##### Table of Contents

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United States Securities and Exchange Commission

Washington, D. C. 20549



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FORM 10 - QSB



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(Mark One)

|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2007



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number: 0-28032



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PATAPSCO BANCORP, INC.

(Exact Name of Small Business Issuer as Specified in its Charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Maryland                                                       |  | 52-1951797                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

1301 Merritt Boulevard, Dundalk, Maryland 21222-2194

(Address of Principal Executive Offices)

(410) 285-1010

Registrants Telephone Number, Including Area Code



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Check whether the issuer
(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).     Yes ̈No  x

As of May 9, 2007, the issuer had 1,877,376 shares of Common Stock issued and outstanding.

Transitional Small Business Disclosure Format (check one):    Yes ̈No  x



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##### Table of Contents

CONTENTS



|                              |  |                                                                                                                    |  |     
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------ |  | ----
|                              |  |                                                                                                                   
|                              |  |                                                                                                                    |  | PAGE
|                              | 
|PART I. FINANCIAL INFORMATION |  |                                                                                                                   
|                              |  |                                                                                                                   
|Item 1.                       |  | Financial Statements                                                                                               |  |     
|                              |  |                                                                                                                   
|                              |  | Consolidated Statements of Financial Condition at March 31, 2007 And June 30, 2006                                 |  | 3   
|                              |  |                                                                                                                   
|                              |  | Consolidated Statements of Operations for the Nine and Three-Month Periods Ended March 31, 2007 and 2006           |  | 4   
|                              |  |                                                                                                                   
|                              |  | Consolidated Statements of Comprehensive Income for the Nine and Three-Month Periods Ended March 31, 2007 and 2006 |  | 5   
|                              |  |                                                                                                                   
|                              |  | Consolidated Statements of Cash Flows for the Nine-Month Periods Ended March 31, 2007 and 2006                     |  | 6   
|                              |  |                                                                                                                   
|                              |  | Notes to Financial Statements                                                                                      |  | 7   
|                              |  |                                                                                                                   
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operation                               |  | 11  
|                              |  |                                                                                                                   
|Item 3.                       |  | Controls and procedures                                                                                            |  | 19  
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                   
|                              |  |                                                                                                                   
|Item 1.                       |  | Legal Proceedings                                                                                                  |  | 20  
|                              |  |                                                                                                                   
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                        |  | 20  
|                              |  |                                                                                                                   
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                    |  | 20  
|                              |  |                                                                                                                   
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                |  | 20  
|                              |  |                                                                                                                   
|Item 5.                       |  | Other Information                                                                                                  |  | 20  
|                              |  |                                                                                                                   
|Item 6.                       |  | Exhibits                                                                                                           |  | 20  
|                              | 
|Signatures                    |  | 21                                                                                                                
|                              | 
|Certifications                |  |                                                                                                                   



2



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##### Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Patapsco Bancorp, Inc. and Subsidiary

Dundalk, Maryland

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

($ in thousands except for share data)



|                                                                                                                               |  |               |         |   |              |   |         |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | - | ------------ | - | ------- | -
|                                                                                                                               |  | March 31,2007 |         |   | June 30,2006 |  
|Assets                                                                                                                         |  |               |         |   |              |   |         |  
|Cash:                                                                                                                          |  |               |         |   |              |   |         |  
|On hand and due from banks                                                                                                     |  | $             | 4,027   |   |              | $ | 4,839   |  
|Interest bearing deposits in other banks                                                                                       |  |               | 886     |   |              |   | 968     |  
|Federal funds sold                                                                                                             |  |               | 4,197   |   |              |   | 2,381   |  
|                                                                                                                               |  |               |         |   |              |   |         |  
|Cash & Cash equivalents                                                                                                        |  |               | 9,110   |   |              |   | 8,188   |  
|Time Deposits at other financial institutions                                                                                  |  |               |        |   |              |   | 605     |  
|Securities, available for sale                                                                                                 |  |               | 14,809  |   |              |   | 16,667  |  
|Loans receivable, net of allowance for loan losses of $1,036 and $1,000, respectively                                          |  |               | 216,324 |   |              |   | 190,589 |  
|Investment in securities required by law, at cost                                                                              |  |               | 2,543   |   |              |   | 2,416   |  
|Property and equipment, net                                                                                                    |  |               | 4,319   |   |              |   | 2,175   |  
|Goodwill and core deposit intangible                                                                                           |  |               | 3,316   |   |              |   | 3,354   |  
|Accrued interest and other assets                                                                                              |  |               | 4,286   |   |              |   | 4,076   |  
|                                                                                                                               |  |               |         |   |              |   |         |  
|Total assets                                                                                                                   |  | $             | 254,707 |   |              | $ | 228,070 |  
|                                                                                                                               |  |               |         |   |              |   |         |  
|Liabilities and Stockholders Equity                                                                                           |  |               |         |   |              |   |         |  
|Liabilities:                                                                                                                   |  |               |         |   |              |   |         |  
|Deposits:                                                                                                                      |  |               |         |   |              |   |         |  
|Non interest bearing deposits                                                                                                  |  |               | 12,604  |   |              |   | 13,186  |  
|Interest bearing deposits                                                                                                      |  |               | 177,574 |   |              |   | 153,647 |  
|                                                                                                                               |  |               |         |   |              |   |         |  
|Total Deposits                                                                                                                 |  |               | 190,178 |   |              |   | 166,833 |  
|Accrued expenses and other liabilities                                                                                         |  |               | 2,412   |   |              |   | 2,899   |  
|Long term Debt                                                                                                                 |  |               | 37,800  |   |              |   | 35,050  |  
|Subordinated Debentures                                                                                                        |  |               | 5,000   |   |              |   | 5,000   |  
|                                                                                                                               |  |               |         |   |              |   |         |  
|Total liabilities                                                                                                              |  |               | 235,390 |   |              |   | 209,782 |  
|Temporary Equity - ESOP shares subject to put option                                                                           |  |               | 2,401   |   |              |   | 1,121   |  
|Stockholders equity:                                                                                                          |  |               |         |   |              |   |         |  
|Common stock $0.01 par value: authorized 4,000,000 shares: issued and outstanding 1,874,580 and 1,813,615 shares, respectively |  |               | 19      |   |              |   | 18      |  
|Additional paid in capital                                                                                                     |  |               | 5,973   |   |              |   | 6,950   |  
|Obligation under Deferred Compensation                                                                                         |  |               | 420     |   |              |   | 395     |  
|Deferred Comp contra                                                                                                           |  |               | (78     | ) |              |   | (78     | )
|Retained income, substantially restricted                                                                                      |  |               | 10,796  |   |              |   | 10,317  |  
|Accumulated other comprehensive loss, net of taxes                                                                             |  |               | (214    | ) |              |   | (435    | )
|                                                                                                                               |  |               |         |   |              |   |         |  
|Total stockholders equity - Permanent                                                                                         |  |               | 16,916  |   |              |   | 17,167  |  
|Total stockholders equity including temporary equity                                                                          |  |               | 19,317  |   |              |   | 18,288  |  
|                                                                                                                               |  |               |         |   |              |   |         |  
|Total liabilities and stockholders equity                                                                                     |  | $             | 254,707 |   |              | $ | 228,070 |  
|                                                                                                                               |  |               |         |   |              |   |         |  

See accompanying notes to financial statements.



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##### Table of Contents

Patapsco Bancorp, Inc. and Subsidiary

Dundalk, Maryland

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|--------------------------------------------------- |  | ------------------------------- | ------ | -------------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|($ in thousands except for per share data)          |  | For Nine Months Ended March 31, |        | For Three Months Ended March 31,
|                                                    |  | 2007                            |        | 2006                             |   | 2007   |  | 2006
|Interest income:                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Loans receivable                                    |  | $                               | 11,420 |                                  | $ | 9,076  |  | $    | 3,979  |  | $ | 3,238 
|Securities, including securities required by law    |  |                                 | 611    |                                  |   | 716    |  |      | 196    |  |   | 245   
|Federal funds sold and other investments            |  |                                 | 100    |                                  |   | 79     |  |      | 32     |  |   | 15    
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Total interest income                               |  |                                 | 12,131 |                                  |   | 9,871  |  |      | 4,207  |  |   | 3,498 
|Interest expense:                                   |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Deposits                                            |  |                                 | 3,938  |                                  |   | 2,486  |  |      | 1,452  |  |   | 903   
|Short-term debt                                     |  |                                 | 37     |                                  |   | 106    |  |      | 2      |  |   | 78    
|Long-term debt                                      |  |                                 | 1,493  |                                  |   | 889    |  |      | 513    |  |   | 334   
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Total interest expense                              |  |                                 | 5,468  |                                  |   | 3,481  |  |      | 1,967  |  |   | 1,315 
|Net interest income                                 |  |                                 | 6,663  |                                  |   | 6,390  |  |      | 2,240  |  |   | 2,183 
|Provision for loan losses                           |  |                                 | 285    |                                  |   | 40     |  |      | 175    |  |   |      
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Net interest income after provision for loan losses |  |                                 | 6,378  |                                  |   | 6,350  |  |      | 2,065  |  |   | 2,183 
|Non-interest income:                                |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Fees and service charges                            |  |                                 | 538    |                                  |   | 457    |  |      | 187    |  |   | 157   
|Net gain on sale of securities available for sale   |  |                                 |       |                                  |   | 2      |  |      |       |  |   | 2     
|Gain on sale of office building                     |  |                                 | 14     |                                  |   | 64     |  |      | 14     |  |   |      
|Other                                               |  |                                 | 73     |                                  |   | 119    |  |      | 20     |  |   | 42    
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Total non-interest income                           |  |                                 | 625    |                                  |   | 642    |  |      | 221    |  |   | 201   
|Non-interest expenses:                              |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Compensation and employee benefits                  |  |                                 | 3,349  |                                  |   | 3,425  |  |      | 1,110  |  |   | 1,205 
|Professional fees                                   |  |                                 | 421    |                                  |   | 161    |  |      | 291    |  |   | 64    
|Equipment expense                                   |  |                                 | 246    |                                  |   | 252    |  |      | 96     |  |   | 78    
|Net Occupancy expense                               |  |                                 | 425    |                                  |   | 419    |  |      | 148    |  |   | 137   
|Advertising                                         |  |                                 | 90     |                                  |   | 67     |  |      | 44     |  |   | 22    
|Data processing                                     |  |                                 | 228    |                                  |   | 203    |  |      | 75     |  |   | 68    
|Amortization of core deposit intangible             |  |                                 | 39     |                                  |   | 39     |  |      | 13     |  |   | 13    
|Telephone, postage & delivery                       |  |                                 | 189    |                                  |   | 208    |  |      | 63     |  |   | 69    
|Other                                               |  |                                 | 654    |                                  |   | 679    |  |      | 227    |  |   | 252   
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Total non-interest expense                          |  |                                 | 5,641  |                                  |   | 5,453  |  |      | 2,067  |  |   | 1,908 
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Income before provision for income taxes            |  |                                 | 1,362  |                                  |   | 1,539  |  |      | 219    |  |   | 476   
|Provision for income taxes                          |  |                                 | 505    |                                  |   | 574    |  |      | 78     |  |   | 175   
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Net Income                                          |  |                                 | 857    |                                  |   | 965    |  |      | 141    |  |   | 301   
|Preferred dividends declared                        |  |                                 |       |                                  |   | 123    |  |      |       |  |   | 40    
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Net income available to common stockholders         |  | $                               | 857    |                                  | $ | 842    |  | $    | 141    |  | $ | 261   
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Basic earnings per share                            |  | $                               | 0.45   |                                  | $ | 0.57   |  | $    | 0.07   |  | $ | 0.17  
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Diluted earnings per share                          |  | $                               | 0.44   |                                  | $ | 0.50   |  | $    | 0.07   |  | $ | 0.16  
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       
|Cash dividends declared per common share            |  | $                               | 0.2025 |                                  | $ | 0.1875 |  | $    | 0.0700 |  | $ | 0.0625
|                                                    |  |                                 |        |                                  |   |        |  |      |        |  |   |       

See accompanying notes to financial statements.



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##### Table of Contents

Patapsco Bancorp, Inc. and Subsidiary

Dundalk, Maryland

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



|                                                                                                                        |  |                                |       |      |                                 |      |      |  |      |     |  |   |     |  
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ----- | ---- | ------------------------------- | ---- | ---- |  | ---- | --- |  | - | --- | -
|($ in thousands)                                                                                                        |  | For Nine Months Ended March 31 |       |      | For Three Months Ended March 31 |     
|                                                                                                                        |  | 2007                           |       | 2006 |                                 |      | 2007 |  | 2006 |    
|Net income                                                                                                              |  | $                              | 857   |      | $                               | 965  |      |  | $    | 141 |  | $ | 301 |  
|Other comprehensive income(loss), net of tax:                                                                           |  |                                |       |      |                                 |      |      |  |      |     |  |   |     |  
|Unrealized net holding losses on securities available-for-sale net of taxes of $139, ($126) 19, and ($29), respectively |  |                                | 221   |      |                                 | (199 | )    |  |      | 30  |  |   | (46 | )
|Reclassification adjustment for gains Included in net income, net of tax of $0, $0.6, $0, $0.6                          |  |                                |      |      |                                 | (1   | )    |  |      |    |  |   | (1  | )
|                                                                                                                        |  |                                |       |      |                                 |      |      |  |      |     |  |   |     |  
|Comprehensive income                                                                                                    |  | $                              | 1,078 |      | $                               | 765  |      |  | $    | 171 |  | $ | 254 |  

See accompanying notes to financial statements.



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##### Table of Contents

Patapsco Bancorp, Inc. and Subsidiary

Dundalk, Maryland

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                                         |  |                            |          |               |   |         
|------------------------------------------------------------------------------------------------------------------------ |  | -------------------------- | -------- | ------------- | - | --------
|                                                                                                                         |  | For the Nine Months Ended,
|($ in thousands)                                                                                                         |  | March 31,2007              |          | March 31,2006
|Cash flows from operating activities:                                                                                    |  |                            |          |               |   |         
|Net Income                                                                                                               |  | $                          | 857      |               | $ | 965     
|Adjustments to reconcile net income to net cash provided by (used in) operating activities:                              |  |                            |          |               |   |         
|Amortization of premiums and discounts, net                                                                              |  |                            | 25       |               |   | 14      
|Amortization of deferred loan origination fees                                                                           |  |                            | (26)     |               |   | (32)    
|Provision for loan loss                                                                                                  |  |                            | 285      |               |   | 40      
|Depreciation                                                                                                             |  |                            | 224      |               |   | 236     
|Gain on sale of available for sale securities                                                                            |  |                            |         |               |   | (2)     
|Gain on sale of office building                                                                                          |  |                            | (14)     |               |   | (64)    
|Amortization of core deposit intangible                                                                                  |  |                            | 39       |               |   | 39      
|Increase in cash surrender value of life insurance                                                                       |  |                            | (50)     |               |   | (40)    
|Increase in accrued interest and other assets                                                                            |  |                            | (275)    |               |   | (5)     
|Non-cash compensation under stock-based benefit plan                                                                     |  |                            | 86       |               |   |        
|Increase in accrued expenses and other liabilities                                                                       |  |                            | 42       |               |   | 278     
|                                                                                                                         |  |                            |          |               |   |         
|Net cash provided by operations                                                                                          |  | $                          | 1,193    |               | $ | 1,429   
|                                                                                                                         |  |                           
|Cash flows from investing activities:                                                                                    |  |                            |          |               |   |         
|Proceeds from maturing time deposits                                                                                     |  | $                          | 600      |               | $ |        
|Proceeds from maturity of investments and principal payments on mortgage backed securities                               |  |                            | 2,119    |               |   | 3,924   
|Proceeds from sale of securities available for sale                                                                      |  |                            | 92       |               |   | 302     
|Purchase of securities available for sale                                                                                |  |                            | (20)     |               |   | (7)     
|Loan principal disbursements, net of repayments                                                                          |  |                            | (24,675) |               |   | (26,459)
|Purchase of consumer loans                                                                                               |  |                            | (1,333)  |               |   | (2,726) 
|Purchase of investments required by law                                                                                  |  |                            | (127)    |               |   | (739)   
|Cash received in sale of premises and equipment                                                                          |  |                            | 50       |               |   | 154     
|Purchase of premises and equipment                                                                                       |  |                            | (2,404)  |               |   | (598)   
|                                                                                                                         |  |                            |          |               |   |         
|Net cash used by investing activities:                                                                                   |  | $                          | (25,698) |               | $ | (26,149)
|                                                                                                                         |  |                           
|Cash flows from financing activities:                                                                                    |  |                            |          |               |   |         
|Net increase in deposits                                                                                                 |  | $                          | 23,366   |               | $ | 3,841   
|Net increase in short-term borrowings                                                                                    |  |                            | 0        |               |   | 11,000  
|Proceeds from long-term borrowings                                                                                       |  |                            | 5,000    |               |   | 9,000   
|Payment on long-term borrowings                                                                                          |  |                            | (2,250)  |               |   | (5,183) 
|Proceeds from the issuance of subordinated debentures                                                                    |  |                            |         |               |   | 5,000   
|Decrease in advance payments by borrowers                                                                                |  |                            | (547)    |               |   | (573)   
|Repurchase of preferred stock                                                                                            |  |                            |         |               |   | (67)    
|Cash received from exercise of stock options                                                                             |  |                            | 217      |               |   | 151     
|Dividends paid                                                                                                           |  |                            | (359)    |               |   | (440)   
|                                                                                                                         |  |                            |          |               |   |         
|Net cash provided by financing activities                                                                                |  | $                          | 25,427   |               | $ | 22,729  
|Net increase (decrease) in cash and cash equivalents                                                                     |  | $                          | 922      |               | $ | (1,991) 
|Cash and cash equivalents at beginning of period                                                                         |  |                            | 8,188    |               |   | 7,648   
|                                                                                                                         |  |                            |          |               |   |         
|Cash and cash equivalents at end of period                                                                               |  | $                          | 9,110    |               | $ | 5,657   
|                                                                                                                         |  |                           
|Interest paid on deposits                                                                                                |  | $                          | 5,373    |               | $ | 3,597   
|Income taxes paid                                                                                                        |  |                            | 759      |               |   | 529     
|Non-cash equity transactions:                                                                                            |  |                            |          |               |   |         
|Conversion of preferred shares to common - 91,069 preferred into 363,638 common in the nine months ended March 31, 2006. |  |                            |         |               |   | 2,279   

See accompanying notes to financial statements.



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Patapsco Bancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Note 1: Principles of Consolidation

The consolidated financial statements
include the accounts of Patapsco Bancorp, Inc. (the Company) and its wholly-owned subsidiary, The Patapsco Bank (the Bank). The Patapsco Banks wholly owned subsidiaries are Prime Business Leasing and Patapsco Financial
Services, Inc. All inter-company accounts and transactions have been eliminated in the accompanying consolidated financial statements.

Note 2: The
Patapsco Bank

The Bank is regulated by The Federal Reserve Bank of Richmond (the Federal Reserve Bank) and The State of Maryland. The primary
business of the Bank is to attract deposits from individual and corporate customers and to originate residential and commercial mortgage loans, consumer loans and commercial business loans. The Bank competes with other financial and mortgage
institutions in attracting and retaining deposits and originating loans.

Note 3: Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with instructions for Form 10-QSB and therefore, do not include all disclosures
necessary for a complete presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. However, all adjustments that are, in the opinion of management, necessary for the fair
presentation of the interim financial statements have been included. Such adjustments were of a normal recurring nature. The results of operations for the three and nine months ended March 31, 2007 are not necessarily indicative of the results
that may be expected for the entire year. For additional information, refer to the consolidated financial statements and footnotes thereto included in the Companys Annual report on Form 10-KSB for the year ended June 30, 2006.

Note 4: Cash and Cash Equivalents

Cash and cash equivalents include
short-term investments, with an original maturity of 90 days or less, which consist of federal funds sold and interest bearing deposits in other financial institutions.

Note 5: Regulatory Capital Requirements

At March 31, 2007, the Bank met each of the three minimum regulatory capital
requirements. The following table summarizes the Banks regulatory capital position at March 31, 2007.



|                                         |  |        |        |   |                              |   |        |                                                         |        |  |      |        |  |        |  |       |  
|---------------------------------------- |  | ------ | ------ | - | ---------------------------- | - | ------ | ------------------------------------------------------- | ------ |  | ---- | ------ |  | ------ |  | ----- | -
|                                         |  | Actual |        |   | For CapitalAdequacy Purposes |   |        | Well Capitalized UnderPrompt CorrectiveAction Provision |       
|($ in thousands)                         |  | Amount |        | % |                              |   | Amount |                                                         | %      |  |      | Amount |  | %      | 
|Total Capital (to Risk Weighted Assets)  |  | $      | 19,692 |   | 10.37                        | % |        | $                                                       | 15,198 |  | 8.00 | %      |  | 18,998 |  | 10.00 | %
|                                         |  |        |        |   |                              |  
|Tier 1 Capital (to Risk Weighted Assets) |  | $      | 18,656 |   | 9.82                         | % |        | $                                                       | 7,599  |  | 4.00 | %      |  | 11,399 |  | 6.00  | %
|                                         |  |        |        |   |                              |  
|Tier 1 Capital (to Average Assets)       |  | $      | 18,656 |   | 7.56                         | % |        | $                                                       | 9,875  |  | 4.00 | %      |  | 12,344 |  | 5.00  | %



7



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##### Table of Contents

The following table summarizes the Banks regulatory capital position at June 30, 2006



|                                         |  |        |        |   |                              |   |        |                                                         |        |  |      |        |  |   |        |  |    |  
|---------------------------------------- |  | ------ | ------ | - | ---------------------------- | - | ------ | ------------------------------------------------------- | ------ |  | ---- | ------ |  | - | ------ |  | -- | -
|                                         |  | Actual |        |   | For CapitalAdequacy Purposes |   |        | Well Capitalized UnderPrompt CorrectiveAction Provision |       
|($ in thousands)                         |  | Amount |        | % |                              |   | Amount |                                                         | %      |  |      | Amount |  | % |       
|Total Capital (to Risk Weighted Assets)  |  | $      | 18,144 |   | 11.25                        | % |        | $                                                       | 12,904 |  | 8.00 | %      |  | $ | 16,130 |  | 10 | %
|                                         |  |        |        |   |                              |  
|Tier 1 Capital (to Risk Weighted Assets) |  | $      | 17,144 |   | 10.63                        | % |        | $                                                       | 6,452  |  | 4.00 | %      |  | $ | 9,678  |  | 6  | %
|                                         |  |        |        |   |                              |  
|Tier 1 Capital (to Average Assets)       |  | $      | 17,144 |   | 7.66                         | % |        | $                                                       | 8,958  |  | 4.00 | %      |  | $ | 11,197 |  | 5  | %

Note 6: Earnings Per Share

The following table presents a summary of per share data and amounts for the periods indicated.



|                                            |  |                              |       |                             |   |       |  |      |       |  |   |      
|------------------------------------------- |  | ---------------------------- | ----- | --------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                            |  | Three Months Ended March 31, |       | Nine Months Ended March 31,
|(in thousands except for share data)        |  | 2007                         |       | 2006                        |   | 2007  |  | 2006
|Net Income as Reported                      |  | $                            | 141   |                             | $ | 301   |  | $    | 857   |  | $ | 965  
|Dividends on Preferred Shares               |  |                              |      |                             |   | 40    |  |      |      |  |   | 123  
|                                            |  |                              |       |                             |   |       |  |      |       |  |   |      
|Net Income available to common stockholders |  | $                            | 141   |                             | $ | 261   |  | $    | 857   |  | $ | 842  
|Basic EPS shares                            |  |                              | 1,922 |                             |   | 1,509 |  |      | 1,898 |  |   | 1,485
|Basic EPS                                   |  | $                            | 0.07  |                             | $ | 0.17  |  | $    | 0.45  |  | $ | 0.57 
|Dilutive shares                             |  |                              | 38    |                             |   | 412   |  |      | 42    |  |   | 435  
|Diluted EPS shares                          |  |                              | 1,960 |                             |   | 1,921 |  |      | 1,940 |  |   | 1,920
|Diluted EPS                                 |  | $                            | 0.07  |                             | $ | 0.16  |  | $    | 0.44  |  | $ | 0.50 

Note 7: Goodwill and Intangible Assets

SFAS No. 142, Goodwill and Other Intangible Assets requires that goodwill no longer be amortized, but rather that it be tested for impairment on an annual basis at the reporting unit level, which is
either at the same level or one level below an operating segment. Other acquired intangible assets with finite lives, such as purchased customer accounts, are required to be amortized over their estimated lives. Other intangible assets are amortized
using the straight-line method over estimated useful lives of 10 years. The Company periodically assesses whether events or changes in circumstances indicate that the carrying amounts of goodwill and other intangible assets may be impaired.

Note 8: Guarantees

The Company does not issue any guarantees
that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.
Generally, all letters of credit, when issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Company,
generally, holds collateral and/or personal guarantees supporting these commitments. The Company had $1,474,000 of standby letters of credit as of March 31, 2007 and $1,583,000 outstanding as of June 30, 2006. Management believes that the
proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payment required under the corresponding guarantees. The current amount of the liability as of
March 31, 2007 and June 30, 2006 for guarantees under standby letters of credit issued is not material.



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Note 9: Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements.This Statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity operates.
This Statement does not require any new fair value measurements, but rather, it provides enhanced guidance to other pronouncements that require or permit assets or liabilities to be measured at fair value. This Statement is effective for fiscal
years beginning after November 15, 2007, with earlier adoption permitted. The Company does not expect that the adoption of this Statement will have a material impact on its financial position, results of operations or cash flows.

At its September 2006 meeting, the Emerging Issues Task Force (EITF) reached a final consensus on Issue 06-04, Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. The consensus stipulates that an agreement by an employer to share a portion of the proceeds of a life insurance policy with an
employee during the postretirement period is a postretirement benefit arrangement required to be accounted for under SFAS No. 106 or Accounting Principles Board Opinion (APB) No. 12, Omnibus Opinion1967. The
consensus concludes that the purchase of a split-dollar life insurance policy does not constitute a settlement under SFAS No. 106 and, therefore, a liability for the postretirement obligation must be recognized under SFAS No. 106 if the
benefit is offered under an arrangement that constitutes a plan or under APB No. 12, if it is not part of a plan. Issue 06-04 is effective for annual or interim reporting periods beginning after December 15, 2007. The Company is currently
assessing the financial statement impact of implementing EITF 06-04.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option
for Financial Assets and Financial Liabilities. This statement permits entities to choose, at specified dates, to measure eligible items at fair value. This election is referred to as the fair value option and must generally be applied on an
instrument by instrument basis; is irrevocable, unless a new election occurs; and is applied only to an entire instrument, not to only specified risks, specific cash flows, or portions of an instrument. A business entity that elects the fair value
option, must report any unrealized gains and losses on the items involved, in earnings at each subsequent reporting date. The statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities
that choose different measurement attributes for similar types of assets and liabilities. The effective date of SFAS No. 159 is for fiscal years beginning after November 15, 2007. The Company does not expect that the adoption of this
Statement will have a material impact on its financial position, results of operations or cash flows

FAS 123(R)

In December 2004, the FASB issued SFAS No. 123 (revised), Share-Based Payment (SFAS 123(R)). SFAS 123(R) replaces SFAS No. 123,
Accounting for Stock-Based Compensation (SFAS 123), and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). SFAS 123(R) requires compensation costs related to
share-based payment transactions to be recognized in the financial statements over the period that an employee provides services in exchange for the award. The Company adopted effective July 1, 2006, the new standard using the modified
prospective method. Under the modified prospective method, companies are required to record compensation cost for new and modified awards over the related vesting period of such awards prospectively, and to record compensation cost prospectively on
the non-vested portion, at the date of adoption, of previously issued and outstanding awards over the remaining vesting period of such awards. No change to prior periods presented is permitted under the modified prospective method. The Company
recognized pre-tax expense of approximately $5,600 in the quarter ending September 30, 2006 for the expense related to the final scheduled vesting of all outstanding stock option awards. No options have been granted since August 3, 2000.
Any additional impact of adopting the new accounting standard will be determined by share-based payments granted in future periods.



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The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value
recognition provisions of FASB Statement No. 123.



|                                                                                                                                                   |  |                                 |      |   |                                   |   |      |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ---- | - | --------------------------------- | - | ---- | -
|                                                                                                                                                   |  | Nine Months EndedMarch 31, 2006 |      |   | Three Months Ended March 31, 2006 |  
|Net Income as reported                                                                                                                             |  | $                               | 965  |   |                                   | $ | 301  |  
|Amounts recognized as expense in the financial statements                                                                                          |  |                                 | 17   |   |                                   |   | 8    |  
|Deduct: Total stock option based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                                 | (22  | ) |                                   |   | (9   | )
|                                                                                                                                                   |  |                                 |      |   |                                   |   |      |  
|Proforma Net Income                                                                                                                                |  | $                               | 960  |   |                                   | $ | 300  |  
|                                                                                                                                                   |  |                                 |      |   |                                   |   |      |  
|Earnings per share:                                                                                                                                |  |                                 |      |   |                                   |   |      |  
|Basic - as reported                                                                                                                                |  | $                               | 0.57 |   |                                   | $ | 0.17 |  
|Basic  pro forma                                                                                                                                  |  |                                 | 0.56 |   |                                   |   | 0.17 |  
|                                                                                                                                                   |  |                                
|Diluted  as reported                                                                                                                              |  | $                               | 0.50 |   |                                   | $ | 0.16 |  
|Diluted  pro forma                                                                                                                                |  |                                 | 0.50 |   |                                   |   | 0.16 |  

A summary of share option activity for the nine month period ended March 31, 2007 follows:



|                            |  |         |  |                              |      |                                                  |     |                                |   |      
|--------------------------- |  | ------- |  | ---------------------------- | ---- | ------------------------------------------------ | --- | ------------------------------ | - | -----
|                            |  | Shares  |  | WeightedAverageExercisePrice |      | WeightedAverageRemainingContractualTerm in Years |     | AggregateIntrinsicValue (000s)
|Outstanding at July 1, 2006 |  | 138,495 |  | $                            | 5.62 |                                                  | 3.6 |                                | $ | 704  
|Granted                     |  |        |  |                              |     |                                                  |    |                                |   |      
|Exercised                   |  | 70,198  |  |                              | 5.23 |                                                  |    |                                |   | 1,264
|Forfeited or expired        |  |        |  |                              |     |                                                  |    |                                |   |      
|Balance at March 31, 2007   |  | 68,297  |  | $                            | 6.02 |                                                  | 4.4 |                                | $ | 1,177

A summary of the status of the Companys non-vested shares as of March 31, 2007 is presented below:



|                               |  |               |  |                                        |      
|------------------------------ |  | ------------- |  | -------------------------------------- | -----
|                               |  | Common Shares |  | Weighted Average Grant-Date Fair
Value
|Non-Vested as of July 31, 2006 |  |              |  | $                                      |     
|Awards Granted, November 2006  |  | 14,453        |  | $                                      | 13.71
|Vested                         |  |              |  | $                                      |     
|Forfeited                      |  |              |  | $                                      |     
|                               |  |               |  |                                        |      
|Non-vested at March 31, 2007   |  | 14,453        |  | $                                      | 13.71

As of March 31, 2007 there was $169,000 of total unrecognized compensation costs related to non-vested
share-based compensation. The cost is expected to be recognized over a weighted average period of 30 months. At grant date, vesting of the shares was cliff vesting at the end of either a two or three year period. Compensation expense
totaling $18,000 and $29,000 has been recognized in the three and nine month periods ended March 31, 2007 as a result of these awards.

Note 10:
Announced Transaction

As announced on March 19, 2007, Patapsco Bancorp, Inc. executed a definitive merger agreement with Bradford Bancorp, Inc whereby
the Company will be merged with and into Bradford Bancorp. The transaction is expected to be completed early in the forth calendar quarter of 2007 and is subject to the approval of the members of Bradford Bank MHC, the shareholders of Patapsco
Bancorp and regulatory authorities.



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##### Table of Contents

In connection with the merger, Bradford Banks current mutual holding company, Bradford Bank MHC, which owns 100% of
Bradford Bancorps outstanding shares, will undergo a full mutual-to-stock conversion and stock offering. Under the terms of the transaction, shareholders of Patapsco Bancorp will be entitled to receive either $23.00 in cash or 2.3 shares of
Bradford Bancorp common stock (assuming a $10.00 per share initial public offering price) in exchange for each share of Patapsco Bancorp common stock. Based upon the $23.00 per share price, the consideration is approximately 278% of tangible book
value, 229% of book value and 30 times trailing twelve months earnings

Item 2. Managements Discussion and Analysis or Plan of Operation

General

The Companys results of operations depend primarily on its level of net interest income, which is the difference between interest earned on interest-earning assets,
consisting primarily of loans, investment securities, mortgage-backed securities and other investments, and the interest paid on interest-bearing liabilities, consisting primarily of deposits and advances from the Federal Home Loan Bank of Atlanta.
The net interest income earned on interest-earning assets (net interest margin) and the ratio of interest-earning assets to interest-bearing liabilities have a significant impact on net interest income. The Companys net interest
margin is affected by regulatory, economic and competitive factors that influence interest rates, loan and deposit flows. The Company, like other financial institutions, is subject to interest rate risk to the degree that its interest-earning assets
mature or reprice at different times, or on a different basis, than its interest-bearing liabilities. The Companys results of operations are also significantly impacted by the amount of its non-interest income, including loan fees and service
charges, and levels of non-interest expense, which consists principally of compensation and employee benefits, insurance premiums, professional fees, equipment expense, occupancy costs, advertising, data processing and other operating expenses.

The Companys operating results are significantly affected by general economic and competitive conditions, in particular, changes in market interest
rates, government policies and actions taken by regulatory authorities. Lending activities are influenced by general economic conditions, competition among lenders, the level of interest rates and the availability of funds. Deposit flows and costs
of funds are influenced by prevailing market rates of interest, primarily on competing investments, account maturities and the level of personal income and savings in the Companys market area.

Forward-Looking Statements

When used in this Form 10-QSB, the words
or phrases will likely result, are expected to, will continue, is anticipated, estimate, project or similar expressions are intended to identify forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Companys market area, changes in
policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Companys market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the
Companys financial performance and could cause the Companys actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

The Companys consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP) and follow general practices within the industry in which it operates. Application of these principles requires management to make estimates, assumptions, and judgments that
affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the consolidated financial statements; accordingly, as this
information changes, the financial statements could



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reflect different estimates, assumptions and judgments. Certain policies inherently have a greater reliance on the use of
estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. These estimates, assumptions and judgments are necessary when financial instruments are
required to be recorded at fair value or when the decline in the value of an asset carried on the balance sheet at historic cost requires an impairment write-down or a valuation reserve to be established.

The allowance for loan losses (allowance) represents an amount, that in the judgment of management, will be adequate to absorb probable losses on outstanding
loans and leases that may become uncollectible. The allowance represents an estimate made based upon two principles of accounting: (1) Statement of Financial Accounting Standards (SFAS) No.5 Accounting for Contingencies,
that requires losses to be accrued when their occurrence is probable and estimable, and (2) SFAS No. 114 Accounting by Creditors for Impairment of a Loan, that requires losses be accrued when it is probable that the lender will
not collect all principal and interest due under the original terms of the loan. The adequacy of the allowance is determined through careful evaluation of the loan portfolio. This determination is inherently subjective and requires significant
estimates, including estimated losses on pools of homogeneous loans based on historical loss experience and consideration of the current economic environment that may be subject to change. Loans and leases deemed uncollectible are charged against
the allowance and recoveries of previously charged-off amounts are credited to it. The level of the allowance is adjusted through the provision for loan losses that is recorded as a current period expense.

The methodology for assessing the appropriateness of the allowance includes a specific allowance, a formula allowance and a nonspecific allowance. The specific allowance
is for risk rated credits on an individual basis. The formula allowance reflects historical losses by credit category. The nonspecific allowance captures losses whose impact on the portfolio have occurred but have yet to be recognized in either the
specific allowance or the formula allowance. The factors used in determining the nonspecific allowance include trends in delinquencies, trends in volumes and terms of loans, the size of loans relative to the allowance, concentration of credits, the
quality of the risk identification system and credit administration and local and national economic trends.

In accordance with the provisions of Statement
of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan, as amended by Statement 118, Accounting by Creditors for Impairment of a LoanIncome Recognition and Disclosures (collectively referred to as
Statement 114), Patapsco determines and recognizes impairment of certain loans. A loan is determined to be impaired when, based on current information and events, it is probable that Patapsco will be unable to collect all amounts due
according to the contractual terms of the loan agreement. A loan is not considered impaired during a period of delay in payment if Patapsco expects to collect all amounts due, including past-due interest. Patapsco generally considers a period of
delay in payment to include delinquency up to and including 90 days. Statement 114 requires that impairment in a loan be measured at the present value of its expected future cash flows discounted at the loans effective interest rate, or at the
loans observable market price or the fair value of the collateral if the loan is collateral dependent.

Statement 114 is generally applicable for all
loans except large groups or smaller-balance homogeneous loans that are evaluated collectively for impairment, including residential first and second mortgage loans and consumer installment loans. Impaired loans are therefore generally comprised of
commercial mortgage, real estate development, and certain restructured residential loans. In addition, impaired loans are generally loans which management has placed in non-accrual status since loans are placed in non-accrual status on the earlier
of the date that management determines that the collection of principal and/or interest is in doubt or the date that principal or interest is 90 days or more past-due.

Management believes that the allowance is adequate. However, its determination requires significant judgment, and estimates of the probable losses in the loan and lease portfolio can vary significantly from amounts
that actually occur.

Comparison of Financial Condition at March 31, 2007 and June 30, 2006

The Companys assets increased by $26.6 million or 11.7% to $254.7 million at March 31, 2007 compared to $228.1 million at June 30, 2006.

Net loans grew by $25.7 million or 13.5% to $216.3 million at March 31, 2007 from $190.6 million at June 30, 2006. The growth in loans includes $1.3 million in
purchases of consumer loans. Growth in commercial business loans of $14.3 million, construction loans of $7.0 million, commercial mortgages of $5.0 million and consumer loans of $1.8 million offset a decrease of $2.4 million in residential
mortgages. Commercial leases were flat at $15.2 million. The Companys commercial business loans are generally secured by real estate collateral as a secondary source of repayment. Loan-to-value ratios on commercial business and commercial real
estate loans generally do not exceed 80% of the appraised value. The residential mortgage portfolio consists of conventionally underwritten mortgages that generally conform to Fannie Mae and Freddie Mac guidelines. The Company has not participated
in the sub-prime mortgage market.



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Securities available for sale decreased by $1.98 million or 11.1% to $14.8 million from $16.7 million as maturities and
amortization of the mortgage-backed securities portfolio was partially offset by an increase in the market value of the portfolio. The increase in property and equipment is a result of the construction of the Companys new branch location and
offices housing all of the loan functions of the Bank. This location has replaced two leased properties.

Asset growth was funded primarily with
certificates of deposits, both retail and brokered and a $2.7 million increase in borrowings from the Federal Home Loan Bank of Atlanta.

Interest bearing
deposits increased $23.9 million or 15.6% in the nine months ended March 31, 2007 to $177.6 million from $153.6 million at June 30, 2006. This increase has primarily occurred in the certificate of deposit account category and includes an
increase of $10.2 million in brokered certificates of deposit.

Borrowings from the Federal Home Loan Bank of Atlanta have increased by $2.7 million or
7.8% to $37.8 million .

Comparison of Operating Results for the Three and Nine Months Ended March 31, 2007 and March 31, 2006

Net Income

The Companys net income decreased by $160,000 or
53.2% to $141,000 for the quarter ended March 31, 2007 from $301,000 for the quarter ended March 31, 2006. The Companys net income decreased by $108,000 or 11.2% to $857,000 for the nine months ended March 31, 2007 from $965,000
for the nine months ended March 31, 2006. The decrease in the Companys net income during the comparable three and nine-month periods is a result of a higher operating expenses resulting from the previously disclosed merger agreement with
Bradford Bancorp and a higher provision for loan losses. Direct expenses, primarily professional fees, related with the transaction for the three and nine-month periods ended March 31, 2007 totaled $244,000 and $268,000 respectively.
Additionally, the provision for loan losses increased substantially in both the comparative quarterly and year-to-date periods.

Interest Income

Total interest income increased by $709,000 or 20.3% to $4.2 million for the quarter ended March 31, 2007 when compared to $3.5 million in the
quarter ended March 31, 2006 as primarily due to higher loans outstanding and higher rates earned on loans.

Total interest income increased by $2.2
million or 22.9% to $12.1 million for the nine months ended March 31, 2007 when compared to $9.9 million for the nine months ended March 31, 2006 as higher loan balances and higher rates earned on all interest earning asset classes offset
reduced income from the securities available for sale portfolio due to lower balances.

Interest income on loans receivable increased by $741,000 or 22.9%
to $3.9 million for the quarter ended March 31, 2007 from $3.2 million for the quarter ended March 31, 2006. Interest income on loans receivable increased by $2.3 million or 25.8% to $11.4 million for the nine months ended March 31,
2007 from $9.1 million for the nine months ended March 31, 2006. The increase in interest income on loans receivable during both the three and nine-month periods is primarily due to higher average balances of these assets. Increased rates
earned on loans also contributed to the increases in both the nine and three month periods.

Interest income on securities decreased by $49,000 to $196,000
and by $105,000 to $611,000 for the three and nine month periods ended March 31, 2007, respectively due to lower average balances offsetting higher rates earned on these assets. The Company has been reinvesting cash generated from the
investment portfolio into the loan portfolio.

Interest income on federal funds sold and other investments increased by $17,000 or 113.3% to $32,000 for
the quarter ended March 31, 2007 from $15,000 for the quarter ended March 31, 2006. Interest income on federal funds sold and other investments increased by $21,000 or 26.6% to $100,000 for the nine months ended March 31, 2007 from
$79,000 for the nine months ended March 31, 2006. The increase in the three month period is due to both higher average balances and higher rates earned. The increase in the nine-month periods is due to higher rates earned offsetting lower
average balances

Interest Expense

Total interest
expense increased by $652,000 or 49.6% to $1.9 million for the quarter ended March 31, 2007 from $1.3 million for the



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quarter ended March 31, 2006. Total interest expense increased by $2.0 million or 57.1% to $5.5 million in the nine
months ended March 31, 2007 from $3.5 million. The increase in interest expense during the comparable quarterly and year-to-date periods is due primarily to higher rates paid on deposits accounts and higher average balances of interest-bearing
liabilities.

Interest expense on deposits increased by $548,000 or 60.7% to $1.4 million for the quarter ended March 31, 2007 from $903,000 for the
quarter ended March 31, 2006. Interest expense on deposits increased by $1.4 million or 58.4% to $3.9 million from $2.5 million for the nine months ended March 31, 2006. The increase in interest expense on deposits in both the quarterly
and year to date periods is due to both the significantly higher rates paid on deposits and the higher average balances of interest-bearing deposits.

Interest expense on short-term borrowings decreased by $76,000 to $2,000 from $78,000 for the quarter ended March 31, 2007 and by $69,000 to $37,000 from $106,000 for the nine-month period March 31, 2007 when compared to the
comparable periods ended March 31, 2006. Interest expense on long-term borrowings increased by $179,000 or 53.6% to $513,000 from $334,000 for the three month period ended March 31, 2007 as compared to the three month period ended
March 31, 2006 due to higher average balances and slightly higher rates paid on these borrowings. Interest expense on long-term borrowings increased by $604,000 or 67.9% to $1.5 million from $889,000 for the nine month period ended
March 31, 2007 as compared to the nine month period ended March 31, 2006 due to both higher average balances and slightly higher rates paid on these borrowings.

Net Interest Income

The Companys net interest income increased by $57,000 or 2.6% to $2.2 million for the
quarter ended March 31, 2007 from $2.2 million for the quarter ended March 31, 2006. Net interest income increased by $273,000 or 4.2% to $6.7 million for the nine months ended March 31, 2007 from $6.4 million during the nine months
ended March 31, 2006. The increases in net interest income during the comparable quarters and nine-month periods were due to the higher volume of earning assets offsetting a reduced net interest margin.



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Average Balance Sheet

The following tables sets forth certain information relating to the Companys average balance sheet and reflects the average yield on assets and cost of liabilities for the periods indicated and the average
yields earned and rates paid. Dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented derives these yield and costs. Average balances are daily balances.

The table presents information for the periods indicated with respect to the net interest margin, which is its net interest income divided by the
average balance of interest-earning assets. Also presented is the difference between the average yield earned on interest-earning assets and average rate paid on interest-bearing liabilities, or interest rate spread ,which is also used to measure
the earnings power of financial institutions.



|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|-------------------------------------------------------------------------------- |  | --------------------------- | ------- | -------- | ---- | -------------- |  | ------ | -------------- |  | -------- | ------- | -------------- | - | ----- |  | ------ | -
|                                                                                 |  | Nine Months Ended March 31, |        
|                                                                                 |  | 2007                        |         |          | 2006 |               
|                                                                                 |  | AverageBalance              |         | Interest |      | AverageRate(1) |  |        | AverageBalance |  | Interest |         | AverageRate(1) |  
|                                                                                 |  | (Dollars in thousands)      |        
|Interest-earning assets:                                                         |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Loans receivable (2)                                                             |  | $                           | 206,428 |          | $    | 11,420         |  | 7.38   | %              |  | $        | 172,672 |                | $ | 9,076 |  | 7.01   | %
|Investment and mortgage-backed securities                                        |  |                             | 18,251  |          |      | 611            |  | 4.46   | %              |  |          | 24,186  |                |   | 716   |  | 3.95   | %
|Federal funds sold and other interest-earning assets                             |  |                             | 2,754   |          |      | 100            |  | 4.85   | %              |  |          | 2,905   |                |   | 79    |  | 3.64   | %
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Total interest earning assets                                                    |  |                             | 227,433 |          |      | 12,131         |  | 7.11   | %              |  |          | 199,763 |                |   | 9,871 |  | 6.59   | %
|Noninterest-earning assets                                                       |  |                             | 14,217  |          |      |                |  |        |                |  |          | 13,499  |                |   |       |  |        |  
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Total assets                                                                     |  | $                           | 241,650 |          |      |                |  |        |                |  | $        | 213,262 |                |   |       |  |        |  
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Interest-bearing liabilities:                                                    |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Iterest-bearing deposits                                                         |  | $                           | 166,217 |          | $    | 3,938          |  | 3.16   | %              |  | $        | 152,214 |                | $ | 2,486 |  | 2.18   | %
|Short-term borrowings                                                            |  |                             | 880     |          |      | 37             |  | 5.61   | %              |  |          | 3,197   |                |   | 106   |  | 4.41   | %
|Long-term borrowings                                                             |  |                             | 41,243  |          |      | 1,493          |  | 4.83   | %              |  |          | 25,390  |                |   | 889   |  | 4.67   | %
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Total interest-bearing liabilities                                               |  |                             | 208,340 |          |      | 5,468          |  | 3.50   | %              |  |          | 180,801 |                |   | 3,481 |  | 2.57   | %
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Noninterest-bearing liabilities                                                  |  |                             | 14,359  |          |      |                |  |        |                |  |          | 14,627  |                |   |       |  |        |  
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Total liabilities                                                                |  |                             | 222,699 |          |      |                |  |        |                |  |          | 195,428 |                |   |       |  |        |  
|Stockholders equity                                                             |  |                             | 18,951  |          |      |                |  |        |                |  |          | 17,834  |                |   |       |  |        |  
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Total liabilities and stockholders equity                                       |  | $                           | 241,650 |          |      |                |  |        |                |  | $        | 213,262 |                |   |       |  |        |  
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Net interest income                                                              |  |                             |         |          | $    | 6,663          |  |        |                |  |          |         |                | $ | 6,390 |  |        |  
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Interest rate spread                                                             |  |                             |         |          |      |                |  | 3.61   | %              |  |          |         |                |   |       |  | 4.02   | %
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Net Interest margin                                                              |  |                             |         |          |      |                |  | 3.91   | %              |  |          |         |                |   |       |  | 4.27   | %
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                             |         |          |      |                |  | 109.16 | %              |  |          |         |                |   |       |  | 110.49 | %
|                                                                                 |  |                             |         |          |      |                |  |        |                |  |          |         |                |   |       |  |        |  

---

|(1) | Yields and rates are annualized.
|--- | --------------------------------

|(2) | Includes nonaccrual loans.
|--- | --------------------------



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|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|-------------------------------------------------------------------------------- |  | ---------------------------- | ------- | -------- | ---- | --------------- |  | ------ | --------------- |  | -------- | ------- | --------------- | - | ----- |  | ------ | -
|                                                                                 |  | Three Months Ended March 31, |        
|                                                                                 |  | 2007                         |         |          | 2006 |                
|                                                                                 |  | AverageBalance               |         | Interest |      | Average Rate(1) |  |        | Average Balance |  | Interest |         | Average Rate(1) |  
|                                                                                 |  | (Dollars in thousands)       |        
|Interest-earning assets:                                                         |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Loans receivable (2)                                                             |  | $                            | 215,812 |          | $    | 3,979           |  | 7.37   | %               |  | $        | 184,660 |                 | $ | 3,238 |  | 7.01   | %
|Investment and mortgage-backed securities                                        |  |                              | 17,525  |          |      | 196             |  | 4.47   | %               |  |          | 22,974  |                 |   | 245   |  | 4.26   | %
|Federal funds sold and other interest-earning assets                             |  |                              | 2,602   |          |      | 32              |  | 4.92   | %               |  |          | 1,759   |                 |   | 15    |  | 3.54   | %
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Total interest earning assets                                                    |  |                              | 235,939 |          |      | 4,207           |  | 7.13   | %               |  |          | 209,393 |                 |   | 3,498 |  | 6.68   | %
|Noninterest-earning assets                                                       |  |                              | 14,885  |          |      |                 |  |        |                 |  |          | 13,289  |                 |   |       |  |        |  
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Total assets                                                                     |  | $                            | 250,824 |          |      |                 |  |        |                 |  | $        | 222,682 |                 |   |       |  |        |  
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Interest-bearing liabilities:                                                    |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Interest bearing deposits                                                        |  | $                            | 174,764 |          | $    | 1,452           |  | 3.32   | %               |  | $        | 154,239 |                 | $ | 903   |  | 2.34   | %
|Short-term borrowings                                                            |  |                              | 105     |          |      | 2               |  | 5.64   | %               |  |          | 6,687   |                 |   | 78    |  | 4.67   | %
|Long-term borrowings                                                             |  |                              | 42,800  |          |      | 513             |  | 4.79   | %               |  |          | 28,836  |                 |   | 334   |  | 4.64   | %
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Total interest-bearing liabilities                                               |  |                              | 217,669 |          |      | 1,967           |  | 3.61   | %               |  |          | 189,762 |                 |   | 1,315 |  | 2.77   | %
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Noninterest-bearing liabilities                                                  |  |                              | 13,828  |          |      |                 |  |        |                 |  |          | 15,080  |                 |   |       |  |        |  
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Total liabilities                                                                |  |                              | 231,497 |          |      |                 |  |        |                 |  |          | 204,842 |                 |   |       |  |        |  
|Stockholders equity                                                             |  |                              | 19,327  |          |      |                 |  |        |                 |  |          | 17,840  |                 |   |       |  |        |  
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Total liabilities and stockholders equity                                       |  | $                            | 250,824 |          |      |                 |  |        |                 |  | $        | 222,682 |                 |   |       |  |        |  
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Net Interest Income                                                              |  |                              |         |          | $    | 2,240           |  |        |                 |  |          |         |                 | $ | 2,183 |  |        |  
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Interest rate spread                                                             |  |                              |         |          |      |                 |  | 3.52   | %               |  |          |         |                 |   |       |  | 3.91   | %
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Net interest margin                                                              |  |                              |         |          |      |                 |  | 3.80   | %               |  |          |         |                 |   |       |  | 4.17   | %
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                              |         |          |      |                 |  | 108.41 | %               |  |          |         |                 |   |       |  | 110.35 | %
|                                                                                 |  |                              |         |          |      |                 |  |        |                 |  |          |         |                 |   |       |  |        |  

---

|(1) | Yields and rates are annualized.
|--- | --------------------------------

|(2) | Includes nonaccrual loans.
|--- | --------------------------

Provision For Loan Losses

Provisions for loan losses are charged to earnings to maintain the total allowance for loan losses at a level considered adequate by management to provide for loan
losses. The components of the allowance for loan losses represent an estimation done pursuant to either Statement of Financial Accounting Standards (SFAS) No. 5, Accounting for Contingencies, or (SFAS)
No. 114, Accounting by Creditors for Impairment of a Loan. The adequacy of the allowance for loan losses is determined through a continuous review of the loan and lease portfolio and considers factors such as prior loss experience,
type of collateral, industry standards, past due loans in the Companys loan portfolio, current economic conditions, both national and local, and other factors unique to particular loans and leases. The Companys management periodically
monitors and adjusts its allowance for loan losses based upon its analysis of the loan portfolio.

The Companys provision for loan losses for the
quarter ended March 31, 2007 was $175,000 as compared to $0 in the quarter ended March 31, 2006. The provision for loan losses increased by $245,000 or 612.5% to $285,000 in the nine-months ended March 31, 2007 from $40,000 for the
nine-months ended March 31, 2006. The ratio of the allowance for loan losses as a percentage of total loans outstanding decreased to 0.50% at March 31, 2007 from 0.52% at June 30, 2006. The primary driver of the level of the allowance
for loan losses is the Companys determination of the level of risk in the portfolio. The Company has determined that there is minimal risk in the residential loan portfolio (35%) of total loans. The residential mortgage portfolio consists
of conventionally underwritten mortgages that generally conform to Fannie Mae and Freddie Mac guidelines. The Company has not participated in the sub-prime mortgage market. As mentioned above, the Company conservatively underwrites all commercial
business and commercial real estate loans with multiple sources of repayment. Loans granted must cash-flow on their own and be backed by substantial collateral. Additionally, $6.9 million of the commercial loan portfolio, including the two
commercial loans on non-accrual are guaranteed by the Small Business Administration with an average guarantee percentage of 76%. In the Companys estimation, the most risk in the portfolio resides in



16



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the commercial leasing portfolio whose net balance of $15.2 million represents 7.0% of the portfolio and whose average
lease size is only $16,600. These determinations by management have been reviewed by an independent third party loan review consultant in a report dated November 13, 2006. The Companys allowance for loan losses as a percentage of
non-performing loans was 214.6% at March 31, 2007 as compared to 409.8% at June 30, 2006.

Activity in the allowance for loan losses is as
follows (dollars in thousands):



|                                               |  |                   |       |                    |   |      |  |      |       |  |   |    
|---------------------------------------------- |  | ----------------- | ----- | ------------------ | - | ---- |  | ---- | ----- |  | - | ---
|                                               |  | Nine Months Ended |       | Three Months Ended
|                                               |  | March 31,        
|                                               |  | 2007              |       | 2006               |   | 2007 |  | 2006
|Allowance for loan losses, beginning of period |  | $                 | 1,000 |                    | $ | 945  |  | $    | 1,001 |  | $ | 952
|                                               |  |                   |       |                   
|Provision for loan losses                      |  |                   | 285   |                    |   | 40   |  |      | 175   |  |   |   
|                                               |  |                   |       |                   
|Loans Charged Off:                             |  |                   |       |                    |   |      |  |      |       |  |   |    
|Consumer                                       |  |                   | 146   |                    |   | 113  |  |      | 40    |  |   | 17 
|Real Estate                                    |  |                   |      |                    |   |     |  |      |      |  |   |   
|Commercial loan                                |  |                   | 9     |                    |   |     |  |      | 9     |  |   |   
|Commercial lease                               |  |                   | 233   |                    |   | 29   |  |      | 117   |  |   | 11 
|                                               |  |                   |       |                    |   |      |  |      |       |  |   |    
|Total Charge-Offs                              |  |                   | 388   |                    |   | 142  |  |      | 166   |  |   | 28 
|                                               |  |                   |       |                   
|Recoveries:                                    |  |                   |       |                    |   |      |  |      |       |  |   |    
|Consumer                                       |  |                   | 70    |                    |   | 28   |  |      | 19    |  |   | 6  
|Real Estate                                    |  |                   |      |                    |   |     |  |      |      |  |   |   
|Commercial loan                                |  |                   | 28    |                    |   | 11   |  |      | 4     |  |   | 4  
|Commercial lease                               |  |                   | 41    |                    |   | 69   |  |      | 3     |  |   | 17 
|                                               |  |                   |       |                    |   |      |  |      |       |  |   |    
|Total Recoveries                               |  |                   | 139   |                    |   | 108  |  |      | 26    |  |   | 27 
|                                               |  |                   |       |                    |   |      |  |      |       |  |   |    
|Allowance for loan losses, end of period       |  | $                 | 1,036 |                    | $ | 951  |  | $    | 1,036 |  | $ | 951
|                                               |  |                   |       |                    |   |      |  |      |       |  |   |    

The following table sets forth information with respect to the Companys non-performing assets at the dates
indicated.



|                                                                |  |                   |      |   |                  |   |      |  
|--------------------------------------------------------------- |  | ----------------- | ---- | - | ---------------- | - | ---- | -
|(dollars in thousands)                                          |  | At March 31, 2007 |      |   | At June 30, 2006 |  
|Loans accounted for on a non-accrual basis: (1)                 |  |                   |      |   |                  |   |      |  
|Real estate:                                                    |  |                   |      |   |                  |   |      |  
|Residential                                                     |  | $                 | 168  |   |                  | $ | 13   |  
|Commercial                                                      |  |                   |     |   |                  |   | 146  |  
|Construction                                                    |  |                   |     |   |                  |   |     |  
|Consumer                                                        |  |                   | 14   |   |                  |   | 7    |  
|Commercial Loan/Lease                                           |  |                   | 324  |   |                  |   | 78   |  
|                                                                |  |                   |      |   |                  |   |      |  
|Total                                                           |  | $                 | 506  |   |                  | $ | 244  |  
|Accruing loans which are contractually past due 90 days or more |  | $                 |     |   |                  | $ |     |  
|                                                                |  |                   |      |   |                  |   |      |  
|Total                                                           |  | $                 |     |   |                  | $ |     |  
|                                                                |  |                   |      |   |                  |   |      |  
|Total non-performing loans                                      |  | $                 | 506  |   |                  | $ | 244  |  
|                                                                |  |                   |      |   |                  |   |      |  
|Percentage of total loans                                       |  |                   | 0.23 | % |                  |   | 0.13 | %
|                                                                |  |                   |      |   |                  |   |      |  
|Other non-performing assets (2)                                 |  | $                 | 5    |   |                  | $ |     |  
|                                                                |  |                   |      |   |                  |   |      |  

---

|(1) | Non-accrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely. Payments received on a non-accrual loan are either
applied to the outstanding principal balance or recorded as interest income, depending on managements assessment of the collectability of the loan.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Other non-performing assets represent property acquired by the Company through foreclosure or repossession.
|--- | -----------------------------------------------------------------------------------------------------------



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At March 31, 2007, non-accrual loans consisted of one residential mortgage with a balance of $168,000 and an
approximate loan-to-value ratio of 44%, two commercial business loans with a combined balance of $254,000, both with 85% guarantees from the SBA, six commercial leases with balances of $70,000 and two consumer loans with a balance of $14,000.

Non-interest Income

The Companys non-interest
income consists of deposit fees, service charges, fees on the sale of annuities and investment products, and gains and losses on sales of securities, loans and repossessed and other assets. Total non-interest income increased by $20,000 or 9.9% to
$221,000 for the quarter ended March 31, 2007 from $201,000 for the quarter ended March 31, 2006. Total non-interest income decreased by $17,000 or 2.6% to $625,000 during the nine months ended March 31, 2007 from $642,000 during the
nine months ended March 31, 2006. Included in the March 31, 2006 year-to-date amount is a gain on the sale of an office building of $64,000.

Non-interest Expenses

Total non-interest expenses increased by $159,000 or 8.3% to $2.1 million for the quarter ended March 31, 2007
from $1.9 million for the quarter ended March 31, 2006. Total non-interest expense increased by $188,000 or 3.5% to $5.6 million during the nine months ended March 31, 2007 from $5.4 million during the nine months ended March 31,
2006. The primary reasons for the increases in both the three and nine-month period are the aforementioned direct expenses, primarily professional fees resulting from the previously disclosed merger agreement with Bradford Bancorp. These expenses
totaled $268,000 and $244,000 for the nine and three month periods ended March 31, 2007, respectively.

Income Taxes

Income tax expense was $78,000 (or 35.6% of income before the provision for income taxes) and $175,000 (or 36.8% of income before the provision for income taxes) for the
quarters ended March 31, 2007 and 2006, respectively. Income tax expense was $505,000 (or 37.1% of income before the provision for income taxes) and $574,000 (or 37.3% of income before the provision for income taxes) for the nine month periods
ended March 31, 2007 and 2006, respectively.

Liquidity and Capital Resources

An important component of the Companys asset/liability structure is the level of liquidity available to meet the needs of customers and creditors. The Companys Asset/Liability Management Committee has
established general guidelines for the maintenance of prudent levels of liquidity. The Committee continually monitors the amount and source of available liquidity, the time to acquire it and its cost. Management of the Company seeks to maintain an
adequate level of liquidity in order to retain flexibility in terms of investment opportunities and deposit pricing. Because liquid assets generally provide lower rates of return, a high level of liquidity will, to a certain extent, result in lower
net interest margins and lower net income.

The Companys most liquid assets are cash on hand, interest-bearing deposits and Federal funds sold, which
are short-term, highly liquid investments with original maturities of less than three months that are readily convertible to known amounts of cash. The levels of these assets are dependent on the Companys operating, financing and investing
activities during any given period. At March 31, 2007, the Companys cash on hand, interest-bearing deposits and Federal funds sold totaled $9.1 million. In addition, the Company has approximately $14.8 million of securities classified as
available-for-sale.

The Company anticipates that it will have sufficient funds available to meet its current loan commitments of $11.1 million. These
funds will be internally generated, raised through deposit operations, or borrowed. Certificates of deposits that are scheduled to mature in less than one year at March 31, 2007 totaled $70.5 million. Historically, a high percentage of maturing
deposits have remained with the Company.

The Companys primary sources of funds are deposits and proceeds from maturing investment securities and
mortgage-backed securities and principal and interest payments on loans. While maturities and scheduled amortization of mortgage-backed securities and loans are predictable sources of funds, deposit flows and mortgage prepayments are greatly
influenced by general interest rates, economic conditions, competition and other factors.

The Company, as the holding company for the Bank, has an annual
cash requirement of approximately $868,000 for the payment of common dividends as well as principal payments on the $5.0 million in subordinated debentures outstanding. The holding company currently has cash on hand of $2.3 million. The only source
of funds for the holding company is dividends from the Bank. The amount of dividends that can be paid to the holding company from the bank is limited by the earnings of the bank.



18



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##### Table of Contents

As discussed in Note 5 - Regulatory Capital Requirements, the Bank exceeded all regulatory minimum capital requirements.

Contingencies and Off-Balance Sheet Items

The Company
is party to financial instruments with off-balance sheet risk including commitments to extend credit under both new facilities and under existing lines of credit. Commitments to fund loans typically expire after 60 days, commercial lines of credit
are subject to annual reviews and home equity lines of credit are generally for a term of 20 years. These instruments contain, to varying degrees, credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

Off-balance sheet financial instruments whose contract amounts represent credit and interest rate risk are summarized as follows:



|                                    |  |                        |        |               |   |       
|----------------------------------- |  | ---------------------- | ------ | ------------- | - | ------
|                                    |  | March 31, 2007         |        | June 30, 2006
|                                    |  | (dollars in thousands)
|Commitments to originate new loans  |  | $                      | 11,166 |               | $ | 13,860
|Undisbursed lines of credit         |  |                        | 12,805 |               |   | 11,161
|Financial standby letters of credit |  |                        | 1,474  |               |   | 1,583 

Contractual Obligations

The following table sets forth the companys contractual obligations as of March 31, 2007:



|                                                        |  |                        |        |              |   |            |  |              |        |       |   |        |  |   |        
|------------------------------------------------------- |  | ---------------------- | ------ | ------------ | - | ---------- |  | ------------ | ------ | ----- | - | ------ |  | - | -------
|                                                        |  | < 1 year               |        | 1 to 3 Years |   | 4 -5 Years |  | Over 5 Years |        | Total
|                                                        |  | (dollars in thousands)
|Time Deposits                                           |  | $                      | 70,471 |              | $ | 26,503     |  | $            | 17,019 |       | $ |       |  | $ | 113,993
|Long-term borrowings, including subordinated debentures |  |                        | 8,700  |              |   | 4,000      |  |              | 5,100  |       |   | 25,000 |  |   | 42,800 
|Lease obligations                                       |  |                        | 179    |              |   | 337        |  |              | 316    |       |   | 3,450  |  |   | 4,283  
|                                                        |  |                        |        |              |   |            |  |              |        |       |   |        |  |   |        
|Total Contractual Obligations                           |  | $                      | 79,350 |              | $ | 30,840     |  | $            | 22,435 |       | $ | 28,450 |  | $ | 161,076

Item 3 : Controls and Procedures

As of the end of the period covered by this report, management of the Company carried
out an evaluation, under the supervision and with the participation of the Companys principal executive officer and principal financial officer, of the effectiveness of the Companys disclosure controls and procedures. Based on this
evaluation, the Companys principal executive officer and principal financial officer concluded that the Companys disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in
reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms

There have been no changes in the Companys internal control over financial reporting identified in connection with the evaluation required by paragraph
(d) of Securities and Exchange Commission Rule 13a-15 that occurred during the Companys last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial
reporting.



19



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##### Table of Contents

Part II. Other Information

Item 1. Legal Proceedings

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information.

None

Item 6. Exhibits

The following exhibits are filed herewith:



|               |  |                                                                                    
|-------------- |  | -----------------------------------------------------------------------------------
|Exhibit Number |  | Title                                                                              
|31             |  | Rule 13a-14(a) Certification of Chief Executive Officer and Chief Financial Officer
|               | 
|32             |  | Certification pursuant to 18 U.S.C. Section 1350                                   



20



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##### Table of Contents

Signature

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.



|                   |  |                                                               
|------------------ |  | --------------------------------------------------------------
|                   |  | PATAPSCO BANCORP, INC.                                        
|                   | 
|Date: May 14, 2007 |  | /s/ Michael J. Dee                                            
|                   |  | Michael J. Dee                                                
|                   |  | President, Chief Executive Officer and Chief Financial Officer
|                   |  | (Principal Executive and Financial Officer)                   



21