | 85,893 |   |
| Securities held-to-maturity (fair value of $112,113 as of December 31, 2010 and $83,698 as of June 30, 2010)                                              |   |                             | 112,396 |   |      |   | 83,249 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                     |   |                             | 8,056   |   |      |   | 8,056 |   |
| Loans held-for-sale                                                                                                                                       |   |                             | 198     |   |      |   | 1,470 |   |
| Loans                                                                                                                                                     |   |                             | 257,362 |   |      |   | 257,423 |   |
| Allowance for loan losses                                                                                                                                 |   |                             | (2,587  | )      |      |   | (2,651 | ) |
| Net loans                                                                                                                                                 |   |                             | 254,775 |   |      |   | 254,772 |   |
| Premises and equipment                                                                                                                                    |   |                             | 5,089   |   |      |   | 5,292 |   |
| Accrued interest receivable                                                                                                                               |   |                             | 1,481   |   |      |   | 1,698 |   |
| Other real estate owned                                                                                                                                   |   |                             | 1,473   |   |      |   | 1,561 |   |
| Goodwill                                                                                                                                                  |   |                             | 6,912   |   |      |   | 6,912 |   |
| Intangible assets                                                                                                                                         |   |                             | 399     |   |      |   | 473 |   |
| Bank owned life insurance                                                                                                                                 |   |                             | 6,331   |   |      |   | 6,191 |   |
| Other assets                                                                                                                                              |   |                             | 9,969   |   |      |   | 10,501 |   |
|                                                                                                                                                      |   |                             |    |   |      |   |   |   |
| Total assets                                                                                                                                              |   | $                                | 480,939 |   |      | $      | 489,359 |   |
|                                                                                                                                                      |   |                             |    |   |      |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                |   |                             |    |   |      |   |   |   |
| Liabilities                                                                                                                                               |   |                             |    |   |      |   |   |   |
| Deposits                                                                                                                                                  |   |                             |    |   |      |   |   |   |
| Noninterest-bearing                                                                                                                                       |   | $                                | 34,936  |   |      | $      | 36,206 |   |
| Interest-bearing                                                                                                                                          |   |                             | 295,489 |   |      |   | 298,940 |   |
| Total deposits                                                                                                                                            |   |                             | 330,425 |   |      |   | 335,146 |   |
| Mortgagors’ escrow accounts                                                                                                                         |   |                             | 1,659   |   |      |   | 1,627 |   |
| Federal Home Loan Bank advances                                                                                                                           |   |                             | 95,500  |   |      |   | 100,500 |   |
|     Securities sold under agreements to repurchase                                                                                    |   |                             | 5,515   |   |      |   | 5,896 |   |
| Other liabilities                                                                                                                                         |   |                             | 2,044   |   |      |   | 2,335 |   |
| Total liabilities                                                                                                                                         |   |                             | 435,143 |   |      |   | 445,504 |   |
|                                                                                                                                                      |   |                             |    |   |      |   |   |   |
| Commitments and Contingencies                                                                                                                             |   |                             |    |   |      |   |   |   |
|                                                                                                                                                      |   |                             |    |   |      |   |   |   |
| Stockholders’ Equity                                                                                                                                |   |                             |    |   |      |   |   |   |
| Preferred stock, $0.10 par value, 1,000,000 shares authorized, no shares issued and outstanding                                                           |   |                             | -       |   |      |   | - |   |
| Common stock, $0.10 par value, 12,000,000 shares authorized, 6,943,125 shares issued, 6,528,863 shares outstanding at December 31, 2010 and June 30, 2010 |   |                             | 694     |   |      |   | 694 |   |
| Additional paid-in capital                                                                                                                                |   |                             | 30,666  |   |      |   | 30,633 |   |
| Retained earnings                                                                                                                                         |   |                             | 22,219  |   |      |   | 21,550 |   |
| Accumulated other comprehensive loss                                                                                                                      |   |                             | (1,713  | )      |      |   | (2,776 | ) |
| Unearned ESOP shares                                                                                                                                      |   |                             | (1,821  | )      |      |   | (1,821 | ) |
| Unearned stock awards                                                                                                                                     |   |                             | (36     | )      |      |   | (212 | ) |
| Treasury stock, at cost (414,262) shares at December 31, 2010 and June 30, 2010)                                                                          |   |                             | (4,213  | )      |      |   | (4,213 | ) |
| Total stockholders’ equity                                                                                                                          |   |                             | 45,796  |   |      |   | 43,855 |   |
|                                                                                                                                                      |   |                             |    |   |      |   |   |   |
| Total liabilities and stockholders’ equity                                                                                                          |   | $                                | 480,939 |   |      | $      | 489,359 |   |

----

|                                                                                   |   | Three Months Ended                |   |                              | Six Months Ended |   |
|----------------------------------------------------------------------------------------|--------|-----------------------------------|--------|-----------------------------------|------------------|--------|
|                                                                                   |   | December 31,                      |   | December 31,                      |             |
|                                                                                   |   | 2010                              |   |                              | 2009             |   |   | 2010 |   |   | 2009 |   |
|                                                                                   |   | (in thousands, except share data) |   | (in thousands, except share data) |
| Interest and dividend income:                                                          |   |                              |   |                              |             |   |   |   |   |   |   |   |
|    Interest on loans                                                    |   | $                                 | 3,434  |                              |             | $      | 3,754 |   |   | $ | 6,937 |   |   | $ | 7,494 |   |
|    Interest and dividends on investments                                |   |                              | 1,519  |                              |             |   | 2,029 |   |   |   | 3,165 |   |   |   | 4,302 |   |
| Total interest and dividend income                                                     |   |                              | 4,953  |                              |             |   | 5,783 |   |   |   | 10,102 |   |   |   | 11,796 |   |
|                                                                                   |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                                                                      |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits and escrow                                                  |   |                              | 1,225  |                              |             |   | 1,542 |   |   |   | 2,483 |   |   |   | 3,157 |   |
|    Borrowed funds                                                       |   |                              | 936    |                              |             |   | 1,045 |   |   |   | 1,902 |   |   |   | 2,297 |   |
| Total interest expense                                                                 |   |                              | 2,161  |                              |             |   | 2,587 |   |   |   | 4,385 |   |   |   | 5,454 |   |
| Net interest and dividend income                                                       |   |                              | 2,792  |                              |             |   | 3,196 |   |   |   | 5,717 |   |   |   | 6,342 |   |
|                                                                                   |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                              |   |                              | 241    |                              |             |   | 265 |   |   |   | 442 |   |   |   | 507 |   |
| Net interest and dividend income after provision                                       |   |                              |   |                              |             |   |   |   |   |   |   |   |   |
|    for loan losses                                                      |   |                              | 2,551  |                              |             |   | 2,931 |   |   |   | 5,275 |   |   |   | 5,835 |   |
|                                                                                   |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest income:                                                                    |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
|     Fees for services                                              |   |                              | 531    |                              |             |   | 595 |   |   |   | 1,063 |   |   |   | 1,192 |   |
|     Mortgage banking activities                                    |   |                              | 64     |                              |             |   | 67 |   |   |   | 113 |   |   |   | 132 |   |
|     Net commissions from brokerage service                         |   |                              | 38     |                              |             |   | 24 |   |   |   | 76 |   |   |   | 37 |   |
| Other than temporary impairment losses on investments                                  |   |                              |   |                              |             |   |   |   |   |   |   |   |
|        Gross impairment losses                      |   |                              | (1,332 | )                                 |             |   | (2,991 | ) |   |   | (2,090 | ) |   |   | (3,391 | ) |
|        Less: Impairments recognized in OCI          |   |                              | 978    |                              |             |   | 2,388 |   |   |   | 1,563 |   |   |   | 2,459 |   |
|        Net impairment losses recognized in earnings |   |                              | (354   | )                                 |             |   | (603 | ) |   |   | (527 | ) |   |   | (932 | ) |
|     Gain on sale of securities                                     |   |                              | -      |                              |             |   | 512 |   |   |   | 254 |   |   |   | 842 |   |
|     Other income                                                   |   |                              | 113    |                              |             |   | 105 |   |   |   | 219 |   |   |   | 214 |   |
| Total noninterest income                                                               |   |                              | 392    |                              |             |   | 700 |   |   |   | 1,198 |   |   |   | 1,485 |   |
|                                                                                   |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest expense:                                                                   |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
|  Compensation and benefits                                                        |   |                              | 1,447  |                              |             |   | 1,519 |   |   |   | 2,936 |   |   |   | 3,021 |   |
|  Occupancy and equipment                                                          |   |                              | 305    |                              |             |   | 301 |   |   |   | 607 |   |   |   | 606 |   |
|  Data processing                                                                  |   |                              | 209    |                              |             |   | 196 |   |   |   | 405 |   |   |   | 390 |   |
|  Advertising and marketing                                                        |   |                              | 60     |                              |             |   | 82 |   |   |   | 121 |   |   |   | 146 |   |
|  Prepayment penalties on borrowings                                               |   |                              | 19     |                              |             |   | 41 |   |   |   | 19 |   |   |   | 172 |   |
|  FDIC deposit insurance                                                           |   |                              | 203    |                              |             |   | 149 |   |   |   | 408 |   |   |   | 353 |   |
|  Writedown of other real estate owned                                             |   |                              | 95     |                              |             |   | - |   |   |   | 95 |   |   |   | 321 |   |
|  Other noninterest expense                                                        |   |                              | 541    |                              |             |   | 626 |   |   |   | 1,033 |   |   |   | 1,084 |   |
| Total noninterest expense                                                              |   |                              | 2,879  |                              |             |   | 2,914 |   |   |   | 5,624 |   |   |   | 6,093 |   |
| Income before income tax expense                                                       |   |                              | 64     |                              |             |   | 717 |   |   |   | 849 |   |   |   | 1,227 |   |
|                                                                                   |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
| Income tax (benefit) expense                                                           |   |                              | (35    | )                                 |             |   | 189 |   |   |   | 180 |   |   |   | 296 |   |
| NET INCOME                                                                             |   | $                                 | 99     |                              |             | $      | 528 |   |   | $ | 669 |   |   | $ | 931 |   |
| Earnings per common share                                                              |   |                              |   |                              |             |   |   |   |   |   |   |   |   |   |   |   |
|    Basic                                                                |   | $                                 | 0.02   |                              |             | $      | 0.08 |   |   | $ | 0.11 |   |   | $ | 0.15 |   |
|    Diluted                                                              |   | $                                 | 0.02   |                              |             | $      | 0.08 |   |   | $ | 0.11 |   |   | $ | 0.15 |   |

----

|                                                                                             |   | Common Stock   |   |   | Additional Paid-in Capital |   |   | Retained Earnings |   |   | Accumulated Other Comprehensive Loss |   |   | Unearned ESOPShares |   |   | Unearned StockAwards |   |   | Treasury Stock |   |   | Total Stockholders’ Equity |   |
|--------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|----------------------------|--------|--------|-------------------|--------|--------|--------------------------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|----------------|--------|--------|----------------------------------|--------|
|                                                                                             |   | (in thousands) |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |
| Balances at June 30, 2009                                                                        |   | $              | 694    |   |                       | $      | 30,656 |              |   | $      | 20,383                               |   |   | $                   | (5,277 | )      |                 | $      | (1,940 | )              |   | $      | (409                             | )      |   | $ | (4,211 | ) |   | $ | 39,896 |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Dividends declared                                                                               |   |           | -      |   |                       |   | -      |              |   |   | (95                                  | )      |   |                | -      |   |                 |   | -      |           |   |   | -                                |   |   |   | - |   |   |   | (95 | ) |
| Stock-based compensation                                                                         |   |           | -      |   |                       |   | 44     |              |   |   | -                                    |   |   |                | -      |   |                 |   | -      |           |   |   | 177                              |   |   |   | - |   |   |   | 221 |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                              |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Net income                                                                                       |   |           | -      |   |                       |   | -      |              |   |   | 931                                  |   |   |                | -      |   |                 |   | -      |           |   |   | -                                |   |   |   | - |   |   |   | - |   |
| Net change in unrealized holding losses on available-for-sale securities, net of tax effect |   |           | -      |   |                       |   | -      |              |   |   | -                                    |   |   |                | 3,137  |   |                 |   | -      |           |   |   | -                                |   |   |   | - |   |   |   |   |   |
| Comprehensive income                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   | 4,068 |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2009                                                                    |   | $              | 694    |   |                       | $      | 30,700 |              |   | $      | 21,219                               |   |   | $                   | (2,140 | )      |                 | $      | (1,940 | )              |   | $      | (232                             | )      |   | $ | (4,211 | ) |   | $ | 44,090 |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Balances at June 30, 2010                                                                        |   | $              | 694    |   |                       | $      | 30,633 |              |   | $      | 21,550                               |   |   | $                   | (2,776 | )      |                 | $      | (1,821 | )              |   | $      | (212                             | )      |   | $ | (4,213 | ) |   | $ | 43,855 |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Stock-based compensation                                                                         |   |           | -      |   |                       |   | 33     |              |   |   | -                                    |   |   |                | -      |   |                 |   | -      |           |   |   | 176                              |   |   |   | - |   |   |   | 209 |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                                            |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Net income                                                                                       |   |           | -      |   |                       |   | -      |              |   |   | 669                                  |   |   |                | -      |   |                 |   | -      |           |   |   | -                                |   |   |   | - |   |   |   | - |   |
| Net change in unrealized holding losses on available-for-sale securities, net of tax effect      |   |           | -      |   |                       |   | -      |              |   |   | -                                    |   |   |                | 1,063  |   |                 |   | -      |           |   |   | -                                |   |   |   | - |   |   |   |   |   |
| Comprehensive income                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   | 1,732 |   |
|                                                                                             |   |           |   |   |                       |   |   |              |   |   |                                 |   |   |                |   |   |                 |   |   |           |   |   |                             |   |   |   |   |   |   |   |   |   |
| Balances at December 31, 2010                                                                    |   | $              | 694    |   |                       | $      | 30,666 |              |   | $      | 22,219                               |   |   | $                   | (1,713 | )      |                 | $      | (1,821 | )              |   | $      | (36                              | )      |   | $ | (4,213 | ) |   | $ | 45,796 |   |

----

|                                                                                                                |   | For the Six Months |    |
|---------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                                                |   | Ended December 31, |    |
|                                                                                                                |   | 2010               |    |   | 2009 |   |
|                                                                                                                |   | (in thousands)     |    |
| Cash flows from operating activities                                                                                |   |               |    |   |   |   |
| Net income                                                                                                          |   | $                  | 669     |   |   | $ | 931 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                   |   |               |    |   |   |   |   |   |
| Amortization of securities, net                                                                                     |   |               | 545     |   |   |   | 127 |   |
| Gain on sales and calls of securities, net                                                                          |   |               | (254    | ) |   |   | (842 | ) |
| Write down of securities                                                                                            |   |               | 527     |   |   |   | 932 |   |
| Net decrease in loans held-for-sale                                                                                 |   |               | 1,272   |   |   |   | 775 |   |
| Change in deferred loan costs, net                                                                                  |   |               | 60      |   |   |   | 6 |   |
| Provision for loan losses                                                                                           |   |               | 442     |   |   |   | 507 |   |
| Gain (loss) on sale of other real estate owned                                                                      |   |               | (40     | ) |   |   | 31 |   |
| Writedown of other real esate owned                                                                                 |   |               | 95      |   |   |   | 321 |   |
| Depreciation and amortization                                                                                       |   |               | 234     |   |   |   | 275 |   |
| Amortization of core deposit intangible                                                                             |   |               | 74      |   |   |   | 89 |   |
|         Decrease (increase) in accrued interest receivable and other assets |   |               | 196     |   |   |   | (2,181 | ) |
| Increase in cash surrender value of bank owned life insurance                                                       |   |               | (140    | ) |   |   | (140 | ) |
| (Decrease) in other liabilities                                                                                     |   |               | (187    | ) |   |   | (626 | ) |
| Stock-based compensation                                                                                            |   |               | 105     |   |   |   | 143 |   |
| Net cash provided by operating activities                                                                           |   |               | 3,598   |   |   |   | 348 |   |
| Cash flows from investing activities                                                                                |   |               |    |   |   |   |   |   |
| Proceeds from sales of available-for-sale securities                                                                |   |               | 6,636   |   |   |   | 21,077 |   |
| Proceeds from maturities of available-for-sale securities                                                           |   |               | 14,097  |   |   |   | 27,654 |   |
| Purchase of held-to-maturity securities                                                                             |   |               | (62,955 | ) |   |   | (35,960 | ) |
| Proceeds from maturities of held-to-maturity securities                                                             |   |               | 33,301  |   |   |   | 465 |   |
| Loan originations net of principal collections                                                                      |   |               | (670    | ) |   |   | 1,493 |   |
| Recoveries of loans previously charged off                                                                          |   |               | 21      |   |   |   | 25 |   |
| Proceeds from sale of other real estate owned                                                                       |   |               | 177     |   |   |   | 1,049 |   |
| Capital expenditures - premises and equipment                                                                       |   |               | (26     | ) |   |   | (559 | ) |
| Net cash provided by investing activities                                                                           |   |               | (9,419  | ) |   |   | 15,244 |   |
| Cash flows from financing activities                                                                                |   |               |    |   |   |   |   |   |
| Net (decrease) increase in savings, demand deposits and NOW accounts                                                |   |               | (4,080  | ) |   |   | 25,681 |   |
| Net (decrease) in time deposit accounts                                                                             |   |               | (641    | ) |   |   | (9,563 | ) |
| Net increase (decrease) in mortgagors’ escrow account                                                         |   |               | 32      |   |   |   | (59 | ) |
| Proceeds from Federal Home Loan Bank advances                                                                       |   |               | 10,000  |   |   |   | - |   |
| Repayments of Federal Home Loans Bank advances                                                                      |   |               | (15,000 | ) |   |   | (18,000 | ) |
| Net (decrease) increase in securities sold under agreement to repurchase                                            |   |               | (381    | ) |   |   | 1,501 |   |
| Dividends paid                                                                                                      |   |               | -       |   |   |   | (236 | ) |
| Net cash used by financing activities                                                                               |   |               | (10,070 | ) |   |   | (676 | ) |
| (Decrease) increase in cash and cash equivalents                                                                    |   |               | (15,891 | ) |   |   | 14,916 |   |
| Cash and cash equivalents at beginning of year                                                                      |   |               | 23,291  |   |   |   | 6,059 |   |
| Cash and cash equivalents at end of period                                                                          |   | $                  | 7,400   |   |   | $ | 20,975 |   |
| Supplemental disclosures                                                                                            |   |               |    |   |   |   |   |   |
| Cash paid during the period for:                                                                                    |   |               |    |   |   |   |   |   |
| Interest                                                                                                            |   | $                  | 4,399   |   |   | $ | 5,511 |   |
| Income taxes paid                                                                                                   |   | $                  | 805     |   |   | $ | 20 |   |
| Loans transferred to other real estate owned                                                                        |   | $                  | 144     |   |   | $ | 1,174 |   |

----

----

----

|                                                                              |   | Quarter Ended     |      |   | Quarter Ended     |   |      | Six Months Ended  |   |   | Six Months Ended  |   |
|-----------------------------------------------------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|-----------|-------------------|--------|--------|-------------------|--------|
|                                                                              |   | December 31, 2010 |      |   | December 31, 2009 |   |      | December 31, 2010 |   |   | December 31, 2009 |   |
| Net income                                                                        |   | $                 | 99,000    |   |              | $      | 528,000   |              |   | $      | 669,000           |   |   | $ | 931,000 |   |
| Dividends and undistributed earnings allocated to unvested shares of stock awards |   |              | 157       |   |              |   | 2,381     |              |   |   | 1,585             |   |   |   | 5,301 |   |
| Net income available to common shareholders                                       |   |              | 98,843    |   |              |   | 525,619   |              |   |   | 667,415           |   |   |   | 925,699 |   |
| Average basic common shares                                                       |   |              | 6,339,910 |   |              |   | 6,309,519 |              |   |   | 6,333,350         |   |   |   | 6,302,691 |   |
| Dilutive effect of stock options                                                  |   |              | 0         |   |              |   | 0         |              |   |   | 0                 |   |   |   | 0 |   |
| Average diluted common shares                                                     |   |              | 6,339,910 |   |              |   | 6,309,519 |              |   |   | 6,333,350         |   |   |   | 6,302,691 |   |
|                                                                              |   |              |      |   |              |   |      |              |   |   |              |   |   |   |   |   |
| Basic EPS:                                                                        |   | $                 | 0.02      |   |              | $      | 0.08      |              |   | $      | 0.11              |   |   | $ | 0.15 |   |
| Diluted EPS:                                                                      |   | $                 | 0.02      |   |              | $      | 0.08      |              |   | $      | 0.11              |   |   | $ | 0.15 |   |

----

|                                  |   |              |    |            |   |    |   |            |   |   |    |   |
|---------------------------------------|--------|-------------------|---------|-----------------|--------|---------|--------|-----------------|--------|--------|---------|--------|
|                                  |   | Carrying Value at |
|                                  |   | December 31, 2010 |    | June 30, 2010   |
|                                  |   | Balance           |    | Percentof total |   | Balance |   | Percentof total |
| (Dollars in thousands)                |   |              |    |            |   |    |   |            |   |   |    |   |
| Securities, available-for-sale:       |   |              |    |            |   |    |   |            |   |   |    |   |
| U.S. Government and agency securities |   | $                 | 1,793   |            |   |    | 1.0    | %               |   | $      | 6,101   |   |   |   | 3.6 | % |
| Corporate bonds and other securities  |   |              | 4,495   |            |   |    | 2.5    | %               |   |   | 4,368   |   |   |   | 2.6 | % |
| Mortgage-backed securities            |   |              | 50,573  |            |   |    | 28.3   | %               |   |   | 66,967  |   |   |   | 39.6 | % |
| Equity securities                     |   |              | 9,599   |            |   |    | 5.3    | %               |   |   | 8,457   |   |   |   | 5.0 | % |
| Total securities, available-for-sale  |   |              | 66,460  |            |   |    | 37.1   | %               |   |   | 85,893  |   |   |   | 50.8 | % |
| Securities, held-to-maturity:         |   |              |    |            |   |    |   |            |   |   |    |   |   |   |   |   |
| U.S. Government and agency securities |   |              | 28,209  |            |   |    | 15.8   | %               |   |   | 45,275  |   |   |   | 26.8 | % |
| Mortgage-backed securities            |   |              | 84,187  |            |   |    | 47.1   | %               |   |   | 37,974  |   |   |   | 22.4 | % |
| Total securities, held-to-maturity    |   |              | 112,396 |            |   |    | 62.9   | %               |   |   | 83,249  |   |   |   | 49.2 | % |
| Total securities                      |   | $                 | 178,856 |            |   |    | 100.0  | %               |   | $      | 169,142 |   |   |   | 100.0 | % |

----

|                                                                      |   |                |   |   |              |   |   |      |   |   |             |   |   |      |   |   |             |   |
|---------------------------------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|-----------|--------|--------|------------------|--------|--------|-----------|--------|--------|------------------|--------|
| December 31, 2010:                                                        |   | Less than 12 months |   |   | 12 months or more |   |   | Total     |   |
| (Dollars in thousands)                                                    |   | FairValue           |   |   | UnrealizedLosses  |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
| U.S. Government and agency securities                                     |   | $                   | 13,507 |   |              | $      | 195    |      |   | $      | -                |   |   | $         | -      |   |             | $      | 13,507 |   |   | $ | 195 |   |
| Corporate bonds and other obligations                                     |   |                | -      |   |              |   | -      |      |   |   | 4,495            |   |   |      | 1,504  |   |             |   | 4,495 |   |   |   | 1,504 |   |
| Mortgage-backed securities                                                |   |                | 48,305 |   |              |   | 571    |      |   |   | 969              |   |   |      | 156    |   |             |   | 49,274 |   |   |   | 727 |   |
| Equity securities                                                         |   |                | -      |   |              |   | -      |      |   |   | 6,291            |   |   |      | 709    |   |             |   | 6,291 |   |   |   | 709 |   |
| Total temporarily impaired securities                                     |   |                | 61,812 |   |              |   | 766    |      |   |   | 11,755           |   |   |      | 2,369  |   |             |   | 73,567 |   |   |   | 3,135 |   |
| Other-than-temporarily impaired debt securities (1)                       |   |                |   |   |              |   |   |      |   |   |             |   |   |      |   |   |             |   |   |   |   |   |   |   |
| Mortgage-backed securities                                                |   |                | 227    |   |              |   | 274    |      |   |   | 10,761           |   |   |      | 2,278  |   |             |   | 10,988 |   |   |   | 2,552 |   |
|                                                                      |   |                |   |   |              |   |   |      |   |   |             |   |   |      |   |   |             |   |   |   |   |   |   |   |
| Total temporarily-impaired and other-than-temporarily impaired securities |   | $                   | 62,039 |   |              | $      | 1,040  |      |   | $      | 22,516           |   |   | $         | 4,647  |   |             | $      | 84,555 |   |   | $ | 5,687 |   |
|                                                                      |   |                |   |   |              |   |   |      |   |   |             |   |   |      |   |   |             |   |   |   |   |   |   |   |
| June 30, 2010:                                                            |   | Less than 12 months |   |   | 12 months or more |   |   | Total     |   |
| (Dollars in thousands)                                                    |   | FairValue           |   |   | UnrealizedLosses  |   |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
| Corporate bonds and other obligations                                     |   | $                   | -      |   |              | $      | -      |      |   | $      | 4,368            |   |   | $         | 1,630  |   |             | $      | 4,368 |   |   | $ | 1,630 |   |
| Mortgage-backed securities                                                |   |                | 12,307 |   |              |   | 101    |      |   |   | 1,032            |   |   |      | 188    |   |             |   | 13,339 |   |   |   | 289 |   |
| Equity securities                                                         |   |                | 2,744  |   |              |   | 256    |      |   |   | 5,660            |   |   |      | 1,340  |   |             |   | 8,404 |   |   |   | 1,596 |   |
| Total temporarily impaired securities                                     |   |                | 15,051 |   |              |   | 357    |      |   |   | 11,060           |   |   |      | 3,158  |   |             |   | 26,111 |   |   |   | 3,515 |   |
| Other-than-temporarily impaired debt securities (1)                       |   |                |   |   |              |   |   |      |   |   |             |   |   |      |   |   |             |   |   |   |   |   |   |   |
| Mortgage-backed securities                                                |   |                | 852    |   |              |   | 419    |      |   |   | 14,349           |   |   |      | 3,107  |   |             |   | 15,201 |   |   |   | 3,526 |   |
|                                                                      |   |                |   |   |              |   |   |      |   |   |             |   |   |      |   |   |             |   |   |   |   |   |   |   |
| Total temporarily-impaired and other-than-temporarily impaired securities |   | $                   | 15,903 |   |              | $      | 776    |      |   | $      | 25,409           |   |   | $         | 6,265  |   |             | $      | 41,312 |   |   | $ | 7,041 |   |

----

----

| Issuer                  | Goldman Sachs    |   | Merrill Lynch    |   | Bank of America  |   | Freddie Mac      |   | Freddie Mac      |
|-------------------------|------------------|--------|------------------|--------|------------------|--------|------------------|--------|------------------|
| Par amount              |  $3,000,000 |   |  $5,000,000 |   |  $2,000,000 |   |  $2,000,000 |   |  $2,000,000 |
| Book Value              |  $3,000,000 |   |  $5,000,000 |   |  $2,000,000 |   |  $23,000    |   |  $23,000    |
| Purchase Date           | 12-12-07         |   | 09-04-07         |   | 11-20-07         |   | 11-09-07         |   | 01-03-08         |
| Maturity Date           | 08-23-26         |   | 05-28-27         |   | 08-17-47         |   | 06-30-20         |   | 06-30-20         |
| Next Reset Date         | 02-18-11         |   | 02-25-11         |   | 02-16-11         |   | 01-10-11         |   | 01-03-11         |
| Reset Frequency         | Quarterly        |   | Quarterly        |   | Quarterly        |   | Quarterly        |   | Quarterly        |
| Failed Auction          | Yes              |   | Yes              |   | Yes              |   | Yes              |   | Yes              |
| Receiving Default Rates | Yes              |   | Yes              |   | Yes              |   | No               |   | No               |
| Current Rate            | 4.593%           |   | 4.714%           |   | 4.678%           |   | 0.000%           |   | 0.000%           |
| Dividends Current:      | Yes              |   | Yes              |   | Yes              |   | No               |   | No               |

----

|                                       |   |                   |    |   |         |   |
|--------------------------------------------|--------|------------------------|---------|--------|--------------|--------|
|                                       |   | December 31,2010       |    |   | June 30,2010 |   |
|                                       |   | Amount                 |    |   | Percent      |   |   | Amount |   |   | Percent |   |
|                                       |   | (Dollars in thousands) |    |
|                                       |   |                   |    |   |         |   |   |   |   |   |   |   |
| Mortgage Loans:                            |   |                   |    |   |         |   |   |   |   |   |   |   |
|    Residential (1)          |   | $                      | 196,003 |   |         |   | 75.72 | % |   | $ | 194,960 |   |   |   | 75.37 | % |
|    Commercial real estate   |   |                   | 53,857  |   |         |   | 20.80 |   |   |   | 54,398 |   |   |   | 21.03 |   |
|    Residential construction |   |                   | 1,019   |   |         |   | 0.39 |   |   |   | 1,338 |   |   |   | 0.52 |   |
| Commercial                                 |   |                   | 6,939   |   |         |   | 2.68 |   |   |   | 6,786 |   |   |   | 2.62 |   |
| Consumer and other                         |   |                   | 1,052   |   |         |   | 0.41 |   |   |   | 1,177 |   |   |   | 0.46 |   |
|                                       |   |                   |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                |   |                   | 258,870 |   |         |   | 100.00 | % |   |   | 258,659 |   |   |   | 100.00 | % |
|                                       |   |                   |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Unadvanced construction loans              |   |                   | (1,733  | )      |         |   |   |   |   |   | (1,521 | ) |   |   |   |   |
|                                       |   |                   | 257,137 |   |         |   |   |   |   |   | 257,138 |   |   |   |   |   |
| Net deferred loan costs                    |   |                   | 225     |   |         |   |   |   |   |   | 285 |   |   |   |   |   |
| Allowance for loan losses                  |   |                   | (2,587  | )      |         |   |   |   |   |   | (2,651 | ) |   |   |   |   |
|                                       |   |                   |    |   |         |   |   |   |   |   |   |   |   |   |   |   |
| Loans, net                                 |   | $                      | 254,775 |   |         |   |   |   |   | $ | 254,772 |   |   |   |   |   |

----

|            |   | Residential |    |   | Commercial  |   |   | Residential  |   |   | Commercial     |   |   |     |   |   |   |   |   |   |   |
|-----------------|--------|-------------|---------|--------|-------------|--------|--------|--------------|--------|--------|----------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
|            |   | Real Estate |    |   | Real Estate |   |   | Construction |   |   | and Industrial |   |   | Consumer |   |   | Other  |   |   | Total  |   |
| Grade:          |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |   |   |
| Pass            |   |        | 193,563 |   |        |   | 39,219 |         |   |   | 234            |   |   |     | 6,723  |   |   |   | 984    |   |   |   | 67 |   |   |   | 240,790 |   |
| Special Mention |   |        | 228     |   |        |   | 3,922  |         |   |   | -              |   |   |     | 121    |   |   |   | -      |   |   |   | - |   |   |   | 4,271 |   |
| Substandard     |   |        | 2,212   |   |        |   | 9,769  |         |   |   | -              |   |   |     | 95     |   |   |   | -      |   |   |   | - |   |   |   | 12,076 |   |
| Doubtful        |   |        | -       |   |        |   | -      |         |   |   | -              |   |   |     | -      |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Loss            |   |        | -       |   |        |   | -      |         |   |   | -              |   |   |     | -      |   |   |   | -      |   |   |   | - |   |   |   | - |   |
| Total           |   |        | 196,003 |   |        |   | 52,910 |         |   |   | 234            |   |   |     | 6,939  |   |   |   | 984    |   |   |   | 67 |   |   |   | 257,137 |   |

|                                                                         |   | At December 31,        |   |   | At June 30, |   |
|------------------------------------------------------------------------------|--------|------------------------|--------|--------|-------------|--------|
|                                                                         |   | 2010                   |   |   | 2010        |   |
|                                                                         |   | (Dollars in thousands) |   |
| Non-accrual loans:                                                           |   |                   |   |   |        |   |
| Residential mortgage loans (1)                                               |   | $                      | 2,213  |   |        | $      | 1,425 |   |
| Commercial real estate                                                       |   |                   | 3,532  |   |        |   | 4,164 |   |
| Residential construction                                                     |   |                   | -      |   |        |   | - |   |
| Commercial                                                                   |   |                   | -      |   |        |   | 213 |   |
| Consumer and other                                                           |   |                   | -      |   |        |   | - |   |
| Total non-accrual loans                                                      |   |                   | 5,745  |   |        |   | 5,802 |   |
|                                                                         |   |                   |   |   |        |   |   |   |
| Accruing loans past due 90 days or more:                                     |   |                   |   |   |        |   |   |   |
| Residential mortgage loans (1)                                               |   |                   | 205    |   |        |   | 491 |   |
| Commercial real estate                                                       |   |                   | 259    |   |        |   | - |   |
| Residential construction                                                     |   |                   | -      |   |        |   | - |   |
| Commercial                                                                   |   |                   | -      |   |        |   | - |   |
| Consumer and other                                                           |   |                   | -      |   |        |   | - |   |
| Total                                                                        |   |                   | 464    |   |        |   | 491 |   |
|                                                                         |   |                   |   |   |        |   |   |   |
| Total non-performing loans                                                   |   |                   | 6,209  |   |        |   | 6,293 |   |
|                                                                         |   |                   |   |   |        |   |   |   |
| Other real estate owned                                                      |   |                   | 1,473  |   |        |   | 1,561 |   |
| Other non-performing assets                                                  |   |                   | 46     |   |        |   | 46 |   |
| Total non-performing assets                                                  |   |                   | 7,728  |   |        |   | 7,900 |   |
|                                                                         |   |                   |   |   |        |   |   |   |
| Troubled debt restructurings in compliance with restructured terms           |   |                   | 4,187  |   |        |   | 930 |   |
|                                                                         |   | $                      | 11,915 |   |        | $      | 8,830 |   |
|                                                                         |   |                   |   |   |        |   |   |   |
| Total non-performing loans to total loans                                    |   |                   | 2.41   | %      |        |   | 2.45 | % |
| Total non-performing assets to total assets                                  |   |                   | 1.61   |   |        |   | 1.61 |   |
| Total non-performing assets and troubled debt restructurings to total assets |   |                   | 2.48   |   |        |   | 1.80 |   |

|   | (1) | Residential mortgage loans include one- to four-family mortgage loans, home equity loans, and home equity lines of credit. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------|

----

|                      |   | 30–59 Days |   |   | 60–89 Days |   |   | 90 days    |   |   | Total    |   |
|---------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------|--------|--------|----------|--------|
|                      |   | Past Due         |   |   | Past Due         |   |   | or greater |   |   | Past Due |   |
| 2010                      |   |             |   |   |             |   |   |       |   |   |     |   |
| Real Estate:              |   |             |   |   |             |   |   |       |   |   |     |   |
| Residential               |   |             | 3,583  |   |             |   | 23     |       |   |   | 1,776    |   |   |   | 5,382 |   |
| Commercial                |   |             | 1,347  |   |             |   | 229    |       |   |   | 2,197    |   |   |   | 3,773 |   |
| Residential Construction  |   |             | 40     |   |             |   | -      |       |   |   | -        |   |   |   | 40 |   |
| Commercial and Industrial |   |             | 168    |   |             |   | -      |       |   |   | -        |   |   |   | 168 |   |
| Consumer                  |   |             | 6      |   |             |   | -      |       |   |   | -        |   |   |   | 6 |   |
| Other                     |   |             | -      |   |             |   | -      |       |   |   | -        |   |   |   | - |   |
| Total                     |   |             | 5,144  |   |             |   | 252    |       |   |   | 3,973    |   |   |   | 9,369 |   |

----

|                                          |   |       |   |   | Unpaid    |   |   |      |   |   | Average    |   |
|-----------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|-----------|--------|--------|------------|--------|
|                                          |   | Recorded   |   |   | Principal |   |   | Related   |   |   | Recorded   |   |
| December 31, 2010                             |   | Investment |   |   | Balance   |   |   | Allowance |   |   | Investment |   |
| Impaired loans without a valuation allowance: |   |       |   |   |      |   |   |      |   |   |       |   |
| Real Estate:                                  |   |       |   |   |      |   |   |      |   |   |       |   |
| Residential                                   |   |       | 2,006  |   |      |   | 2,006  |      |   |   | 0          |   |   |   | 1,220 |   |
| Commercial                                    |   |       | 2,860  |   |      |   | 2,860  |      |   |   | 0          |   |   |   | 2,858 |   |
| Residential Construction                      |   |       | 0      |   |      |   | 0      |      |   |   | 0          |   |   |   | 0 |   |
| Commercial and Industrial                     |   |       | 0      |   |      |   | 0      |      |   |   | 0          |   |   |   | 0 |   |
| Consumer                                      |   |       | 0      |   |      |   | 0      |      |   |   | 0          |   |   |   | 0 |   |
| Total impaired with no related allowance      |   |       | 4,866  |   |      |   | 4,866  |      |   |   | 0          |   |   |   | 4,078 |   |
|                                          |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| Impaired loans with a valuation allowance:    |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| Real Estate:                                  |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| Residential                                   |   |       | 898    |   |      |   | 1,009  |      |   |   | 111        |   |   |   | 1,142 |   |
| Commercial                                    |   |       | 3,652  |   |      |   | 4,004  |      |   |   | 352        |   |   |   | 2,727 |   |
| Residential Construction                      |   |       | 0      |   |      |   | 0      |      |   |   | 0          |   |   |   | 0 |   |
| Commercial and Industrial                     |   |       | 0      |   |      |   | 0      |      |   |   | 0          |   |   |   | 71 |   |
| Consumer                                      |   |       | 0      |   |      |   | 32     |      |   |   | 32         |   |   |   | 33 |   |
| Total impaired with an allowance recorded     |   |       | 4,550  |   |      |   | 5,045  |      |   |   | 495        |   |   |   | 3,973 |   |
|                                          |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| Total Impaired Loans:                         |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| Real Estate:                                  |   |       |   |   |      |   |   |      |   |   |       |   |   |   |   |   |
| Residential                                   |   |       | 2,904  |   |      |   | 3,015  |      |   |   | 111        |   |   |   | 2,362 |   |
| Commercial                                    |   |       | 6,512  |   |      |   | 6,864  |      |   |   | 352        |   |   |   | 5,585 |   |
| Residential Construction                      |   |       | 0      |   |      |   | 0      |      |   |   | 0          |   |   |   | 0 |   |
| Commercial and Industrial                     |   |       | 0      |   |      |   | 0      |      |   |   | 0          |   |   |   | 71 |   |
| Consumer                                      |   |       | 0      |   |      |   | 32     |      |   |   | 32         |   |   |   | 33 |   |
| Total impaired loans                          |   |       | 9,416  |   |      |   | 9,911  |      |   |   | 495        |   |   |   | 8,051 |   |

----

|                         |   | Three Months Ended |   |   | Six Months Ended |
|------------------------------|--------|--------------------|--------|--------|------------------|
|                         |   | December 31,       |   |   | December 31,     |   |
|                         |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                         |   | (in thousands)     |   |   | (in thousands)   |   |
|                         |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of period |   | $                  | 2,580  |   |             | $ | 2,128 |   |   | $ | 2,651 |   |   | $ | 2,200 |   |
| Provision for loan losses    |   |               | 242    |   |             |   | 265 |   |   |   | 442 |   |   |   | 507 |   |
| Charge offs                  |   |               | (244   | )      |             |   | (201 | ) |   |   | (527 | ) |   |   | (525 | ) |
| Recoveries                   |   |               | 9      |   |             |   | 15 |   |   |   | 21 |   |   |   | 25 |   |
| Balance, end of period       |   | $                  | 2,587  |   |             | $ | 2,207 |   |   | $ | 2,587 |   |   | $ | 2,207 |   |

----

|                                                           |   | Residential |    |   | Commercial  |   |   | Residential  |   |   | Commercial     |   |   |     |   |   |   |   |   |        |   |   |   |   |
|----------------------------------------------------------------|--------|-------------|---------|--------|-------------|--------|--------|--------------|--------|--------|----------------|--------|--------|----------|--------|--------|--------|--------|--------|-------------|--------|--------|--------|--------|
| December 31, 2010                                              |   | Real Estate |    |   | Real Estate |   |   | Construction |   |   | and Industrial |   |   | Consumer |   |   | Other  |   |   | Unallocated |   |   | Total  |   |
| Allowance for credit losses:                                   |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |
| Beginning balance                                              |   |        | 1,332   |   |        |   | 901    |         |   |   | 10             |   |   |     | 297    |   |   |   | 37     |        |   |   | 6      |   |   |   | 68 |   |   |   | 2,651 |   |
| Charge-offs                                                    |   |        | 207     |   |        |   | 63     |         |   |   | -              |   |   |     | 212    |   |   |   | 2      |        |   |   | 43     |   |   |   | - |   |   |   | 527 |   |
| Recoveries                                                     |   |        | 2       |   |        |   | -      |         |   |   | -              |   |   |     | -      |   |   |   | 1      |        |   |   | 18     |   |   |   | - |   |   |   | 21 |   |
| Provision                                                      |   |        | 244     |   |        |   | 183    |         |   |   | (2             | )      |   |     | 2      |   |   |   | (2     | )           |   |   | 23     |   |   |   | (6 | ) |   |   | 442 |   |
| Ending Balance                                                 |   |        | 1,371   |   |        |   | 1,021  |         |   |   | 8              |   |   |     | 87     |   |   |   | 34     |        |   |   | 4      |   |   |   | 62 |   |   |   | 2,587 |   |
|                                                           |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:Individually evaluated for impairment           |   |        | 111     |   |        |   | 352    |         |   |   | -              |   |   |     | -      |   |   |   | 32     |        |   |   | -      |   |   |   | - |   |   |   | 495 |   |
|                                                           |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:collectively evaluated for impairment           |   |        | 1,260   |   |        |   | 669    |         |   |   | 8              |   |   |     | 87     |   |   |   | 2      |        |   |   | 4      |   |   |   | 62 |   |   |   | 2,092 |   |
|                                                           |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:loans acquired with deteriorated credit quality |   |        | -       |   |        |   | -      |         |   |   | -              |   |   |     | -      |   |   |   | -      |        |   |   | -      |   |   |   | - |   |   |   | - |   |
|                                                           |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans:                                                         |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending Balance                                                 |   |        | 196,003 |   |        |   | 52,910 |         |   |   | 234            |   |   |     | 6,939  |   |   |   | 984    |        |   |   | 67     |   |   |   | - |   |   |   | 257,137 |   |
|                                                           |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:Individually evaluated for impairment           |   |        | 3,008   |   |        |   | 6,868  |         |   |   | -              |   |   |     | -      |   |   |   | 32     |        |   |   | -      |   |   |   | - |   |   |   | 9,908 |   |
|                                                           |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:collectively evaluated for impairment           |   |        | 192,995 |   |        |   | 46,042 |         |   |   | 234            |   |   |     | 6,939  |   |   |   | 952    |        |   |   | 67     |   |   |   | - |   |   |   | 247,229 |   |
|                                                           |   |        |    |   |        |   |   |         |   |   |           |   |   |     |   |   |   |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance:loans acquired with deteriorated credit quality |   |        | -       |   |        |   | -      |         |   |   | -              |   |   |     | -      |   |   |   | -      |        |   |   | -      |   |   |   | - |   |   |   | - |   |

----

|                                  |   |           |   |   |     |   |
|---------------------------------------|--------|----------------|--------|--------|----------|--------|
|                                  |   | December 31,   |   |   | June 30, |   |
|                                  |   | 2010           |   |   | 2010     |   |
|                                  |   | (in thousands) |   |
| Balances not subject to amortization: |   |           |   |   |     |   |
| Goodwill                              |   | $              | 6,912  |   |     | $      | 6,912 |   |
| Balances subject to amortization:     |   |           |   |   |     |   |   |   |
| Core Deposit Intangible               |   |           | 399    |   |     |   | 473 |   |
| Total intangible assets               |   | $              | 7,311  |   |     | $      | 7,385 |   |

|                                       |   |           |   |
|--------------------------------------------|--------|----------------|--------|
|                                       |   | (in thousands) |   |
|                                       |   |           |   |
| For the six months ending June 30, 2011    |   |           | 75     |   |
| For the twelve months ending June 30, 2012 |   |           | 121    |   |
| For the twelve months ending June 30, 2013 |   |           | 93     |   |
| For the twelve months ending June 30, 2014 |   |           | 65     |   |
| For the twelve months ending June 30, 2015 |   |           | 37     |   |
| For the twelve months ending June 30, 2016 |   |           | 8      |   |
| Total                                      |   | $              | 399    |   |

----

|                                                                   |   | Three Months Ended |   |   | Six Months Ended |   |
|------------------------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                                   |   | December 31,       |   |   | December 31,     |   |
|                                                                   |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                                                                   |   | (in thousands)     |   |   | (in thousands)   |   |
| Net Income                                                             |   | $                  | 99     |   |             | $      | 528 |   |   | $ | 669 |   |   | $ | 931 |   |
|                                                                   |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income                                             |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized holding (losses) gains on available-for-sale securities |   |               | (80    | )      |             |   | 2,056 |   |   |   | 1,338 |   |   |   | 4,664 |   |
| Reclassification adjustment for loss recognized in net income          |   |               | 355    |   |             |   | 91 |   |   |   | 273 |   |   |   | 90 |   |
| Other comprehensive income before tax expense                          |   |               | 275    |   |             |   | 2,147 |   |   |   | 1,611 |   |   |   | 4,754 |   |
| Income tax expense related to items of other comprehensive income      |   |               | (93    | )      |             |   | (729 | ) |   |   | (548 | ) |   |   | (1,617 | ) |
| Other comprehensive income, net of tax                                 |   |               | 182    |   |             |   | 1,418 |   |   |   | 1,063 |   |   |   | 3,137 |   |
| Total comprehensive income                                             |   | $                  | 281    |   |             | $      | 1,946 |   |   | $ | 1,732 |   |   | $ | 4,068 |   |

----

----

|                                                                            |   | Fair Value Measurements at Reporting Date Using: |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
| (In thousands)                                                                  |   | December 31, 2010                                |   |   | Quoted Prices inActive Markets forIdentical AssetsLevel 1 |   |   | Significant OtherObservable InputsLevel 2 |   |   | SignificantUnobservable InputsLevel 3 |   |
|                                                                            |   |                                             |   |   |   |   |   |   |   |   |   |   |
| Securities available for sale                                                   |   |                                             |   |   |   |   |   |   |   |   |   |   |
| U. S. Government agency securities                                              |   | $                                                | 1,793  |   |   | $ | - |   |   | $ | 1,793 |   |   | $ | - |   |
| Corporate securities                                                            |   |                                             | 4,495  |   |   |   | - |   |   |   | 4,495 |   |   |   | - |   |
| Mortgage backed securities insured or guaranteed by U.S. Government enterprises |   |                                             | 35,767 |   |   |   | - |   |   |   | 35,767 |   |   |   | - |   |
| Non-agency mortgage-backed securities                                           |   |                                             | 14,806 |   |   |   | - |   |   |   | 14,806 |   |   |   | - |   |
| Equity securities                                                               |   |                                             | 9,599  |   |   |   | - |   |   |   | - |   |   |   | 9,599 |   |
| Total                                                                           |   | $                                                | 66,460 |   |   | $ | - |   |   | $ | 56,861 |   |   | $ | 9,599 |   |

|                                                                                                                                                                                                                                   |   | Fair Value MeasurementsUsing Significant Unobservable InputsLevel 3 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|
| (In thousands)                                                                                                                                                                                                                         |   | Available-for-saleSecurities                                        |   |   | Total |   |
| Beginning balance, July 1, 2010                                                                                                                                                                                                        |   | $                                                                   | 8,457  |   |   | $ | 8,457 |   |
| Total gains or losses                                                                                                                                                                                                                  |   |                                                                |   |   |   |   |   |   |
| Included in earnings                                                                                                                                                                                                                   |   |                                                                | -      |   |   |   | - |   |
| Included in other comprehensive income                                                                                                                                                                                                 |   |                                                                | 1,142  |   |   |   | 1,142 |   |
| Principal payments on securities                                                                                                                                                                                                       |   |                                                                | -      |   |   |   | - |   |
| Amortization of securities, net                                                                                                                                                                                                        |   |                                                                | -      |   |   |   | - |   |
| Transfers in and/or out of Level 3                                                                                                                                                                                                     |   |                                                                | -      |   |   |   | - |   |
| Ending balance, December 31, 2010                                                                                                                                                                                                      |   | $                                                                   | 9,599  |   |   | $ | 9,599 |   |
| The amount of total gains or losses for the period included in earnings (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at the reporting date for trading securities |   | $                                                                   | -      |   |   | $ | - |   |

----

|                    | Fair Value Measurements at Reporting Date Using: |                    |
|-------------------------|--------------------------------------------------|-------------------------|
|   (In thousands)   |                                             |  December 31, 2010 |   |   | Quoted Prices inActive Markets forIdentical AssetsLevel 1 |   |   |  Significant OtherObservable InputsLevel 2 |   |   |  SignificantUnobservable InputsLevel 3 |   |
|                    |                                             |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans          |                                             | $                       | 4,550 |   |   | $ | - |   |   | $ | - |   |   | $ | 4,550 |   |
| Other real estate owned |                                             |                    | 1,473 |   |   |   | - |   |   |   | 398 |   |   |   | 1,075 |   |
| Totals                  |                                             | $                       | 6,023 |   |   | $ | - |   |   | $ | 398 |   |   | $ | 5,625 |   |

|                                 |   | Fair Value MeasurementsUsing Significant Unobservable Inputs |   |
|--------------------------------------|--------|--------------------------------------------------------------|--------|
| (In thousands)                       |   | ImpairedLoans                                                |   |   | Level 3Other RealEstate Owned |   |   | Total |   |
| Beginning balance, July 1, 2010      |   | $                                                            | 1,784  |   |   | $ | 1,170 |   |   | $ | 2,954 |   |
| Total gains or losses                |   |                                                         | -      |   |   |   | - |   |   |   | - |   |
| Writedown of other real estate owned |   |                                                         | -      |   |   |   | (95 | ) |   |   | (95 | ) |
| Transfers in and/or out of Level 3   |   |                                                         | 2,766  |   |   |   | - |   |   |   | 2,766 |   |
| Ending balance December 31, 2010     |   | $                                                            | 4,550  |   |   | $ | 1,075 |   |   | $ | 5,625 |   |

----

|                                                                                                                                                                                 |   | Fair Value Measurements at June 30, 2010 Using: |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                                                                                                                                                 |   |                                            |   |   | Quoted Prices in |   |   | Significant |   |   | Significant |   |
|                                                                                                                                                                                 |   |                                            |   |   | Active Markets for |   |   | Other Observable |   | Unobservable |   |
|                                                                                                                                                                                 |   |                                            |   |   | Identical Assets |   |   | Inputs |   |   | Inputs |   |
|                                                                                                                                                                                 |   | June 30, 2010                                   |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Securities available-for-sale                                                                                                                                                        |   |                                            |   |   |   |   |   |   |   |   |   |   |
| U. S. Government agency securities                                                                                                                                                   |   | $                                               | 6,101  |   |   | $ | - |   |   | $ | 6,101 |   |   | $ | - |   |
| Corporate securities                                                                                                                                                                 |   |                                            | 4,368  |   |   |   | - |   |   |   | 4,368 |   |   |   | - |   |
| Mortgage-backed securities insured or guaranteed by U. S. Government enterprises                                                                                                     |   |                                            | 50,734 |   |   |   | - |   |   |   | 50,734 |   |   |   | - |   |
| Non-agency mortgage-backed securities                                                                                                                                                |   |                                            | 16,233 |   |   |   | - |   |   |   | 16,233 |   |   |   | - |   |
| Equity securities                                                                                                                                                                    |   |                                            | 8,457  |   |   |   | - |   |   |   | 0 |   |   |   | 8,457 |   |
| Total                                                                                                                                                                                |   | $                                               | 85,893 |   |   | $ | - |   |   | $ | 77,436 |   |   | $ | 8,457 |   |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   | Fair Value Measurements |   |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   | Using Significant Unobservable Inputs |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   | (Level 3) |   |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   | Available-for-sale |   |   |   |   |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   | Securities |   |   | Total |   |
| Beginning balance, July 1, 2009                                                                                                                                                      |   |                                            |   |   |   |   |   |   |   | $ | 7,466 |   |   | $ | 7,466 |   |
| Total gains or losses (realized/unrealized)                                                                                                                                          |   |                                            |   |   |   |   |   |   |   |   |   |   |   |
| Included in earnings                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Included in other comprehensive income                                                                                                                                               |   |                                            |   |   |   |   |   | 991 |   |   |   | 991 |   |
| Principal payments on securities                                                                                                                                                     |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Accretion of securities, net                                                                                                                                                         |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Transfers out of Level 3                                                                                                                                                             |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Ending balance, June 30, 2010                                                                                                                                                        |   |                                            |   |   |   |   |   |   |   | $ | 8,457 |   |   | $ | 8,457 |   |
|                                                                                                                                                                                 |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date |   |                                            |   |   |   |   |   |   |   | $ |  - |   |   | $ | - |   |

----

|                                                             |   |                                             |   |   |                                                      |                                  |   |                                      |                          |   |                                  |   |   |   |   |   |
|------------------------------------------------------------------|--------|--------------------------------------------------|--------|--------|-----------------------------------------------------------|---------------------------------------|--------|-------------------------------------------|-------------------------------|--------|---------------------------------------|--------|--------|--------|--------|--------|
|                                                             |   | Fair Value Measurements at Reporting Date Using: |   |
| (In thousands)                                                   |   | June 30, 2010                                    |   |   | Quoted Prices inActive Markets forIdentical AssetsLevel 1 |                                  |   | Significant OtherObservable InputsLevel 2 |                          |   | SignificantUnobservable InputsLevel 3 |   |
|                                                             |   |                                             |   |   |                                                      |                                  |   |                                      |                          |   |                                  |   |
| Impaired loans                                                   |   | $                                                | 1,784  |   |                                                      | $                                     | -      |                                      |                          | $      | -                                     |   |   | $      | 1,784  |   |
| Other real estate owned                                          |   |                                             | 1,561  |   |                                                      |                                  | -      |                                      |                          |   | 391                                   |   |   |   | 1,170  |   |
|    Totals                                         |   | $                                                | 3,345  |   |                                                      | $                                     | -      |                                      |                          | $      | 391                                   |   |   | $      | 2,954  |   |
|                                                             |   |                                             |   |   |                                                      |                                  |   |                                      |                          |   |                                  |   |   |   |   |   |
|                                                             |   |                                             |   |   |                                                      | Fair Value Measurements               |   |
|                                                             |   |                                             |   |   |                                                      | Using Significant Unobservable Inputs |   |
| (In thousands)                                                   |   |                                             |   |   |                                                      | ImpairedLoans                         |   |                                      | Level 3Other RealEstate Owned |   |                                  | Total  |   |
| Beginning balance, July 1, 2009                                  |   |                                             |   |   |                                                      | $                                     | -      |                                      |                          | $      | -                                     |   |   | $      | -      |   |
|      Total gains or losses              |   |                                             |   |   |                                                      |                                  |   |                                      |                          |   |                                  |   |   |   |   |   |
|      Transfers in and/or out of Level 3 |   |                                             |   |   |                                                      |                                  | 1,784  |                                      |                          |   | 1,170                                 |   |   |   | 2,954  |   |
| Ending balance June 30, 2010                                     |   |                                             |   |   |                                                      | $                                     | 1,784  |                                      |                          | $      | 1,170                                 |   |   | $      | 2,954  |   |

----

|                   |   | November 7, 2005 |   |   | June 7, 2006 |   |   | May 25, 2007 |   |
|------------------------|--------|------------------|--------|--------|--------------|--------|--------|--------------|--------|
|                   |   | Grant            |   |   | Grant        |   |   | Grant        |   |
| Dividend yield         |   |             | 1.89   | %      |         |   | 2.23   | %            |   |   | 2.24 | % |
| Expected volatility    |   |             | 12.65  | %      |         |   | 12.17  | %            |   |   | 11.04 | % |
| Risk-free rate         |   |             | 4.56   | %      |         |   | 4.95   | %            |   |   | 4.86 | % |
| Expected life in years |   |             | 6.5    |   |         |   | 6.5    |         |   |   | 6.5 |   |
| Fair value             |   | $                | 2.00   |   |         | $      | 1.97   |         |   | $ | 1.84 |   |

----

|                                                                                |   | December 31,   |   |   | June 30, |   |
|-------------------------------------------------------------------------------------|--------|----------------|--------|--------|----------|--------|
|                                                                                |   | 2010           |   |   | 2010     |   |
|                                                                                |   | (in thousands) |   |
| Commitments to extend credit:                                                       |   |           |   |   |     |   |
|      Loan commitments                                      |   | $              | 2,243  |   |     | $      | 1,305 |   |
|      Unadvanced construction loans                         |   |           | 1,733  |   |     |   | 1,521 |   |
|      Unadvanced lines of credit                            |   |           | 14,236 |   |     |   | 15,213 |   |
|      Standby letters of credit                             |   |           | 757    |   |     |   | 857 |   |
|           Outstanding commitments |   | $              | 18,969 |   |     | $      | 18,896 |   |

----

----

----

----

----

|                              |   |                   |    |   |     |   |
|-----------------------------------|--------|------------------------|---------|--------|----------|--------|
|                              |   | December 31,           |    |   | June 30, |   |
|                              |   | 2010                   |    |   | 2010     |   |
|                              |   | (Dollars in thousands) |    |
|                              |   |                   |    |   |     |   |   |   |
| Allowance for loan losses         |   | $                      | 2,587   |   |     | $      | 2,651 |   |
| Gross loans outstanding           |   |                   | 257,362 |   |     |   | 257,423 |   |
| Nonperforming loans               |   |                   | 6,209   |   |     |   | 6,293 |   |
|                              |   |                   |    |   |     |   |   |   |
| Allowance/gross loans outstanding |   |                   | 1.01    | %      |     |   | 1.03 | % |
| Allowance/nonperforming loans     |   |                   | 41.7    | %      |     |   | 42.1 | % |

----

----

----

----

|                                                           |   |  For the Three Months Ended December 31, |    |
|----------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                           |   |                                          |    |   | 2010 |   |   |   |   |   |   |   |   | 2009 |   |   |   |   |
|                                                           |   |                                          |    |   |   |   |   | (Dollars in thousands) |   |   |   |   |   |   |   |
|                                                           |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | Average                                       |    |   | Interest |   |   | Yield/ |   |   | Average |   |   | Interest |   |   | Yield/ |   |
| Interest-earning assets:                                       |   | Balance                                       |    |   | Income/Expense |   |   | Cost |   |   | Balance |   |   | Income/Expense |   |   | Cost |   |
| Investment securities                                          |   | $                                             | 189,635 |   |   | $ | 1,518 |   |   |   | 3.18 | % |   | $ | 162,290 |   |   | $ | 2,028 |   |   |   | 4.96 | % |
| Loans                                                          |   |                                          | 256,266 |   |   |   | 3,434 |   |   |   | 5.32 | % |   |   | 267,109 |   |   |   | 3,754 |   |   |   | 5.58 | % |
| Other earning assets                                           |   |                                          | 2,780   |   |   |   | 1 |   |   |   | 0.14 | % |   |   | 13,949 |   |   |   | 1 |   |   |   | 0.03 | % |
| Total interest-earnings assets                                 |   |                                          | 448,681 |   |   |   | 4,953 |   |   |   | 4.38 | % |   |   | 443,348 |   |   |   | 5,783 |   |   |   | 5.18 | % |
| Non-interest-earning assets                                    |   |                                          | 35,403  |   |   |   |   |   |   |   |   |   |   |   | 32,964 |   |   |   |   |   |   |   |   |   |
| Total assets                                                   |   | $                                             | 484,084 |   |   |   |   |   |   |   |   |   |   | $ | 476,312 |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                  |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                                                   |   | $                                             | 88,742  |   |   |   | 244 |   |   |   | 1.09 | % |   | $ | 79,579 |   |   |   | 367 |   |   |   | 1.83 | % |
| Savings accounts                                               |   |                                          | 47,349  |   |   |   | 42 |   |   |   | 0.35 | % |   |   | 45,669 |   |   |   | 54 |   |   |   | 0.47 | % |
| Money market accounts                                          |   |                                          | 13,578  |   |   |   | 31 |   |   |   | 0.91 | % |   |   | 10,501 |   |   |   | 29 |   |   |   | 1.10 | % |
| Time deposits                                                  |   |                                          | 144,797 |   |   |   | 908 |   |   |   | 2.49 | % |   |   | 148,315 |   |   |   | 1,092 |   |   |   | 2.92 | % |
| Borrowed money                                                 |   |                                          | 103,527 |   |   |   | 936 |   |   |   | 3.59 | % |   |   | 109,748 |   |   |   | 1,045 |   |   |   | 3.78 | % |
| Total interest-bearing liabilities                             |   |                                          | 397,993 |   |   |   | 2,161 |   |   |   | 2.15 | % |   |   | 393,812 |   |   |   | 2,587 |   |   |   | 2.61 | % |
| Non-interest-bearing demand deposits                           |   |                                          | 36,043  |   |   |   |   |   |   |   |   |   |   |   | 35,384 |   |   |   |   |   |   |   |   |   |
| Other non-interest-bearing liabilities                         |   |                                          | 4,207   |   |   |   |   |   |   |   |   |   |   |   | 4,069 |   |   |   |   |   |   |   |   |   |
| Capital accounts                                               |   |                                          | 45,841  |   |   |   |   |   |   |   |   |   |   |   | 43,047 |   |   |   |   |   |   |   |   |   |
| Total liabilities and capital accounts                         |   | $                                             | 484,084 |   |   |   |   |   |   |   |   |   |   | $ | 476,312 |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                            |   |                                          |    |   |   | $ | 2,792 |   |   |   |   |   |   |   |   |   |   | $ | 3,196 |   |   |   |   |   |
| Interest rate spread                                           |   |                                          |    |   |   |   |   |   |   |   | 2.23 | % |   |   |   |   |   |   |   |   |   |   | 2.57 | % |
| Net interest-earning assets                                    |   | $                                             | 50,688  |   |   |   |   |   |   |   |   |   |   | $ | 49,536 |   |   |   |   |   |   |   |   |   |
| Net interest margin                                            |   |                                          |    |   |   |   |   |   |   |   | 2.47 | % |   |   |   |   |   |   |   |   |   |   | 2.86 | % |
| Average earning assets to average interest-bearing liabilities |   |                                          |    |   |   |   |   |   |   |   | 112.74 | % |   |   |   |   |   |   |   |   |   |   | 112.58 | % |

----

|                                                           |   |  For the Six Months Ended December 31, |    |
|----------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                           |   |                                        |    |   | 2010 |   |   |   |   |   |   |   |   | 2009 |   |   |   |   |
|                                                           |   |                                        |    |   |   |   |   | (Dollars in thousands) |   |   |   |   |   |   |   |
|                                                           |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | Average                                     |    |   | Interest/ |   |   | Yield/ |   |   | Average |   |   | Interest/ |   |   | Yield/ |   |
| Interest-earning assets:                                       |   | Balance                                     |    |   | Dividends |   |   | Cost |   |   | Balance |   |   | Dividends |   |   | Cost |   |
| Investment securities                                          |   | $                                           | 186,516 |   |   | $ | 3,162 |   |   |   | 3.36 | % |   | $ | 166,868 |   |   | $ | 4,299 |   |   |   | 5.11 | % |
| Loans                                                          |   |                                        | 256,664 |   |   |   | 6,937 |   |   |   | 5.36 | % |   |   | 267,780 |   |   |   | 7,494 |   |   |   | 5.55 | % |
| Other earning assets                                           |   |                                        | 7,643   |   |   |   | 3 |   |   |   | 0.08 | % |   |   | 11,610 |   |   |   | 3 |   |   |   | 0.05 | % |
| Total interest-earnings assets                                 |   |                                        | 450,823 |   |   |   | 10,102 |   |   |   | 4.45 | % |   |   | 446,258 |   |   |   | 11,796 |   |   |   | 5.24 | % |
| Non-interest-earning assets                                    |   |                                        | 32,961  |   |   |   |   |   |   |   |   |   |   |   | 33,451 |   |   |   |   |   |   |   |   |   |
| Total assets                                                   |   | $                                           | 483,784 |   |   |   |   |   |   |   |   |   |   | $ | 479,709 |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                  |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                                                   |   | $                                           | 88,951  |   |   |   | 505 |   |   |   | 1.13 | % |   | $ | 71,878 |   |   |   | 687 |   |   |   | 1.90 | % |
| Savings accounts                                               |   |                                        | 47,206  |   |   |   | 85 |   |   |   | 0.36 | % |   |   | 45,858 |   |   |   | 108 |   |   |   | 0.47 | % |
| Money market accounts                                          |   |                                        | 13,236  |   |   |   | 60 |   |   |   | 0.90 | % |   |   | 10,982 |   |   |   | 61 |   |   |   | 1.10 | % |
| Time deposits                                                  |   |                                        | 144,849 |   |   |   | 1,833 |   |   |   | 2.51 | % |   |   | 151,350 |   |   |   | 2,301 |   |   |   | 3.02 | % |
| Borrowed money                                                 |   |                                        | 106,123 |   |   |   | 1,902 |   |   |   | 3.56 | % |   |   | 118,368 |   |   |   | 2,297 |   |   |   | 3.85 | % |
| Total interest-bearing liabilities                             |   |                                        | 400,365 |   |   |   | 4,385 |   |   |   | 2.17 | % |   |   | 398,436 |   |   |   | 5,454 |   |   |   | 2.72 | % |
| Non-interest-bearing demand deposits                           |   |                                        | 36,143  |   |   |   |   |   |   |   |   |   |   |   | 35,338 |   |   |   |   |   |   |   |   |   |
| Other non-interest-bearing liabilities                         |   |                                        | 2,004   |   |   |   |   |   |   |   |   |   |   |   | 4,120 |   |   |   |   |   |   |   |   |   |
| Capital accounts                                               |   |                                        | 45,272  |   |   |   |   |   |   |   |   |   |   |   | 41,815 |   |   |   |   |   |   |   |   |   |
| Total liabilities and capital accounts                         |   | $                                           | 483,784 |   |   |   |   |   |   |   |   |   |   | $ | 479,709 |   |   |   |   |   |   |   |   |   |
|                                                           |   |                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                            |   |                                        |    |   |   | $ | 5,717 |   |   |   |   |   |   |   |   |   |   | $ | 6,342 |   |   |   |   |   |
| Interest rate spread                                           |   |                                        |    |   |   |   |   |   |   |   | 2.27 | % |   |   |   |   |   |   |   |   |   |   | 2.53 | % |
| Net interest-earning assets                                    |   | $                                           | 50,458  |   |   |   |   |   |   |   |   |   |   | $ | 47,822 |   |   |   |   |   |   |   |   |   |
| Net interest margin                                            |   |                                        |    |   |   |   |   |   |   |   | 2.52 | % |   |   |   |   |   |   |   |   |   |   | 2.82 | % |
| Average earning assets to average interest-bearing liabilities |   |                                        |    |   |   |   |   |   |   |   | 112.60 | % |   |   |   |   |   |   |   |   |   |   | 112.00 | % |

----

|                          |   |                                                 |   |
|-------------------------------|--------|------------------------------------------------------|--------|
|                          |   | For the Three Months Ended December 31, 2010         |   |
|                          |   | Compared to the Three Months Ended December 31, 2009 |   |
|                          |   |                                                 |   |   |   |   |   |   |   |
|                          |   | Increase(Decrease) Due to                            |   |   |   |   |
| INTEREST INCOME               |   | Rate                                                 |   |   | Volume |   |   | Net |   |
|                          |   |                                                 |   |   |   |   |   |   |   |
| Investment securities         |   | $                                                    | (2,193 | ) |   | $ | 1,683 |   |   | $ | (510 | ) |
| Loans                         |   |                                                 | (171   | ) |   |   | (149 | ) |   |   | (320 | ) |
| Other interest-earning assets |   |                                                 | 5      |   |   |   | (5 | ) |   |   | - |   |
| TOTAL INTEREST INCOME         |   |                                                 | (2,359 | ) |   |   | 1,529 |   |   |   | (830 | ) |
|                          |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE:             |   |                                                 |   |   |   |   |   |   |   |   |   |   |
|                          |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                  |   |                                                 | (357   | ) |   |   | 234 |   |   |   | (123 | ) |
| Savings accounts              |   |                                                 | (24    | ) |   |   | 12 |   |   |   | (12 | ) |
| Money Market accounts         |   |                                                 | (24    | ) |   |   | 26 |   |   |   | 2 |   |
| Time deposits                 |   |                                                 | (159   | ) |   |   | (25 | ) |   |   | (184 | ) |
| Other borrowed money          |   |                                                 | (51    | ) |   |   | (58 | ) |   |   | (109 | ) |
| TOTAL INTEREST INCOME         |   |                                                 | (615   | ) |   |   | 189 |   |   |   | (426 | ) |
|                          |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| CHANGE IN NET INTEREST INCOME |   | $                                                    | (1,744 | ) |   | $ | 1,340 |   |   | $ | (404 | ) |

----

|                          |   | For the Six Months Ended December 31, 2010         |   |
|-------------------------------|--------|----------------------------------------------------|--------|
|                          |   | Compared to the Six Months Ended December 31, 2009 |   |
|                          |   | Increase(Decrease) Due to                          |   |   |   |   |
| INTEREST INCOME               |   | Rate                                               |   |   | Volume |   |   | Net |   |
|                          |   |                                               |   |   |   |   |   |   |   |
| Investment securities         |   | $                                                  | (2,340 | ) |   | $ | 1,203 |   |   | $ | (1,137 | ) |
| Loans                         |   |                                               | (252   | ) |   |   | (305 | ) |   |   | (557 | ) |
| Other interest-earning assets |   |                                               | 2      |   |   |   | (2 | ) |   |   | - |   |
| TOTAL INTEREST INCOME         |   |                                               | (2,590 | ) |   |   | 896 |   |   |   | (1,694 | ) |
|                          |   |                                               |   |   |   |   |   |   |   |   |   |   |
| INTEREST EXPENSE:             |   |                                               |   |   |   |   |   |   |   |   |   |   |
|                          |   |                                               |   |   |   |   |   |   |   |   |   |   |
| NOW accounts                  |   |                                               | (523   | ) |   |   | 341 |   |   |   | (182 | ) |
| Savings accounts              |   |                                               | (32    | ) |   |   | 9 |   |   |   | (23 | ) |
| Money Market accounts         |   |                                               | (24    | ) |   |   | 23 |   |   |   | (1 | ) |
| Time deposits                 |   |                                               | (373   | ) |   |   | (95 | ) |   |   | (468 | ) |
| Other borrowed money          |   |                                               | (168   | ) |   |   | (227 | ) |   |   | (395 | ) |
| TOTAL INTEREST INCOME         |   |                                               | (1,120 | ) |   |   | 51 |   |   |   | (1,069 | ) |
|                          |   |                                               |   |   |   |   |   |   |   |   |   |   |
| CHANGE IN NET INTEREST INCOME |   | $                                                  | (1,470 | ) |   | $ | 845 |   |   | $ | (625 | ) |

----

|                     |   |                          |   |                          |
|--------------------------|--------|-------------------------------|--------|-------------------------------|
|                     |   | Net Interest Income At-Risk   |   |                          |
|                     |   |                          |   |                          |
|                     |   | Estimated Increase (Decrease) |   | Estimated Increase (Decrease) |
| Change in Interest Rates |   | in NII                        |   | in NII                        |
| (Basis Points)           |   | September 30, 2010            |   | June 30, 2010                 |
|                     |   |                          |   |                          |
| + 100                    |   | -1.50%                        |   | -1.25%                        |
| + 200                    |   | -5.10%                        |   | -4.59%                        |

----

|                                            |   |             |   |   |   |   |                                |    |   |   |          |   |   |                             |                                              |   |   |   |   |   |   |
|-------------------------------------------------|--------|------------------|--------|--------|--------|--------|-------------------------------------|---------|--------|--------|---------------|--------|--------|----------------------------------|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                            |   |             |   |   |   |   |                                |    |   |   |          |   |   |                             | NPV as a Percentage of PresentValue of Assets (3) |   |
|  Change inInterest Rates(basis points) (1) |   |             |   |   |   |   | Estimated Increase (Decrease) inNPV |    |   |   |          |   |   | Increase(Decrease)(basis points) |                                              |
|                                            |   | EstimatedNPV (2) |   |   | Amount |   |                                | Percent |   |   | NPV Ratio (4) |   |   |                             |
|                                            |   |             |   |   |   |   |                                |    |   |   |          |   |   |                             |                                              |   |   |   |   |   |   |
| +300                                            |   |             | $      | 31,909 |   |   | $                                   | (7,278  | )      |   |          | -19    | %      |                             |                                              | 6.72   | %      |   |   | -119   |   |
| +200                                            |   |             | $      | 36,577 |   |   | $                                   | (2,610  | )      |   |          | -7     | %      |                             |                                              | 7.56   | %      |   |   | -35    |   |
| +100                                            |   |             | $      | 39,272 |   |   | $                                   | 85      |   |   |          | 0      | %      |                             |                                              | 8.00   | %      |   |   | 9      |   |
| 0                                               |   |             | $      | 39,187 |   |   | $                                   | -       |   |   |          | 0      | %      |                             |                                              | 7.91   | %      |   |   | 0      |   |
| -100                                            |   |             | $      | 38,045 |   |   | $                                   | (1,142  | )      |   |          | -3     | %      |                             |                                              | 7.63   | %      |   |   | -28    |   |

----

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

|   | (2) | NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------|

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

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

----

|                                                       |   | Required |   |   | Actual |   |
|------------------------------------------------------------|--------|----------|--------|--------|--------|--------|
|                                                       |   |     |   |   |   |   |
| Ratio of Tier 1 Capital to total assets                    |   |     | 4      | %      |   |   | 7.30 | % |
| Ratio of Total Risk Based Capital to risk-weighted assets  |   |     | 8      | %      |   |   | 14.42 | % |
| Ratio of Tier 1 Risk Based Capital to risk-weighted assets |   |     | 4      | %      |   |   | 13.36 | % |

----

| Item 1.  | Legal Proceedings – Not applicable                                      |
|----------|-------------------------------------------------------------------------------|
|     |                                                                          |
| Item 1A. | Risk Factors – Not applicable                                           |
|     |                                                                          |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                   |
|     |                                                                          |
|     |  a) Not applicable                                                       |
|     |                                                                          |
|     |  b) Not applicable                                                       |
|     |                                                                          |
|     |  c) Not applicable                                                       |
|     |                                                                          |
| Item 3.  | Defaults Upon Senior Securities – Not applicable                        |
|     |                                                                          |
| Item 4.  | [Reserved]                                                                    |
|     |                                                                          |
| Item 5.  | Other Information                                                             |
|     | a.          Not applicable. |
|     |                                                                          |
| Item 6.  | Exhibits                                                                      |

|   Exhibits |   |
|----------------------|--------|
|                 | 31.1   | Chief Executive Officer Certification pursuant to 17 CFR 240.13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|                 | 31.2   | Chief Financial Officer Certification pursuant to 17 CFR 240.13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|                 | 32.1   | Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350. |
|                 | 32.2   | Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350. |

----

|             |              |   | PSB HOLDINGS, INC. |                                             |
|------------------|-------------------|--------|--------------------|--------------------------------------------------|
|             |              |   | (Registrant)       |                                             |
|             |              |   |               |                                             |   |
| Date   | February 14, 2011 |   |               | /s/ Thomas A. Borner                             |   |
|             |              |   |               | Thomas A. Borner                                 |   |
|             |              |   |               | Chief Executive Officer                          |   |
|             |              |   |               |                                             |   |
| Date             | February 14, 2011 |   |               | /s/ Robert J. Halloran, Jr.                      |   |
|             |              |   |               | Robert J. Halloran, Jr.                          |   |
|             |              |   |               | President, Chief Financial Officer and Treasurer |   |

----