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

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

| United States                                  | 36-4519533                                 |
|------------------------------------------------|--------------------------------------------|
| (State or other jurisdiction of                |  (I.R.S. Employer Identification No.) |
| incorporation or organization)                 |                                       |
|                                           |                                       |
| 615 Burlington Avenue,                         |                                       |
| Delanco, New Jersey                            | 08075                                      |
|  (Address of principal executive offices) | (Zip Code)                                 |
|                                           |                                       |

| Common Stock, par value $0.01 per share |
|-----------------------------------------|
| (Title of class)                        |

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

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|       |   |                                                                                                               |   | Page   |   |
|------------|--------|--------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|       |   |                                                                                                               |   |   |   |
| Part I     |   |
|       |   |                                                                                                               |   |   |   |
| Item 1.    |   | Business                                                                                                           |   |   | 1      |   |
| Item 1A.   |   | Risk Factors                                                                                                       |   |   | 13     |   |
| Item 1B.   |   | Unresolved Staff Comments                                                                                          |   |   | 18     |   |
| Item 2.    |   | Properties                                                                                                         |   |   | 18     |   |
| Item 3.    |   | Legal Proceedings                                                                                                  |   |   | 18     |   |
| Item 4.    |   | [Removed and Reserved]                                                                                             |   |   | 18     |   |
|       |   |                                                                                                               |   |   |   |   |
| Part II    |   |
|       |   |                                                                                                               |   |   |   |   |
| Item 5.    |   | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |   |   | 18     |   |
| Item 6.    |   | Selected Financial Data                                                                                            |   |   | 19     |   |
| Item 7.    |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        |   |   | 20     |   |
| Item 7A.   |   | Quantitative and Qualitative Disclosures About Market Risk                                                         |   |   | 34     |   |
| Item 8.    |   | Financial Statements and Supplementary Data                                                                        |   |   | 34     |   |
| Item 9.    |   | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                               |   |   | 34     |   |
| Item 9A.   |   | Controls and Procedures                                                                                            |   |   | 34     |   |
| Item 9B.   |   | Other Information                                                                                                  |   |   | 34     |   |
|       |   |                                                                                                               |   |   |   |   |
| Part III   |   |
|       |   |                                                                                                               |   |   |   |   |
| Item 10.   |   | Directors, Executive Officers and Corporate Governance                                                             |   |   | 35     |   |
| Item 11.   |   | Executive Compensation                                                                                             |   |   | 36     |   |
| Item 12.   |   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     |   |   | 36     |   |
| Item 13.   |   | Certain Relationships and Related Transactions, and Director Independence                                          |   |   | 36     |   |
| Item 14.   |   | Principal Accounting Fees and Services                                                                             |   |   | 36     |   |
|       |   |                                                                                                               |   |   |   |   |
| Part IV    |   |
|       |   |                                                                                                               |   |   |   |   |
| Item 15.   |   | Exhibits and Financial Statement Schedules                                                                         |   |   | 37     |   |
|       |   |                                                                                                               |   |   |   |   |
| SIGNATURES |   |                                                                                                               |   |   |

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| ITEM 1.  | BUSINESS |
|---------------|----------|

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|   | · | maintain (i) a tier 1 (core) capital to adjusted total assets ratio of at least 6.0% and (ii) a total risk-based capital to risk-weighted assets ratio of at least 10.0% after the funding of an adequate allowance for loan and lease losses; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | If the Bank fails to meet these capital ratio requirements at any time, within 15 days thereafter prepare a written contingency plan detailing actions to be taken, with specific time frames, providing for (i) a merger with another federally insured depository institution or holding company thereof,  or (ii) voluntary liquidation; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | prepare a problem asset plan that will include strategies, targets and timeframes to reduce the Bank’s level of criticized assets and nonperforming loans; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | within 30 days after the end of each quarter, beginning with the quarter ending June 30, 2010, prepare a quarterly written asset status report that will include the requirements contained in the Order; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | prepare an updated business plan that will include the requirements contained in the Order and that also will include strategies to restructure the Bank’s operations, strengthen and improve the Bank’s earnings, reduce expenses and achieve positive core income and consistent profitability; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | restrict quarterly asset growth to an amount not to exceed net interest credited on deposit liabilities for the prior quarter without the prior non-objection of the OTS; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | refrain from making, investing in or purchasing any new commercial loans without the prior non-objection of the OTS (the Bank may refinance, extend or otherwise modify any existing commercial loans, so long as no new loan proceeds are advanced as part of the transaction); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | cease to accept, renew or roll over any brokered deposit or act as a deposit broker, without the prior written waiver of the Federal Deposit Insurance Corporation; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | not make any severance or indemnification payments without complying with regulatory requirements regarding such payments; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | comply with prior regulatory notification requirements for any changes in directors or senior executive officers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

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| ITEM 1A. | RISK FACTORS |
|----------|--------------|

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| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
|----------|---------------------------|

| ITEM 2.  | PROPERTIES |
|---------------|------------|

| ITEM 3. | LEGAL PROCEEDINGS |
|---------|-------------------|

| ITEM 4.  | [REMOVED AND RESERVED] |
|---------------|------------------------|

| ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
|---------|--------------------------------------------------------------------------------------------------------------------|

| For the Year EndedMarch 31, 2011 |   | High   |   |   | Low    |   |
|-----------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                      |   |   |   |   |   |   |
| First Quarter                                             |   | $      | 2.10   |   |   | $      | 1.25 |   |
| Second Quarter                                            |   |   | 3.50   |   |   |   | 1.30 |   |
| Third Quarter                                             |   |   | 4.00   |   |   |   | 2.50 |   |
| Fourth Quarter                                            |   |   | 5.99   |   |   |   | 3.99 |   |
|                                                      |   |   |   |   |   |   |
| For the Year EndedMarch 31, 2010                          |   | High   |   |   | Low    |   |
|                                                      |   |   |   |   |   |   |   |   |
| First Quarter                                             |   | $      | 4.00   |   |   | $      | 2.03 |   |
| Second Quarter                                            |   |   | 7.00   |   |   |   | 2.50 |   |
| Third Quarter                                             |   |   | 6.00   |   |   |   | 1.75 |   |
| Fourth Quarter                                            |   |   | 2.30   |   |   |   | 1.75 |   |

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| ITEM 6.  | SELECTED FINANCIAL DATA |
|---------------|-------------------------|

|                                                                        |   | Years Ended March 31, |      |
|-----------------------------------------------------------------------------|--------|--------------------------------------|-----------|
| (Dollars in thousands, except per share data) |   | 2011                                 |      |   | 2010 |   |   | 2009 |   |
|                                                                        |   |                                 |      |   |   |   |   |   |   |
| Financial Condition Data:                                                   |   |                                 |      |   |   |   |   |   |   |
| Total assets                                                                |   | $                                    | 136,172   |   |   | $ | 139,922 |   |   | $ | 130,468 |   |
| Investment securities                                                       |   |                                 | 15,944    |   |   |   | 16,618 |   |   |   | 14,505 |   |
| Loans receivable, net                                                       |   |                                 | 103,867   |   |   |   | 107,204 |   |   |   | 103,624 |   |
| Deposits                                                                    |   |                                 | 120,842   |   |   |   | 127,164 |   |   |   | 113,983 |   |
| Borrowings                                                                  |   |                                 | 2,100     |   |   |   | – |   |   |   | 3,750 |   |
| Total stockholders’ equity                                            |   |                                 | 12,213    |   |   |   | 11,735 |   |   |   | 11,521 |   |
|                                                                        |   |                                 |      |   |   |   |   |   |   |   |   |   |
| Operating Data:                                                             |   |                                 |      |   |   |   |   |   |   |   |   |   |
| Interest income                                                             |   |                                 | 6,693     |   |   |   | 6,973 |   |   |   | 6,793 |   |
| Interest expense                                                            |   |                                 | 1,890     |   |   |   | 2,640 |   |   |   | 3,578 |   |
| Net interest income                                                         |   |                                 | 4,803     |   |   |   | 4,333 |   |   |   | 3,215 |   |
| Provision for loan losses                                                   |   |                                 | 440       |   |   |   | 1,140 |   |   |   | 1,127 |   |
| Net interest income after provision for loan losses                         |   |                                 | 4,363     |   |   |   | 3,193 |   |   |   | 2,088 |   |
| Noninterest income                                                          |   |                                 | 134       |   |   |   | 174 |   |   |   | 188 |   |
| Noninterest expenses                                                        |   |                                 | 3,740     |   |   |   | 3,666 |   |   |   | 4,010 |   |
| Income before taxes                                                         |   |                                 | 757       |   |   |   | (299 | ) |   |   | (1,734 | ) |
| Income tax benefit                                                          |   |                                 | 289       |   |   |   | (482 | ) |   |   | (503 | ) |
| Net income                                                                  |   | $                                    | 468       |   |   | $ | 183 |   |   | $ | (1,231 | ) |
|                                                                        |   |                                 |      |   |   |   |   |   |   |   |   |   |
| Per Share Data:                                                             |   |                                 |      |   |   |   |   |   |   |   |   |   |
| Earnings per share, basic                                                   |   | $                                    | 0.30      |   |   | $ | 0.12 |   |   | $ | (0.78 | ) |
| Earnings per share, diluted                                                 |   |                                 | 0.30      |   |   |   | 0.12 |   |   |   | (0.78 | ) |
| Weighted average shares – basic                                       |   |                                 | 1,583,460 |   |   |   | 1,580,256 |   |   |   | 1,577,052 |   |
| Weighted average shares – diluted                                     |   |                                 | 1,583,460 |   |   |   | 1,580,256 |   |   |   | 1,577,052 |   |

----

|                                                                        |   | Years Ended March 31, |   |
|-----------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                        |   | 2011                                 |   |   | 2010 |   |   | 2009 |   |
|                                                                        |   |                                 |   |   |   |   |   |   |   |
| Performance Ratios:                                                         |   |                                 |   |   |   |   |   |   |   |
| Return on average assets                                                    |   |                                 | 0.34   | % |   |   | 0.13 | % |   |   | (0.95 | )% |
| Return on average equity                                                    |   |                                 | 3.89   |   |   |   | 1.59 |   |   |   | (9.97 | ) |
| Interest rate spread (1)                                                    |   |                                 | 3.75   |   |   |   | 3.33 |   |   |   | 2.50 |   |
| Net interest margin (2)                                                     |   |                                 | 3.82   |   |   |   | 3.43 |   |   |   | 2.68 |   |
| Noninterest expense to average assets                                       |   |                                 | 2.73   |   |   |   | 2.67 |   |   |   | 3.08 |   |
| Efficiency ratio (3)                                                        |   |                                 | 75.75  |   |   |   | 81.34 |   |   |   | 117.84 |   |
| Average interest-earning assets to average interest-bearing liabilities     |   |                                 | 104.80 |   |   |   | 104.88 |   |   |   | 106.88 |   |
| Average equity to average assets                                            |   |                                 | 8.76   |   |   |   | 8.39 |   |   |   | 9.48 |   |
|                                                                        |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Capital Ratios (4):                                                         |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Tangible capital                                                            |   |                                 | 8.67   |   |   |   | 7.76 |   |   |   | 8.68 |   |
| Core capital                                                                |   |                                 | 8.67   |   |   |   | 7.76 |   |   |   | 8.68 |   |
| Total risk-based capital                                                    |   |                                 | 14.52  |   |   |   | 12.62 |   |   |   | 13.91 |   |
|                                                                        |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Asset Quality Ratios:                                                       |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses as a percent of total loans                       |   |                                 | 1.22   |   |   |   | 0.92 |   |   |   | 1.47 |   |
| Allowance for loan losses as a percent of nonperforming loans               |   |                                 | 23.80  |   |   |   | 16.47 |   |   |   | 17.74 |   |
| Net charge-offs (recoveries) to average outstanding loans during the period |   |                                 | 0.15   |   |   |   | 1.57 |   |   |   | 0.94 |   |
| Non-performing loans as a percent of total loans                            |   |                                 | 5.14   |   |   |   | 5.60 |   |   |   | 8.27 |   |

----

| (1) | Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Represents net interest income as a percent of average interest-earning assets. |
|-----|---------------------------------------------------------------------------------|

| (3) | Represents noninterest expense divided by the sum of net interest income and noninterest income. |
|-----|--------------------------------------------------------------------------------------------------|

| (4) | Capital ratios are for Delanco Federal Savings Bank. |
|-----|------------------------------------------------------|

| ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION |
|---------|--------------------------------------------------------------------------------------------|

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| Table 1: Loan Portfolio Analysis |   |
|------------------------------------------------------|--------|
|                                                 |   |
|                                                 |   | 2011 |   |   | 2010 |   |   | 2009 |   |
| March 31, (Dollars in thousands) |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                          |   | $ | 80,222 |   |   |   | 76.2 | % |   | $ | 79,637 |   |   |   | 73.5 | % |   | $ | 70,806 |   |   |   | 67.2 | % |
| Commercial and multi-family                          |   |   | 21,866 |   |   |   | 20.8 |   |   |   | 23,998 |   |   |   | 22.2 |   |   |   | 26,054 |   |   |   | 24.7 |   |
| Construction                                         |   |   | 374 |   |   |   | 0.4 |   |   |   | 395 |   |   |   | 0.4 |   |   |   | 1,796 |   |   |   | 1.7 |   |
| Total real estate loans                              |   |   | 102,462 |   |   |   | 97.4 |   |   |   | 104,030 |   |   |   | 96.1 |   |   |   | 98,656 |   |   |   | 93.6 |   |
| Commercial loans                                     |   |   | 1,736 |   |   |   | 1.6 |   |   |   | 2,821 |   |   |   | 2.6 |   |   |   | 4,618 |   |   |   | 4.4 |   |
| Consumer loans                                       |   |   | 1,026 |   |   |   | 1.0 |   |   |   | 1,419 |   |   |   | 1.3 |   |   |   | 2,134 |   |   |   | 2.0 |   |
| Total loans                                          |   |   | 105,224 |   |   |   | 100.0 | % |   |   | 108,270 |   |   |   | 100.0 | % |   |   | 105,408 |   |   |   | 100.0 | % |
| Loans in process                                     |   |   | – |   |   |   |   |   |   |   | – |   |   |   |   |   |   |   | (139 | ) |   |   |   |   |
| Net deferred loan fees                               |   |   | (71 | ) |   |   |   |   |   |   | (67 | ) |   |   |   |   |   |   | (98 | ) |   |   |   |   |
| Allowance for losses                                 |   |   | (1,286 | ) |   |   |   |   |   |   | (999 | ) |   |   |   |   |   |   | (1,547 | ) |   |   |   |   |
| Loans, net                                           |   | $ | 103,867 |   |   |   |   |   |   | $ | 107,204 |   |   |   |   |   |   | $ | 103,624 |   |   |   |   |   |

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| Table 2: Contractual Maturities and Interest Rate Sensitivity |   |
|--------------------------------------------------------------------------------------------------|--------|
| March 31, 2011 (Dollars in thousands)                                   |   | Real EstateLoans |   |   | CommercialLoans |   |   | ConsumerLoans |   |   | TotalLoans |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Amounts due in:                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| One year or less                                                                                 |   | $ | 12,831 |   |   | $ | 531 |   |   | $ | 82 |   |   | $ | 13,444 |   |
| More than one to five years                                                                      |   |   | 18,192 |   |   |   | 244 |   |   |   | 222 |   |   |   | 18,658 |   |
| More than five years                                                                             |   |   | 71,439 |   |   |   | 962 |   |   |   | 722 |   |   |   | 73,123 |   |
| Total                                                                                            |   |   | 102,462 |   |   |   | 1,737 |   |   |   | 1,026 |   |   |   | 105,225 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate terms on amounts due after one year:                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate loans                                                                                 |   |   | 80,461 |   |   |   | 244 |   |   |   | 589 |   |   |   | 81,294 |   |
| Adjustable-rate loans                                                                            |   |   | 9,170 |   |   |   | 962 |   |   |   | 355 |   |   |   | 10,487 |   |
| Total                                                                                            |   | $ | 89,631 |   |   | $ | 1,206 |   |   | $ | 944 |   |   | $ | 91,781 |   |

| Table 3: Investment Securities              |   |
|------------------------------------------------------------|--------|
|                                                       |   | 2011 |   |   | 2010 |   |   | 2008 |   |
| March 31,  (Dollars in thousands) |   | AmortizedCost |   |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities available for sale:                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds                                               |   | $ | 249 |   |   | $ | 248 |   |   | $ | 256 |   |   | $ | 258 |   |   | $ | 245 |   |   | $ | 223 |   |
| Total available for sale                                   |   |   | 249 |   |   |   | 248 |   |   |   | 256 |   |   |   | 258 |   |   |   | 245 |   |   |   | 223 |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities held to maturity:                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government sponsored enterprise securities                 |   |   | 8,890 |   |   |   | 8,650 |   |   |   | 6,997 |   |   |   | 7,013 |   |   |   | 2,500 |   |   |   | 2,508 |   |
| Mortgage-backed securities                                 |   |   | 6,806 |   |   |   | 7,031 |   |   |   | 9,363 |   |   |   | 9,793 |   |   |   | 11,782 |   |   |   | 12,223 |   |
| Total held to maturity                                     |   |   | 15,696 |   |   |   | 15,681 |   |   |   | 16,360 |   |   |   | 16,806 |   |   |   | 14,282 |   |   |   | 14,731 |   |
| Total                                                      |   | $ | 15,945 |   |   | $ | 15,929 |   |   | $ | 16,616 |   |   | $ | 17,064 |   |   | $ | 14,527 |   |   | $ | 14,954 |   |

| Table 4: Investment Maturities Schedule |   |
|-------------------------------------------------------------|--------|
|                                                   |   | One Year or Less |   |   | More than One Year toFive Years |   |   | More than Five Yearsto Ten Years |   |   | More than Ten Years |   |   | Total |   |
| March 31, 2011(Dollars in thousands)    |   | Carrying Value |   |   | WeightedAverageYield |   |   | Carrying Value |   |   | WeightedAverageYield |   |   | Carrying Value |   |   | WeightedAverageYield |   |   | Carrying Value |   |   | WeightedAverageYield |   |   | Carrying Value |   |   | WeightedAverageYield |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities available-for-sale:                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual funds                                                |   | $ | – |   |   |   | – | % |   | $ | – |   |   |   | – | % |   | $ | – |   |   |   | – | % |   | $ | – |   |   |   | – | % |   | $ | 248 |   |   |   | – | % |
| Total available for sale                                    |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   | $ | 248 |   |   |   | – |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities held to maturity:                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government sponsored enterprise securities                  |   |   | 144 |   |   |   | 1.60 |   |   |   | 1,000 |   |   |   | 1.88 |   |   |   | 6,747 |   |   |   | 3.20 |   |   |   | 999 |   |   |   | 4.05 |   |   |   | 8,890 |   |   |   | 3.12 |   |
| Mortgage-backed securities                                  |   |   | 1,876 |   |   |   | 6.02 |   |   |   | 880 |   |   |   | 4.38 |   |   |   | 8 |   |   |   | 8.68 |   |   |   | 4,042 |   |   |   | 4.12 |   |   |   | 6,806 |   |   |   | 4.68 |   |
| Total held to maturity                                      |   |   | 2,020 |   |   |   | 5.70 |   |   |   | 1,880 |   |   |   | 3.05 |   |   |   | 6,755 |   |   |   | 3.21 |   |   |   | 5,041 |   |   |   | 4.10 |   |   |   | 15,696 |   |   |   | 3.80 |   |
| Total                                                       |   | $ | 2,020 |   |   |   | 5.70 | % |   | $ | 1,880 |   |   |   | 3.05 | % |   | $ | 6,755 |   |   |   | 3.21 | % |   | $ | 5,041 |   |   |   | 4.10 | % |   | $ | 15,944 |   |   |   | 3.80 | % |

----

| Table 5: Deposits                          |   |
|------------------------------------------------------|--------|
|                                                 |   |
|                                                 |   | 2011 |   |   | 2010 |   |   | 2009 |   |
| March 31, (Dollars in thousands) |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing demand deposits                  |   | $ | 4,161 |   |   |   | 3.4 | % |   | $ | 3,941 |   |   |   | 3.1 | % |   | $ | 2,519 |   |   |   | 2.2 | % |
| Interest-bearing demand deposits                     |   |   | 13,136 |   |   |   | 10.9 |   |   |   | 9,922 |   |   |   | 7.8 |   |   |   | 10,036 |   |   |   | 8.8 |   |
| Savings and money market accounts                    |   |   | 39,550 |   |   |   | 32.7 |   |   |   | 42,510 |   |   |   | 33.4 |   |   |   | 39,241 |   |   |   | 34.4 |   |
| Certificates of deposit                              |   |   | 63,995 |   |   |   | 53.0 |   |   |   | 70,791 |   |   |   | 55.7 |   |   |   | 62,187 |   |   |   | 54.6 |   |
| Total                                                |   | $ | 120,842 |   |   |   | 100.0 | % |   | $ | 127,164 |   |   |   | 100.0 | % |   | $ | 113,983 |   |   |   | 100.0 | % |

| Table 6:  Time Deposit Maturities of $100,000 or more |   |                        |   |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                               |   |                        |   |
| March 31, 2011 (Dollars in thousands)                                     |   | Certificatesof Deposit |   |
|                                                                                               |   |                        |   |
| Maturity Period                                                                                    |   |                        |   |
| Three months or less                                                                               |   | S                           | 4,389  |   |
| Over three through six months                                                                      |   |                        | 3,099  |   |
| Over six through twelve months                                                                     |   |                        | 3,787  |   |
| Over twelve months                                                                                 |   |                        | 6,727  |   |
| Total                                                                                              |   | $                           | 18,002 |   |

| Table 7: Borrowings                                  |   |
|----------------------------------------------------------------|--------|
|                                                           |   |
| March 31, (Dollars in thousands)           |   | 2011 |   |   | 2010 |   |   | 2009 |   |
|                                                           |   |   |   |   |   |   |   |   |   |
| Maximum amount outstanding at any month end during the period: |   |   |   |   |   |   |   |   |   |
| Advances                                                       |   | $ | 2,100 |   |   | $ | 3,000 |   |   | $ | 3,750 |   |
| Average amount outstanding during the period (1):              |   |   |   |   |   |   |   |   |   |   |   |   |
| Advances                                                       |   |   | 175 |   |   |   | 917 |   |   |   | 833 |   |
| Weighted average interest rate during the period (1):          |   |   |   |   |   |   |   |   |   |   |   |   |
| Advances                                                       |   |   | 0.89 | % |   |   | 1.89 | % |   |   | 1.48 | % |
| Balance outstanding at end of period:                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Advances                                                       |   |   | 2,100 |   |   |   | – |   |   |   | 3,750 |   |
| Weighted average interest rate at end of period:               |   |   |   |   |   |   |   |   |   |   |   |   |
| Advances                                                       |   |   | 0.89 | % |   |   | – |   |   |   | 1.26 | % |

| (1) | Averages are based on month-end balances. |
|-----|-------------------------------------------|

----

| Table 8:  Summary Income Statements              |   |   |   |   |   |   |   |   |                   |   |   |          |
|---------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|--------|---------------|
|                                                                      |   |   |   |   |   |   |   |   |                   |   |   |          |
| Year Ended March 31, (Dollars in thousands) |   | 2011   |   |   | 2010   |   |   |   | 2011 v. 2010 |   |   | % Change |   |
|                                                                      |   |   |   |   |   |   |   |   |                   |   |   |          |   |
| Net interest income                                                       |   | $      | 4,803  |   |   | $      | 4,333  |   |                   | $      | 470    |          |   |   | 10.8 | % |
| Provision for loan losses                                                 |   |   | 440    |   |   |   | 1,140  |   |                   |   | (700   | )             |   |   | 61.4 |   |
| Noninterest income                                                        |   |   | 134    |   |   |   | 174    |   |                   |   | (40    | )             |   |   | 23.0 |   |
| Noninterest expenses                                                      |   |   | 3,740  |   |   |   | 3,666  |   |                   |   | 74     |          |   |   | 2.0 |   |
| Net income                                                                |   |   | 468    |   |   |   | 183    |   |                   |   | 285    |          |   |   | 155.7 |   |
|                                                                      |   |   |   |   |   |   |   |   |                   |   |   |          |   |   |   |   |
| Return on average equity                                                  |   |   | 3.89   | %      |   |   | 1.59   | %      |                   |   |   |          |   |   |   |   |
| Return on average assets                                                  |   |   | 0.34   |   |   |   | 0.13   |   |                   |   |   |          |   |   |   |   |

| Table 9:  Analysis of Net Interest Income |   |   |    |   |   |   |    |                   |   |   |          |   |
|------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|------------------------|--------|--------|---------------|--------|
|                                                                         |   |   |    |   |   |   |    |                   |   |   |          |   |
| Year Ended March 31, (Dollars in thousands)    |   | 2011   |    |   | 2010   |   |    | 2011 v. 2010 |   |   | % Change |   |
|                                                                         |   |   |    |   |   |   |    |                   |   |   |          |   |   |
| Components of net interest income                                            |   |   |    |   |   |   |    |                   |   |   |          |   |   |
| Loans                                                                        |   | $      | 6,061   |   |   | $      | 6,279   |                   |   | $      | (218          | )      |   |   | (3.5 | )% |
| Investment securities                                                        |   |   | 632     |   |   |   | 694     |                   |   |   | (62           | )      |   |   | (8.9 | ) |
| Total interest income                                                        |   |   | 6,693   |   |   |   | 6,973   |                   |   |   | (280          | )      |   |   | (4.0 | ) |
| Deposits                                                                     |   |   | 1,890   |   |   |   | 2,620   |                   |   |   | (730          | )      |   |   | (27.9 | ) |
| Borrowings                                                                   |   |   | – |   |   |   | 20      |                   |   |   | (20           | )      |   |   | (100.0 | ) |
| Total interest expense                                                       |   |   | 1,890   |   |   |   | 2,640   |                   |   |   | (750          | )      |   |   | (28.4 | ) |
| Net interest income                                                          |   |   | 4,803   |   |   |   | 4,333   |                   |   |   | 470           |   |   |   | 10.8 |   |
| Average yields and rates paid                                                |   |   |    |   |   |   |    |                   |   |   |          |   |   |   |   |   |
| Interest-earning assets                                                      |   |   | 5.32    | %      |   |   | 5.52    | %                      |   |   | (20           | )bp    |   |   |   |   |
| Interest-bearing liabilities                                                 |   |   | 1.57    |   |   |   | 2.19    |                   |   |   | (62           | )      |   |   |   |   |
| Interest rate spread                                                         |   |   | 3.75    |   |   |   | 3.33    |                   |   |   | 42            |   |   |   |   |   |
| Net interest margin                                                          |   |   | 3.82    |   |   |   | 3.43    |                   |   |   | 39            |   |   |   |   |   |
| Average balances                                                             |   |   |    |   |   |   |    |                   |   |   |          |   |   |   |   |   |
| Loans                                                                        |   | $      | 105,400 |   |   | $      | 107,341 |                   |   | $      | (1,941        | )      |   |   | (1.8 | ) |
| Investment securities                                                        |   |   | 15,821  |   |   |   | 14,484  |                   |   |   | 1,337         |   |   |   | 9.2 |   |
| Earning assets                                                               |   |   | 125,823 |   |   |   | 126,350 |                   |   |   | (527          | )      |   |   | (0.4 | ) |
| Interest-bearing deposits                                                    |   |   | 120,054 |   |   |   | 119,369 |                   |   |   | 685           |   |   |   | 0.6 |   |

----

| Table 10:  Noninterest Income Summary            |   |   |    |   |   |   |    |          |   |   |          |   |
|---------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|---------------|--------|--------|---------------|--------|
|                                                                      |   |   |    |   |   |   |    |          |   |   |          |   |
| Year Ended March 31, (Dollars in thousands) |   | 2011   |    |   | 2010   |   |    | $ Change |   |   | % Change |   |
|                                                                      |   |   |    |   |   |   |    |          |   |   |          |   |
| Service charges                                                           |   | $      | 135     |   |   |   | 127     |          |   | $      | 8             |   |   |   | 6.3 | % |
| Gain on sale of investment                                                |   |   | – |   |   |   | 15      |          |   |   | (15           | )      |   |   | (100.0 | ) |
| Loss on sale of real estate owned                                         |   |   | (27     | )      |   |   | – |          |   |   | (27           | )      |   |   | – |   |
| Rental income                                                             |   |   | 6       |   |   |   | 1       |          |   |   | 5             |   |   |   | 500.0 |   |
| Income from bank owned life insurance                                     |   |   | 6       |   |   |   | 6       |          |   |   | –       |   |   |   | – |   |
| Other                                                                     |   |   | 14      |   |   |   | 25      |          |   |   | (11           | )      |   |   | (44.0 | ) |
| Total                                                                     |   |   | 134     |   |   | $      | 174     |          |   |   | (40           | )      |   |   | (23.0 | ) |

| Table 11:  Noninterest Expense Summary           |   |   |   |   |   |   |   |          |   |   |          |   |
|---------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------------|--------|--------|---------------|--------|
|                                                                      |   |   |   |   |   |   |   |          |   |   |          |   |
| Year Ended March 31, (Dollars in thousands) |   | 2011   |   |   | 2010   |   |   | $ Change |   |   | % Change |   |
|                                                                      |   |   |   |   |   |   |   |          |   |   |          |   |
| Salaries and employee benefits                                            |   | $      | 1,579  |   |   | $      | 1,762  |          |   | $      | (183          | )      |   |   | (10.4 | )% |
| Advertising                                                               |   |   | 25     |   |   |   | 34     |          |   |   | (9            | )      |   |   | (26.5 | ) |
| Office supplies, telephone and postage                                    |   |   | 91     |   |   |   | 117    |          |   |   | (26           | )      |   |   | (22.2 | ) |
| Occupancy expense                                                         |   |   | 719    |   |   |   | 697    |          |   |   | 22            |   |   |   | 3.2 |   |
| Federal insurance premiums                                                |   |   | 381    |   |   |   | 289    |          |   |   | 92            |   |   |   | 31.8 |   |
| Real estate owned loss reserve                                            |   |   | 88     |   |   |   | 75     |          |   |   | 13            |   |   |   | 17.3 |   |
| Data processing expenses                                                  |   |   | 196    |   |   |   | 131    |          |   |   | 65            |   |   |   | 49.6 |   |
| ATM expenses                                                              |   |   | 22     |   |   |   | 23     |          |   |   | (1            | )      |   |   | (4.3 | ) |
| Bank charges and fees                                                     |   |   | 90     |   |   |   | 103    |          |   |   | (13           | )      |   |   | (12.6 | ) |
| Insurance and surety bond premiums                                        |   |   | 71     |   |   |   | 69     |          |   |   | 2             |   |   |   | 2.9 |   |
| Dues and subscriptions                                                    |   |   | 27     |   |   |   | 35     |          |   |   | (8            | )      |   |   | (22.9 | ) |
| Professional fees                                                         |   |   | 245    |   |   |   | 193    |          |   |   | 52            |   |   |   | 26.9 |   |
| Real estate owned expense                                                 |   |   | 66     |   |   |   | 13     |          |   |   | 53            |   |   |   | 407.7 |   |
| Other                                                                     |   |   | 140    |   |   |   | 125    |          |   |   | 15            |   |   |   | 12.0 |   |
| Total                                                                     |   | $      | 3,740  |   |   | $      | 3,666  |          |   |   | 74            |   |   |   | 2.0 | % |

----

| Table 12: Average Balance Tables                      |   |
|---------------------------------------------------------------------------|--------|
|                                                                      |   | 2011 |   |   | 2010 |   |
| Year Ended March 31, (Dollars in thousands) |   | AverageBalance |   |   | InterestandDividends |   |   | Yield/Cost |   |   | Average Balance |   |   | InterestandDividends |   |   | Yield/Cost |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                     |   | $ | 105,400 |   |   | $ | 6,061 |   |   |   | 5.75 | % |   | $ | 107,341 |   |   | $ | 6,279 |   |   |   | 5.85 | % |
| Investment securities                                                     |   |   | 15,821 |   |   |   | 624 |   |   |   | 3.94 |   |   |   | 14,484 |   |   |   | 670 |   |   |   | 4.63 |   |
| Other interest-earning assets                                             |   |   | 4,602 |   |   |   | 8 |   |   |   | 0.17 |   |   |   | 4,525 |   |   |   | 24 |   |   |   | 0.53 |   |
| Total interest-earning assets                                             |   |   | 125,823 |   |   |   | 6,693 |   |   |   | 5.32 |   |   |   | 126,350 |   |   |   | 6,973 |   |   |   | 5.52 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning assets                                                |   |   | 11,366 |   |   |   |   |   |   |   |   |   |   |   | 11,155 |   |   |   |   |   |   |   |   |   |
| Total assets                                                              |   | $ | 137,189 |   |   |   |   |   |   |   |   |   |   | $ | 137,505 |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities and equity:                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing demand deposits                                          |   | $ | 13,049 |   |   |   | 84 |   |   |   | 0.64 |   |   | $ | 11,945 |   |   |   | 105 |   |   |   | 0.88 |   |
| Savings and money market accounts                                         |   |   | 40,538 |   |   |   | 342 |   |   |   | 0.84 |   |   |   | 39,331 |   |   |   | 497 |   |   |   | 1.26 |   |
| Certificates of deposit                                                   |   |   | 66,467 |   |   |   | 1,464 |   |   |   | 2.20 |   |   |   | 68,093 |   |   |   | 2,018 |   |   |   | 2.96 |   |
| Total interest-bearing deposits                                           |   |   | 120,054 |   |   |   | 1,890 |   |   |   | 1.57 |   |   |   | 119,369 |   |   |   | 2,620 |   |   |   | 2.19 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FHLB advances                                                             |   |   | 6 |   |   |   | – |   |   |   | – |   |   |   | 1,099 |   |   |   | 20 |   |   |   | 1.82 |   |
| Total interest-bearing liabilities                                        |   |   | 120,060 |   |   |   | 1,890 |   |   |   | 1.57 |   |   |   | 120,468 |   |   |   | 2,640 |   |   |   | 2.19 |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing demand deposits                                       |   |   | 4,143 |   |   |   |   |   |   |   |   |   |   |   | 4,121 |   |   |   |   |   |   |   |   |   |
| Other noninterest-bearing liabilities                                     |   |   | 968 |   |   |   |   |   |   |   |   |   |   |   | 1,382 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                         |   |   | 125,171 |   |   |   |   |   |   |   |   |   |   |   | 125,971 |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retained earnings                                                         |   |   | 12,018 |   |   |   |   |   |   |   |   |   |   |   | 11,534 |   |   |   |   |   |   |   |   |   |
| Total liabilities and retained earnings                                   |   | $ | 137,189 |   |   |   |   |   |   |   |   |   |   | $ | 137,505 |   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                       |   |   |   |   |   | $ | 4,803 |   |   |   |   |   |   |   |   |   |   | $ | 4,333 |   |   |   |   |   |
| Interest rate spread                                                      |   |   |   |   |   |   |   |   |   |   | 3.75 |   |   |   |   |   |   |   |   |   |   |   | 3.33 |   |
| Net interest margin                                                       |   |   |   |   |   |   |   |   |   |   | 3.82 |   |   |   |   |   |   |   |   |   |   |   | 3.43 |   |
| Average interest-earning assets to average interest-bearing liabilities   |   |   | 104.80 | % |   |   |   |   |   |   |   |   |   |   | 104.88 | % |   |   |   |   |   |   |   |   |

----

| Table 13:  Net Interest Income – Changes Due to Rate and Volume |   |   |    |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
|                                                                                                                              |   |   |    |
| 2011 Compared to 2010 (Dollars in thousands)                                                        |   | Volume |    |   | Rate |   |   | Net |   |
|                                                                                                                              |   |   |    |   |   |   |   |   |   |
| Interest income:                                                                                                                  |   |   |    |   |   |   |   |   |   |
| Loans receivable                                                                                                                  |   | $      | (113    | ) |   | $ | (105 | ) |   | $ | (218 | ) |
| Investment securities                                                                                                             |   |   | 62      |   |   |   | (108 | ) |   |   | (46 | ) |
| Other interest-earning assets                                                                                                     |   |   | – |   |   |   | (16 | ) |   |   | (16 | ) |
| Total                                                                                                                             |   |   | (51     | ) |   |   | (229 | ) |   |   | (280 | ) |
| Interest expense:                                                                                                                 |   |   |    |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                                                          |   |   | 14      |   |   |   | (744 | ) |   |   | (730 | ) |
| FHLB advances                                                                                                                     |   |   | (20     | ) |   |   | – |   |   |   | (20 | ) |
| Total                                                                                                                             |   |   | (6      | ) |   |   | (744 | ) |   |   | (750 | ) |
| Increase (decrease) in net interest income                                                                                        |   | $      | (45     | ) |   | $ | 515 |   |   | $ | 470 |   |

----

| Table 14: Nonperforming Assets                               |   |
|-----------------------------------------------------------------------------|--------|
|                                                                        |   |
| March 31, (Dollars in thousands)                        |   | 2011 |   |   | 2010 |   |   | 2009 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |
| Nonaccrual loans:                                                           |   |   |   |   |   |   |   |   |   |
| Residential real estate                                                     |   | $ | 2,973 |   |   | $ | 2,053 |   |   | $ | 361 |   |
| Commercial and multi-family real estate                                     |   |   | 2,374 |   |   |   | 3,789 |   |   |   | 6,031 |   |
| Construction                                                                |   |   | – |   |   |   | – |   |   |   | 760 |   |
| Commercial                                                                  |   |   | 46 |   |   |   | 225 |   |   |   | 596 |   |
| Consumer                                                                    |   |   | 11 |   |   |   | – |   |   |   | 550 |   |
| Total                                                                       |   |   | 5,404 |   |   |   | 6,067 |   |   |   | 8,298 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing loans past due 90 days or more:                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate                                                     |   |   | – |   |   |   | – |   |   |   | 128 |   |
| Commercial and multi-family real estate                                     |   |   | – |   |   |   | – |   |   |   | – |   |
| Construction                                                                |   |   | – |   |   |   | – |   |   |   | – |   |
| Commercial                                                                  |   |   | – |   |   |   | – |   |   |   | – |   |
| Consumer                                                                    |   |   | – |   |   |   | – |   |   |   | – |   |
| Total                                                                       |   |   | – |   |   |   | – |   |   |   | 128 |   |
| Other nonperforming assets                                                  |   |   | 771 |   |   |   | 413 |   |   |   | 295 |   |
| Total nonperforming assets                                                  |   |   | 6,175 |   |   |   | 6,480 |   |   |   | 8,721 |   |
| Troubled debt restructurings                                                |   |   | 2,438 |   |   |   | 3,792 |   |   |   | 303 |   |
| Troubled debt restructurings and total nonperforming assets                 |   | $ | 8,613 |   |   | $ | 10,272 |   |   | $ | 9,024 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Total nonperforming loans to total loans                                    |   |   | 5.14 | % |   |   | 5.60 | % |   |   | 8.27 | % |
| Total nonperforming loans to total assets                                   |   |   | 3.97 |   |   |   | 4.34 |   |   |   | 6.46 |   |
| Total nonperforming assets and troubled debt restructurings to total assets |   |   | 6.33 |   |   |   | 7.34 |   |   |   | 6.92 |   |

| Table 15: Classified Assets           |   |
|------------------------------------------------------|--------|
|                                                 |   |
| March 31, (Dollars in thousands) |   | 2011 |   |   | 2010 |   |   | 2009 |   |
|                                                 |   |   |   |   |   |   |   |   |   |
| Special mention assets                               |   | $ | 1,026 |   |   | $ | 2,545 |   |   | $ | 5,105 |   |
| Substandard assets                                   |   |   | 9,639 |   |   |   | 9,898 |   |   |   | 6,515 |   |
| Doubtful assets                                      |   |   | – |   |   |   | 225 |   |   |   | 13 |   |
| Loss assets                                          |   |   | – |   |   |   | – |   |   |   | – |   |
| Total classified assets                              |   | $ | 10,665 |   |   | $ | 12,668 |   |   | $ | 11,633 |   |

----

----

| Table 16: Allocation of Allowance of Loan Losses |   |
|-------------------------------------------------------------------------------------|--------|
|                                                                                |   |
|                                                                                |   | 2011 |   |   | 2010 |   |   | 2009 |   |
| March 31, (Dollars in thousands)                                |   | Amount |   |   | % of Loans inCategoryto TotalLoans |   |   | Amount |   |   | % of Loans inCategoryto TotalLoans |   |   | Amount |   |   | % of Loans inCategoryto TotalLoans |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate                                                             |   | $ | 507 |   |   |   | 76.2 | % |   | $ | 125 |   |   |   | 73.5 | % |   | $ | — |   |   |   | 67.2 | % |
| Commercial and multi-family real estate                                             |   |   | 596 |   |   |   | 20.8 |   |   |   | 683 |   |   |   | 22.2 |   |   |   | 571 |   |   |   | 24.7 |   |
| Construction                                                                        |   |   | – |   |   |   | 0.4 |   |   |   | – |   |   |   | 0.4 |   |   |   | — |   |   |   | 1.7 |   |
| Commercial                                                                          |   |   | 70 |   |   |   | 1.6 |   |   |   | 101 |   |   |   | 2.6 |   |   |   | 758 |   |   |   | 4.4 |   |
| Consumer                                                                            |   |   | 113 |   |   |   | 1.0 |   |   |   | 91 |   |   |   | 1.3 |   |   |   | 218 |   |   |   | 2.0 |   |
| Unallocated                                                                         |   |   | – |   |   |   | - |   |   |   | – |   |   |   | – |   |   |   | — |   |   |   | — |   |
| Total allowance for loan losses                                                     |   | $ | 1,286 |   |   |   | 100.0 | % |   | $ | 999 |   |   |   | 100.0 | % |   | $ | 1,547 |   |   |   | 100.0 | % |

| Table 17: Analysis of Loan Loss Experience    |   |
|-----------------------------------------------------------------------------|--------|
|                                                                        |   |
| Year Ended March 31, (Dollars in thousands)   |   | 2011 |   |   | 2010 |   |   | 2009 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance at beginning of period                                            |   | $ | 999 |   |   | $ | 1,547 |   |   | $ | 1,353 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                   |   |   | 440 |   |   |   | 1,140 |   |   |   | 1,127 |   |
| Charge offs:                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential real estate loans                                               |   |   | 31 |   |   |   | – |   |   |   | 2 |   |
| Commercial and multi-family real estate loans                               |   |   | 92 |   |   |   | 815 |   |   |   | 444 |   |
| Construction loans                                                          |   |   | – |   |   |   | – |   |   |   | — |   |
| Commercial loans                                                            |   |   | 51 |   |   |   | 503 |   |   |   | 614 |   |
| Consumer loans                                                              |   |   | 32 |   |   |   | 419 |   |   |   | 194 |   |
| Total charge-offs                                                           |   |   | 206 |   |   |   | 1,737 |   |   |   | 1,254 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries                                                                  |   |   | 53 |   |   |   | 49 |   |   |   | 321 |   |
| Net charge-offs                                                             |   |   | 153 |   |   |   | 1,688 |   |   |   | 933 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance at end of period                                                  |   | $ | 1,286 |   |   | $ | 999 |   |   | $ | 1,547 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance to nonperforming loans                                            |   |   | 23.80 | % |   |   | 16.47 | % |   |   | 17.74 | % |
| Allowance to total loans outstanding at the end of the period               |   |   | 1.22 |   |   |   | 0.92 |   |   |   | 1.47 |   |
| Net charge-offs (recoveries) to average loans outstanding during the period |   |   | 0.15 |   |   |   | 1.57 |   |   |   | 0.94 |   |

----

| Table 18: NPV Analysis    |   |
|------------------------------------------|--------|
|                                     |   |
| Basis Point (“bp”) |   | Net Portfolio Value(Dollars in thousands) |   |   | Net Portfolio Value as % ofPortfolio Value of Assets |   |
| Change in Rates                |   | $ Amount |   |   | $ Change |   |   | % Change |   |   | NPV Ratio |   |   | Change |   |
| 300                                      |   | $ | 7,486 |   |   | $ | (8,450 | ) |   |   | (53 | )% |   |   | 5.71 | % |   |   | (556 | ) bp |
| 200                                      |   |   | 10,568 |   |   |   | (5,368 | ) |   |   | (34 | ) |   |   | 7.84 |   |   |   | (343 | ) |
| 100                                      |   |   | 13,511 |   |   |   | (2,425 | ) |   |   | (15 | ) |   |   | 9.76 |   |   |   | (150 | ) |
| 50                                       |   |   | 14,685 |   |   |   | (1,251 | ) |   |   | (8 | ) |   |   | 10.50 |   |   |   | (77 | ) |
| 0                                        |   |   | 15,936 |   |   |   | — |   |   |   | — |   |   |   | 11.26 |   |   |   | — |   |
| (50)                                     |   |   | 16,701 |   |   |   | 765 |   |   |   | 5 |   |   |   | 11.71 |   |   |   | 45 |   |
| (100)                                    |   |   | 17,591 |   |   |   | 1,655 |   |   |   | 10 |   |   |   | 12.25 |   |   |   | 98 |   |

----

----

| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|----------|------------------------------------------------------------|

| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
|---------|---------------------------------------------|

| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|---------|--------------------------------------------------------------------------------------|

| ITEM 9A. | CONTROLS AND PROCEDURES |
|----------|-------------------------|

|   | (a) | Disclosure Controls and Procedures |
|--------|-----|------------------------------------|

|   | (b) | Internal Control Over Financial Reporting |
|--------|-----|-------------------------------------------|

|   | (c) | Changes in Internal Control Over Financial Reporting |
|--------|-----|------------------------------------------------------|

| ITEM 9B.  | OTHER INFORMATION |
|----------------|-------------------|

----

| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|----------|--------------------------------------------------------|

| Name         |   | Position                                          |
|--------------|--------|---------------------------------------------------|
| James E. Igo |   | Chairman, President and Chief Executive Officer   |
| Eva Modi     |   | Senior Vice President and Chief Financial Officer |

| Name                  |   | Position                                          |
|-----------------------|--------|---------------------------------------------------|
| James E. Igo          |   | Chairman, President and Chief Executive Officer   |
| Eva Modi              |   | Senior Vice President and Chief Financial Officer |
| Douglas R. Allen, Jr. |   | Senior Vice President                             |

----

| ITEM 11.  | EXECUTIVE COMPENSATION |
|----------------|------------------------|

| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
|----------|------------------------------------------------------------------------------------------------|

|   | (a) | Security Ownership of Certain Owners |
|--------|-----|--------------------------------------|

|   | (b) | Security Ownership of Management |
|--------|-----|----------------------------------|

|   | (c) | Changes in Control |
|--------|-----|--------------------|

|   | (d) | Equity Compensation |
|--------|-----|---------------------|

| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
|----------|---------------------------------------------------------------------------|

| ITEM 14.  | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|----------------|----------------------------------------|

----

| ITEM 15.  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
|----------------|--------------------------------------------|

|   | (1) | The financial statements required in response to this item are incorporated by reference from Item 8 of this report. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------|

|   | (2) | All financial statement schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Exhibits |
|--------|-----|----------|

| 3.1 | Charter of Delanco Bancorp, Inc. (Incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form SB-2 (File No. 333-139339)) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Bylaws of Delanco Bancorp, Inc. (Incorporated herein by reference to Exhibit 3.2 to the Form 8-K filed with the Securities and Exchange Commission on August 21, 2010) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.0 | Stock Certificate of Delanco Bancorp, Inc. (Incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form SB-2 (File No. 333-139339) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Order to Cease and Desist dated March 17, 2010, by and between Delanco Federal Savings Bank and the Office of Thrift Supervision (Incorporated herein by reference to Exhibit 10.1 to the Form 10-K filed with the Securities and Exchange Commission on June 28, 2010)) |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Delanco Federal Savings Bank Employee Severance Compensation Plan (Incorporated by reference from Exhibit 10.5 of the Form 10-KSB filed with the Securities and Exchange Commission on July 13, 2007) |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Delanco Federal Savings Bank Directors Retirement Plan (Incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form SB-2 (File No. 333-139339)) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Delanco Bancorp, Inc. 2008 Equity Incentive Plan (Incorporated herein by reference the Company’s definitive proxy materials for the Annual Meeting of Stockholders filed with the Securities and Exchange Commission on July 17, 2008) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 23.1 | Consent of Connolly, Grady & Cha, P.C. |
|------|--------------------------------------------|

| 31.1  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
|------------|-------------------------------------------------------------------|

| 31.2  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
|------------|-------------------------------------------------------------------|

| 32.0  | Section 1350 Certification |
|------------|----------------------------|

----

|                           |   | DELANCO BANCORP, INC. |
|--------------------------------|--------|-----------------------|
|                           |   |                  |   |
| Date:  June 29, 2011 |   | By:                   | /s/ James E. Igo |
|                           |   |                  | James E. Igo |
|                           |   |                  | Chairman, President and Chief Executive Officer |

| Name                       |         | Title                                        |         | Date          |
|----------------------------|--------------|----------------------------------------------|--------------|---------------|
|                       |         |                                         |         |          |
| /s/ James E. Igo           |         | Chairman, President and Chief Executive      |         | June 29, 2011 |
| James E. Igo               |         | Officer                                      |         |          |
|                       |         |                                         |         |          |
| /s/ Eva Modi               |         | Chief Financial Officer (principal financial |         | June 29, 2011 |
| Eva Modi                   |         | and accounting officer)                      |         |          |
|                       |         |                                         |         |          |
| /s/ Thomas J. Coleman, III |         | Director                                     |         | June 29, 2011 |
| Thomas J. Coleman, III     |         |                                         |         |          |
|                       |         |                                         |         |          |
| /s/ William C. Jenkins     |         | Director                                     |         | June 29, 2011 |
| William C. Jenkins         |         |                                         |         |          |
|                       |         |                                         |         |          |
| /s/ John A. Latimer        |         | Director                                     |         | June 29, 2011 |
| John A. Latimer            |         |                                         |         |          |
|                       |         |                                         |         |          |
| /s/ Donald R. Neff         |         | Director                                     |         | June 29, 2011 |
| Donald R. Neff             |         |                                         |         |          |
|                       |         |                                         |         |          |
| /s/ James W. Verner        |         | Director                                     |         | June 29, 2011 |
| James W. Verner            |         |                                         |         |          |
|                       |         |                                         |         |          |
| /s/ Renee C. Vidal         |         | Director                                     |         | June 29, 2011 |
| Renee C. Vidal             |    |                                         |    |          |

----

| MANAGEMENT’S REPORT ON              |
|-------------------------------------------|
| INTERNAL CONTROL OVER FINANCIAL REPORTING |
|                                      |

----

|                                                             | Page   |
|------------------------------------------------------------------|--------|
|                                                             |   |
|                                                             |   |
| Report of Independent Registered Public Accounting Firm          | F-1    |
|                                                             |   |
| Financial Statements                                             |   |
|                                                             |   |
| Consolidated Statements of Financial Condition                   |   |
| As of March 31, 2011 and 2010                                    | F-2    |
|                                                             |   |
| Consolidated Statements of Income                                |   |
| For the Years Ended March 31, 2011 and 2010                      | F-3    |
|                                                             |   |
| Consolidated Statements of Changes in Stockholders’ Equity |   |
| For the Years Ended March 31, 2011 and 2010                      | F-4    |
|                                                             |   |
| Consolidated Statements of Cash Flows                            |   |
| For the Years Ended March 31, 2011 and 2010                      | F-5    |
|                                                             |   |
| Notes to Consolidated Financial Statements                       | F-6    |

----

----

| Assets                                                                    |   |
|---------------------------------------------------------------------------|--------|
|                                                                      |   | March 31, |   |
| Cash and cash equivalents                                                 |   | 2011 |   |   | 2010 |   |
| Cash and amount due from depository institutions                          |   | $ | 658,449 |   |   | $ | 674,788 |   |
| Interest-bearing deposits in other banks                                  |   |   | 5,004,180 |   |   |   | 4,208,881 |   |
| Total cash and cash equivalents                                           |   |   | 5,662,629 |   |   |   | 4,883,669 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Investment securities                                                     |   |   |   |   |   |   |   |   |
| Securities held-to-maturity (fair value of $15,680,809 and                |   |   |   |   |   |   |   |   |
| $16,806,099 at March 31, 2011 and 2010, respectively)                     |   |   | 15,696,063 |   |   |   | 16,359,598 |   |
| Securities available-for-sale (amortized cost of $249,295                 |   |   |   |   |   |   |   |   |
| and $255,699 at March 31, 2011 and 2010, respectively)                    |   |   | 248,062 |   |   |   | 258,163 |   |
| Total investment securities                                               |   |   | 15,944,125 |   |   |   | 16,617,761 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Loans, net of allowance for loan losses of $1,286,301 and                 |   |   |   |   |   |   |   |   |
| $998,526 at March 31, 2011 and 2010, respectively                         |   |   | 103,867,330 |   |   |   | 107,204,042 |   |
| Accrued interest receivable                                               |   |   | 458,524 |   |   |   | 492,682 |   |
| Premises and equipment, net                                               |   |   | 7,398,015 |   |   |   | 7,723,970 |   |
| Federal Home Loan Bank stock, at cost                                     |   |   | 274,700 |   |   |   | 206,700 |   |
| Deferred income taxes                                                     |   |   | 747,900 |   |   |   | 1,029,028 |   |
| Bank-owned life insurance                                                 |   |   | 141,703 |   |   |   | 136,004 |   |
| Prepaid and refundable income taxes                                       |   |   |   |   |   |   | 11,822 |   |
| Real estate owned                                                         |   |   | 770,639 |   |   |   | 412,969 |   |
| Other assets                                                              |   |   | 906,834 |   |   |   | 1,203,676 |   |
| Total Assets                                                              |   | $ | 136,172,399 |   |   | $ | 139,922,323 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders’ Equity                                |   |
| Liabilities                                                               |   |   |   |   |   |   |   |   |
| Deposits                                                                  |   |   |   |   |   |   |   |   |
| Non-interest bearing deposits                                             |   | $ | 4,161,255 |   |   | $ | 3,940,884 |   |
| Interest-bearing deposits                                                 |   |   | 116,681,155 |   |   |   | 123,222,698 |   |
| Total deposits                                                            |   |   | 120,842,410 |   |   |   | 127,163,582 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Line of credit from Atlantic Central Bankers Bank                         |   |   | 1,000,000 |   |   |   |   |   |
| Advances from Federal Home Loan Bank                                      |   |   | 1,100,000 |   |   |   |   |   |
| Accrued interest payable                                                  |   |   | 22,658 |   |   |   | 45,580 |   |
| Advance payments by borrowers for taxes and insurance                     |   |   | 394,864 |   |   |   | 424,291 |   |
| Other liabilities                                                         |   |   | 599,146 |   |   |   | 553,994 |   |
| Total liabilities                                                         |   |   | 123,959,078 |   |   |   | 128,187,447 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Commitments and Contingencies (Note 20)                                   |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Stockholders’ Equity                                                |   |   |   |   |   |   |   |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Preferred stock, $.01 par value, 3,000,000 shares authorized; None issued |   |   |   |   |   |   |   |   |
| Common stock, $.01 par value, 7,000,000 shares authorized;                |   |   |   |   |   |   |   |   |
| 1,634,725 shares issued and outstanding as of March 31, 2011 and 2010     |   | $ | 16,347 |   |   | $ | 16,347 |   |
| Additional paid-in capital                                                |   |   | 6,606,577 |   |   |   | 6,625,801 |   |
| Retained earnings, substantially restricted                               |   |   | 6,150,811 |   |   |   | 5,682,964 |   |
| Unearned common stock held by employee stock ownership plan               |   |   | (512,648 | ) |   |   | ( 544,688 | ) |
| Accumulated other comprehensive loss                                      |   |   | (47,766 | ) |   |   | ( 45,548 | ) |
| Total stockholders’ equity                                          |   |   | 12,213,321 |   |   |   | 11,734,876 |   |
|                                                                      |   |   |   |   |   |   |   |   |
| Total Liabilities and Stockholders’ Equity                          |   | $ | 136,172,399 |   |   | $ | 139,922,323 |   |

| See accompanying notes to consolidated financial statements. |
|--------------------------------------------------------------|

----

|                                                 |   | Years Ended |      |
|------------------------------------------------------|--------|-------------|-----------|
|                                                 |   | March 31,   |      |
| Interest Income                                      |   | 2011        |      |   | 2010 |   |
| Loans                                                |   | $           | 6,061,439 |   |   | $ | 6,278,720 |   |
| Investment securities                                |   |        | 631,675   |   |   |   | 694,104 |   |
| Total interest income                                |   |        | 6,693,114 |   |   |   | 6,972,824 |   |
|                                                 |   |        |      |   |   |   |   |   |
| Interest Expense                                     |   |        |      |   |   |   |   |   |
| Interest-bearing checking accounts                   |   |        | 83,730    |   |   |   | 104,995 |   |
| Passbook and money market accounts                   |   |        | 341,974   |   |   |   | 497,228 |   |
| Certificates of deposits                             |   |        | 1,463,898 |   |   |   | 2,017,976 |   |
| Advances from Federal Home Loan Bank                 |   |        | 52        |   |   |   | 19,676 |   |
| Total interest expense                               |   |        | 1,889,654 |   |   |   | 2,639,875 |   |
|                                                 |   |        |      |   |   |   |   |   |
| Net interest income                                  |   |        | 4,803,460 |   |   |   | 4,332,949 |   |
|                                                 |   |        |      |   |   |   |   |   |
| Provision for loan losses                            |   |        | 440,100   |   |   |   | 1,140,000 |   |
| Net interest income after provision for loan losses  |   |        | 4,363,360 |   |   |   | 3,192,949 |   |
|                                                 |   |        |      |   |   |   |   |   |
| Non-Interest Income                                  |   |        |      |   |   |   |   |   |
| Service charges                                      |   |        | 134,655   |   |   |   | 127,052 |   |
| Income from bank-owned life insurance                |   |        | 5,699     |   |   |   | 5,962 |   |
| Rental income                                        |   |        | 6,733     |   |   |   | 783 |   |
| Other                                                |   |        | 13,934    |   |   |   | 25,219 |   |
| Net gain from sales of available-for-sale securities |   |        |      |   |   |   | 15,053 |   |
| Loss on sale of real estate owned                    |   |        | (27,472   | ) |   |   |   |   |
| Total non-interest income                            |   |        | 133,549   |   |   |   | 174,069 |   |
|                                                 |   |        |      |   |   |   |   |   |
| Non-Interest Expense                                 |   |        |      |   |   |   |   |   |
| Salaries and employee benefits                       |   |        | 1,579,165 |   |   |   | 1,761,953 |   |
| Advertising                                          |   |        | 25,068    |   |   |   | 33,701 |   |
| Office supplies, telephone and postage               |   |        | 91,127    |   |   |   | 117,175 |   |
| Occupancy expense                                    |   |        | 718,731   |   |   |   | 697,250 |   |
| Federal insurance premiums                           |   |        | 381,252   |   |   |   | 289,090 |   |
| Real estate owned – impairment losses          |   |        | 87,900    |   |   |   | 75,000 |   |
| Data processing expenses                             |   |        | 195,821   |   |   |   | 130,724 |   |
| ATM expenses                                         |   |        | 21,844    |   |   |   | 23,052 |   |
| Bank charges and fees                                |   |        | 89,651    |   |   |   | 102,872 |   |
| Insurance and surety bond premium                    |   |        | 71,061    |   |   |   | 69,268 |   |
| Dues and subscriptions                               |   |        | 26,912    |   |   |   | 34,913 |   |
| Professional fees                                    |   |        | 245,287   |   |   |   | 193,024 |   |
| Real estate owned expenses                           |   |        | 65,990    |   |   |   | 12,698 |   |
| Other                                                |   |        | 140,170   |   |   |   | 125,593 |   |
| Total non-interest expense                           |   |        | 3,739,979 |   |   |   | 3,666,313 |   |
|                                                 |   |        |      |   |   |   |   |   |
| Income (Loss) Before Income Tax Expense (Benefit)    |   |        | 756,930   |   |   |   | ( 299,295 | ) |
|                                                 |   |        |      |   |   |   |   |   |
| Income tax expense (benefit)                         |   |        | 289,083   |   |   |   | ( 482,446 | ) |
|                                                 |   |        |      |   |   |   |   |   |
| Net Income                                           |   | $           | 467,847   |   |   | $ | 183,151 |   |
|                                                 |   |        |      |   |   |   |   |   |
| Income per share                                     |   |        |      |   |   |   |   |   |
| Basic                                                |   | $           | 0.30      |   |   | $ | 0.12 |   |
| Diluted                                              |   | $           | 0.30      |   |   | $ | 0.12 |   |
| Weighted average shares outstanding                  |   |        |      |   |   |   |   |   |
| Basic                                                |   |        | 1,583,460 |   |   |   | 1,580,256 |   |
| Diluted                                              |   |        | 1,583,460 |   |   |   | 1,580,256 |   |

| See accompanying notes to consolidated financial statements. |
|--------------------------------------------------------------|

----

|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   | Accumulated         |   |           |          |   |   |          |   |
|-------------------------------------|--------|--------------|-----------|--------|---------|--------|--------|------------|--------|--------|------------|--------|--------|---------------|-----------|--------|---------------------|--------|----------------|---------------|--------|--------|---------------|--------|
|                                |   |         |      |   |    |   |   | Additional |   |   |       |   |   | Common        |      |   | Other               |   |           | Total         |   |   |          |   |
|                                |   | Common Stock |      |   | Paid-in |   |   | Retained   |   |   | Stock Held |   |   | Comprehensive |      |   | Stockholders’ |   |           | Comprehensive |   |
|                                |   | Shares       |      |   | Amount  |   |   | Capital    |   |   | Earnings   |   |   | By ESOP       |      |   | Income (Loss)       |   |           | Equity        |   |   | Income (Loss) |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |
| BALANCES, MARCH 31, 2009            |   |         | 1,634,725 |   |    | $      | 16,347 |       |   | $      | 6,652,235  |   |   | $             | 5,499,813 |   |                | $      | (576,729       | )             |   | $      | ( 70,249 | )      |   | $ | 11,521,417 |   |   |   |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |
| Net income                          |   |         |      |   |    |   |   |       |   |   |       |   |   |          | 183,151   |   |                |   |           |          |   |   |          |   |   |   | 183,151 |   |   |   | 183,151 |   |
| Net change in unrealized gain       |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| (loss) on securities available-     |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| for-sale, net of deferred taxes     |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| of $9,915                           |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   | 14,873        |   |   |   | 14,873 |   |   |   | 14,873 |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| Postretirement benefit plan         |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| adjustments – net of deferred |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| taxes of $6,552                     |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   | 9,828         |   |   |   | 9,828 |   |   |   | 9,828 |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| Comprehensive income                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   | $ | 207,852 |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| 3204.05 shares of common stock      |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| transferred to ESOP for services    |   |         |      |   |    |   |   |       |   |   | (26,434    | )      |   |          |      |   |                |   | 32,041         |          |   |   |          |   |   |   | 5,607 |   |   |   |   |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| BALANCES, MARCH 31, 2010            |   | $            | 1,634,725 |   |    | $      | 16,347 |       |   | $      | 6,625,801  |   |   | $             | 5,682,964 |   |                | $      | ( 544,688 | )             |   | $      | ( 45,548      | )      |   | $ | 11,734,876 |   |   |   |   |   |
| Net income                          |   |         |      |   |    |   |   |       |   |   |       |   |   |          | 467,847   |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   | 467,847 |   |
| Net change in unrealized gain       |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| (loss) on securities available-     |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| for-sale, net of deferred taxes     |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| of ($1,478)                         |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   | (2,218        | )      |   |   |   |   |   |   | (2,218 | ) |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| Comprehensive income                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   | $ | 465,629 |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| 3204.05 shares of common stock      |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| transferred to ESOP for services    |   |         |      |   |    |   |   |       |   |   | (19,224    | )      |   |          |      |   |                |   | 32,040         |          |   |   |          |   |   |   |   |   |   |   |   |   |
|                                |   |         |      |   |    |   |   |       |   |   |       |   |   |          |      |   |                |   |           |          |   |   |          |   |   |   |   |   |   |   |   |   |
| BALANCES, MARCH 31, 2011            |   |         | 1,634,725 |   |    | $      | 16,347 |       |   | $      | 6,606,577  |   |   | $             | 6,150,811 |   |                | $      | ( 512,648      | )             |   | $      | (47,766       | )      |   | $ | 12,213,321 |   |   |   |   |   |

----

|                                                                                      |   | Years Ended |              |
|-------------------------------------------------------------------------------------------|--------|-------------|-------------------|
|                                                                                      |   | March 31,   |              |
| Cash Flows from Operating Activities                                                      |   | 2011        |              |   | 2010 |   |
| Net income                                                                                |   | $           | 467,847           |   |   | $ | 183,151 |   |
| Adjustments to reconcile net income to net                                                |   |        |              |   |   |   |   |   |
| cash provided by operating activities:                                                    |   |        |              |   |   |   |   |   |
| Amortization of ESOP                                                                      |   |        | 12,816            |   |   |   | 5,607 |   |
| Deferred income tax benefit                                                               |   |        | 282,610           |   |   |   | ( 453,062 | ) |
| Gain on sale of available-for-sale securities, net                                        |   |        |              |   |   |   | (15,053 | ) |
| Loss on sale of real estate owned                                                         |   |        | 27,472            |   |   |   |   |   |
| Depreciation                                                                              |   |        | 343,936           |   |   |   | 341,858 |   |
| Amortization of premiums and discounts, net                                               |   |        | (43,447           | ) |   |   | (4,834 | ) |
| Income from bank owned life insurance                                                     |   |        | (5,699            | ) |   |   | (5,962 | ) |
| Provision for loan losses                                                                 |   |        | 440,100           |   |   |   | 1,140,000 |   |
| Proceeds from sale of other property owned                                                |   |        |              |   |   |   | 294,000 |   |
| Proceeds from sale of real estate owned                                                   |   |        | 160,469           |   |   |   |   |   |
| Impairment losses, real estate owned                                                      |   |        | 87,900            |   |   |   | 75,000 |   |
| Changes in operating assets and liabilities                                               |   |        |              |   |   |   |   |   |
| (Increase) decrease in:                                                                   |   |        |              |   |   |   |   |   |
| Accrued interest receivable                                                               |   |        | 34,158            |   |   |   | 7,299 |   |
| Other assets                                                                              |   |        | 296,842           |   |   |   | ( 998,710 | ) |
| Prepaid and refundable income taxes                                                       |   |        | 11,822            |   |   |   | 550,149 |   |
| Increase (decrease) in:                                                                   |   |        |              |   |   |   |   |   |
| Accrued interest payable                                                                  |   |        | (22,922           | ) |   |   | ( 166,382 | ) |
| Other liabilities                                                                         |   |        | 45,152            |   |   |   | ( 88,038 | ) |
| Net cash provided by operating activities                                                 |   |        | 2,139,056         |   |   |   | 865,023 |   |
|                                                                                      |   |        |              |   |   |   |   |   |
| Cash Flows from Investing Activities                                                      |   |        |              |   |   |   |   |   |
| Proceeds from sale of securities available-for-sale                                       |   |        | 6,404             |   |   |   | 106,358 |   |
| Purchases of securities available-for-sale                                                |   |        |              |   |   |   | (117,014 | ) |
| Purchases of securities held-to-maturity                                                  |   |        | ( 12,894,320 | ) |   |   | (9,000,000 | ) |
| Proceeds from maturities and principal repayments of                                      |   |        |              |   |   |   |   |   |
| securities held-to-maturity                                                               |   |        | 13,601,302        |   |   |   | 6,927,491 |   |
| Redemption (purchase) of Federal Home Loan Bank stock                                     |   |        | (68,000           | ) |   |   | 139,200 |   |
| Net (increase) decrease in loans                                                          |   |        | 2,317,646         |   |   |   | (5,207,668 | ) |
| Purchases of premises and equipment                                                       |   |        | ( 17,983     | ) |   |   | (41,596 | ) |
| Improvements to real estate owned                                                         |   |        | ( 54,546     | ) |   |   |   |   |
| Net cash used in investing activities                                                     |   |        | 2,890,503         |   |   |   | (7,193,229 | ) |
|                                                                                      |   |        |              |   |   |   |   |   |
| Cash Flows from Financing Activities                                                      |   |        |              |   |   |   |   |   |
| Net increase (decrease) in deposits                                                       |   |        | ( 6,321,172  | ) |   |   | 13,180,367 |   |
| Net increase (decrease) in advance payments by borrowers for taxes and insurance          |   |        | ( 29,427     | ) |   |   | 64,553 |   |
| Borrowing on line of credit from Atlantic Central Bankers Bank                            |   |        | 1,000,000         |   |   |   |   |   |
| (Payments on) advances from Federal Home Loan Bank                                        |   |        | 1,100,000         |   |   |   | (3,750,000 | ) |
| Net cash provided by (used in) financing activities                                       |   |        | ( 4,250,599  | ) |   |   | 9,494,920 |   |
|                                                                                      |   |        |              |   |   |   |   |   |
| Net Increase in Cash and Cash Equivalents                                                 |   | $           | 778,960           |   |   | $ | 3,166,714 |   |
| Cash and Cash Equivalents, Beginning of Year                                              |   |        | 4,883,669         |   |   |   | 1,716,955 |   |
|                                                                                      |   |        |              |   |   |   |   |   |
| Cash and Cash Equivalents, End of Year                                                    |   | $           | 5,662,629         |   |   | $ | 4,883,669 |   |
|                                                                                      |   |        |              |   |   |   |   |   |
| Supplemental Disclosures of Cash Flow Information                                         |   |        |              |   |   |   |   |   |
| Cash paid during the year for interest                                                    |   | $           | 1,912,576         |   |   | $ | 2,806,257 |   |
| Cash paid during the year for income taxes                                                |   | $           | 3,540             |   |   | $ | 1,560 |   |
| Loans transferred to real estate owned                                                    |   | $           | 578,966           |   |   | $ | 487,969 |   |
| Total increase (decrease) in unrealized gain on securities available-for-sale, net of tax |   | $           | ( 3,696      | ) |   | $ | 24,788 |   |

----

| 1.  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----------|--------------------------------------------|

|   | Delanco Bancorp, Inc. (the “Company”) is a federally-chartered subsidiary holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, Delanco Federal Savings Bank (the “Bank”), and its wholly-owned inactive subsidiary, Delanco Financial Services Corporation.  The Company is majority owned by Delanco MHC, a federally chartered mutual holding company.  Delanco MHC has virtually no operations or assets other than an investment in the Company, and is not included in these financial statements.  The Bank provides a variety of financial services to individual and business customers located primarily in Southern New Jersey and Southeastern Pennsylvania.  The Bank’s primary source of revenue is from single-family residential and commercial loans.  The Bank is subject to regulation by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Basis of Consolidation |
|--------|------------------------|

|   | The accounting and reporting policies of the Company and the Bank conform with U.S. generally accepted accounting principles (“GAAP”) and predominant practices within the banking industry.  The consolidated financial statements of the Company include the accounts of Delanco Federal Savings Bank and its subsidiary, Delanco Financial Services Corporation.  All intercompany accounts and transactions have been eliminated in consolidation. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Use of Estimates |
|--------|------------------|

|   | The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for losses on loans, the valuation of foreclosed real estate and the evaluation of income taxes.  In connection with the determination of the estimated losses on loans and foreclosed real estate, management obtains independent appraisals for significant properties. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A majority of the Bank’s loan portfolio consists of single-family residential and commercial loans in Southern New Jersey and Southeastern Pennsylvania.  Accordingly, the ultimate collectibility of a substantial portion of the Bank’s loan portfolio and the recovery of a substantial portion of the carrying amount of foreclosed real estate are susceptible to changes in local market conditions. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | While management uses available information to recognize losses on loans and foreclosed real estate, further reductions in the carrying amounts of loans and foreclosed assets may be necessary based on changes in local economic conditions.  In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans and foreclosed real estate.  Such agencies may require the Bank to recognize additional losses based on their judgments about information available to them at the time of their examination.  Because of these factors, it is reasonably possible that the estimated losses on loans and foreclosed real estate may change materially in the near term.  However, the amount of the change that is reasonably possible cannot be estimated. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
|----|--------------------------------------------------------|

|   | Investment Securities |
|--------|-----------------------|

|   | Securities Held-to-Maturity:  Securities that management has the positive intent and ability to hold to maturity are reported at cost, adjusted for amortization of premiums and accretion of discounts that are recognized in interest income using methods approximating the interest method over the period to maturity.  Mortgage-backed securities represent participating interests in pools of long-term first mortgage loans originated and serviced by issuers of the securities.  Mortgage-backed securities are carried at unpaid principal balances, adjusted for unamortized premiums and unearned discounts.  Premiums and discounts are amortized using methods approximating the interest method over the remaining period to contractual maturity, adjusted for anticipated prepayments. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Securities Available-for-Sale:  Available-for-sale securities consist of investment securities not classified as trading securities nor as held-to-maturity securities.  Unrealized holding gains and losses, net of tax, on available-for-sale securities are included in other comprehensive income.  Realized gains (losses) on available-for-sale securities are included in other income (expense) and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income.  Gains and losses on the sale of available-for-sale securities are determined using the specific-identification method.  The amortization of premiums and the accretion of discounts are recognized in interest income using methods approximating the interest method over the period of maturity. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The related write-downs are included in earnings as realized losses.  In estimating other than temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans and Allowance for Loan Losses |
|--------|-------------------------------------|

|   | The Bank grants mortgage, commercial, consumer and lines of credit loans to customers.  A substantial portion of the loan portfolio is represented by mortgage and commercial loans in Southern New Jersey and Southeastern Pennsylvania.  The ability of the Bank’s debtors to honor their contracts is dependent upon the real estate and general economic conditions in these areas. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan fees and unearned discounts. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | Loan origination and commitment fees, as well as certain direct origination costs, are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method.  Amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The recognition of income on a loan is discontinued and previously accrued interest is reversed, when interest or principal payments become ninety (90) days past due unless, in the opinion of management, the outstanding interest remains collectible.  Past due status is determined based on contractual terms.  Interest is subsequently recognized only as received until the loan is returned to accrual status.  A loan is restored to accrual status when all interest and principal payments are current and the borrower has demonstrated to management the ability to make payments of principal and interest as scheduled.  The Bank’s practice is to charge off any loan or portion of a loan when the loan is determined by management to be uncollectible due to the borrower’s failure to meet repayment terms, the borrower’s deteriorating or deteriorated financial condition, the depreciation of the underlying collateral, the loan’s classification as a loss by regulatory examiners, or for other reasons. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1.  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
|----------|--------------------------------------------------------|

|   | The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | The allowance consists of specific, general, and unallocated components.  The specific component relates to loans that are classified as doubtful, substandard, or special mention.  For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors.  An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses.  The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reason for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. |
|--------|----------------------------------------------------------------------------------------------|

|   | Bank-Owned Life Insurance |
|--------|---------------------------|

|   | The Bank owns a life insurance policy on the life of a retired member of the Board of Directors.  The cash surrender value of the policy is recorded as an asset of the bank and changes in this value are reflected in non-interest income.  Death benefit proceeds in excess of the policy’s cash surrender value will be recognized as income upon receipt.  There are no policy loans offset against the cash surrender value or restrictions on the use of the proceeds. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Premises and Equipment |
|--------|------------------------|

|   | Land is carried at cost.  Other premises and equipment are recorded at cost less accumulated depreciation.  Office buildings and improvements are depreciated using the straight line method using useful lives ranging from 3 to 40 years.  Furniture, fixtures and equipment are depreciated using the straight line method with useful lives ranging from 3 to 10 years.   Charges for maintenance and repairs are expensed as incurred. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1.  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
|----------|--------------------------------------------------------|

|   | Real estate owned is comprised of properties acquired through foreclosure proceedings or acceptance of a deed in lieu offoreclosure.  Real estate owned is recorded at the lower of the carrying value of the loan or the fair value of the property, netof estimated selling costs.  Costs relating to the development or improvement of the properties are capitalized while expenses related to the operation and maintenance of properties are recorded as an expense as incurred.  Gains or losses upon dispositions are reflected in earnings as realized.  The Company had $770,639 and $412,969 in real estate owned at March 31, 2011 and 2010, respectively.  The Company recorded $27,472 and $-0- loss on sale of real estate owned for the years ended March 31, 2011 and 2010, respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxescurrently due plus deferred taxes related primarily to tax net operating loss carryforwards and differences between the basis of available-for-sale securities, allowance for loan losses, estimated losses on foreclosed real estate, accumulated depreciation, and accrued employee benefits for financial and income tax reporting. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carry forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available.  Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company considers all cash and amounts due from depository institutions and interest-bearing deposits in other banks to be cash equivalents for purposes of the statements of cash flows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Advertising Costs |
|--------|-------------------|

|   | Advertising costs are expensed as incurred.  Advertising expenses totaled $25,06 and $33,701 for the years ended March 31, 2011 and 2010, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company accounts for its ESOP based on guidance from the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) 96-3 “Employer’s Accounting for Employee Stock Ownership Plans”.  Shares are released to participants proportionately as the loan is repaid.  If the Company declares a dividend, the dividends on the allocated shares would be recorded as dividends and charged to retained earnings.  Dividends declared on common stock held by the ESOP and not allocated to the account of a participant can be used to repay the loan.  Allocation of shares to the ESOP participants is contingent upon the repayment of the loan to the Company. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1.  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
|----------|--------------------------------------------------------|

|   | Certain reclassifications have been made to the 2010 financial statement presentation to correspond to the current year’s format.  Total equity and net income are unchanged due to these reclassifications. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | RECENT ACCOUNTING PRONOUNCEMENTS |
|----|----------------------------------|

| 3.  | RESTRICTIONS ON CASH AND DUE FROM BANKS |
|----------|-----------------------------------------|

----

| 4. | INVESTMENT SECURITIES |
|----|-----------------------|

|   | Investment securities have been classified according to management’s intent.  The amortized cost of securities and their approximate fair values as of March 31, 2011 and 2010 are as follows: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Held-to-Maturity |       |
|---------------------------------------|--------|------------------|------------|
|                                  |   | March 31, 2011   |       |
|                                  |   |             |       |   | Gross |   |   | Gross |   |   |   |   |
|                                  |   | Amortized        |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                  |   | Cost             |       |   | Gains |   |   | Losses |   |   | Value |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank Bonds          |   | $                | 4,746,159  |   |   | $ | 110 |   |   | $ | (162,712 | ) |   | $ | 4,583,557 |   |
| Federal Farm Credit Bonds             |   |             | 1,000,133  |   |   |   |   |   |   |   | (22,093 | ) |   |   | 978,040 |   |
| Federal Home Loan Mortgage            |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation Bonds                     |   |             | 999,137    |   |   |   |   |   |   |   | (14,417 | ) |   |   | 984,720 |   |
| Federal National Mortgage Association |   |             | 2,000,000  |   |   |   | 2,915 |   |   |   | (43,495 | ) |   |   | 1,959,420 |   |
| Municipal Bond                        |   |             | 144,320    |   |   |   |   |   |   |   |   |   |   |   | 144,320 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |             | 8,889,749  |   |   |   | 3,025 |   |   |   | ( 242,717 | ) |   |   | 8,650,057 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-Backed Securities:           |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Mortgage            |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                           |   |             | 2,027,616  |   |   |   | 71,849 |   |   |   |   |   |   |   | 2,099,465 |   |
| Federal National Mortgage             |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Association                           |   |             | 4,358,582  |   |   |   | 138,772 |   |   |   | (80 | ) |   |   | 4,497,274 |   |
| Government National Mortgage          |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                           |   |             | 420,116    |   |   |   | 13,902 |   |   |   | (5 | ) |   |   | 434,013 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |             | 6,806,314  |   |   |   | 224,523 |   |   |   | ( 85 | ) |   |   | 7,030,752 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                 |   | $                | 15,696,063 |   |   | $ | 227,548 |   |   | $ | (242,802 | ) |   | $ | 15,680,809 |   |

----

| 4.  | INVESTMENT SECURITIES  (Continued) |
|----------|-----------------------------------------|

|                                  |   | Held-to-Maturity |       |
|---------------------------------------|--------|------------------|------------|
|                                  |   | March 31, 2010   |       |
|                                  |   |             |       |   | Gross |   |   | Gross |   |   |   |   |
|                                  |   | Amortized        |       |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                  |   | Cost             |       |   | Gains |   |   | Losses |   |   | Value |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank Bonds          |   | $                | 997,238    |   |   | $ | 5,417 |   |   | $ |   |   |   | $ | 1,002,655 |   |
| Federal Farm Credit Bonds             |   |             | 1,000,000  |   |   |   | 3,125 |   |   |   | (1,250 | ) |   |   | 1,001,875 |   |
| Federal Home Loan Mortgage            |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation Bonds                     |   |             | 3,000,000  |   |   |   | 6,870 |   |   |   | ( 3,510 | ) |   |   | 3,003,360 |   |
| Federal National Mortgage Association |   |             | 2,000,000  |   |   |   | 5,940 |   |   |   | (465 | ) |   |   | 2,005,475 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |             | 6,997,238  |   |   |   | 21,352 |   |   |   | ( 5,225 | ) |   |   | 7,013,365 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-Backed Securities:           |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Mortgage            |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                           |   |             | 2,693,176  |   |   |   | 108,680 |   |   |   |   |   |   |   | 2,801,856 |   |
| Federal National Mortgage             |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Association                           |   |             | 6,104,708  |   |   |   | 299,944 |   |   |   | (116 | ) |   |   | 6,404,536 |   |
| Government National Mortgage          |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporation                           |   |             | 564,476    |   |   |   | 22,800 |   |   |   | (934 | ) |   |   | 586,342 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |             | 9,362,360  |   |   |   | 431,424 |   |   |   | 1,050 | ) |   |   | 9,792,734 |   |
|                                  |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                 |   | $                | 16,359,598 |   |   | $ | 452,776 |   |   | $ | ( 6,275 | ) |   | $ | 16,806,099 |   |

|               |   | Available-for-Sale |    |
|--------------------|--------|--------------------|---------|
|               |   | March 31, 2011     |    |
|               |   |               |    |   |   | Gross |   |   | Gross |   |   |   |   |   |
|               |   | Amortized          |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|               |   | Cost               |    |   | Gains |   |   | Losses |   |   | Value |   |
|               |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Fund Shares |   | $                  | 249,295 |   |   | $ |   |   |   | $ | ( 1,233 | ) |   | $ | 248,062 |   |

|               |   | Available-for-Sale |    |
|--------------------|--------|--------------------|---------|
|               |   | March 31, 2010     |    |
|               |   |               |    |   |   | Gross |   |   | Gross |   |   |   |   |   |
|               |   | Amortized          |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|               |   | Cost               |    |   | Gains |   |   | Losses |   |   | Value |   |
|               |   |               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Fund Shares |   | $                  | 255,699 |   |   | $ | 2,692 |   |   | $ | ( 228 | ) |   | $ | 258,163 |   |

----

| 4.  | INVESTMENT SECURITIES  (Continued) |
|----------|-----------------------------------------|

|   | The following is a summary of maturities of securities held-to-maturity and available-for-sale as of March 31, 2011 and 2010. |
|--------|-------------------------------------------------------------------------------------------------------------------------------|

|                     |   | March 31, 2011   |       |
|--------------------------|--------|------------------|------------|
|                     |   | Held-to-maturity |       |   | Available-for-sale |   |
|                     |   | Amortized        |       |   | Fair |   |   | Amortized |   |   | Fair |   |
|                     |   | Cost             |       |   | Value |   |   | Cost |   |   | Value |   |
| Amounts maturing in:     |   |             |       |   |   |   |   |   |   |   |   |   |
| One year or less         |   | $                | 2,020,308  |   |   | $ | 2,035,189 |   |   | $ |   |   |   | $ |   |   |
| After one year through   |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| five years               |   |             | 1,880,356  |   |   |   | 1,898,902 |   |   |   |   |   |   |   |   |   |
| After five years through |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ten years                |   |             | 6,754,359  |   |   |   | 6,605,651 |   |   |   |   |   |   |   |   |   |
| After ten years          |   |             | 5,041,040  |   |   |   | 5,141,067 |   |   |   |   |   |   |   |   |   |
| Equity securities        |   |             |       |   |   |   |   |   |   |   | 249,295 |   |   |   | 248,062 |   |
|                     |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   | $                | 15,696,063 |   |   | $ | 15,680,809 |   |   | $ | 249,295 |   |   | $ | 248,062 |   |

|                     |   | March 31, 2010   |       |
|--------------------------|--------|------------------|------------|
|                     |   | Held-to-maturity |       |   | Available-for-sale |   |
|                     |   | Amortized        |       |   | Fair |   |   | Amortized |   |   | Fair |   |
|                     |   | Cost             |       |   | Value |   |   | Cost |   |   | Value |   |
| Amounts maturing in:     |   |             |       |   |   |   |   |   |   |   |   |   |
| One year or less         |   | $                | 1,257,508  |   |   | $ | 1,279,463 |   |   | $ |   |   |   | $ |   |   |
| After one year through   |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| five years               |   |             | 6,691,053  |   |   |   | 6,889,401 |   |   |   |   |   |   |   |   |   |
| After five years through |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ten years                |   |             | 4,008,761  |   |   |   | 4,023,142 |   |   |   |   |   |   |   |   |   |
| After ten years          |   |             | 4,402,276  |   |   |   | 4,614,093 |   |   |   |   |   |   |   |   |   |
| Equity securities        |   |             |       |   |   |   |   |   |   |   | 255,699 |   |   |   | 258,163 |   |
|                     |   |             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     |   | $                | 16,359,598 |   |   | $ | 16,806,099 |   |   | $ | 255,699 |   |   | $ | 258,163 |   |

|   | The amortized cost and fair value of mortgage-backed securities are presented in the held-to-maturity category by contractual maturity in the preceding table.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations without call or prepayment penalties. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During 2010, the Bank sold securities available-for-sale for total proceeds of $106,358 resulting in gross realized gains of $15,053. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | Information pertaining to securities with gross unrealized losses at March 31, 2011 and 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4.  | INVESTMENT SECURITIES  (Continued) |
|----------|-----------------------------------------|

|                        |   | Less Than 12 Months |      |   | 12 Months or Greater |   |      | Total  |   |
|-----------------------------|--------|---------------------|-----------|--------|----------------------|--------|-----------|--------|--------|
|                        |   |                |      |   | Gross                |   |      |   |   |   | Gross |   |   |   |   |   |   |   |
|                        |   | Fair                |      |   | Unrealized           |   |      | Fair   |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
| March 31, 2011              |   | Value               |      |   | Losses               |   |      | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                        |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank      |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Bonds                       |   | $                   | 4,582,352 |   |                 | $      | (162,712  | )      |   | $ |   |   |   | $ |   |   |   | $ | 4,582,352 |   |   | $ | (162,712 | ) |
| Federal Farm Credit         |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bonds                       |   |                | 978,040   |   |                 |   | (22,093   | )      |   |   |   |   |   |   |   |   |   |   | 978,040 |   |   |   | (22,093 | ) |
| Federal Home Loan           |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Corporation        |   |                | 984,720   |   |                 |   | (14,417   | )      |   |   |   |   |   |   |   |   |   |   | 984,720 |   |   |   | (14,417 | ) |
| Federal National            |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Association        |   |                | 1,456,505 |   |                 |   | (43,495   | )      |   |   |   |   |   |   |   |   |   |   | 1,456,505 |   |   |   | (43,495 | ) |
| Municipal Bond              |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                | 8,001,617 |   |                 |   | (242,717  | )      |   |   |   |   |   |   |   |   |   |   | 8,001,617 |   |   |   | (242,717 | ) |
|                        |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-Backed Securities: |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan           |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Corporation        |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal National            |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Association        |   |                | 146,243   |   |                 |   | (80       | )      |   |   |   |   |   |   |   |   |   |   | 146,243 |   |   |   | (80 | ) |
| Government National         |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Association        |   |                | 580       |   |                 |   | ( 5  | )      |   |   |   |   |   |   |   |   |   |   | 580 |   |   |   | (5 | ) |
|                        |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                | 146,823   |   |                 |   | ( 85 | )      |   |   |   |   |   |   |   |   |   |   | 146,823 |   |   |   | (85 | ) |
|                        |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Fund Shares          |   |                |      |   |                 |   |      |   |   |   | 247,637 |   |   |   | (1,233 | ) |   |   | 247,637 |   |   |   | (1,233 | ) |
|                        |   |                |      |   |                 |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                       |   | $                   | 8,148,440 |   |                 | $      | (242,802  | )      |   | $ | 247,637 |   |   | $ | (1,233 | ) |   | $ | 8,396,077 |   |   | $ | (244,035 | ) |

|                   |   | Less Than 12 Months |      |   | 12 Months or Greater |   |    | Total  |   |
|------------------------|--------|---------------------|-----------|--------|----------------------|--------|---------|--------|--------|
|                   |   |                |      |   | Gross                |   |    |   |   |   | Gross |   |   |   |   |   |   |   |
|                   |   | Fair                |      |   | Unrealized           |   |    | Fair   |   |   | Unrealized |   |   |   |   |   | Unrealized |   |
| March 31, 2010         |   | Value               |      |   | Losses               |   |    | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                   |   |                |      |   |                 |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Federal Home Loan Bank |   |                |      |   |                 |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Bonds                  |   | $                   |      |   |                 | $      |    |   |   | $ |   |   |   | $ |   |   |   | $ |   |   |   | $ |   |   |
| Federal Farm Credit    |   |                |      |   |                 |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bonds                  |   |                | 498,750   |   |                 |   | (1,250  | )      |   |   |   |   |   |   |   |   |   |   | 498,750 |   |   |   | (1,250 | ) |
| Federal Home Loan      |   |                |      |   |                 |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Corporation   |   |                | 496,490   |   |                 |   | (3,510  | )      |   |   |   |   |   |   |   |   |   |   | 496,490 |   |   |   | (3,510 | ) |
| Federal National       |   |                |      |   |                 |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Association   |   |                | 999,535   |   |                 |   | (465    | )      |   |   |   |   |   |   |   |   |   |   | 999,535 |   |   |   | (465 | ) |
|                   |   |                |      |   |                 |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   |   |                | 1,994,775 |   |                 |   | ( 5,225 | )      |   |   | -0- |   |   |   | -0- |   |   |   | 1,994,775 |   |   |   | (5,225 | ) |

----

| 4.  | INVESTMENT SECURITIES  (Continued) |
|----------|-----------------------------------------|

|                        |   | Less Than 12 Months |      |   | 12 Months or Greater |   |       | Total  |   |
|-----------------------------|--------|---------------------|-----------|--------|----------------------|--------|------------|--------|--------|
|                        |   |                |      |   | Gross                |   |       |   |   |   | Gross |   |   |   |   |   |   |   |
|                        |   | Fair                |      |   | Unrealized           |   |       | Fair   |   |   | Unrealized |   |   | Unrealized |   |   |   |   |
| March 31, 2010              |   | Value               |      |   | Losses               |   |       | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
|                        |   |                |      |   |                 |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-Backed Securities: |   |                |      |   |                 |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Federal National            |   |                |      |   |                 |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Association        |   |                | 15,850    |   |                 |   | (116       | )      |   |   |   |   |   |   |   |   |   | 15,850 |   |   |  (116 | )  |
| Government National         |   |                |      |   |                 |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage Association        |   |                |      |   |                 |   |       |   |   |   | 49,989 |   |   |   | (934 | ) |   |   | 49,989 |   |   |   | (934 | ) |
|                        |   |                |      |   |                 |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                | 15,850    |   |                 |   | ( 116 | )      |   |   | 49,989 |   |   |   | (934 | ) |   |   | 65,839 |   |   |   | (1,050 | ) |
|                        |   |                |      |   |                 |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mutual Fund Shares          |   |                |      |   |                 |   |       |   |   |   | 71,341 |   |   |   | ( 228 | ) |   |   | 71,341 |   |   |   | (228 | ) |
|                        |   |                |      |   |                 |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                       |   | $                   | 2,010,625 |   |                 | $      | (5,341     | )      |   | $ | 121,330 |   |   | $ | (1,162 | ) |   | $ | 2,131,955 |   |   | $ | (6,503 | ) |

|   | Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At March 31, 2011, the twenty debt securities with unrealized losses have depreciated3.0% from the Bank’s amortized cost basis.  These unrealized losses relate principally to current interest rates for similar types of securities.  In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies, or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.  As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other-than-temporary. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | LOANS |
|----|-------|

|   | The Bank monitors and assesses the credit risk of its loan portfolio using the classes set forth below.  These classes also represent the segments by which the Bank monitors the performance of its loan portfolio and estimates its allowance for loan losses. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 5. | LOANS  (Continued) |
|----|------------------------------|

|                                         |   | March 31, |        |
|----------------------------------------------|--------|-----------|-------------|
|                                         |   | 2011      |        |   | 2010 |   |
|                                         |   |      |        |   |   |   |
| Residential (one to four family) real estate |   | $         | 62,875,152  |   |   | $ | 59,363,703 |   |
| Multi-family and commercial real estate      |   |      | 21,866,570  |   |   |   | 23,998,000 |   |
| Commercial                                   |   |      | 1,736,420   |   |   |   | 2,821,000 |   |
| Home equity                                  |   |      | 17,346,601  |   |   |   | 20,272,944 |   |
| Consumer                                     |   |      | 1,025,664   |   |   |   | 1,419,000 |   |
| Construction                                 |   |      | 374,158     |   |   |   | 395,000 |   |
|                                         |   |      |        |   |   |   |   |   |
| Total loans                                  |   |      | 105,224,565 |   |   |   | 108,269,647 |   |
|                                         |   |      |        |   |   |   |   |   |
| Net deferred loan origination fees           |   |      | (70,934     | ) |   |   | (67,079 | ) |
| Allowance for loan losses                    |   |      | (1,286,301  | ) |   |   | (998,526 | ) |
|                                         |   |      |        |   |   |   |   |   |
|                                         |   |      | (1,357,235  | ) |   |   | ( 1,065,605 | ) |
|                                         |   |      |        |   |   |   |   |   |
| Loans, net                                   |   | $         | 103,867,330 |   |   | $ | 107,204,042 |   |

----

| 5.  | LOANS  (Continued) |
|----------|-------------------------|

|   | a. | Loans that present an acceptable degree of risk associated with the financing being considered as measured againstearnings and balance sheet trends, industry averages, etc.  Actual and projected indicators and market conditions provide satisfactory evidence that the credit will perform as agreed. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Loans to borrowers that display acceptable financial conditions and operating results.  Debt service capacity is demonstrated and future prospects are considered good. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | Loans to borrowers where a comfort level is achieved by the strength of the cash flows from the business or project andthe strength and quantity of the collateral or security position (i.e.; receivables, inventory and other readily marketablesecurities) as supported by a current valuation and/or the strong capabilities of a guarantor. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 5.  | LOANS  (Continued) |
|----------|-------------------------|

|                        |   |   |       |   | Special |   |      |       |   |   | Non-       |   |   |   |      |
|-----------------------------|--------|--------|------------|--------|---------|--------|-----------|------------|--------|--------|------------|--------|--------|--------|-----------|
|                        |   |   |       |   | Mention |   |      | Classified |   |   | Performing |   |   |   |      |
|                        |   | Pass   |       |   | Loans   |   |      | Loans      |   |   | Loans      |   |   | Total  |      |
| Residential real estate     |   | $      | 61,096,650 |   |    | $      |      |       |   | $      |       |   |   | $      | 1,778,502 |   |   | $ | 62,875,152 |   |
| Multi-family and commercial |   |   |       |   |    |   |      |       |   |   |       |   |   |   |      |   |   |   |   |   |
| real estate                 |   |   | 14,626,607 |   |    |   | 665,019   |       |   |   | 4,201,080  |   |   |   | 2,373,864 |   |   |   | 21,866,570 |   |
| Commercial                  |   |   | 1,294,682  |   |    |   | 360,796   |       |   |   | 34,471     |   |   |   | 46,471    |   |   |   | 1,736,420 |   |
| Home equity                 |   |   | 16,152,592 |   |    |   |      |       |   |   |       |   |   |   | 1,194,009 |   |   |   | 17,346,601 |   |
| Consumer                    |   |   | 1,014,946  |   |    |   |      |       |   |   |       |   |   |   | 10,718    |   |   |   | 1,025,664 |   |
| Construction                |   |   | 374,158    |   |    |   |      |       |   |   |       |   |   |   |      |   |   |   | 374,158 |   |
|                        |   | $      | 94,559,635 |   |    | $      | 1,025,815 |       |   | $      | 4,235,551  |   |   | $      | 5,403,564 |   |   | $ | 105,224,565 |   |

|                        |   | 30-89     |      |   |          |   |   |       |   |   |       |   |   |     |       |   |       |   |
|-----------------------------|--------|-----------|-----------|--------|---------------|--------|--------|------------|--------|--------|------------|--------|--------|----------|------------|--------|------------|--------|
|                        |   | Days      |      |   | 90 Days or    |   |   | Total Past |   |   |       |   |   |     |       |   |       |   |
|                        |   | Past Due  |      |   | More Past     |   |   | Due and    |   |   | Accruing   |   |   | Non-     |       |   |       |   |
|                        |   | and Still |      |   | Due and Still |   |   | Still      |   |   | Current    |   |   | Accrual  |       |   | Total Loan |   |
|                        |   | Accruing  |      |   | Accruing      |   |   | Accruing   |   |   | Balances   |   |   | Balances |       |   | Balances   |   |
|                        |   |      |      |   |          |   |   |       |   |   |       |   |   |     |       |   |       |   |
| Residential real estate     |   | $         | 873,156   |   |          | $      |   |       |   | $      | 873,156    |   |   | $        | 60,223,494 |   |       | $      | 1,778,502 |   |   | $ | 62,875,152 |   |
| Multi-family and commercial |   |      |      |   |          |   |   |       |   |   |       |   |   |     |       |   |       |   |   |   |   |   |   |   |
| real estate                 |   |      | 959,912   |   |          |   |   |       |   |   | 959,912    |   |   |     | 18,532,794 |   |       |   | 2,373,864 |   |   |   | 21,866,570 |   |
| Commercial                  |   |      | 320,098   |   |          |   |   |       |   |   | 320,098    |   |   |     | 1,369,851  |   |       |   | 46,471 |   |   |   | 1,736,420 |   |
| Home equity                 |   |      | 304,426   |   |          |   |   |       |   |   | 304,426    |   |   |     | 15,848,166 |   |       |   | 1,194,009 |   |   |   | 17,346,601 |   |
| Consumer                    |   |      | 20,386    |   |          |   |   |       |   |   | 20,386     |   |   |     | 994,560    |   |       |   | 10,718 |   |   |   | 1,025,664 |   |
| Construction                |   |      |      |   |          |   |   |       |   |   |       |   |   |     | 374,158    |   |       |   |   |   |   |   | 374,158 |   |
|                        |   |      |      |   |          |   |   |       |   |   |       |   |   |     |       |   |       |   |   |   |   |   |   |   |
| Total Loans                 |   | $         | 2,477,978 |   |          | $      |   |       |   | $      | $2,477,978 |   |   | $        | 97,343,023 |   |       | $      | 5,403,564 |   |   |   | 105,224,565 |   |
|                        |   |      |      |   |          |   |   |       |   |   |       |   |   |     |       |   |       |   |   |   |   |   |   |   |
| Percentage of Total Loans   |   |      | 2.35      | %      |          |   | N/A    | %          |   |   | 2.35       | %      |   |     | 92.51      | %      |       |   | 5.14 | % |   |   | 100.0 | % |

----

| 5.  | LOANS  (Continued) |
|----------|-------------------------|

|                                                 |   | March 31, |      |
|------------------------------------------------------|--------|-----------|-----------|
|                                                 |   | 2011      |      |   | 2010 |   |
|                                                 |   |      |      |   |   |   |
| Impaired loans for which a valuation allowance       |   |      |      |   |   |   |
| has been provided                                    |   | $         | 2,881,997 |   |   | $ | 1,071,533 |   |
| Impaired loans for which no valuation allowance      |   |      |      |   |   |   |   |   |
| has been provided                                    |   |      | 2,576,471 |   |   |   | 6,487,581 |   |
|                                                 |   |      |      |   |   |   |   |   |
| Total loans determined to be impaired                |   | $         | 5,458,468 |   |   | $ | 7,559,114 |   |
|                                                 |   |      |      |   |   |   |   |   |
| Allowance for loans losses related to impaired loans |   | $         | 502,247   |   |   | $ | 302,303 |   |
|                                                 |   |      |      |   |   |   |   |   |
| Average recorded investment in impaired loans        |   | $         | 5,444,577 |   |   | $ | 7,649,947 |   |
|                                                 |   |      |      |   |   |   |   |   |
| Cash basis interest income recognized on             |   |      |      |   |   |   |   |   |
| impaired loans                                       |   | $         | 154,440   |   |   | $ | 228,255 |   |

|                        |   |       |      |   |      |   |      |      |   |   |       |   |   | Interest   |      |
|-----------------------------|--------|------------|-----------|--------|-----------|--------|-----------|-----------|--------|--------|------------|--------|--------|------------|-----------|
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   | Income     |      |
|                        |   |       |      |   |      |   |      |      |   |   | Average    |   |   | Recognized |      |
|                        |   |       |      |   | Unpaid    |   |      | Related   |   |   | Annual     |   |   | While On   |      |
|                        |   | Recorded   |      |   | Principal |   |      | Valuation |   |   | Recorded   |   |   | Impaired   |      |
|                        |   | Investment |      |   | Balance   |   |      | Allowance |   |   | Investment |   |   | Status     |      |
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |
| Impaired loans with a       |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |
| valuation allowance:        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |
| Residential real estate     |   | $          | 985,636   |   |      | $      | 937,455   |      |   | $      | 211,001    |   |   | $          | 972,411   |   |   | $ |   |   |
| Multi-family and commercial |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| real estate                 |   |       | 1,438,858 |   |      |   | 1,438,858 |      |   |   | 209,000    |   |   |       | 1,439,056 |   |   |   | 40,238 |   |
| Commercial                  |   |       | 46,471    |   |      |   | 46,471    |      |   |   | 46,471     |   |   |       | 41,471    |   |   |   | 1,554 |   |
| Home equity                 |   |       | 403,257   |   |      |   | 403,257   |      |   |   | 28,000     |   |   |       | 403,257   |   |   |   |   |   |
| Consumer                    |   |       | 7,775     |   |      |   | 7,775     |      |   |   | 7,775      |   |   |       | 7,775     |   |   |   |   |   |
| Construction                |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| Subtotal                    |   | $          | 2,881,997 |   |      | $      | 2,833,816 |      |   | $      | 502,247    |   |   | $          | 2,863,970 |   |   | $ | 41,792 |   |

----

| 5.  | LOANS  (Continued) |
|----------|-------------------------|

|                        |   |       |      |   |      |   |      |      |   |   |       |   |   | Interest   |      |
|-----------------------------|--------|------------|-----------|--------|-----------|--------|-----------|-----------|--------|--------|------------|--------|--------|------------|-----------|
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   | Income     |      |
|                        |   |       |      |   |      |   |      |      |   |   | Average    |   |   | Recognized |      |
|                        |   |       |      |   | Unpaid    |   |      | Related   |   |   | Annual     |   |   | While On   |      |
|                        |   | Recorded   |      |   | Principal |   |      | Valuation |   |   | Recorded   |   |   | Impaired   |      |
|                        |   | Investment |      |   | Balance   |   |      | Allowance |   |   | Investment |   |   | Status     |      |
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |
| Impaired loans with no      |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |
| valuation allowance:        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |
| Residential real estate     |   | $          | 847,770   |   |      | $      | 841,046   |      |   | $      |       |   |   | $          | 849,738   |   |   | $ | 33,577 |   |
| Multi-family and commercial |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| real estate                 |   |       | 935,007   |   |      |   | 935,007   |      |   |   |       |   |   |       | 935,702   |   |   |   | 51,262 |   |
| Commercial                  |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| Home equity                 |   |       | 790,752   |   |      |   | 790,752   |      |   |   |       |   |   |       | 791,193   |   |   |   | 27,529 |   |
| Consumer                    |   |       | 2,942     |   |      |   | 2,942     |      |   |   |       |   |   |       | 3,974     |   |   |   | 280 |   |
| Construction                |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| Subtotal                    |   | $          | 2,576,471 |   |      | $      | 2,569,747 |      |   | $      |       |   |   | $          | 2,580,607 |   |   | $ | 112,648 |   |
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| Total impaired loans:       |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| Residential real estate     |   | $          | 1,833,406 |   |      | $      | 1,778,501 |      |   | $      | 211,001    |   |   | $          | 1,822,149 |   |   | $ | 33,577 |   |
| Multi-family and commercial |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| real estate                 |   |       | 2,373,865 |   |      |   | 2,373,865 |      |   |   | 209,000    |   |   |       | 2,374,758 |   |   |   | 91,500 |   |
| Commercial                  |   |       | 46,471    |   |      |   | 46,471    |      |   |   | 46,471     |   |   |       | 41,471    |   |   |   | 1,554 |   |
| Home equity                 |   |       | 1,194,009 |   |      |   | 1,194,009 |      |   |   | 28,000     |   |   |       | 1,194,450 |   |   |   | 27,529 |   |
| Consumer                    |   |       | 10,717    |   |      |   | 10,717    |      |   |   | 7,775      |   |   |       | 11,749    |   |   |   | 280 |   |
| Construction                |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
|                        |   |       |      |   |      |   |      |      |   |   |       |   |   |       |      |   |   |   |   |   |
| Total                       |   | $          | 5,458,468 |   |      | $      | 5,403,563 |      |   | $      | 502,247    |   |   | $          | 5,444,577 |   |   | $ | 154,440 |   |

----

| 5.  | LOANS  (Continued) |
|----------|-------------------------|

|                                                  |   | March 31, |   |
|-------------------------------------------------------|--------|-----------|--------|
|                                                  |   | 2011      |   |   | 2010 |   |
| Non-accrual loans:                                    |   |      |   |   |   |   |
| Residential real estate                               |   |      | 2,973  |   |   |   | 2,053 |   |
| Multi-family and commercial                           |   |      |   |   |   |   |   |   |
| real estate                                           |   |      | 2,374  |   |   |   | 3,789 |   |
| Commercial                                            |   |      | 46     |   |   |   | 225 |   |
| Consumer                                              |   |      | 11     |   |   |   |   |   |
| Construction                                          |   |      |   |   |   |   |   |   |
|                                                  |   |      |   |   |   |   |   |   |
| Total non-accrual loans                               |   |      | 5,404  |   |   |   | 6,067 |   |
|                                                  |   |      |   |   |   |   |   |   |
| Impaired loans                                        |   |      | 2,438  |   |   |   | 3,792 |   |
|                                                  |   |      |   |   |   |   |   |   |
| Total non-performing loans                            |   |      | 7,842  |   |   |   | 9,859 |   |
| Real estate owned                                     |   |      | 771    |   |   |   | 413 |   |
|                                                  |   |      |   |   |   |   |   |   |
| Total non-performing assets                           |   | $         | 8,613  |   |   | $ | 10,272 |   |
|                                                  |   |      |   |   |   |   |   |   |
| Non-performing loans as a percentage of loans         |   |      | 4.99   | % |   |   | 5.60 | % |
|                                                  |   |      |   |   |   |   |   |   |
| Non-performing assets as a percentage of loans and    |   |      |   |   |   |   |   |   |
| real estate owned                                     |   |      | 8.19   | % |   |   | 9.49 | % |
|                                                  |   |      |   |   |   |   |   |   |
| Non-performing assets as a percentage of total assets |   |      | 6.33   | % |   |   | 7.34 | % |

|   | The following table sets forth with respect to the Bank’s allowance for losses on loans: |
|--------|------------------------------------------------------------------------------------------------|

|                         |   | March 31, |    |
|------------------------------|--------|-----------|---------|
|                         |   | 2011      |    |   | 2010 |   |
|                         |   |      |    |   |   |   |
| Balance at beginning of year |   | $         | 998,526 |   |   | $ | 1,546,601 |   |
| Provision:                   |   |      |    |   |   |   |   |   |
| Commercial                   |   |      | 20,901  |   |   |   | ( 159,074 | ) |
| Commercial real estate       |   |      | (1,741  | ) |   |   | 886,975 |   |
| Residential real estate      |   |      | 413,160 |   |   |   | 125,290 |   |
| Consumer                     |   |      | 7,780   |   |   |   | 286,809 |   |
|                         |   |      |    |   |   |   |   |   |
| Total Provision              |   | $         | 440,100 |   |   | $ | 1,140,000 |   |

----

| 5.  | LOANS  (Continued) |
|----------|-------------------------|

|                                             |   | March 31, |          |
|--------------------------------------------------|--------|-----------|---------------|
|                                             |   | 2011      |          |   | 2010 |   |
| Charge-Offs:                                     |   |      |          |   |   |   |
| Commercial                                       |   |      | 143,491       |   |   |   | 1,318,282 |   |
| Residential real estate                          |   |      | 30,914        |   |   |   |   |   |
| Consumer                                         |   |      | 31,601        |   |   |   | 419,322 |   |
| Recoveries                                       |   |      | ( 53,681 | ) |   |   | (49,529 | ) |
|                                             |   |      |          |   |   |   |   |   |
| Total Net Charge-Offs                            |   |      | 152,325       |   |   |   | 1,688,075 |   |
|                                             |   |      |          |   |   |   |   |   |
| Balance at end of year                           |   | $         | 1,286,301     |   |   | $ | 998,526 |   |
|                                             |   |      |          |   |   |   |   |   |
| Year-end loans outstanding                       |   | $         | 105,224,565   |   |   | $ | 108,269,647 |   |
|                                             |   |      |          |   |   |   |   |   |
| Average loans outstanding                        |   | $         | 105,400,000   |   |   | $ | 107,341,000 |   |
|                                             |   |      |          |   |   |   |   |   |
| Allowance as a percentage of year-end loans      |   |      | 1.22          | % |   |   | .92 | % |
|                                             |   |      |          |   |   |   |   |   |
| Net charge-offs as a percentage of average loans |   |      | 0.15          | % |   |   | 1.57 | % |

|                       |   |       |    |   | Commercial  |   |    | Residential |   |   |          |   |   |   |          |
|----------------------------|--------|------------|---------|--------|-------------|--------|---------|-------------|--------|--------|---------------|--------|--------|--------|---------------|
|                       |   | Commercial |    |   | Real Estate |   |    | Real Estate |   |   | Consumer      |   |   | Total  |          |
|                       |   |       |    |   |        |   |    |        |   |   |          |   |   |   |          |
| Balance, beginning of year |   | $          | 100,584 |   |        | $      | 681,621 |        |   | $      | 125,290       |   |   | $      | 91,031        |   |   | $ | 998,526 |   |
| Loan charge-offs           |   |       | (51,063 | )      |        |   | (92,429 | )           |   |   | ( 30,914 | )      |   |   | ( 31,601 | ) |   |   | (206,007 | ) |
| Recoveries                 |   |       |    |   |        |   | 8,377   |        |   |   |          |   |   |   | 45,305        |   |   |   | 53,682 |   |
| Provision for loan losses  |   |       | 20,901  |   |        |   | (1,741  | )           |   |   | 413,160       |   |   |   | 7,780         |   |   |   | 440,100 |   |
|                       |   |       |    |   |        |   |    |        |   |   |          |   |   |   |          |   |   |   |   |   |
| Balance, end of year       |   | $          | 70,422  |   |        | $      | 595,828 |        |   | $      | 507,536       |   |   | $      | 112,515       |   |   | $ | 1,286,301 |   |

|   | The Bank prepares an allowance for loan loss model on a quarterly basis to determine the adequacy of the allowance.  Management considers a variety of factors when establishing the allowance, such as the impact of current economic conditions, diversification of the loan portfolio, delinquency statistics, results of independent loan review and related classifications.  The Bank’s historic loss rates and the loss rates of peer financial institutions are also considered.  In evaluating the Bank’s allowance for loan loss, the Bank maintains a loan committee consisting of senior management and the Board of Directors that monitors problem loans and formulates collection efforts and resolution plans for each borrower.  On a monthly basis, the loan committee meets to review each problem loan and determine if there has been any change in collateral value due to changes in market conditions.  Each quarter, when calculating the allowance for loan loss, the loan committee reviews an updated loan impairment analysis on each problem loan to determine if a specific provision for loan loss is warranted.  Management reviews the most recent appraisal on each loan adjusted for holding and selling costs.  In the event there is not a recent appraisal on file, the Bank will use the aged appraisal and apply a discount factor to the appraisal and then adjust the holding and selling costs from the discounted appraisal value.  At March 31, 2011, the Bank maintained an allowance for loan loss ratio of 1.22% to year end loans outstanding.  On a linked basis, non-performing assets have decreased by $1,619,000 over their stated levels at March 31, 2010 representing a non-performing asset to total asset ratio of 6.33% at March 31, 2011 as compared to a non-performing asset to total asset ratio of 7.34% at March 31, 2010. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 5.  | LOANS  (Continued) |
|----------|-------------------------|

|   | The Bank’s charge-off policy states that any asset classified loss shall be charged-off within thirty days of such classification unless the asset has already been eliminated from the books by collection or other appropriate entry.  On a quarterly basis, the loan committee will review past due, classified, non-performing and other loans, as it deems appropriate, to determine the collectability of such loans.  If the loan committee determines a loan to be uncollectable, the loan shall be charged to the allowance for loan loss.  In addition, upon reviewing the collectability, the loan committee may determine a portion of the loan to be uncollectable; in which case that portion of the loan deemed uncollectable will be partially charged-off against the allowance for loan loss. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For the year ending March 31, 2011, the Bank experienced 6 charge-offs relating to 6 loan relationships totaling $62,515 and 4 partial charge-offs relating to 4 loan relationships totaling $143,491 as compared to charge-offs of31 loans representing 30 relationships totaling $1,737,604 for the year ended March 31, 2010. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In the ordinary course of business, the Bank has and expects to continue to have transactions, including borrowings, with its officers and directors.  In the opinion of management, transactions with directors were on substantially the same terms, including interest rates and collateral, as those prevailing at the time of comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Bank.  Officers of the Company are entitled to 1% loan discount, under a Bank-wide employee discount program, from those prevailing at the time of comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Bank.  Loans to such borrowers are summarized as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                       |   | March 31, |           |
|----------------------------|--------|-----------|----------------|
|                       |   | 2011      |           |   | 2010 |   |
|                       |   |      |           |   |   |   |
| Balance, beginning of year |   | $         | 1,008,961      |   |   | $ | 891,150 |   |
| Payments                   |   |      | ( 433,095 | ) |   |   | ( 16,744 | ) |
| Borrowings                 |   |      |           |   |   |   | 134,555 |   |
|                       |   |      |           |   |   |   |   |   |
| Balance, end of year       |   | $         | 575,866        |   |   | $ | 1,008,961 |   |

| 6.  | LOAN SERVICING |
|----------|----------------|

|   | Mortgage loans serviced for others are not included in the accompanying statement of financial condition.  The unpaid principal balances of these loans at March 31, 2011 and 2010 are summarized as follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | March 31, |    |
|------------------------------------|--------|-----------|---------|
|                               |   | 2011      |    |   | 2010 |   |
| Mortgage Loan Servicing Portfolio: |   |      |    |   |   |   |
| Mortgage Partnership               |   |      |    |   |   |   |
| Finance FHLB New York              |   | $         | 416,553 |   |   | $ | 425,947 |   |

----

| 7.  | ACCRUED INTEREST RECEIVABLE |
|----------|-----------------------------|

|   | Accrued interest receivable at March 31, 2011 and 2010 consists of the following: |
|--------|-----------------------------------------------------------------------------------|

|                       |   | March 31, |    |
|----------------------------|--------|-----------|---------|
|                       |   | 2011      |    |   | 2010 |   |
|                       |   |      |    |   |   |   |
| Loans                      |   | $         | 377,631 |   |   | $ | 406,445 |   |
| Investment securities      |   |      | 65,867  |   |   |   | 62,826 |   |
| Mortgage backed securities |   |      | 15,026  |   |   |   | 23,411 |   |
|                       |   |      |    |   |   |   |   |   |
|                       |   | $         | 458,524 |   |   | $ | 492,682 |   |

| 8.  | PREMISES AND EQUIPMENT |
|----------|------------------------|

|   | Premises and equipment at March 31, 2011 and 2010 consists of the following: |
|--------|------------------------------------------------------------------------------|

|                              |   |  March 31, |       |
|-----------------------------------|--------|-----------------|------------|
|                              |   | 2011            |       |   | 2010 |   |
|                              |   |            |       |   |   |   |
| Land                              |   | $               | 1,451,203  |   |   | $ | 1,451,203 |   |
| Buildings                         |   |            | 6,808,979  |   |   |   | 6,806,760 |   |
| Furniture, fixtures and equipment |   |            | 1,881,320  |   |   |   | 1,948,305 |   |
|                              |   |            | 10,141,502 |   |   |   | 10,206,268 |   |
| Accumulated depreciation          |   |            | (2,743,487 | ) |   |   | (2,482,298 | ) |
|                              |   |            |       |   |   |   |   |   |
|                              |   | $               | 7,398,015  |   |   | $ | 7,723,970 |   |

|   | Depreciation expense amounted to $343,936 and $341,858 for the years ended March 31, 2011 and 2010, respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------|

| 9.   | FEDERAL HOME LOAN BANK STOCK |
|----------------|------------------------------|

|   | The Bank is a member of the Federal Home Loan Bank System.  As a member, the Bank maintains an investment in the capital stock of the Federal Home Loan Bank of New York in an amount not less than 1% of its outstanding home loans or 1/20 of its outstanding notes payable, if any, to the Federal Home Loan Bank of New York, whichever is greater, as calculated December 31 of each year. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.  | DEPOSITS |
|-----------|----------|

|   | Deposit account balances at March 31, 2011 and 2010 are summarized as follows: |
|--------|--------------------------------------------------------------------------------|

|                               |   | March 31, 2011 |       |
|------------------------------------|--------|----------------|------------|
|                               |   |           |       |   | Weighted Average |   |   | Percent of |   |
|                               |   | Amount         |       |   | Interest Rate |   |   | Portfolio |   |
|                               |   |           |       |   |   |   |   |   |   |
| Non interest bearing accounts      |   | $              | 4,161,255  |   |   |   |   |   |   |  3.44 |   |
| Interest bearing checking accounts |   |           | 13,136,424 |   |   |   | 0.49 | % |   |   | 10.87 |   |
| Passbook savings accounts          |   |           | 15,572,055 |   |   |   | 0.40 |   |   |   | 12.89 |   |
| Money Market accounts              |   |           | 23,824,162 |   |   |   | 0.82 |   |   |   | 19.71 |   |
| Club accounts                      |   |           | 153,621    |   |   |   | 0.40 |   |   |   | 0.13 |   |
|                               |   |           | 56,847,517 |   |   |   |   |   |   |   | 47.04 |   |

----

| 10.  | DEPOSITS  (Continued) |
|-----------|----------------------------|

|                      |   | March 31, 2011 |        |
|---------------------------|--------|----------------|-------------|
|                      |   |           |        |   | Weighted Average |   |   | Percent of |   |
|                      |   | Amount         |        |   | Interest Rate |   |   | Portfolio |   |
|                      |   |           |        |   |   |   |   |   |   |
|                      |   |           |        |   |   |   |   |   |   |
| Certificates of Deposits: |   |           |        |   |   |   |   |   |   |
| 0.10% to 0.99%            |   |           | 5,359,163   |   |   |   | 0.78 |   |   |   | 4.44 |   |
| 1.00% to 1.99%            |   |           | 34,758,404  |   |   |   | 1.39 |   |   |   | 28.76 |   |
| 2.00% to 2.99%            |   |           | 13,226,418  |   |   |   | 2.50 |   |   |   | 10.95 |   |
| 3.00% to 3.99%            |   |           | 10,645,784  |   |   |   | 3.72 |   |   |   | 8.81 |   |
| 4.00% to 4.99%            |   |           | 5,124       |   |   |   | 4.82 |   |   |   |   |   |
|                      |   |           |        |   |   |   |   |   |   |   |   |   |
|                      |   |           | 63,994,893  |   |   |   |   |   |   |   | 52.96 |   |
|                      |   |           |        |   |   |   |   |   |   |   |   |   |
|                      |   | $              | 120,842,410 |   |   |   |   |   |   |   | 100.00 | % |

|                               |   | March 31, 2010 |        |
|------------------------------------|--------|----------------|-------------|
|                               |   |           |        |   | Weighted Average |   |   | Percent of |   |
|                               |   | Amount         |        |   | Interest Rate |   |   | Portfolio |   |
|                               |   |           |        |   |   |   |   |   |   |
| Non interest bearing accounts      |   | $              | 3,940,884   |   |   |   |   |   |   | 3.10 |   |
| Interest bearing checking accounts |   |           | 9,922,308   |   |   |   | 0.84 | % |   |   | 7.80 |   |
| Passbook savings accounts          |   |           | 14,707,503  |   |   |   | 0.45 |   |   |   | 11.57 |   |
| Money Market accounts              |   |           | 27,658,755  |   |   |   | 1.27 |   |   |   | 21.75 |   |
| Club accounts                      |   |           | 143,428     |   |   |   | 0.40 |   |   |   | 0.11 |   |
|                               |   |           | 56,372,878  |   |   |   |   |   |   |   | 44.33 |   |
|                               |   |           |        |   |   |   |   |   |   |   |   |   |
| Certificates of Deposits:          |   |           |        |   |   |   |   |   |   |   |   |   |
| 1.00% to 1.99%                     |   |           | 13,055,308  |   |   |   | 1.68 |   |   |   | 10.27 |   |
| 2.00% to 2.99%                     |   |           | 35,128,582  |   |   |   | 2.33 |   |   |   | 27.63 |   |
| 3.00% to 3.99%                     |   |           | 12,722,497  |   |   |   | 3.29 |   |   |   | 10.00 |   |
| 4.00% to 4.99%                     |   |           | 9,884,317   |   |   |   | 4.11 |   |   |   | 7.77 |   |
|                               |   |           | 70,790,704  |   |   |   |   |   |   |   | 55.67 |   |
|                               |   |           |        |   |   |   |   |   |   |   |   |   |
|                               |   | $              | 127,163,582 |   |   |   |   |   |   |   | 100.00 | % |

|   | Scheduled maturities of certificates of deposits at March 31, 2011 and 2010 are as follows: |
|--------|---------------------------------------------------------------------------------------------|

|                |   | March 31, |       |
|---------------------|--------|-----------|------------|
|                |   | 2011      |       |   | 2010 |   |
|                |   |      |       |   |   |   |
| 2011                |   | $         |       |   |   | $ | 47,899,059 |   |
| 2012                |   |      | 42,877,600 |   |   |   | 13,283,879 |   |
| 2013                |   |      | 11,984,042 |   |   |   | 5,231,818 |   |
| 2014                |   |      | 4,797,660  |   |   |   | 2,012,811 |   |
| 2015                |   |      | 2,249,478  |   |   |   | 2,363,137 |   |
| 2016 and thereafter |   |      | 2,086,113  |   |   |   |   |   |
|                |   |      |       |   |   |   |   |   |
|                |   | $         | 63,994,893 |   |   | $ | 70,790,704 |   |

----

| 10.  | DEPOSITS  (Continued) |
|-----------|----------------------------|

|   | The Bank held deposits from officers and directors of approximately $182,000 and $225,000 at March 31, 2011 and 2010, respectively.  These transactions were on the same terms as those prevailing at the time of comparable transactions with other persons. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | LINE OF CREDIT FROM ATLANTIC CENTRAL BANKERS BANK |
|-----|---------------------------------------------------|

|   | The Bank maintains a line of credit with Atlantic Central Bankers Bank at a rate to be determined by the lender when funds are borrowed.  At March 31, 2011 and 2010, the outstanding balance on the unsecured line of credit was $1,000,000 and |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | $-0-, respectively.  The interest rate at March 31, 2011 was 1.5%. |
|--------|------------------------------------------------------------------------------|

| 12. | ADVANCES FROM FEDERAL HOME LOAN BANK |
|-----|--------------------------------------|

|   | As of March 31, 2011, the Bank had a borrowing capacity in a combination of term advances and overnight borrowings of up to $7,759,090 at the FHLB of New York. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Advances from the Federal Home Loan Bank of New York are as follows: |
|--------|----------------------------------------------------------------------|

| Maturity      |   |   |   |   | Interest       |   |      |           |   |
|---------------|--------|--------|--------|--------|----------------|--------|-----------|----------------|--------|
| Date          |   | Rate   |   |   | March 31, 2011 |   |      | March 31, 2010 |   |
|          |   |   |   |   |           |   |      |           |   |
| April 7, 2011 |   |   | 0.34%  |   |           | $      | 1,100,000 |           |   | $ | -0- |   |

|   | Specific repos and other securities, with balances approximating $8,100,000 and $8,800,000 at March 31, 2011 and 2010, respectively, were pledged to the FHLB of New York as collateral. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13.  | INCOME TAXES |
|-----------|--------------|

|   | The Company and subsidiary file a consolidated federal income tax return.  The Company’s consolidated provision for income taxes for the years ended March 31, 2011 and 2010 consists of the following: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | Years Ended |    |
|---------------------------------------|--------|-------------|---------|
|                                  |   | March 31,   |    |
|                                  |   | 2011        |    |   | 2010 |   |
|                                  |   |        |    |   |   |   |
| Income Tax Expense (benefit)          |   |        |    |   |   |   |
| Current federal tax expense (benefit) |   |        |    |   |   |   |
| Federal                               |   | $           | 3,700   |   |   | $ | (13,500 | ) |
| State                                 |   |        | 3,500   |   |   |   | 2,500 |   |
| Deferred tax (benefit)                |   |        |    |   |   |   |   |   |
| Federal                               |   |        | 224,500 |   |   |   | ( 356,800 | ) |
| State                                 |   |        | 57,383  |   |   |   | ( 114,646 | ) |
|                                  |   |        |    |   |   |   |   |   |
|                                  |   | $           | 289,083 |   |   | $ | (482,446 | ) |

----

| 13.  | INCOME TAXES  (Continued) |
|-----------|--------------------------------|

|   | The consolidated provision for income taxes for the years ended March 31, 2011 and 2010 differs from that computed by applying federal statutory rates to income before federal income tax expense, as indicated in the following analysis: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | Years Ended |    |
|------------------------------------------------------|--------|-------------|---------|
|                                                 |   | March 31,   |    |
|                                                 |   | 2011        |    |   | 2010 |   |
|                                                 |   |        |    |   |   |   |
| Expected federal tax provision (benefit) at 34% rate |   | $           | 257,356 |   |   | $ | (101,760 | ) |
| State income tax effect                              |   |        | 33,861  |   |   |   | ( 178,659 | ) |
| Bank owned life insurance                            |   |        | (1,938  | ) |   |   | (2,027 | ) |
| Municipal bond interest                              |   |        | (196    | ) |   |   |   |   |
| Decrease in deferred tax asset valuation allowance   |   |        |    |   |   |   | (200,000 | ) |
|                                                 |   |        |    |   |   |   |   |   |
| Income tax (benefit)                                 |   | $           | 289,083 |   |   | $ | (482,446 | ) |
|                                                 |   |        |    |   |   |   |   |   |
| Effective tax rate (benefit)                         |   |        | 38.0    | % |   |   | ( 161.2 | %) |

|   | A summary of deferred tax assets and liabilities as of March 31, 2011 and 2010 are as follows: |
|--------|------------------------------------------------------------------------------------------------|

|                                               |   | March 31, |    |
|----------------------------------------------------|--------|-----------|---------|
|                                               |   | 2011      |    |   | 2010 |   |
| Deferred tax assets:                               |   |      |    |   |   |   |
| Accrued pension costs                              |   | $         | 9,600   |   |   | $ | 4,700 |   |
| Accrued post retirement medical plan               |   |      | 7,300   |   |   |   | 13,200 |   |
| Accrued retirement plan                            |   |      | 21,700  |   |   |   | 27,500 |   |
| Allowance for loan losses                          |   |      | 439,000 |   |   |   | 338,400 |   |
| Directors’ benefit plans                     |   |      | 111,300 |   |   |   | 102,900 |   |
| FASB 158 – unrecognized transition costs     |   |      | 31,400  |   |   |   | 31,400 |   |
| Net operating loss carry forward                   |   |      | 186,000 |   |   |   | 609,728 |   |
| Unrealized losses on securities available-for-sale |   |      | 500     |   |   |   |   |   |
| Non accrual interest                               |   |      | 29,000  |   |   |   |   |   |
| Total deferred tax assets                          |   | $         | 835,800 |   |   | $ | 1,127,828 |   |

----

| 13.  | INCOME TAXES  (Continued) |
|-----------|--------------------------------|

|                           |   | March 31, |          |
|--------------------------------|--------|-----------|---------------|
|                           |   | 2011      |          |   | 2010 |   |
|                           |   |      |          |   |   |   |
| Deferred tax liabilities:      |   |      |          |   |   |   |
| Accumulated depreciation       |   | $         | ( 87,900 | ) |   | $ | (97,900 | ) |
| Unrealized gains on securities |   |      |          |   |   |   |   |   |
| available-for-sale             |   |      |          |   |   |   | ( 900 | ) |
|                           |   |      |          |   |   |   |   |   |
| Total deferred tax liabilities |   |      | (87,900       | ) |   |   | ( 98,800 | ) |
|                           |   |      |          |   |   |   |   |   |
| NET DEFERRED TAX ASSETS        |   | $         | 747,900       |   |   | $ | 1,029,028 |   |

|   | The Company accounts for uncertainties in income taxes in accordance with Financial ASC Topic 740 “Accounting for Uncertainty in Income Taxes”.  ASC Topic 740 prescribes a threshold and measurement process for recognizing in the financial statements a tax position taken or expected to be taken in a tax return.  ASC Topic 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The Company has determined that there are no significant uncertain tax positions requiring recognition in its financial statements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In the event the Company is assessed for interest and/or penalties by taxing authorities, such assessed amounts will be classified in the financial statements as income tax expense.  Tax years 2007 through 2010 remain subject to examination by Federal and New Jersey taxing authorities. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company believes that it is more likely than not that the deferred tax assets, net of a valuation allowance, will be realized through taxable earnings or alternative tax strategies.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible.  Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible; the Company believes the net deferred tax assets are more likely than not to be realized. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | EMPLOYEE BENEFITS |
|-----|-------------------|

|   | Cash/Deferred Profit Sharing Plan |
|--------|-----------------------------------|

|   | The Bank maintains a cash/deferred profit sharing plan covering all full time employees with one year of service and who are at least twenty-one years of age.  Participants enter the Plan on the 1st of January or 1st of July subsequent to meeting the above requirements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Bank may contribute up to 10% of the annual compensation of each eligible employee.  The Bank’s contribution to the plan was $-0- for the years ended March 31, 2011 and 2010. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Retirement Incentive Plan |
|--------|---------------------------|

|   | A retired officer of the Bank is covered by a Retirement Incentive Plan that pays him $1,416.67 per month for ten years from the date of retirement at age sixty-five. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | To fund the above benefit, the Bank has purchased and is the sole beneficiary of a life insurance policy on the life of the officer.  The cash surrender value of this policy was $141,703 and $136,004 as of March 31, 2011 and 2010, respectively, and is reflected on the consolidated statement of financial position as Bank-owned life insurance. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 14. | EMPLOYEE BENEFITS  (Continued) |
|-----|------------------------------------------|

| 15. | BOARD OF DIRECTORS’ RETIREMENT PLAN |
|-----|-------------------------------------------|

|   | The Bank established a Defined Benefit Retirement Plan for the Bank’s Board of Directors on January 1, 2002.  This plan provides a monthly retirement benefit equal to 4% of the board fees payable as of their retirement date, multiplied by their completed years of service, up to a maximum of 80% of the final fee amount.  Directors must complete at least ten years of service in order to receive a retirement benefit under the plan.  Director retirement benefits are payable in equal monthly installments during the director’s lifetime, unless the director elects to receive a life annuity with the first 129 months guaranteed or a life annuity with either 50% or 100% (joint and survivor benefits) continuing for the spouse’s lifetime after the Director dies.  Under these other options, the retirement benefit is reduced to account for the value of the potential additional payments. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The estimated past service liability that will be amortized from accumulated other comprehensive income into net periodic pension costs over the next fiscal year is $15,192. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Net pension expense was $39,264 and $43,488 for years ended March 31, 2011 and 2010, respectively.  The components of net pension cost are as follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                          |   | Years Ended |   |
|-------------------------------|--------|-------------|--------|
|                          |   | March 31,   |   |
|                          |   | 2011        |   |   | 2010 |   |
|                          |   |        |   |   |   |   |
| Service cost                  |   | $           | 3,712  |   |   | $ | 7,780 |   |
| Interest cost                 |   |        | 20,208 |   |   |   | 20,516 |   |
| Return on assets              |   |        | 152    |   |   |   |   |   |
| Net amortization and deferral |   |        | 15,192 |   |   |   | 15,192 |   |
|                          |   |        |   |   |   |   |   |   |
| Net periodic pension cost     |   | $           | 39,264 |   |   | $ | 43,488 |   |

|   | The following table presents a reconciliation of the funded status of the defined benefit pension plan at March 31, 2011 and 2010: |
|--------|------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | March 31, |    |
|---------------------------------------|--------|-----------|---------|
|                                  |   | 2011      |    |   | 2010 |   |
|                                  |   |      |    |   |   |   |
| Accumulated benefit obligation        |   | $         | 345,897 |   |   | $ | 333,832 |   |
| Projected benefit obligation          |   |      | 349,374 |   |   |   | 335,542 |   |
| Fair value of plan assets             |   |      | -0-     |   |   |   | -0- |   |
| Unfunded projected benefit obligation |   |      | 349,374 |   |   |   | 335,542 |   |

----

| 15. | BOARD OF DIRECTORS’ RETIREMENT PLAN (Continued) |
|-----|-------------------------------------------------------|

|   | The following table presents a reconciliation of benefit obligations and plan assets: |
|--------|---------------------------------------------------------------------------------------|

|                                              |   | March 31, |          |
|---------------------------------------------------|--------|-----------|---------------|
|                                              |   | 2011      |          |   | 2010 |   |
| Change in Benefit Obligation                      |   |      |          |   |   |   |
| Projected benefit obligation at beginning of year |   | $         | 335,542       |   |   | $ | 276,395 |   |
| Service cost                                      |   |      | 3,712         |   |   |   | 7,780 |   |
| Interest cost                                     |   |      | 20,208        |   |   |   | 20,516 |   |
| Actuarial (gain) loss                             |   |      | 7,863         |   |   |   | 43,262 |   |
| Benefits paid                                     |   |      | ( 17,951 | ) |   |   | (12,411 | ) |
| Benefit obligation at end of year                 |   | $         | 349,374       |   |   | $ | 335,542 |   |

|                                           |   | March 31, |          |
|------------------------------------------------|--------|-----------|---------------|
|                                           |   | 2011      |          |   | 2010 |   |
| Change in Plan Assets                          |   |      |          |   |   |   |
| Fair value of Plan assets at beginning of year |   | $         | -0-           |   |   | $ | -0- |   |
| Actual return on Plan assets                   |   |      | -0-           |   |   |   | -0- |   |
| Employer contributions                         |   |      | 17,951        |   |   |   | 12,411 |   |
| Benefits paid                                  |   |      | ( 17,951 | ) |   |   | ( 12,411 | ) |
| Fair value of Plan assets at end of year       |   | $         | -0-           |   |   | $ | -0- |   |

|   | Actuarial assumptions used in determining pension amounts are as follows: |
|--------|---------------------------------------------------------------------------|

|                                    |   | Years Ended |   |
|-----------------------------------------|--------|-------------|--------|
|                                    |   | March 31,   |   |
|                                    |   | 2011        |   |   | 2010 |   |
|                                    |   |        |   |   |   |   |
| Discount rate for periodic pension cost |   |        | 6.25   | % |   |   | 7.50 | % |
| Discount rate for benefit obligation    |   |        | 6.00   | % |   |   | 6.25 | % |
| Rate of increase in compensation levels |   |        |   |   |   |   |   |   |
| and social security wage base           |   |        | 4.00   | % |   |   | 4.00 | % |
| Expected long-term rate of return on    |   |        |   |   |   |   |   |   |
| plan assets                             |   |        | N/A    |   |   |   | N/A |   |

| 16. | EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) |
|-----|--------------------------------------|

|   | In March 2007, the Company established an Employee Stock Ownership Plan (“ESOP”) covering all eligible employees as defined by the ESOP.  The ESOP is a tax-qualified plan, designed to invest in the Company’s common stock, which provides employees with the opportunity to receive a funded retirement benefit based primarily on the value of the Company’s common stock.  The Company accounts for its ESOP in accordance with Statement of Position (“SOP”) 93-6, “Employer’s Accounting for Employee Stock Ownership Plans,” issued by the Accounting Standards Division of the American Institute of Certified Public Accountants (“AICPA”). |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | To purchase the Company’s common stock, the ESOP borrowed $640,810 from the Company to purchase 64,081 shares of the Company’s common stock in the Company’s initial public offering.  The ESOP loan is being repaid principally from the Bank’s contributions to the ESOP over a period of up to 20 years.  Dividends declared on common stock held by the ESOP and not allocated to the account of a participant can be used to repay the loan.  Compensation expense is recognized in accordance with SOP 93-6.  The number of shares released annually is based upon the ratio that the current principal and interest payment bears to the current and all remaining scheduled future principal and interest payments. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 16. | EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)  (Continued) |
|-----|-------------------------------------------------------------|

|   | All shares that have not been released for allocation to participants are held in a suspense account by the ESOP for future allocation as the loan is repaid.  Unallocated common stock purchased by the ESOP is recorded as a reduction of stockholders’ equity at cost.  As of March 31, 2011, the Company had allocated a total of 12,816 shares from the suspense account to participants.  The Company recognized compensation expense related to the ESOP of $12,816 and $5,607 for the years ended March 31, 2011 and 2010, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.  | EARNINGS PER SHARE |
|-----------|--------------------|

|                       |   | 2011   |      |   | 2010   |   |
|----------------------------|--------|--------|-----------|--------|--------|--------|
| Numerator:                 |   |   |      |   |   |   |
| Net income                 |   | $      | 467,847   |   |   | $      | 183,151 |   |
| Denominator:               |   |   |      |   |   |   |   |   |
| Basic number of shares     |   |   | 1,583,460 |   |   |   | 1,580,256 |   |
| Dilutive effect of options |   |   | -         |   |   |   | - |   |
| Diluted number of shares   |   |   | 1,583,460 |   |   |   | 1,580,256 |   |
| Earnings per share:        |   |   |      |   |   |   |   |   |
| Basic earnings per share   |   | $      | 0.30      |   |   | $      | 0.12 |   |
| Diluted earnings per share |   | $      | 0.30      |   |   | $      | 0.12 |   |

|   | As of March 31, 2011, the Company did not have any outstanding stock options. |
|--------|-------------------------------------------------------------------------------|

| 18. | FAIR VALUES OF FINANCIAL INSTRUMENTS |
|-----|--------------------------------------|

|   | ASC Topic No. 820, “Fair Value Measurements and Disclosures” establishes a framework for measuring fair value under U.S. generally accepted accounting principles, and expands disclosure requirements for fair value measurements.  ASC Topic No. 820 does not require any new fair value measurements.  The adoption of ASC Topic No. 820 did not have a material impact on the Company’s consolidated financial statements. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 1: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. |
|--------|-------------------------------------------------------------------------------------------------------------|

|   | Level 2: Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly orindirectly.  Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3: Level 3 inputs are unobservable inputs. |
|--------|--------------------------------------------------|

|   | The fair value of securities available for sale are determined by obtaining quoted prices on a nationally recognized securities exchange (Level 1 inputs) of matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A financial instrument’s level within the fair value hierarchy is based upon the lowest level of any input significant to the fair value measurement. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 18. | FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued) |
|-----|--------------------------------------------------|

|   | Assets and Liabilities Measured on a Recurring Basis |
|--------|------------------------------------------------------|

|   | Assets and liabilities measured at fair value on a recurring basis are summarized below: |
|--------|------------------------------------------------------------------------------------------|

|               |   | Fair Value Measurements at Reporting Date Using |    |
|--------------------|--------|-------------------------------------------------|---------|
|               |   |                                            |    |   |   |   |   |   |   |
|               |   | Quoted Prices                                   |    |   | Significant |   |   | Significant |   |
|               |   | in Active                                       |    |   | Other |   |   | Other |   |
|               |   | Markets for                                     |    |   | Observable |   |   | Unobservable |   |
|               |   | Identical Assets                                |    |   | Inputs |   |   | Inputs |   |
|               |   | (Level 1)                                       |    |   | (Level 2) |   |   | (Level 3) |   |
|               |   |                                            |    |   |   |   |   |   |   |
| March 31, 2011     |   |                                            |    |   |   |   |   |   |   |
| Available-for-sale |   |                                            |    |   |   |   |   |   |   |
| securities         |   | $                                               | 248,062 |   |   |   | NONE |   |   |   | NONE |   |
|               |   |                                            |    |   |   |   |   |   |   |   |   |   |
| March 31, 2010     |   |                                            |    |   |   |   |   |   |   |   |   |   |
| Available-for-sale |   |                                            |    |   |   |   |   |   |   |   |   |   |
| securities         |   | $                                               | 258,163 |   |   |   | NONE |   |   |   | NONE |   |

|   | Assets and Liabilities Measured on a Non-Recurring Basis |
|--------|----------------------------------------------------------|

|   | Assets and liabilities measured at fair value on a non-recurring basis at March 31, 2011 and 2010 are as follows: |
|--------|-------------------------------------------------------------------------------------------------------------------|

|              |   | Fair Value Measurements at Reporting Date Using |   |
|-------------------|--------|-------------------------------------------------|--------|
|              |   |                                            |   |   |   |   |   |   |   |
|              |   | Quoted Prices                                   |   |   | Significant |   |   | Significant |   |
|              |   | in Active                                       |   |   | Other |   |   | Other |   |
|              |   | Markets for                                     |   |   | Observable |   |   | Unobservable |   |
|              |   | Identical Assets                                |   |   | Inputs |   |   | Inputs |   |
|              |   | (Level 1)                                       |   |   | (Level 2) |   |   | (Level 3) |   |
| March 31, 2011    |   |                                            |   |   |   |   |   |   |   |
| Impaired loans    |   | $                                               |   |   |   | $ | 5,458,468 |   |   | $ |   |   |
| Real estate owned |   |                                            |   |   |   |   | 770,639 |   |   |   |   |   |
|              |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Total             |   |                                            | NONE   |   |   | $ | 6,229,107 |   |   | $ | NONE |   |
|              |   |                                            |   |   |   |   |   |   |   |   |   |   |
| March 31, 2010    |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Impaired loans    |   | $                                               |   |   |   | $ | 7,559,115 |   |   | $ |   |   |
| Real estate owned |   |                                            |   |   |   |   | 412,969 |   |   |   |   |   |
|              |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Total             |   |                                            | NONE   |   |   | $ | 7,972,084 |   |   | $ | NONE |   |

----

| 18. | FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued) |
|-----|--------------------------------------------------|

|   | Cash and cash equivalents, accrued interest receivable, and accrued interest payable |
|--------|--------------------------------------------------------------------------------------|

|   | The items are generally short-term in nature, and accordingly, the carrying amounts reported in the consolidated statements of financial condition are reasonable approximations of their fair values. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Investment securities |
|--------|-----------------------|

|   | Fair values for investment securities are based on quoted market prices, if available.  If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans |
|--------|-------|

|   | Fair values are estimated for portfolios of loans with similar financial characteristics.  Loans are segregated by type such as residential mortgage, construction, land and consumer.  Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fair value of performing loans is estimated by discounting cash flows using estimated market discount rates at which similar loans would be made to borrowers and reflect similar credit ratings and interest rate risk for the same remaining maturities. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fair value for significant nonperforming loans is based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Real estate owned |
|--------|-------------------|

|   | The carrying amounts approximate the fair value. |
|--------|--------------------------------------------------|

|   | Deposits |
|--------|----------|

|   | The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings, and NOW and money market accounts, is equal to the amount payable on demand.  The fair value of certificates of deposit is based on the discounted value of contractual cash flows.  The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Lines of Credit from Atlantic Central Bankers Bank and Advances from Federal Home Loan Bank |
|--------|---------------------------------------------------------------------------------------------|

|   | The carrying amounts approximate the fair value. |
|--------|--------------------------------------------------|

|   | Accrued interest |
|--------|------------------|

|   | The carrying amounts of accrued interest approximate the fair values. |
|--------|-----------------------------------------------------------------------|

|   | Advanced payments by borrowers for taxes and insurance (escrows) |
|--------|------------------------------------------------------------------|

|   | The carrying amounts of escrow accounts approximate fair value. |
|--------|-----------------------------------------------------------------|

----

| 18. | FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued) |
|-----|--------------------------------------------------|

|   | Off-balance sheet instruments |
|--------|-------------------------------|

|   | Off-balance sheet instruments are primarily comprised of loan commitments and unfunded lines of credit which are generally priced at market rate at the time of funding.  Therefore, these instruments have nominal value prior to funding. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As required by ASC Topic No. 825-10-65, the estimated fair value of financial instruments at March 31, 2011 and 2010 are as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | March 31, 2011 |        |   | March 31, 2010 |   |
|-----------------------------|--------|----------------|-------------|--------|----------------|--------|
|                        |   | Carrying       |        |   | Estimated      |   |   | Carrying |   |   | Estimated |   |
|                        |   | Amount         |        |   | Fair Value     |   |   | Amount |   |   | Fair Value |   |
|                        |   |           |        |   |           |   |   |   |   |   |   |   |
| Financial Assets:           |   |           |        |   |           |   |   |   |   |   |   |   |
| Cash and cash equivalents   |   | $              | 5,662,629   |   |           | $      | 5,662,629 |   |   | $ | 4,883,669 |   |   | $ | 4,883,669 |   |
| Investment securities       |   |           | 15,945,358  |   |           |   | 15,928,871 |   |   |   | 16,615,297 |   |   |   | 17,064,262 |   |
| Loans - net                 |   |           | 103,867,330 |   |           |   | 107,877,000 |   |   |   | 107,204,042 |   |   |   | 111,865,000 |   |
| FHLB stock                  |   |           | 274,700     |   |           |   | 274,700 |   |   |   | 206,700 |   |   |   | 206,700 |   |
| Accrued interest            |   |           |        |   |           |   |   |   |   |   |   |   |   |   |   |   |
| receivable                  |   |           | 458,524     |   |           |   | 458,524 |   |   |   | 492,682 |   |   |   | 492,682 |   |
| Real estate owned           |   |           | 770,639     |   |           |   | 770,639 |   |   |   | 412,969 |   |   |   | 412,969 |   |
| Total financial assets      |   | $              | 126,979,180 |   |           | $      | 130,972,363 |   |   | $ | 129,815,359 |   |   | $ | 134,925,282 |   |
|                        |   |           |        |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Financial Liabilities:      |   |           |        |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                    |   |           | 120,842,410 |   |           |   | 122,053,000 |   |   |   | 127,163,582 |   |   |   | 128,742,000 |   |
| Line of credit from ACBB    |   |           | 1,000,000   |   |           |   | 1,000,000 |   |   |   |   |   |   |   |   |   |
| Advances from FHLB          |   |           | 1,100,000   |   |           |   | 1,100,000 |   |   |   |   |   |   |   |   |   |
| Advance payments by         |   |           |        |   |           |   |   |   |   |   |   |   |   |   |   |   |
| borrowers for taxes         |   |           |        |   |           |   |   |   |   |   |   |   |   |   |   |   |
| and insurance               |   |           | 394,864     |   |           |   | 394,864 |   |   |   | 424,291 |   |   |   | 424,291 |   |
| Accrued interest payable    |   |           | 22,658      |   |           |   | 22,658 |   |   |   | 45,580 |   |   |   | 45,580 |   |
| Total financial liabilities |   | $              | 123,359,932 |   |           | $      | 124,570,522 |   |   | $ | 127,633,453 |   |   | $ | 129,211,871 |   |

|                           |   | March 31, 2011 |      |   | March 31, 2010 |   |
|--------------------------------|--------|----------------|-----------|--------|----------------|--------|
|                           |   | Contract       |      |   | Estimated      |   |   | Contract |   |   | Estimated |   |
|                           |   | Value          |      |   | Fair Value     |   |   | Value |   |   | Fair Value |   |
| Off-balance sheet instruments: |   |           |      |   |           |   |   |   |   |   |   |   |
| Commitments to                 |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| extend credit                  |   | $              | 5,706,000 |   |           | $      | 5,706,000 |   |   | $ | 1,526,000 |   |   | $ | 1,526,000 |   |

| 19.  | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK |
|-----------|---------------------------------------------------|

|   | In the normal course of business, the Bank has outstanding commitments and contingent liabilities, such as commitments to extend credit, which are not included in the accompanying consolidated financial statements.  The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit is represented by the contractual or notional amount of those instruments.  The Bank uses the same credit policies in making such commitments as it does for instruments that are included in the consolidated balance sheet. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 19.  | FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK  (Continued) |
|-----------|---------------------------------------------------------------------|

|   | Financial instruments whose contract amount represents credit risk were as follows: |
|--------|-------------------------------------------------------------------------------------|

|                         |   | March 31, |      |
|------------------------------|--------|-----------|-----------|
| Commitments to Extend Credit |   | 2011      |      |   | 2010 |   |
|                         |   |      |      |   |   |   |
| Home equity line of credit   |   | $         | 4,407,000 |   |   | $ | 439,000 |   |
| Commercial line of credit    |   |      | 1,298,000 |   |   |   | 1,086,000 |   |
| Consumer line of credit      |   |      | 1,000     |   |   |   | 1,000 |   |
|                         |   | $         | 5,706,000 |   |   | $ | 1,526,000 |   |

| 20.  | COMMITMENTS AND CONTINGENT LIABILITIES |
|-----------|----------------------------------------|

|           |   | March 31, 2011 |      |
|----------------|--------|----------------|-----------|
|           |   | Fixed-         |      |   | Variable- |   |   |   |   |
|           |   | Rate           |      |   | Rate |   |   | Total |   |
|           |   |           |      |   |   |   |   |   |   |
| First-mortgage |   | $              | 2,303,000 |   |   | $ |   |   |   | $ | 2,303,000 |   |

| 21.  | REGULATORY CAPITAL |
|-----------|--------------------|

|   | Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of:  total risk-based capital and Tier I capital to risk-weighted assets (as defined in the regulations), Tier I capital to adjusted total assets (as defined), and tangible capital to adjusted total assets (as defined).   Management believes that, as of March 31, 2011, the Bank met all capital adequacy requirements to which it was subject. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 21.  | REGULATORY CAPITAL  (Continued) |
|-----------|--------------------------------------|

|   | As of March 31, 2011, the most recent notification from the OTS, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action.  To remain categorized as adequately capitalized, the Bank would have to maintain minimum total risk-based, Tier I risk-based, Tier I leverage and Tangible Capital to adjusted total assets ratios as disclosed in the table below.  There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Bank’s actual and required capital amounts and ratios as of March 31, 2011 and 2010 are as follows: |
|--------|---------------------------------------------------------------------------------------------------------------|

|                       |   |   |       |   |              |   |   | For Capital Adequacy        |   |
|----------------------------|--------|--------|------------|--------|-------------------|--------|--------|-----------------------------|--------|
|                       |   |   |       |   |              |   |   | Purposes and to Be          |   |
|                       |   |   |       |   |              |   |   | Adequately Capitalized      |   |
|                       |   |   |       |   |              |   |   | Under the Prompt Corrective |   |
|                       |   | Actual |       |   | Action Provisions |   |
|                       |   | Amount |       |   | Ratio             |   |   | Amount                      |   |   | Ratio |   |
| As of March 31, 2011:      |   |   |       |   |              |   |   |                        |   |   |   |   |
| Total Risk-Based Capital   |   |   |       |   |              |   |   |                        |   |   |   |   |
| (to Risk-Weighted Assets)  |   | $      | 12,579,000 |   |              |   | 14.52  | %                           |   | ≥$ |     6,932,240 |   |   |   | ≥  8.0 | % |
| Tier I Capital             |   |   |       |   |              |   |   |                        |   |   |   |   |   |   |   |   |
| (to Risk-Weighted Assets)  |   |   | 11,795,000 |   |              |   | 13.61  | %                           |   | ≥ |     3,466,120 |   |   |   | ≥  4.0 | % |
| Tier I Capital             |   |   |       |   |              |   |   |                        |   |   |   |   |   |   |   |   |
| (to Adjusted Total Assets) |   |   | 11,795,000 |   |              |   | 8.67   | %                           |   | ≥ |     5,443,720 |   |   |   | ≥  4.0 | % |
| Tangible Capital           |   |   |       |   |              |   |   |                        |   |   |   |   |   |   |   |   |
| (to Adjusted Total Assets) |   |   | 11,795,000 |   |              |   | 8.67   | %                           |   | ≥ |     2,041,395 |   |   |   | ≥  1.5 | % |

|                       |   |   |       |              |   |   |   | For Capital Adequacy        |   |
|----------------------------|--------|--------|------------|-------------------|--------|--------|--------|-----------------------------|--------|
|                       |   |   |       |              |   |   |   | Purposes and to Be          |   |
|                       |   |   |       |              |   |   |   | Adequately Capitalized      |   |
|                       |   |   |       |              |   |   |   | Under the Prompt Corrective |   |
|                       |   | Actual |       | Action Provisions |   |
|                       |   | Amount |       |              | Ratio  |   |   | Amount                      |   |   | Ratio |   |
| As of March 31, 2010:      |   |   |       |              |   |   |   |                        |   |   |   |   |
| Total Risk-Based Capital   |   |   |       |              |   |   |   |                        |   |   |   |   |
| (to Risk-Weighted Assets)  |   | $      | 11,501,000 |              |   |   | 12.62  | %                           |   | ≥$ | 7,293,400 |   |   |   | ≥  8.0 | % |
| Tier I Capital             |   |   |       |              |   |   |   |                        |   |   |   |   |   |   |   |   |
| (to Risk-Weighted Assets)  |   |   | 10,804,000 |              |   |   | 11.85  | %                           |   | ≥ | 3,646,700 |   |   |   | ≥  4.0 | % |
| Tier I Capital             |   |   |       |              |   |   |   |                        |   |   |   |   |   |   |   |   |
| (to Adjusted Total Assets) |   |   | 10,804,000 |              |   |   | 7.76   | %                           |   | ≥ | 5,569,600 |   |   |   | ≥  4.0 | % |
| Tangible Capital           |   |   |       |              |   |   |   |                        |   |   |   |   |   |   |   |   |
| (to Adjusted Total Assets) |   |   | 10,804,000 |              |   |   | 7.76   | %                           |   | ≥ | 2,088,600 |   |   |   | ≥  1.5 | % |

|   | Federal regulations place certain restrictions on dividends paid by the Bank to the Company.  The total amount of dividends that may be paid at any date is generally limited to the earnings of the Bank year to date plus retained earnings for the prior two fiscal years, net of any prior capital distributions.  In addition, dividends paid by the Bank to the Company would be prohibited if the distribution would cause the Bank’s capital to be reduced below the applicable minimum capital requirements. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 22.  | CEASE AND DESIST ORDER |
|-----------|------------------------|

|   | ·  | maintain (i) a tier 1 (core) capital to adjusted total assets ratio of at least 6.0% and (ii) a total risk-based capital to risk-weighted assets ratio of at least 10.0% after the funding of an adequate allowance for loan and lease losses; |
|--------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | if the Bank fails to meet these capital ratio requirements at any time, within 15 days thereafter prepare a written contingency plan detailing actions to be taken, with specific time frames, providing for (i) a merger with another federally insured depository institution or holding company thereof, or (ii) voluntary liquidation; |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | prepare a problem asset plan that will include strategies, targets and timeframes to reduce the Bank’s level of criticized assets and nonperforming loans; |
|--------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | within 30 days after the end of each quarter, beginning with the quarter ending June 30, 2010, prepare a quarterly written status report that will include the requirements contained in the Order; |
|--------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | prepare an updated business plan that will include the requirements contained in the Order and that also will include strategies to restructure the Bank’s operations, strengthen and improve the Bank’s earnings, reduce expenses and achieve positive core income and consistent profitability; |
|--------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | restrict quarterly asset growth to an amount not to exceed net interest credited on deposit liabilities for the prior quarter without the prior non-objection of the OTS; |
|--------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | refrain from making, investing in or purchasing any new commercial loans without the prior non-objection of the OTS (the Bank may refinance, extend or otherwise modify any existing commercial loans, so long as no new loan proceeds are advanced as part of the transaction); |
|--------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | cease to accept, renew or roll over any brokered deposit or act as a deposit broker, without the prior written waiver of the Federal Deposit Insurance Corporation; |
|--------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | not make any severance or indemnification payments without complying with regulatory requirements regarding such payments; and |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | comply with prior regulatory notification requirements for any changes in directors or senior executive officers. |
|--------|--------------|-------------------------------------------------------------------------------------------------------------------|

----