| VSB Bancorp, Inc.                                              |
|----------------------------------------------------------------|
| (Exact name of registrant as specified in its charter)         |
|                                                           |
| New York                                                       |
| (State or other jurisdiction of incorporation or organization) |
|                                                           |
| 11 - 3680128                                                   |
| (I. R. S. Employer Identification No.)                         |
|                                                           |
| 4142 Hylan Boulevard, Staten Island, New York 10308            |
| (Address of principal executive offices)                       |
|                                                           |
| (718) 979-1100                                                 |
| Issuer’s telephone number                                |
|                                                           |
| Common Stock                                                   |
| (Title of Class)                                               |

| Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company x |
|---------------------------|--------------------------|-------------------------|-----------------------------|

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|   | ● | deterioration in local, regional, national or global economic conditions which could result in, among other things, an increase in loan delinquencies, a decrease in property values, or a change in the real estate turnover rate; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | changes in market interest rates or changes in the speed at which market interest rates change;                                                                                                                                     |
|   | ● | changes in laws and regulations affecting the financial service industry;                                                                                                                                                           |
|   | ● | changes in the public’s perception of financial institutions in general and banks in particular;                                                                                                                              |
|   | ● | changes in competition; and                                                                                                                                                                                                         |
|   | ● | changes in consumer preferences by our customers or the customers of our business borrowers.                                                                                                                                        |

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|                                                |   |  At December 31, |       |
|-----------------------------------------------------|--------|-----------------------|------------|
|                                                |   | 2010                  |       | 2009 |   | 2008 |   | 2007 |   | 2006 |   |
|                                                |   |                  |       | % |   |   |   | % |   |   |   | % |   |   |   | % of |   |   |   | % of |   |
|                                                |   |   Amount    |       | of Total |   | Amount |   | of Total |   | Amount |   | of Total |   | Amount |   | Total |   | Amount |   | Total |   |
|                                                |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial loans:                                   |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial secured                                  |   | $                     | 1,393,532  |   | 1.7 | % | $ | 1,138,308 |   | 1.4 | % | $ | 1,177,796 |   | 1.8 | % | $ | 1,171,152 |   | 1.9 | % | $ | 1,231,880 |   | 1.8 | % |
| Commercial unsecured                                |   |                  | 12,924,378 |   | 15.8 |   |   | 10,966,874 |   | 13.9 |   |   | 9,558,296 |   | 14.4 |   |   | 10,981,044 |   | 17.5 |   |   | 10,882,002 |   | 16.3 |   |
| Total commercial loans                              |   |                  | 14,317,910 |   | 17.5 |   |   | 12,105,182 |   | 15.3 |   |   | 10,736,092 |   | 16.2 |   |   | 12,152,196 |   | 19.4 |   |   | 12,113,882 |   | 18.1 |   |
| Real Estate loans:                                  |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                          |   |                  | 58,204,596 |   | 71.1 |   |   | 48,767,729 |   | 61.7 |   |   | 39,918,879 |   | 60.1 |   |   | 31,607,039 |   | 50.6 |   |   | 33,215,627 |   | 49.9 |   |
| Residential                                         |   |                  | 2,460,114  |   | 3.0 |   |   | 2,914,956 |   | 3.7 |   |   | 2,548,159 |   | 3.8 |   |   | 2,314,716 |   | 3.7 |   |   | 165,801 |   | 0.2 |   |
| Total real estate loans                             |   |                  | 60,664,710 |   | 74.1 |   |   | 51,682,685 |   | 65.4 |   |   | 42,467,038 |   | 63.9 |   |   | 33,921,755 |   | 54.3 |   |   | 33,381,428 |   | 50.1 |   |
| Construction loans:                                 |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                          |   |                  | 5,387,500  |   | 6.6 |   |   | 10,964,000 |   | 13.9 |   |   | 10,996,432 |   | 16.5 |   |   | 13,585,698 |   | 21.7 |   |   | 17,552,797 |   | 26.4 |   |
| Owner occupied one-to-four family                   |   |                  | 487,000    |   | 0.6 |   |   | 2,294,000 |   | 2.9 |   |   | 900,000 |   | 1.4 |   |   | 1,523,895 |   | 2.4 |   |   | 1,825,000 |   | 2.7 |   |
| Total construction loans                            |   |                  | 5,874,500  |   | 7.2 |   |   | 13,258,000 |   | 16.8 |   |   | 11,896,432 |   | 17.9 |   |   | 15,109,593 |   | 24.1 |   |   | 19,377,797 |   | 29.1 |   |
| Other loans:                                        |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer loans                                      |   |                  | 533,860    |   | 0.7 |   |   | 532,498 |   | 0.7 |   |   | 599,293 |   | 0.9 |   |   | 566,356 |   | 0.9 |   |   | 826,528 |   | 1.2 |   |
| Other loans                                         |   |                  | 386,750    |   | 0.5 |   |   | 1,455,224 |   | 1.8 |   |   | 757,481 |   | 1.1 |   |   | 827,122 |   | 1.3 |   |   | 974,278 |   | 1.5 |   |
| Total other loans                                   |   |                  | 920,610    |   | 1.2 |   |   | 1,987,722 |   | 2.5 |   |   | 1,356,774 |   | 2.0 |   |   | 1,393,478 |   | 2.2 |   |   | 1,800,806 |   | 2.7 |   |
|                                                |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans                                         |   |                  | 81,777,730 |   | 100.0 | % |   | 79,033,589 |   | 100.0 | % |   | 66,456,336 |   | 100.0 | % |   | 62,577,022 |   | 100.0 | % |   | 66,673,913 |   | 100.0 | % |
|                                                |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                               |   |                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unearned discounts, net and deferred loan fees, net |   |                  | 239,506    |   |   |   |   | 199,433 |   |   |   |   | 209,684 |   |   |   |   | 203,944 |   |   |   |   | 263,236 |   |   |   |
| Allowance for loan losses                           |   |                  | 1,277,220  |   |   |   |   | 1,063,454 |   |   |   |   | 987,876 |   |   |   |   | 927,161 |   |   |   |   | 1,128,824 |   |   |   |
| Loans, net                                          |   | $                     | 80,261,004 |   |   |   | $ | 77,770,702 |   |   |   | $ | 65,258,776 |   |   |   | $ | 61,445,917 |   |   |   | $ | 65,281,853 |   |   |   |

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|                          |   | Year Ended   |        |   | Year Ended   |   |        | Year Ended   |   |
|-------------------------------|--------|--------------|-------------|--------|--------------|--------|-------------|--------------|--------|
|                          |   | December 31, |        |   | December 31, |   |        | December 31, |   |
|                          |   | 2010         |        |   | 2009         |   |        | 2008         |   |
| Commercial Loans (gross):     |   |         |        |   |         |   |        |         |   |
| At beginning of period        |   | $            | 12,105,182  |   |         | $      | 10,736,092  |         |   | $ | 12,152,196 |   |
| Commercial loans originated:  |   |         |        |   |         |   |        |         |   |   |   |   |
| Secured                       |   |         | 1,484,940   |   |         |   | 1,178,006   |         |   |   | 1,841,943 |   |
| Unsecured                     |   |         | 34,313,999  |   |         |   | 30,778,779  |         |   |   | 30,451,244 |   |
| Total commercial loans        |   |         | 35,798,939  |   |         |   | 31,956,785  |         |   |   | 32,293,187 |   |
| Principal repayments          |   |         | (33,586,211 | )      |         |   | (30,587,695 | )            |   |   | (33,709,291 | ) |
| At end of period              |   | $            | 14,317,910  |   |         | $      | 12,105,182  |         |   | $ | 10,736,092 |   |
|                          |   |         |        |   |         |   |        |         |   |   |   |   |
| Real Estate loans:            |   |         |        |   |         |   |        |         |   |   |   |   |
| At beginning of period        |   | $            | 51,682,685  |   |         | $      | 42,467,038  |         |   | $ | 33,921,755 |   |
| Real estate loans originated: |   |         |        |   |         |   |        |         |   |   |   |   |
| Commercial                    |   |         | 21,034,000  |   |         |   | 16,934,000  |         |   |   | 12,217,500 |   |
| Residential                   |   |         | —     |   |         |   | 535,000     |         |   |   | 4,180,000 |   |
| Total real estate loans       |   |         | 21,034,000  |   |         |   | 17,469,000  |         |   |   | 16,397,500 |   |
| Principal repayments          |   |         | (12,051,975 | )      |         |   | (8,253,353  | )            |   |   | (7,852,217 | ) |
| At end of period              |   | $            | 60,664,710  |   |         | $      | 51,682,685  |         |   | $ | 42,467,038 |   |
| Construction loans            |   |         |        |   |         |   |        |         |   |   |   |   |
| At beginning of period        |   | $            | 13,258,000  |   |         | $      | 11,896,432  |         |   | $ | 15,109,593 |   |
| Construction loans originated |   |         | 4,460,000   |   |         |   | 5,938,000   |         |   |   | 8,422,000 |   |
| Principal repayments          |   |         | (11,843,500 | )      |         |   | (4,576,432  | )            |   |   | (11,635,161 | ) |
| At end of period              |   | $            | 5,874,500   |   |         | $      | 13,258,000  |         |   | $ | 11,896,432 |   |
| Other loans (gross):          |   |         |        |   |         |   |        |         |   |   |   |   |
| At beginning of period        |   | $            | 1,987,722   |   |         | $      | 1,356,774   |         |   | $ | 1,393,478 |   |
| Other loans originated        |   |         | 479,555     |   |         |   | 798,536     |         |   |   | 769,067 |   |
| Principal repayments          |   |         | (1,546,667  | )      |         |   | (167,588    | )            |   |   | (805,771 | ) |
| At end of period              |   | $            | 920,610     |   |         | $      | 1,987,722   |         |   | $ | 1,356,774 |   |

|                      |   |  At December 31, 2010 |       |
|---------------------------|--------|----------------------------|------------|
|                      |   | Commercial                 |       |   | Commercial |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                      |   | Unsecured                  |       |   | Secured |   |   | Construction |   |   | Real Estate |   |   | Loans |   |   | Total |   |
| Amounts due:              |   |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Within one year           |   | $                          | 8,452,240  |   |   | $ | 1,042,114 |   |   | $ | 3,454,500 |   |   | $ | 10,672,348 |   |   | $ | 433,298 |   |   | $ | 24,054,500 |   |
| After one year:           |   |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One to five years         |   |                       | 4,332,005  |   |   |   | 351,418 |   |   |   | 2,420,000 |   |   |   | 8,429,312 |   |   |   | 487,312 |   |   |   | 16,020,047 |   |
| After five years          |   |                       | 140,133    |   |   |   | — |   |   |   | — |   |   |   | 41,563,050 |   |   |   | — |   |   |   | 41,703,183 |   |
| Total amount due          |   |                       | 12,924,378 |   |   |   | 1,393,532 |   |   |   | 5,874,500 |   |   |   | 60,664,710 |   |   |   | 920,610 |   |   |   | 81,777,730 |   |
|                      |   |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                     |   |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unearned fees             |   |                       | —    |   |   |   | 342 |   |   |   | 40,585 |   |   |   | 198,579 |   |   |   | — |   |   |   | 239,506 |   |
| Allowance for loan losses |   |                       | 520,953    |   |   |   | 13,486 |   |   |   | 52,138 |   |   |   | 660,536 |   |   |   | 30,107 |   |   |   | 1,277,220 |   |
| Loans, net                |   | $                          | 12,403,425 |   |   | $ | 1,379,704 |   |   | $ | 5,781,777 |   |   | $ | 59,805,595 |   |   | $ | 890,503 |   |   | $ | 80,261,004 |   |

----

|                       |   | Due After December 31, 2011 |       |
|----------------------------|--------|-----------------------------|------------|
|                       |   | Fixed                       |       |   | Variable |   |   | Total |   |
|                       |   |                        |       |   |   |   |   |   |   |
| Commercial Business Loans: |   |                        |       |   |   |   |   |   |   |
| Unsecured                  |   | $                           | 104,080    |   |   | $ | 4,368,058 |   |   | $ | 4,472,138 |   |
| Secured                    |   |                        | 152,520    |   |   |   | 198,898 |   |   |   | 351,418 |   |
| Real Estate                |   |                        |       |   |   |   |   |   |   |   |   |   |
| Commercial                 |   |                        | 6,897,071  |   |   |   | 51,307,525 |   |   |   | 58,204,596 |   |
| Residential                |   |                        | 2,460,114  |   |   |   | — |   |   |   | 2,460,114 |   |
| Construction               |   |                        | —    |   |   |   | 2,420,000 |   |   |   | 2,420,000 |   |
| Other loans                |   |                        | 487,312    |   |   |   | — |   |   |   | 487,312 |   |
| Total loans                |   | $                           | 10,101,097 |   |   | $ | 58,294,481 |   |   | $ | 68,395,578 |   |

----

----

|                            |   |  At December 31, 2010 |    |
|---------------------------------|--------|----------------------------|---------|
|                            |   | 60-89 Days                 |    |   | 90 Days or more |   |
|                            |   | Number                     |    |   | Principal |   |   | Number |   |   | Principal |   |
|                            |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate          |   |                       | 2       |   |   | $ | 277,960 |   |   |   | 12 |   |   | $ | 4,064,281 |   |
| Commercial unsecured            |   |                       | 2       |   |   |   | 42,708 |   |   |   | 2 |   |   |   | 37,706 |   |
| Real Estate - Residential       |   |                       | — |   |   |   | — |   |   |   | 3 |   |   |   | 2,276,306 |   |
| Total                           |   |                       | 4       |   |   | $ | 320,668 |   |   |   | 17 |   |   | $ | 6,378,293 |   |
| Delinquent loans to total loans |   |                       |    |   |   |   | 0.39 | % |   |   |   |   |   |   | 7.80 | % |

|                            |   |  At December 31, 2009 |    |
|---------------------------------|--------|----------------------------|---------|
|                            |   | 60-89 Days                 |    |   | 90 Days or more |   |
|                            |   | Number                     |    |   | Principal |   |   | Number |   |   | Principal |   |
|                            |   |                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate          |   |                       | 9       |   |   | $ | 3,848,990 |   |   |   | 7 |   |   | $ | 1,176,114 |   |
| Commercial construction         |   |                       | — |   |   |   | — |   |   |   | 2 |   |   |   | 480,000 |   |
| Commercial unsecured            |   |                       | 4       |   |   |   | 61,907 |   |   |   | 1 |   |   |   | 41,037 |   |
| Real Estate - Residential       |   |                       | 3       |   |   |   | 2,299,322 |   |   |   | — |   |   |   | — |   |
| Total                           |   |                       | 16      |   |   | $ | 6,210,219 |   |   |   | 10 |   |   | $ | 1,697,151 |   |
| Delinquent loans to total loans |   |                       |    |   |   |   | 7.86 | % |   |   |   |   |   |   | 2.15 | % |

----

|                            |   | At December 31, 2008 |    |
|---------------------------------|--------|----------------------|---------|
|                            |   | 60-89 Days           |    |   | 90 Days or more |   |
|                            |   | Number               |    |   | Principal |   |   | Number |   |   | Principal |   |
|                            |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate          |   |                 | 2       |   |   | $ | 207,047 |   |   |   | 5 |   |   | $ | 1,453,846 |   |
| Commercial construction         |   |                 | — |   |   |   | — |   |   |   | 2 |   |   |   | 480,000 |   |
| Commercial unsecured            |   |                 | — |   |   |   | — |   |   |   | 7 |   |   |   | 345,221 |   |
| Total                           |   |                 | 2       |   |   | $ | 207,047 |   |   |   | 14 |   |   | $ | 2,279,067 |   |
| Delinquent loans to total loans |   |                 |    |   |   |   | 0.31 | % |   |   |   |   |   |   | 3.43 | % |

|                            |   | At December 31, 2007 |    |
|---------------------------------|--------|----------------------|---------|
|                            |   | 60-89 Days           |    |   | 90 Days or more |   |
|                            |   | Number               |    |   | Principal |   |   | Number |   |   | Principal |   |
|                            |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate          |   |                 | 2       |   |   | $ | 1,406,936 |   |   |   | 3 |   |   | $ | 459,371 |   |
| Commercial construction         |   |                 | 2       |   |   |   | 2,944,000 |   |   |   | 6 |   |   |   | 2,505,134 |   |
| Commercial unsecured            |   |                 | 1       |   |   |   | 300,000 |   |   |   | 2 |   |   |   | 14,970 |   |
| Other                           |   |                 | — |   |   |   | — |   |   |   | 1 |   |   |   | 5,877 |   |
| Total                           |   |                 | 5       |   |   | $ | 4,650,936 |   |   |   | 12 |   |   | $ | 2,985,352 |   |
| Delinquent loans to total loans |   |                 |    |   |   |   | 7.43 | % |   |   |   |   |   |   | 4.77 | % |

|                            |   | At December 31, 2006 |    |
|---------------------------------|--------|----------------------|---------|
|                            |   | 60-89 Days           |    |   | 90 Days or more |   |
|                            |   | Number               |    |   | Principal |   |   | Number |   |   | Principal |   |
|                            |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial real estate          |   |                 | — |   |   | $ | — |   |   |   | 3 |   |   | $ | 773,924 |   |
| Commercial unsecured            |   |                 | 2       |   |   |   | 29,648 |   |   |   | 1 |   |   |   | 20,709 |   |
| Other                           |   |                 | 1       |   |   |   | 9,676 |   |   |   | — |   |   |   | — |   |
| Total                           |   |                 | 3       |   |   | $ | 39,324 |   |   |   | 4 |   |   | $ | 794,633 |   |
| Delinquent loans to total loans |   |                 |    |   |   |   | 0.06 | % |   |   |   |   |   |   | 1.19 | % |

|                                  |   | At December 31, |      |   | At December 31, |   |      | At December 31, |   |
|---------------------------------------|--------|-----------------|-----------|--------|-----------------|--------|-----------|-----------------|--------|
|                                  |   | 2010            |      |   | 2009            |   |      | 2008            |   |
| Non-performing assets:                |   |            |      |   |            |   |      |            |   |
| Commercial loans:                     |   |            |      |   |            |   |      |            |   |
| Unsecured                             |   | $               | 37,706    |   |            | $      | 41,037    |            |   | $ | 345,221 |   |
| Commercial real estate                |   |            | 4,064,281 |   |            |   | 1,176,114 |            |   |   | 1,453,846 |   |
| Residential real estate               |   |            | 2,276,306 |   |            |   | —   |            |   |   | — |   |
| Construction                          |   |            | —   |   |            |   | 480,000   |            |   |   | 480,000 |   |
|                                  |   |            |      |   |            |   |      |            |   |   |   |   |
| Total non-performing assets           |   | $               | 6,378,293 |   |            | $      | 1,697,151 |            |   | $ | 2,279,067 |   |
|                                  |   |            |      |   |            |   |      |            |   |   |   |   |
| Non-performing loans to total loans   |   |            | 7.80      | %      |            |   | 2.15      | %               |   |   | 3.43 | % |
| Non-performing loans to total assets  |   |            | 2.71      | %      |            |   | 0.72      | %               |   |   | 1.07 | % |
| Non-performing assets to total assets |   |            | 2.71      | %      |            |   | 0.72      | %               |   |   | 1.07 | % |

----

|                      |   | At December 31, 2010 |   |
|---------------------------|--------|----------------------|--------|
|                      |   | Substandard          |   |   | Doubtful |   |
|                      |   | Number               |   |   | Amount |   |   | Number |   |   | Amount |   |
| Classification of assets: |   |                 |   |   |   |   |   |   |   |   |   |   |
| Commercial Loans:         |   |                 |   |   |   |   |   |   |   |   |   |   |
| Unsecured                 |   |                 | 2      |   |   | $ | 37,706 |   |   |   | — |   |   | $ | — |   |
| Commercial Real Estate    |   |                 | 16     |   |   |   | 5,623,816 |   |   |   | — |   |   |   | — |   |
| Residential Real Estate   |   |                 | 3      |   |   |   | 2,276,306 |   |   |   | — |   |   |   | — |   |
| Total loans               |   |                 | 21     |   |   | $ | 7,937,828 |   |   |   | — |   |   |   | — |   |

|   | ● | $2,403,245 in two loans to a retail business, which are fully secured by commercial real estate collateral. We have entered into a modified repayment arrangement with the borrower and we have obtained confessions of judgment. We have collected a large portion of their arrears and the borrower has agreed to pay all remaining arrears over the upcoming year. The borrower is current in payments under the modified payment terms. We maintain the personal guaranties of the principals on these loans. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | $2,200,000 in two residential mortgage loans that are fully secured. We have entered into modified repayment arrangements with the borrowers and we have obtained confessions of judgment. We have collected a large portion of their arrears and the borrowers have agreed to pay all remaining arrears over the upcoming year. The borrowers are current in payments under the modified payments terms.                                                                                                         |
|   | ● | $371,818 in a loan to a local business in which we are a participant in the loan with another bank. We are not the lead lender. The loan is in arrears and the lead lender has commenced a foreclosure action. The loan is secured by a first mortgage on a commercial building, a security interest in the business, and the personal guaranties of the principals.                                                                                                                                              |
|   | ● | $270,787 in a net loan to a local business, which is secured by a first mortgage on commercial real estate collateral. We have entered into modified repayment arrangements with the borrowers and we have obtained confessions of judgment. We maintain a security interest in the business as well as the personal guaranty of the principal. The borrower is current under the modified payments terms.                                                                                                        |
|   | ● | $271,940 in a net loan to a local business, which is secured by a first mortgage on two parcels of commercial real estate. The loan has been sent to our attorneys for collection. We also have a security interest in the business as well as the personal guaranty of the principal.                                                                                                                                                                                                                            |

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|                                                                                                     |   | For the Year Ended December 31, |      |
|----------------------------------------------------------------------------------------------------------|--------|---------------------------------|-----------|
|                                                                                                     |   | 2010                            |      |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
|                                                                                                     |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for Loan Losses:                                                                               |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at beginning of period                                                                           |   | $                               | 1,063,454 |   |   | $ | 987,876 |   |   | $ | 927,161 |   |   | $ | 1,128,824 |   |   | $ | 1,153,298 |   |
| Charge-offs:                                                                                             |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans:                                                                                       |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                               |   |                            | —   |   |   |   | (110,241 | ) |   |   | — |   |   |   | — |   |   |   | — |   |
| Commercial loans:                                                                                        |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unsecured                                                                                                |   |                            | (15,765   | ) |   |   | (412,112 | ) |   |   | (483,326 | ) |   |   | (254,986 | ) |   |   | (62,181 | ) |
| Consumer loan                                                                                            |   |                            | (4,863    | ) |   |   | (18,606 | ) |   |   | (7,959 | ) |   |   | — |   |   |   | (17,511 | ) |
| Other loans                                                                                              |   |                            | (2,084    | ) |   |   | (15,679 | ) |   |   | (3,503 | ) |   |   | (8,639 | ) |   |   | (28,111 | ) |
| Total charge-offs                                                                                        |   |                            | (22,712   | ) |   |   | (556,638 | ) |   |   | (494,788 | ) |   |   | (263,625 | ) |   |   | (107,803 | ) |
| Recoveries                                                                                               |   |                            | 96,478    |   |   |   | 72,216 |   |   |   | 270,503 |   |   |   | 66,962 |   |   |   | 148,329 |   |
| Net (charge-offs) / recoveries                                                                           |   |                            | 73,766    |   |   |   | (484,422 | ) |   |   | (224,285 | ) |   |   | (196,663 | ) |   |   | 40,526 |   |
| Provision charged to income                                                                              |   |                            | 140,000   |   |   |   | 560,000 |   |   |   | 285,000 |   |   |   | (5,000 | ) |   |   | (65,000 | ) |
| Balance at end of period                                                                                 |   | $                               | 1,277,220 |   |   | $ | 1,063,454 |   |   | $ | 987,876 |   |   | $ | 927,161 |   |   | $ | 1,128,824 |   |
|                                                                                                     |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio of net charge-offs / (recoveries) during the period to average loans outstanding during the period |   |                            | -0.09     | % |   |   | 0.68 | % |   |   | 0.35 | % |   |   | 0.32 | % |   |   | -0.06 | % |
| Ratio of allowance for loan losses to total loans at the end of period                                   |   |                            | 1.56      | % |   |   | 1.35 | % |   |   | 1.49 | % |   |   | 1.48 | % |   |   | 1.69 | % |
| Ratio of allowance for loan losses to non-performing loans at the end of the period                      |   |                            | 20.02     | % |   |   | 62.66 | % |   |   | 43.35 | % |   |   | 96.56 | % |   |   | 538.61 | % |
| Ratio of allowance for loan losses to non-performing assets at the end of the period                     |   |                            | 20.02     | % |   |   | 62.66 | % |   |   | 43.35 | % |   |   | 96.56 | % |   |   | 538.61 | % |

|                    |   | At December 31, |      |   | At December 31, |   |   | At December 31, |   |      | At December 31, |   |   | At December 31, |   |
|-------------------------|--------|-----------------|-----------|--------|-----------------|--------|--------|-----------------|--------|-----------|-----------------|--------|--------|-----------------|--------|
|                    |   | 2010            |      |   | 2009            |   |   | 2008            |   |      | 2007            |   |   | 2006            |   |
|                    |   |            |      |   | % of Loans      |   |   |            |   |      | % of Loans      |   |   |            |   |   | % of Loans |   |   |   |   |   | % of Loans |   |   |   |   |   | % of Loans |   |
|                    |   |            |      |   | in Category     |   |   |            |   |      | in Category     |   |   |            |   |   | in Category |   |   |   |   |   | in Category |   |   |   |   |   | in Category |   |
|                    |   |            |      |   | to              |   |   |            |   |      | to              |   |   |            |   |   | to |   |   |   |   |   | to |   |   |   |   |   | to |   |
|                    |   | Amount          |      |   | Total Loans     |   |   | Amount          |   |      | Total Loans     |   |   | Amount          |   |   | Total Loans |   |   | Amount |   |   | Total Loans |   |   | Amount |   |   | Total Loans |   |
|                    |   |            |      |   |            |   |   |            |   |      |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance:              |   |            |      |   |            |   |   |            |   |      |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial loans:       |   |            |      |   |            |   |   |            |   |      |            |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unsecured               |   | $               | 520,953   |   |            | 15.8   | %      |            | $      | 460,474   |            |   | 13.9   | %               |   | $ | 372,803 |   |   | 14.4 | % |   | $ | 330,355 |   |   | 17.5 | % |   | $ | 337,054 |   |   | 16.3 | % |
| Secured                 |   |            | 13,486    |   |            | 1.7    |   |            |   | 8,124     |            |   | 1.4    |            |   |   | 7,451 |   |   | 1.8 |   |   |   | 19,877 |   |   | 1.9 |   |   |   | 10,859 |   |   | 1.8 |   |
| Commercial real estate  |   |            | 653,362   |   |            | 71.1   |   |            |   | 418,215   |            |   | 61.7   |            |   |   | 449,525 |   |   | 60.1 |   |   |   | 345,407 |   |   | 50.6 |   |   |   | 518,620 |   |   | 49.9 |   |
| Residential real estate |   |            | 7,174     |   |            | 3.0    |   |            |   | 40,302    |            |   | 3.7    |            |   |   | 25,686 |   |   | 3.8 |   |   |   | 15,887 |   |   | 3.7 |   |   |   | 12,501 |   |   | 0.2 |   |
| Construction loans      |   |            | 52,138    |   |            | 7.2    |   |            |   | 71,968    |            |   | 16.8   |            |   |   | 100,737 |   |   | 17.9 |   |   |   | 166,437 |   |   | 24.1 |   |   |   | 198,901 |   |   | 29.1 |   |
| Other loans             |   |            | 30,107    |   |            | 1.2    |   |            |   | 64,371    |            |   | 2.5    |            |   |   | 31,674 |   |   | 2.0 |   |   |   | 49,198 |   |   | 2.2 |   |   |   | 50,889 |   |   | 2.7 |   |
| Total allowances        |   | $               | 1,277,220 |   |            | 100.0  | %      |            | $      | 1,063,454 |            |   | 100.0  | %               |   | $ | 987,876 |   |   | 100.0 | % |   | $ | 927,161 |   |   | 100.0 | % |   | $ | 1,128,824 |   |   | 100.0 | % |

----

|                                       |   | At December 31, |        |
|--------------------------------------------|--------|-----------------|-------------|
|                                       |   | 2010            |        |   | 2009 |   |   | 2008 |   |
|                                       |   | Amortized       |        |   | Fair |   |   | Amortized |   |   | Fair |   |   | Amortized |   |   | Fair |   |
|                                       |   | Cost            |        |   | Value |   |   | Cost |   |   | Value |   |   | Cost |   |   | Value |   |
|                                       |   |            |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments securities, available for sale |   |            |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FNMA                                       |   | $               | 3,428,696   |   |   | $ | 3,571,217 |   |   | $ | 4,855,213 |   |   | $ | 5,040,820 |   |   | $ | 6,646,320 |   |   | $ | 6,690,593 |   |
| FHLMC                                      |   |            | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 37,411 |   |   |   | 37,643 |   |
| GNMA                                       |   |            | 4,092,912   |   |   |   | 4,081,112 |   |   |   | 1,265,428 |   |   |   | 1,321,240 |   |   |   | 1,576,764 |   |   |   | 1,632,790 |   |
| Whole Loan MBS                             |   |            | 1,212,246   |   |   |   | 1,235,501 |   |   |   | 1,860,603 |   |   |   | 1,856,893 |   |   |   | 2,620,965 |   |   |   | 2,559,037 |   |
| Collateralized mortgage obligations        |   |            | 109,921,495 |   |   |   | 112,420,077 |   |   |   | 102,933,529 |   |   |   | 105,693,451 |   |   |   | 108,331,330 |   |   |   | 109,368,525 |   |
|                                       |   |            |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | $               | 118,655,349 |   |   | $ | 121,307,907 |   |   | $ | 110,914,773 |   |   | $ | 113,912,404 |   |   | $ | 119,212,790 |   |   | $ | 120,288,588 |   |

----

|                                |   | At December 31, 2010 |    |
|-------------------------------------|--------|----------------------|---------|
|                                |   |                 |    | Weighted |   |   |   | Weighted |   |   |   | Weighted |   |   |   | Weighted |   |   |   |
|                                |   | Less Than            |    | Average |   | 1 To 5 |   | Average |   | 5 To 10 |   | Average |   | Over 10 |   | Average |   |   |   |
|                                |   | 1 Year               |    | Yield |   | Years |   | Yield |   | Years |   | Yield |   | Years |   | Yield |   | Total |   |
|                                |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment Securities:              |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FNMA                                |   | $                    | 576,009 |   | 4.22 | % |   | $ | 477,176 |   | 5.17 | % |   | $ | 1,302,618 |   | 4.71 | % |   | $ | 1,072,893 |   | 2.69 | % |   | $ | 3,428,696 |   |
| FHLMC                               |   |                 | — |   | — |   |   |   | — |   | — |   |   |   | — |   | — |   |   |   | — |   | — |   |   |   | — |   |
| GNMA                                |   |                 | — |   | — |   |   |   | — |   | — |   |   |   | 1,023,986 |   | 4.47 |   |   |   | 3,068,926 |   | 1.46 |   |   |   | 4,092,912 |   |
| Whole Loan MBS                      |   |                 | — |   | — |   |   |   | — |   | — |   |   |   | 1,212,246 |   | 4.84 |   |   |   | — |   | — |   |   |   | 1,212,246 |   |
| Collateralized Mortgage Obligations |   |                 | — |   | — |   |   |   | 953,858 |   | 5.69 |   |   |   | 24,826,571 |   | 4.61 |   |   |   | 84,141,066 |   | 3.28 |   |   |   | 109,921,495 |   |
|                                |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                               |   | $                    | 576,009 |   | 4.22 | % |   | $ | 1,431,034 |   | 5.52 | % |   | $ | 28,365,421 |   | 4.62 | % |   | $ | 88,282,885 |   | 3.21 | % |   | $ | 118,655,349 |   |

|                                |   | At December 31, 2009 |    |
|-------------------------------------|--------|----------------------|---------|
|                                |   |                 |    | Weighted |   |   |   | Weighted |   |   |   | Weighted |   |   |   | Weighted |   |   |   |
|                                |   | Less Than            |    | Average |   | 1 To 5 |   | Average |   | 5 To 10 |   | Average |   | Over 10 |   | Average |   |   |   |
|                                |   | 1 Year               |    | Yield |   | Years |   | Yield |   | Years |   | Yield |   | Years |   | Yield |   | Total |   |
|                                |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment Securities:              |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FNMA                                |   | $                    | — |   | — | % |   | $ | 1,390,603 |   | 4.49 | % |   | $ | 1,682,752 |   | 4.42 | % |   | $ | 1,781,857 |   | 3.95 | % |   | $ | 4,855,212 |   |
| FHLMC                               |   |                 | — |   | — |   |   |   | — |   | — |   |   |   | — |   | — |   |   |   | — |   | — |   |   |   | — |   |
| GNMA                                |   |                 | — |   | — |   |   |   | — |   | — |   |   |   | 1,265,428 |   | 4.38 |   |   |   | — |   | — |   |   |   | 1,265,428 |   |
| Whole Loan MBS                      |   |                 | — |   | — |   |   |   | — |   | — |   |   |   | 1,860,603 |   | 4.64 |   |   |   | — |   | — |   |   |   | 1,860,603 |   |
| Collateralized Mortgage Obligations |   |                 | — |   | — |   |   |   | 1,941,530 |   | 4.82 |   |   |   | 37,530,714 |   | 4.43 |   |   |   | 63,461,286 |   | 4.32 |   |   |   | 102,933,530 |   |
|                                |   |                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                               |   |                 | — |   | — | % |   | $ | 3,332,133 |   | 4.68 | % |   | $ | 42,339,497 |   | 4.44 | % |   | $ | 65,243,143 |   | 4.31 | % |   | $ | 110,914,773 |   |

----

|                                             |   | Year Ended   |        |   | Year Ended   |   |        | Year Ended   |   |
|--------------------------------------------------|--------|--------------|-------------|--------|--------------|--------|-------------|--------------|--------|
|                                             |   | December 31, |        |   | December 31, |   |        | December 31, |   |
|                                             |   | 2010         |        |   | 2009         |   |        | 2008         |   |
|                                             |   |         |        |   |         |   |        |         |   |
| Beginning balance                                |   | $            | 210,986,086 |   |         | $      | 188,109,449 |         |   | $ | 176,334,443 |   |
| Net increase/(decrease) before interest credited |   |         | (4,600,492  | )      |         |   | 21,511,428  |         |   |   | 9,646,073 |   |
| Interest credited on deposits                    |   |         | 1,021,063   |   |         |   | 1,365,209   |         |   |   | 2,128,933 |   |
|                                             |   |         |        |   |         |   |        |         |   |   |   |   |
| Ending balance                                   |   | $            | 207,406,657 |   |         | $      | 210,986,086 |         |   | $ | 188,109,449 |   |

| Maturity Period               |   | Amount |       |
|-------------------------------|--------|--------|------------|
|                          |   |   |       |
| Three months or less          |   | $      | 34,689,845 |   |
| Over three through six months |   |   | 14,833,103 |   |
| Over six through 12 months    |   |   | 2,174,782  |   |
| Over 12 months                |   |   | 910,059    |   |
| Total                         |   | $      | 52,607,789 |   |

|                  |   |       |       |   | Over Six Mos. |   |      | Over One Year |   |   | Over Two Years |   |   |       |    |   |   |   |
|-----------------------|--------|------------|------------|--------|---------------|--------|-----------|---------------|--------|--------|----------------|--------|--------|------------|---------|--------|--------|--------|
|                  |   | Six Months |       |   | Through One   |   |      | Through Two   |   |   | Through Three  |   |   | Over Three |    |   |   |   |
|                  |   | And Less   |       |   | Year          |   |      | Years         |   |   | Years          |   |   | Years      |    |   | Total  |   |
| Certificate accounts: |   |       |       |   |          |   |      |          |   |   |           |   |   |       |    |   |   |   |
| 0.00% to 0.99%        |   | $          | 38,209,021 |   |          | $      | 770,867   |          |   | $      | 148,918        |   |   | $          | — |   |   | $      | 2,212,222 |   |   | $ | 41,341,028 |   |
| 1.00% to 1.99%        |   |       | 15,664,184 |   |          |   | 3,034,746 |          |   |   | 710,535        |   |   |       | 469,163 |   |   |   | 36,000 |   |   |   | 19,914,628 |   |
| 2.00% to 2.99%        |   |       | 137,683    |   |          |   | —   |          |   |   | 108,608        |   |   |       | — |   |   |   | 1,361,132 |   |   |   | 1,607,423 |   |
| 3.00% to 3.99%        |   |       | —    |   |          |   | —   |          |   |   | —        |   |   |       | 404,000 |   |   |   | — |   |   |   | 404,000 |   |
| 4.00% to 4.99%        |   |       | 208,825    |   |          |   | 21,902    |          |   |   | 147,156        |   |   |       | — |   |   |   | — |   |   |   | 377,883 |   |
|                  |   | $          | 54,219,713 |   |          | $      | 3,827,515 |          |   | $      | 1,115,217      |   |   | $          | 873,163 |   |   | $      | 3,609,354 |   |   | $ | 63,644,962 |   |

----

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|   | 1.     | The law exempts smaller reporting companies filing with the Securities and Exchange Commission, such as our company, from the internal controls attestation rules of Section 404(b) of the Sarbanes-Oxley Act. Thus far, we have incurred expenses to prepare for compliance but we have not been governed by Section 404(b) due to temporary SEC extensions of the compliance deadline. The permanent exemption means that we will not be required to incur the expense of actual compliance as long as we continue to qualify as a smaller reporting company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | 2.     | Securities brokers may not vote shares held in “street name” unless they receive instructions from their customers on the election of directors, executive compensation or any other significant matter, as determined by the SEC. This may increase our costs of holding annual stockholder meetings if it becomes necessary for us to retain the services of a proxy solicitor to increase shareholder participation in our meetings or to obtain approval of matters that the Board presents to stockholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | 3.     | At least every three years, we will be required to submit to our stockholders, for a non-binding vote, our executive compensation. This requirement may increase the cost of holding some stockholder meetings. The law also requires that the SEC implement other requirements for enhanced compensation disclosures. The SEC adopted a temporary exemption for smaller reporting companies, such as our company, until annual meetings occurring on or after January 21, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | 4.     | The law includes a number of changes to expand FDIC insurance coverage, as well as changes to the premiums banks must pay for insurance coverage, and the requirements applicable to the reserve ratio (the ratio of the deposit insurance fund to the amount of insured deposits). One important change is that, in the future, deposit insurance premiums we pay will be based upon total assets minus tangible capital, rather than based upon deposits. Since we do not use material borrowings to provide funds for asset growth, and we do not have material intangible assets that are excluded from capital such as goodwill, we anticipate that our share of the total deposit premiums to be collected may decrease as the result of this change. However, other factors, such as required replenishment of the current reserve fund, which has a negative reserve ratio and which must be increased to 1.35% of total insured deposits in the next ten years, as well as future failures of banks that may further deplete the fund, may result in an increase in our future deposit insurance premium. The FDIC must provide an offset for smaller banks negating the adverse effect of requiring a reserve ratio in excess of 1.15%, but reaching even the 1.15% ratio may require additional burdens on smaller banks. The FDIC approved final regulations implementing these changes on February 25, 2011, effective April 1, 2011. According to the FDIC, the substantial majority of banks will see reduced deposit insurance premiums as a result of the new rules. We believe that will be the case for us as long as all other relevant factors remain unchanged. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | 5.     | The law increases the amount of each customer’s deposits that are subject to FDIC insurance. The general limit has been permanently increased from $100,000 to $250,000. In addition, non-interest bearing transaction accounts will be fully insured, without limit, from December 31, 2010 to January 1, 2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | 6.     | The law repeals the prohibition on paying interest on demand deposit accounts, effective in July 2011. Interest-free demand deposits represent a substantial portion of our deposit base. Once the prohibition on paying interest on such deposits becomes effective, competitive pressures may require that we offer interest checking accounts to businesses in order to retain deposits. That could have a direct adverse effect on our cost of funds. Although current market interest rates are very low, and such deposits are unlikely to carry high rates of interest, an increase in market interest rates could result in significant additional costs in order to maintain the level of such deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

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|   | 7.     | The law makes interstate branching by banks much easier than in the past. We have no plans to branch outside New York State, but the law facilitates out of state banks branching into our market area, thus increasing competition.                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 8.     | The law creates a new federal agency – the Consumer Financial Protection Bureau– which will have substantial authority to regulate consumer financial transactions. Our loans are primarily made to businesses rather than individual consumers, so the bureau will not have a direct effect on many of our loan transactions. However, the bureau also has authority to regulate other non-loan consumer transactions, such as deposits and electronic banking transactions. The implementation of new consumer regulations may increase our operating costs in a manner we cannot predict until regulations are adopted. |

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|                        |   |   |       |              |   |              |        |   |                    |   |   | To be well-capitalized |
|-----------------------------|--------|--------|------------|-------------------|--------|-------------------|-------------|--------|-------------------------|--------|--------|------------------------|
|                        |   |   |       |              |   |              | For capital |   | under prompt corrective |
|                        |   | Actual |       | adequacy purposes |   | action provisions |
|                        |   | Amount |       | Ratio             |   | Amount            |        | Ratio  |                    | Amount |   | Ratio                  |
|                        |   |   |       |              |   |              |        |   |                    |   |   |                   |   |   |   |
| As of December 31, 2010     |   |   |       |              |   |              |        |   |                    |   |   |                   |   |   |   |
|   Tier 1 Capital       |   |   |       |              |   |              |        |   |                    |   |   |                   |   |   |   |   |   |   |
|  (to Average Assets)   |   | $      | 24,062,000 |              | 9.96   | %                 |        | $      | 9,664,133               |   | 4.00   | %                      |   | $ | 12,080,167 |   | 5.00 | % |
|   Tier 1 Capital  |   |   |       |              |   |              |        |   |                    |   |   |                   |   |   |   |   |   |   |
| (to Risk Weighted Assets)   |   |   | 24,062,000 |              | 24.63  | %                 |        |   | 3,907,400               |   | 4.00   | %                      |   |   | 5,861,100 |   | 6.00 | % |
|   Total Capital        |   |   |       |              |   |              |        |   |                    |   |   |                   |   |   |   |   |   |   |
| (to Risk Weighted Assets)   |   |   | 25,284,000 |              | 25.88  | %                 |        |   | 7,814,800               |   | 8.00   | %                      |   |   | 9,768,500 |   | 10.00 | % |

----

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|                      |   |          |   |      |   | Original  |   |           |   | Net Book Value    |      |
|---------------------------|--------|---------------|--------|-----------|--------|-----------|--------|----------------|--------|-------------------|-----------|
|                      |   |          |   |      |   | Date      |   | Date of        |   | of Leasehold      |      |
|                      |   |          |   | Leased or |   | Leased or |   | Lease          |   | Improvements at   |      |
| Location                  |   | Description   |   | Owned     |   | Acquired  |   | Expiration (2) |   | December 31, 2010 |      |
|                      |   |          |   |      |   |      |   |           |   |              |      |
| 4142 Hylan Boulevard      |   |          |   |      |   |      |   |           |   |              |      |
| Staten Island, N.Y. 10308 |   | Main Office   |   | Leased    |   | 2005      |   | 3/25/2020      |   | $                 | 1,676,329 |   |
|                      |   |          |   |      |   |      |   |           |   |              |      |   |
| 755 Forest Avenue         |   |          |   |      |   |      |   |           |   |              |      |   |
| Staten Island, N.Y. 10310 |   | Branch        |   | Leased    |   | 1999      |   | 11/30/2013     |   | $                 | 35,300    |   |
|                      |   |          |   |      |   |      |   |           |   |              |      |   |
| One Hyatt Street          |   |          |   |      |   |      |   |           |   |              |      |   |
| Staten Island, N.Y. 10301 |   | Branch        |   | Leased    |   | 1999      |   | 10/30/2014     |   | $                 | 11,140    |   |
|                      |   |          |   |      |   |      |   |           |   |              |      |   |
| 1762 Hylan Boulevard      |   |          |   |      |   |      |   |           |   |              |      |   |
| Staten Island, N.Y. 10305 |   | Branch        |   | Leased    |   | 2001      |   | 6/30/2016      |   | $                 | 188,781   |   |
|                      |   |          |   |      |   |      |   |           |   |              |      |   |
| 1766 Hylan Boulevard (1)  |   |          |   |      |   |      |   |           |   |              |      |   |
| Staten Island, N.Y. 10305 |   | Retail Stores |   | Leased    |   | 2001      |   | 6/30/2016      |   | $                 | 38,746    |   |
|                      |   |          |   |      |   |      |   |           |   |              |      |   |
| 1065 Bay Street           |   |          |   |      |   |      |   |           |   |              |      |   |
| Staten Island, N.Y. 10305 |   | Branch        |   | Leased    |   | 2006      |   | 04/26/2021     |   | $                 | 116,156   |   |
| Total net book value      |   |          |   |      |   |      |   |           |   | $                 | 2,066,452 |   |

| (1)    | We leased the retail stores at 1766 Hylan Boulevard as a component of the lease for the 1762 Hylan Boulevard branch and we sublease the property to retail tenants.  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                      |
| (2)    | We maintain multiple lease extension options that we may elect, in our sole discretion, which will extend the maturity of these leases.                                   |

----

|     |   | 2010          |   |
|----------|--------|---------------|--------|
|     |   | First Quarter |   |   | Second Quarter |   |   | Third Quarter |   |   | Fourth Quarter |   |
| High Bid |   | $             | 12.12  |   |   | $ | 12.00 |   |   | $ | 12.75 |   |   | $ | 11.75 |   |
| Low Bid  |   | $             | 9.01   |   |   | $ | 10.50 |   |   | $ | 9.76 |   |   | $ | 11.00 |   |
|     |   |          |   |
|     |   | 2009          |   |
|     |   | First Quarter |   |   | Second Quarter |   |   | Third Quarter |   |   | Fourth Quarter |   |
| High Bid |   | $             | 8.90   |   |   | $ | 12.98 |   |   | $ | 12.50 |   |   | $ | 11.90 |   |
| Low Bid  |   | $             | 7.65   |   |   | $ | 8.08 |   |   | $ | 10.21 |   |   | $ | 10.92 |   |

| Period                                |   | (a) Total Number of Shares Purchased |   | (b) Average Price Paid Per Share |   | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (2) |   | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |   |
|---------------------------------------|--------|--------------------------------------|--------|----------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|
| October 1, 2010 to October 31, 2010   |   |                                 | 9,015  |                             | $      | 11.69                                                                                        |   |                                                                                                                        | 9,015  |   |   | 6,176 |   |
| November 1, 2010 to November 30, 2010 |   | None                                 |   | None                             |   | None                                                                                         |   |                                                                                                                        | 6,176  |   |
| December 1, 2010 to December 31, 2010 |   |                                 | 6,176  |                             | $      | 11.50                                                                                        |   |                                                                                                                        | 6,176  |   | None |   |
| Total                                 |   |                                 | 15,191 |                             | $      | 11.61                                                                                        |   |                                                                                                                        | 15,191 |   | None |   |

| (1) | On April 21, 2009, we announced a second stock repurchase program for the repurchase of up to 100,000 shares of our common stock. All purchases shown in the table were pursuant to such plan. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | As of December 31, 2010, the Company had repurchased a total of 200,000 shares of its common stock under these stock repurchase programs and is now completed. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Equity Compensation Plan Information                       |   |
|------------------------------------------------------------|--------|
| Plan category                                              |   | Number of securities to be issued upon exercise of outstanding options, warrants and rights(a) |   |   | Weighted-average exercise price of outstanding options, warrants and rights(b) |   |   | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(c) |   |
| Equity compensation plans approved by security holders     |   |   | 124,423 |   |   | $ | 14.28 |   |   |   | 37,177 | (1) |
| Equity compensation plans not approved by security holders |   | None |   |   |   | N/A |   |   | None |   |
| Total                                                      |   |   | 124,423 |   |   | $ | 14.28 |   |   |   | 37,177 | (1) |

|   | (1) | Includes 14,500 shares of restricted stock available to be awarded under the Company’s 2010 Retention and Recognition Plan. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | As explained above, an increase in the target federal funds rate, which normally presages an immediate increase in the prime rate, will not have an immediate positive effect on most of our adjustable rate loans because they have interest rate floors that must be surpassed before yields on those assets begin to increase. However, the increase in the prime rate is likely to put prompt upward pressure on the rates we pay to depositors, at least in the case of certificates of deposit.                                                                                                                                                                                                                                                      |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | The gap table does not consider the effects of customer discretion. When market interest rates are very low, the difference between the rates paid on different deposit types is relatively small, and customers may elect to keep funds in very liquid deposits with the lowest interest rates because those deposits provide the greatest flexibility when market rates increase. Those customers may elect to switch a deposit to a higher cost category, such as from NOW accounts to a time deposit, if the increase in market rates makes the difference in rates between those two deposit types more meaningful. Our cost of a specific customer’s deposit could go up faster than market rates are rising if the customer decides to do so. |
|   | ● | The gap table does not take into account discretion by the Bank in making deposit pricing decisions. Other external factors, such as changes in competition or the decision by a local competitor to aggressively seek local deposits by offering premium rates on deposits, may cause the Bank to increase deposit rates more rapidly to match competitors.                                                                                                                                                                                                                                                                                                                                                                                               |

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|                                                                                         |   | At December 31, 2010 |        |
|----------------------------------------------------------------------------------------------|--------|----------------------|-------------|
|                                                                                         |   | Three                |        |   | Four |   |   | More than |   |   |   |   |   |   |   |
|                                                                                         |   | months               |        |   | to twelve |   |   | One year to |   |   | More than |   |   |   |   |
|                                                                                         |   | or less              |        |   | months |   |   | five years |   |   | five years |   |   | Total |   |
| Interest-earning assets:                                                                     |   |                 |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial loans (1)                                                                         |   | $                    | 66,433,529  |   |   | $ | 423,078 |   |   | $ | 1,102,799 |   |   | $ | 5,848,613 |   |   | $ | 73,808,019 |   |
| Consumer loans (1)                                                                           |   |                 | 390,357     |   |   |   | 569,739 |   |   |   | 516,539 |   |   |   | 114,782 |   |   |   | 1,591,417 |   |
| Mortgage-backed securities                                                                   |   |                 | 12,347,217  |   |   |   | 37,041,651 |   |   |   | 68,309,362 |   |   |   | — |   |   |   | 117,698,230 |   |
| Other interest-earning assets                                                                |   |                 | 26,489,709  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 26,489,709 |   |
| Total interest-earning assets                                                                |   |                 | 105,660,812 |   |   |   | 38,034,468 |   |   |   | 69,928,700 |   |   |   | 5,963,395 |   |   |   | 219,587,375 |   |
| Less:                                                                                        |   |                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unearned (discount) and deferred fees (2)                                                    |   |                 | 40,531      |   |   |   | 121,593 |   |   |   | 555,490 |   |   |   | — |   |   |   | 717,614 |   |
| Net interest-earning assets                                                                  |   |                 | 105,701,343 |   |   |   | 38,156,061 |   |   |   | 70,484,190 |   |   |   | 5,963,395 |   |   |   | 220,304,989 |   |
|                                                                                         |   |                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                |   |                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings accounts                                                                             |   |                 | 14,938,440  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 14,938,440 |   |
| NOW accounts                                                                                 |   |                 | 35,138,867  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 35,138,867 |   |
| Money market accounts                                                                        |   |                 | 27,521,455  |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 27,521,455 |   |
| Certificate accounts                                                                         |   |                 | 37,923,844  |   |   |   | 20,123,384 |   |   |   | 5,597,734 |   |   |   | — |   |   |   | 63,644,962 |   |
| Total interest-bearing liabilities                                                           |   |                 | 115,522,606 |   |   |   | 20,123,384 |   |   |   | 5,597,734 |   |   |   | — |   |   |   | 141,243,724 |   |
|                                                                                         |   |                 |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest sensitivity gap                                                                     |   | $                    | (9,821,263  | ) |   | $ | 18,032,677 |   |   | $ | 64,886,456 |   |   | $ | 5,963,395 |   |   | $ | 79,061,265 |   |
| Cumulative gap                                                                               |   | $                    | (9,821,263  | ) |   | $ | 8,211,414 |   |   | $ | 73,097,870 |   |   | $ | 79,061,265 |   |   | $ | 79,061,265 |   |
| Cumulative gap as a percentage of total interest-earning assets                              |   |                 | –4.47 | % |   |   | 3.74 | % |   |   | 33.29 | % |   |   | 36.00 | % |   |   | 36.00 | % |
| Cumulative net interest-earning assets as a percentage of total interest-bearing liabilities |   |                 | 91.50       | % |   |   | 106.05 | % |   |   | 151.75 | % |   |   | 155.98 | % |   |   | 155.98 | % |

| (1)    | For purposes of the gap analysis, mortgage and other loans are reduced by non-performing loans but are not reduced by the allowance for possible loan losses. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                          |
| (2)    | For purposes of the gap analysis, unearned discount and deferred fees are pro-rated.                                                                          |

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|                                                                |   | Year Ended December 31, |        | Year Ended December 31, |   | Year Ended December 31, |   |
|---------------------------------------------------------------------|--------|-------------------------|-------------|-------------------------|--------|-------------------------|--------|
|                                                                |   | 2010                    |        | 2009                    |   | 2008                    |   |
|                                                                |   | Average                 |        |                    |   | Yield/                  |   | Average |   |   |   | Yield/ |   | Average |   |   |   | Yield/ |   |
|                                                                |   | Balance                 |        | Interest1               |   | Cost                    |   | Balance |   | Interest1 |   | Cost |   | Balance |   | Interest1 |   | Cost |   |
| Assets:                                                             |   |                    |        |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                            |   |                    |        |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable                                                    |   | $                       | 78,995,376  |                    | $      | 5,800,691               |   | 7.34 | % | $ | 71,655,679 |   | $ | 5,465,368 |   | 7.63 | % | $ | 64,186,215 |   | $ | 5,078,576 |   | 7.91 | % |
| Other interest earning assets                                       |   |                    | 39,091,176  |                    |   | 61,124                  |   | 0.16 |   |   | 27,440,096 |   |   | 33,050 |   | 0.12 |   |   | 14,864,864 |   |   | 237,490 |   | 1.60 |   |
| Investment securities                                               |   |                    | 114,319,832 |                    |   | 4,401,547               |   | 3.85 |   |   | 118,475,481 |   |   | 5,149,770 |   | 4.35 |   |   | 119,976,379 |   |   | 5,699,228 |   | 4.75 |   |
| Total interest-earning assets                        |   |                    | 232,406,384 |                    |   | 10,263,362              |   | 4.42 |   |   | 217,571,256 |   |   | 10,648,188 |   | 4.89 |   |   | 199,027,458 |   |   | 11,015,294 |   | 5.53 |   |
|                                                                |   |                    |        |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest earning assets                                         |   |                    | 8,380,147   |                    |   |                    |   |   |   |   | 8,472,431 |   |   |   |   |   |   |   | 11,105,146 |   |   |   |   |   |   |
| Total assets                                                        |   | $                       | 240,786,531 |                    |   |                    |   |   |   | $ | 226,043,687 |   |   |   |   |   |   | $ | 210,132,604 |   |   |   |   |   |   |
| Liabilities and equity:                                             |   |                    |        |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                       |   |                    |        |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings accounts                                                    |   | $                       | 15,262,470  |                    |   | 47,445                  |   | 0.31 |   | $ | 13,733,980 |   |   | 50,145 |   | 0.37 |   | $ | 12,046,954 |   |   | 76,011 |   | 0.63 |   |
| Time accounts                                                       |   |                    | 65,196,898  |                    |   | 572,292                 |   | 0.88 |   |   | 66,249,743 |   |   | 925,793 |   | 1.40 |   |   | 69,562,982 |   |   | 1,615,142 |   | 2.32 |   |
| Money market accounts                                               |   |                    | 27,820,065  |                    |   | 240,461                 |   | 0.86 |   |   | 25,387,152 |   |   | 246,866 |   | 0.97 |   |   | 21,092,188 |   |   | 310,714 |   | 1.47 |   |
| Now accounts                                                        |   |                    | 35,273,971  |                    |   | 160,865                 |   | 0.46 |   |   | 29,304,494 |   |   | 142,405 |   | 0.49 |   |   | 17,607,727 |   |   | 127,066 |   | 0.72 |   |
| Subordinated debt                                                   |   |                    | —     |                    |   | —                 |   | — |   |   | — |   |   | — |   | — |   |   | 3,098,634 |   |   | 214,685 |   | 6.91 |   |
| Total interest-bearing liabilities                                  |   |                    | 143,553,404 |                    |   | 1,021,063               |   | 0.71 |   |   | 134,675,369 |   |   | 1,365,209 |   | 1.01 |   |   | 123,408,485 |   |   | 2,343,618 |   | 1.90 |   |
| Checking accounts                                                   |   |                    | 68,686,944  |                    |   |                    |   |   |   |   | 64,757,449 |   |   |   |   |   |   |   | 63,123,757 |   |   |   |   |   |   |
| Escrow Deposits                                                     |   |                    | 437,880     |                    |   |                    |   |   |   |   | 484,013 |   |   |   |   |   |   |   | 421,768 |   |   |   |   |   |   |
| Total                                                               |   |                    | 212,678,228 |                    |   |                    |   |   |   |   | 199,916,831 |   |   |   |   |   |   |   | 186,954,010 |   |   |   |   |   |   |
| Other liabilities                                                   |   |                    | 2,169,130   |                    |   |                    |   |   |   |   | 1,740,429 |   |   |   |   |   |   |   | 1,308,257 |   |   |   |   |   |   |
| Total liabilities                                                   |   |                    | 214,847,358 |                    |   |                    |   |   |   |   | 201,657,260 |   |   |   |   |   |   |   | 188,262,267 |   |   |   |   |   |   |
| Equity                                                              |   |                    | 25,939,173  |                    |   |                    |   |   |   |   | 24,386,427 |   |   |   |   |   |   |   | 21,870,337 |   |   |   |   |   |   |
| Total liabilities and equity                                        |   | $                       | 240,786,531 |                    |   |                    |   |   |   | $ | 226,043,687 |   |   |   |   |   |   | $ | 210,132,604 |   |   |   |   |   |   |
| Net interest income/net interest rate spread                        |   |                    |        |                    | $      | 9,242,299               |   | 3.71 | % |   |   |   | $ | 9,282,979 |   | 3.88 | % |   |   |   | $ | 8,671,676 |   | 3.63 | % |
| Net interest earning assets/net interest margin                     |   | $                       | 88,852,980  |                    |   |                    |   | 3.98 | % | $ | 82,895,887 |   |   |   |   | 4.27 | % | $ | 75,618,973 |   |   |   |   | 4.36 | % |
| Ratio of interest-earning assets to to interest-bearing liabilities |   |                    | 1.62        |  x                 |   |                    |   |   |   |   | 1.62 |  x |   |   |   |   |   |   | 1.61 |  x |   |   |   |   |   |
|                                                                |   |                    |        |                    |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return On Average Assets:                                           |   |                    |        |                    |   |                    |   | 0.78 | % |   |   |   |   |   |   | 0.81 | % |   |   |   |   |   |   | 0.92 | % |
| Return On Average Equity:                                           |   |                    |        |                    |   |                    |   | 7.25 | % |   |   |   |   |   |   | 7.47 | % |   |   |   |   |   |   | 8.83 | % |
| Equity To Assets:                                                   |   |                    |        |                    |   |                    |   | 11.07 | % |   |   |   |   |   |   | 10.33 | % |   |   |   |   |   |   | 10.91 | % |
| Dividend Payout Ratio                                               |   |                    |        |                    |   |                    |   | 22.86 | % |   |   |   |   |   |   | 23.25 | % |   |   |   |   |   |   | 22.97 | % |

----

|                              |   | Year Ended December 31, 2010 |     |   | Year Ended December 31, 2009 |   |     | Year Ended December 31, 2008 |   |
|-----------------------------------|--------|------------------------------|----------|--------|------------------------------|--------|----------|------------------------------|--------|
|                              |   | Compared to                  |     |   | Compared to                  |   |     | Compared to                  |   |
|                              |   | December 31, 2009            |     |   | December 31, 2008            |   |     | December 31, 2007            |   |
|                              |   | Increase/(Decrease)          |     |   | Increase/(Decrease)          |   |     | Increase/(Decrease)          |   |
|                              |   | In Net Interest Income       |     |   | In Net Interest Income       |   |     | In Net Interest Income       |   |
|                              |   | Due to                       |     |   |                         |   |     | Due to                       |   |   |   |   |   | Due to |   |   |   |   |
|                              |   | Volume                       |     |   | Rate                         |   |     | Net                          |   |   | Volume |   |   | Rate |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
|                              |   |                         |     |   |                         |   |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:          |   |                         |     |   |                         |   |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable                  |   | $                            | 560,019  |   |                         | $      | (224,696 | )                            |   | $ | 335,323 |   |   | $ | 590,835 |   |   | $ | (204,043 | ) |   | $ | 386,792 |   |   | $ | 301,408 |   |   | $ | (1,202,965 | ) |   | $ | (901,557 | ) |
| Other interest-earning assets     |   |                         | 13,981   |   |                         |   | 14,093   |                         |   |   | 28,074 |   |   |   | 201,204 |   |   |   | (405,644 | ) |   |   | (204,440 | ) |   |   | (278,390 | ) |   |   | (478,454 | ) |   |   | (756,844 | ) |
| Investment securities, afs        |   |                         | (180,771 | )      |                         |   | (567,452 | )                            |   |   | (748,223 | ) |   |   | (71,293 | ) |   |   | (478,165 | ) |   |   | (549,458 | ) |   |   | 368,831 |   |   |   | 26,511 |   |   |   | 395,342 |   |
| Total                             |   |                         | 393,229  |   |                         |   | (778,055 | )                            |   |   | (384,826 | ) |   |   | 720,746 |   |   |   | (1,087,852 | ) |   |   | (367,106 | ) |   |   | 391,850 |   |   |   | (1,654,909 | ) |   |   | (1,263,059 | ) |
|                              |   |                         |     |   |                         |   |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:     |   |                         |     |   |                         |   |     |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings accounts                  |   |                         | 5,655    |   |                         |   | (8,355   | )                            |   |   | (2,700 | ) |   |   | 10,628 |   |   |   | (36,494 | ) |   |   | (25,866 | ) |   |   | 856 |   |   |   | (22,745 | ) |   |   | (21,889 | ) |
| Time accounts                     |   |                         | (14,740  | )      |                         |   | (338,761 | )                            |   |   | (353,501 | ) |   |   | (76,867 | ) |   |   | (612,482 | ) |   |   | (689,349 | ) |   |   | 122,378 |   |   |   | (943,924 | ) |   |   | (821,546 | ) |
| Money market accounts             |   |                         | 23,599   |   |                         |   | (30,004  | )                            |   |   | (6,405 | ) |   |   | 63,136 |   |   |   | (126,984 | ) |   |   | (63,848 | ) |   |   | (5,645 | ) |   |   | (122,877 | ) |   |   | (128,522 | ) |
| Now accounts                      |   |                         | 29,250   |   |                         |   | (10,790  | )                            |   |   | 18,460 |   |   |   | 84,217 |   |   |   | (68,878 | ) |   |   | 15,339 |   |   |   | (11,225 | ) |   |   | 6,657 |   |   |   | (4,568 | ) |
| Subordinated debt                 |   |                         | —  |   |                         |   | —  |                         |   |   | — |   |   |   | (214,685 | ) |   |   | — |   |   |   | (214,685 | ) |   |   | (141,474 | ) |   |   | — |   |   |   | (141,474 | ) |
| Total                             |   |                         | 43,765   |   |                         |   | (387,911 | )                            |   |   | (344,146 | ) |   |   | (133,571 | ) |   |   | (844,838 | ) |   |   | (978,409 | ) |   |   | (35,110 | ) |   |   | (1,082,889 | ) |   |   | (1,117,999 | ) |
| Net change in net interest income |   | $                            | 349,464  |   |                         | $      | (390,144 | )                            |   | $ | (40,680 | ) |   | $ | 854,317 |   |   | $ | (243,014 | ) |   | $ | 611,303 |   |   | $ | 426,959 |   |   | $ | (572,019 | ) |   | $ | (145,060 | ) |

----

----

|   | ● | Interest income of $10,263,362                     |
|--------|---------|----------------------------------------------------|
|   | ● | Reduced by interest expense of $1,021,063          |
|   | ● | Reduced by a provision for loan losses of $140,000 |
|   | ● | Increased by non-interest income of $2,485,923     |
|   | ● | Reduced by non-interest expense of $8,121,458      |
|   | ● | Reduced by income tax expense of $1,586,135        |

----

----

|   | ● | a $293,350 increase in salaries and benefits as a result of new hires, higher related benefit costs, including the costs of the recently adopted stock plans, and increased salary and benefits due to normal raises; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | a $49,095 increase in legal expense primarily due to increased collection costs; and                                                                                                                                  |
|   | ● | a $55,250 decrease in professional fees due to the exemption in complying with SOX 404(b).                                                                                                                            |

|   | ● | a $7,395,503 net increase in investment securities available for sale; |
|--------|---------|------------------------------------------------------------------------|
|   | ● | a $2,490,302 net increase in net loans receivable, partially offset by |
|   | ● | a $10,951,932 net decrease in cash and cash equivalents.               |

----

----

| Contractual Obligations and Commitments at December 31, 2010         |   |
|----------------------------------------------------------------------|--------|
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contractual Obligations                                              |   | Payment due by Period |   |
|                                                                 |   | Less than |   |   | One to three |   |   | Four to five |   |   | After |   |   | Total Amounts |   |
|                                                                 |   | One Year |   |   | years |   |   | years |   |   | five years |   |   | committed |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Minimum annual rental payments under non-cancelable operating leases |   | $ | 413,067 |   |   | $ | 846,968 |   |   | $ | 750,021 |   |   | $ | 1,040,319 |   |   | $ | 3,050,375 |   |
| Remaining contractual maturities of time deposits                    |   |   | 58,047,229 |   |   |   | 2,475,934 |   |   |   | 3,121,800 |   |   |   | — |   |   |   | 63,644,963 |   |
| Total contractual cash obligations                                   |   | $ | 58,460,296 |   |   | $ | 3,322,902 |   |   | $ | 3,871,821 |   |   | $ | 1,040,319 |   |   | $ | 66,695,338 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other commitments                                                    |   | Amount of commitment Expiration by Period |   |
|                                                                 |   | Less than |   |   | One to three |   |   | Four to five |   |   | After |   |   | Total Amounts |   |
|                                                                 |   | One Year |   |   | years |   |   | years |   |   | five years |   |   | committed |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan commitments                                                     |   | $ | 24,508,597 |   |   | $ | 3,151,054 |   |   | $ | — |   |   | $ | — |   |   | $ | 27,659,651 |   |

| Report of Independent Registered Public Accounting Firm                                              |   | F-1    |
|------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                 |   |   |
| Consolidated Statements of Financial Condition as of December 31, 2010 and 2009                      |   | F-2    |
|                                                                                                 |   |   |
| Consolidated Statements of Earnings for the Years Ended December 31, 2010 and 2009                   |   | F-3    |
|                                                                                                 |   |   |
| Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2010 and 2009 |   | F-4    |
|                                                                                                 |   |   |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009                 |   | F-5    |
|                                                                                                 |   |   |
| Notes to Consolidated Financial Statements                                                           |   | F-6    |

----

Report of Independent Registered Public Accounting Firm

|                   | /s/ Crowe Horwath LLP |   |
|------------------------|-----------------------|--------|
|                   |                  |
| Livingston, New Jersey |                  |
| March 14, 2011         |                  |

----

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

----

|                                                                                                                                                                                     |   | 2010   |        |   | 2009   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                                                                                                                                                                     |   |   |        |   |   |   |
| ASSETS                                                                                                                                                                                   |   |   |        |   |   |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                                |   | $      | 28,764,987  |   |   | $      | 39,716,919 |   |
| Investment securities, available for sale                                                                                                                                                |   |   | 121,307,907 |   |   |   | 113,912,404 |   |
| Loans receivable (net of allowance for loan losses of $1,277,220 and $1,063,454, respectively)                                                                                           |   |   | 80,261,004  |   |   |   | 77,770,702 |   |
| Accrued interest receivable                                                                                                                                                              |   |   | 673,967     |   |   |   | 722,228 |   |
| Premises and equipment, net                                                                                                                                                              |   |   | 2,732,229   |   |   |   | 3,204,063 |   |
| Prepaid and other assets                                                                                                                                                                 |   |   | 1,513,605   |   |   |   | 1,673,556 |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| Total assets                                                                                                                                                                             |   | $      | 235,253,699 |   |   | $      | 236,999,872 |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                               |   |   |        |   |   |   |   |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| LIABILITIES:                                                                                                                                                                             |   |   |        |   |   |   |   |   |
| Deposits                                                                                                                                                                                 |   |   |        |   |   |   |   |   |
| Non-interest bearing                                                                                                                                                                     |   | $      | 66,626,755  |   |   | $      | 70,688,777 |   |
| Interest bearing                                                                                                                                                                         |   |   | 140,779,902 |   |   |   | 140,297,309 |   |
| Total deposits                                                                                                                                                                           |   |   | 207,406,657 |   |   |   | 210,986,086 |   |
| Accounts payable, accrued expenses and other liabilities                                                                                                                                 |   |   | 1,802,186   |   |   |   | 1,529,837 |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| Total liabilities                                                                                                                                                                        |   |   | 209,208,843 |   |   |   | 212,515,923 |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| Commitments and contigent liabilities (Note 12)                                                                                                                                          |   |   | —     |   |   |   | — |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                                                                                                                               |   |   |        |   |   |   |   |   |
| Common stock ($.0001 par value, 3,000,000 shares authorized, 1,989,509 issued, 1,825,009 outstanding at December 31, 2010; 1,945,134 issued, 1,762,191 outstanding at December 31, 2009) |   |   | 199         |   |   |   | 195 |   |
| Additional paid-in capital                                                                                                                                                               |   |   | 9,249,600   |   |   |   | 9,317,719 |   |
| Retained earnings                                                                                                                                                                        |   |   | 17,563,435  |   |   |   | 16,112,741 |   |
| Treasury stock, at cost (164,500 shares at December 31, 2010 and 182,943 shares at December 31, 2009)                                                                                    |   |   | (1,643,797  | )      |   |   | (1,840,249 | ) |
| Unearned Employee Stock Ownership Plan shares                                                                                                                                            |   |   | (563,594    | )      |   |   | (732,672 | ) |
| Accumulated other comprehensive gains, net of taxes of $1,213,545 and $1,371,416, respectively                                                                                           |   |   | 1,439,013   |   |   |   | 1,626,215 |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| Total stockholders’ equity                                                                                                                                                         |   |   | 26,044,856  |   |   |   | 24,483,949 |   |
|                                                                                                                                                                                     |   |   |        |   |   |   |   |   |
| Total liabilities and stockholders’ equity                                                                                                                                         |   | $      | 235,253,699 |   |   | $      | 236,999,872 |   |

----

CONSOLIDATED STATEMENTS OF EARNINGS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

----

|                                                |   | 2010   |       |   | 2009   |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|--------|
| INTEREST INCOME:                                    |   |   |       |   |   |   |
| Loans receivable                                    |   | $      | 5,800,691  |   |   | $      | 5,465,368 |   |
| Investment securities                               |   |   | 4,401,547  |   |   |   | 5,149,770 |   |
| Other interest income                               |   |   | 61,124     |   |   |   | 33,050 |   |
| Total interest income                               |   |   | 10,263,362 |   |   |   | 10,648,188 |   |
| INTEREST EXPENSE:                                   |   |   |       |   |   |   |   |   |
| Deposits                                            |   |   | 1,021,063  |   |   |   | 1,365,209 |   |
| Total interest expense                              |   |   | 1,021,063  |   |   |   | 1,365,209 |   |
| Net interest income                                 |   |   | 9,242,299  |   |   |   | 9,282,979 |   |
| PROVISION FOR LOAN LOSSES                           |   |   | 140,000    |   |   |   | 560,000 |   |
| Net interest income after provision for loan losses |   |   | 9,102,299  |   |   |   | 8,722,979 |   |
| NON-INTEREST INCOME:                                |   |   |       |   |   |   |   |   |
| Deposit service fees                                |   |   | 2,190,397  |   |   |   | 2,137,676 |   |
| Other income                                        |   |   | 295,526    |   |   |   | 281,181 |   |
| Total non-interest income                           |   |   | 2,485,923  |   |   |   | 2,418,857 |   |
| NON-INTEREST EXPENSES:                              |   |   |       |   |   |   |   |   |
| Salaries and employee benefits                      |   |   | 3,968,499  |   |   |   | 3,675,149 |   |
| Occupancy and equipment                             |   |   | 1,445,538  |   |   |   | 1,482,300 |   |
| Data processing service fees                        |   |   | 264,423    |   |   |   | 279,152 |   |
| Legal fees                                          |   |   | 274,267    |   |   |   | 225,172 |   |
| Professional fees                                   |   |   | 252,850    |   |   |   | 308,100 |   |
| Director fees                                       |   |   | 239,600    |   |   |   | 218,225 |   |
| FDIC and NYSBD assessments                          |   |   | 399,000    |   |   |   | 392,000 |   |
| Supplies and service                                |   |   | 351,699    |   |   |   | 351,015 |   |
| Checkbook charges                                   |   |   | 126,814    |   |   |   | 147,048 |   |
| Other                                               |   |   | 798,768    |   |   |   | 751,635 |   |
| Total non-interest expenses                         |   |   | 8,121,458  |   |   |   | 7,829,796 |   |
| INCOME BEFORE INCOME TAXES                          |   |   | 3,466,764  |   |   |   | 3,312,040 |   |
| PROVISION/(BENEFIT) FOR INCOME TAXES:               |   |   |       |   |   |   |   |   |
| Current                                             |   |   | 1,670,259  |   |   |   | 1,373,021 |   |
| Deferred                                            |   |   | (84,124    | )      |   |   | 116,742 |   |
| Total income taxes                                  |   |   | 1,586,135  |   |   |   | 1,489,763 |   |
| NET INCOME                                          |   | $      | 1,880,629  |   |   | $      | 1,822,277 |   |
| Earnings per share:                                 |   |   |       |   |   |   |   |   |
| Basic                                               |   | $      | 1.06       |   |   | $      | 1.02 |   |
| Diluted                                             |   | $      | 1.06       |   |   | $      | 1.01 |   |
| Comprehensive income                                |   | $      | 1,693,427  |   |   | $      | 2,861,429 |   |

----

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

----

|                                                                                |   | Number of Common Shares |   |   | Common Stock |    | Additional Paid-in Capital |   |      | Retained Earnings |   |   | Treasury Stock, at cost |   |   | Unearned ESOP Shares |       |   | Other Comprehensive Gain |   | Total Stockholders’ Equity |   |
|-------------------------------------------------------------------------------------|--------|-------------------------|--------|--------|--------------|---------|----------------------------|--------|-----------|-------------------|--------|--------|-------------------------|--------|--------|----------------------|------------|--------|--------------------------|--------|----------------------------------|--------|
| Balance at December 31, 2008                                                        |   | 1,882,461               |   |   | $            | 192     |                       | $      | 9,200,010 |              |   | $      | 14,714,143              |   |   | $                    | (395,891   | )      |                     | $      | (901,750                         | )      |   | $ | 587,063 |   | $ | 23,203,767 |   |
| Exercise of stock options, including tax benefit                                    |   | 21,250                  |   |   |         | 3       |                       |   | 118,624   |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 118,627 |   |
| Stock-based compensation                                                            |   |                    |   |   |         |    |                       |   | 1,278     |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 1,278 |   |
| Amortization of earned portion of ESOP common stock                                 |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   | 169,078                          |   |   |   |   |   |   | 169,078 |   |
| Amortization of cost over fair value - ESOP                                         |   |                    |   |   |         |    |                       |   | (2,193    | )                 |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | (2,193 | ) |
| Cash dividends declared ($0.24 per share)                                           |   |                    |   |   |         |    |                       |   |      |              |   |   | (423,679                | )      |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | (423,679 | ) |
| Purchase of treasury stock, at cost                                                 |   | (141,520                | )      |   |         |    |                       |   |      |              |   |   |                    |   |   |                 | (1,444,358 | )      |                     |   |                             |   |   |   |   |   |   | (1,444,358 | ) |
| Comprehensive income:                                                               |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   |   |   |
| Net income                                                                          |   |                    |   |   |         |    |                       |   |      |              |   |   | 1,822,277               |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 1,822,277 |   |
| Other comprehensive income, net:                                                    |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   |   |   |
| Change in unrealized gain on securities available for sale, net of tax effects |   | —                 |   |   |         | — |                       |   | —   |              |   |   | —                 |   |   |                 | —    |   |                     |   | —                          |   |   |   | 1,039,152 |   |   | 1,039,152 |   |
| Total comprehensive income                                                          |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 2,861,429 |   |
|                                                                                |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                                        |   | 1,762,191               |   |   | $            | 195     |                       | $      | 9,317,719 |              |   | $      | 16,112,741              |   |   | $                    | (1,840,249 | )      |                     | $      | (732,672                         | )      |   | $ | 1,626,215 |   | $ | 24,483,949 |   |
|                                                                                |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   |   |   |
| Exercise of stock options, including tax benefit                                    |   | 44,375                  |   |   |         | 4       |                       |   | 292,207   |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 292,211 |   |
| Stock-based compensation                                                            |   |                    |   |   |         |    |                       |   | 70,811    |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 70,811 |   |
| Amortization of earned portion of ESOP common stock                                 |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   | 169,078                          |   |   |   |   |   |   | 169,078 |   |
| Amortization of cost over fair value - ESOP                                         |   |                    |   |   |         |    |                       |   | (35,551   | )                 |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | (35,551 | ) |
| Cash dividends declared ($0.24 per share)                                           |   |                    |   |   |         |    |                       |   |      |              |   |   | (429,935                | )      |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | (429,935 | ) |
| Purchase of treasury stock, at cost                                                 |   | (17,057                 | )      |   |         |    |                       |   |      |              |   |   |                    |   |   |                 | (199,134   | )      |                     |   |                             |   |   |   |   |   |   | (199,134 | ) |
| Contribution to RRP Trust from treasury shares                                      |   | 35,500                  |   |   |         |    |                       |   | (395,586  | )                 |   |   |                    |   |   |                 | 395,586    |   |                     |   |                             |   |   |   |   |   |   | — |   |
| Comprehensive income:                                                               |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   |   |   |
| Net income                                                                          |   |                    |   |   |         |    |                       |   |      |              |   |   | 1,880,629               |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 1,880,629 |   |
| Other comprehensive income, net:                                                    |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   |   |   |
| Change in unrealized gain on securities available for sale, net of tax effects      |   | —                 |   |   |         | — |                       |   | —   |              |   |   | —                 |   |   |                 | —    |   |                     |   | —                          |   |   |   | (187,202 | ) |   | (187,202 | ) |
| Total comprehensive income                                                          |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   | 1,693,427 |   |
|                                                                                |   |                    |   |   |         |    |                       |   |      |              |   |   |                    |   |   |                 |       |   |                     |   |                             |   |   |   |   |   |   |   |   |
| Balance at December 31, 2010                                                        |   | 1,825,009               |   |   | $            | 199     |                       | $      | 9,249,600 |              |   | $      | 17,563,435              |   |   | $                    | (1,643,797 | )      |                     | $      | (563,594                         | )      |   | $ | 1,439,013 |   | $ | 26,044,856 |   |

----

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2010 and 2009

----

|                                                                              |   | 2010   |        |   | 2009   |   |
|-----------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                             |   |   |        |   |   |   |
| Net income                                                                        |   | $      | 1,880,629   |   |   | $      | 1,822,277 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |        |   |   |   |   |   |
| Depreciation and amortization                                                     |   |   | 598,384     |   |   |   | 665,422 |   |
| Amortization of premium/(accretion of income), net                                |   |   | 34,449      |   |   |   | (15,186 | ) |
| ESOP compensation expense                                                         |   |   | 102,065     |   |   |   | 94,370 |   |
| Stock-based compensation expense                                                  |   |   | 70,811      |   |   |   | 1,278 |   |
| Provision for loan losses                                                         |   |   | 140,000     |   |   |   | 560,000 |   |
| Changes in operating assets and liabilities:                                      |   |   |        |   |   |   |   |   |
| Decrease/(increase) in prepaid and other assets                                   |   |   | 159,951     |   |   |   | (748,549 | ) |
| Decrease in accrued interest receivable                                           |   |   | 48,261      |   |   |   | 1,245 |   |
| (Increase)/decrease in deferred income taxes                                      |   |   | (84,124     | )      |   |   | 116,742 |   |
| Increase/(decrease) in accrued expenses, income tax payable and other liabilities |   |   | 545,807     |   |   |   | (215,744 | ) |
| Net cash provided by operating activities                                         |   |   | 3,496,233   |   |   |   | 2,281,855 |   |
|                                                                              |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                             |   |   |        |   |   |   |   |   |
| Net change in loans receivable                                                    |   |   | (2,520,342  | )      |   |   | (12,953,701 | ) |
| Proceeds from repayments and calls of investment securities, available for sale   |   |   | 38,643,601  |   |   |   | 37,675,927 |   |
| Purchase of investment securities, available for sale                             |   |   | (46,528,587 | )      |   |   | (29,480,949 | ) |
| Purchases of premises and equipment, net                                          |   |   | (126,550    | )      |   |   | (173,663 | ) |
| Net used in investing activities                                                  |   |   | (10,531,878 | )      |   |   | (4,932,386 | ) |
|                                                                              |   |   |        |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                             |   |   |        |   |   |   |   |   |
| Net increase in deposits                                                          |   |   | (3,579,429  | )      |   |   | 22,876,637 |   |
| Cash dividends paid                                                               |   |   | (429,935    | )      |   |   | (423,679 | ) |
| Exercise of stock options                                                         |   |   | 292,211     |   |   |   | 118,627 |   |
| Purchase of treasury stock, at cost                                               |   |   | (199,134    | )      |   |   | (1,444,358 | ) |
| Net cash (used in)/provided by financing activities                               |   |   | (3,916,287  | )      |   |   | 21,127,227 |   |
|                                                                              |   |   |        |   |   |   |   |   |
| NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                              |   |   | (10,951,932 | )      |   |   | 18,476,696 |   |
|                                                                              |   |   |        |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                      |   |   | 39,716,919  |   |   |   | 21,240,223 |   |
|                                                                              |   |   |        |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, END OF YEAR                                            |   | $      | 28,764,987  |   |   | $      | 39,716,919 |   |
|                                                                              |   |   |        |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                 |   |   |        |   |   |   |   |   |
| Cash paid during the period for:                                                  |   |   |        |   |   |   |   |   |
| Interest                                                                          |   | $      | 1,051,191   |   |   | $      | 1,486,955 |   |
| Income taxes                                                                      |   | $      | 1,630,317   |   |   | $      | 1,303,405 |   |

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2010 and 2009

----

----

----

----

|                                                                  |   | Year ended        |      |   | Year ended        |   |
|-----------------------------------------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                                                                  |   | December 31, 2010 |      |   | December 31, 2009 |   |
| Basic                                                                 |   |              |      |   |              |   |
| Distributed earnings allocated to common stock                        |   | $                 | 421,730   |   |              | $      | 437,346 |   |
| Undistributed earnings allocated to common sock                       |   |              | 1,435,162 |   |              |   | 1,384,931 |   |
| Net earnings allocated to common stock                                |   | $                 | 1,856,892 |   |              | $      | 1,822,277 |   |
|                                                                  |   |              |      |   |              |   |   |   |
| Weighted common shares outstanding including participating securities |   |              | 1,781,025 |   |              |   | 1,791,756 |   |
| Less: Participating securities                                        |   |              | (23,815   | )      |              |   | — |   |
| Weighted average shares                                               |   |              | 1,757,210 |   |              |   | 1,791,756 |   |
|                                                                  |   |              |      |   |              |   |   |   |
| Basic EPS                                                             |   | $                 | 1.06      |   |              | $      | 1.02 |   |
|                                                                  |   |              |      |   |              |   |   |   |
| Diluted                                                               |   |              |      |   |              |   |   |   |
| Net earnings allocated to common stock                                |   | $                 | 1,856,892 |   |              | $      | 1,822,277 |   |
|                                                                  |   |              |      |   |              |   |   |   |
| Weighted average shares for basic                                     |   |              | 1,757,210 |   |              |   | 1,791,756 |   |
| Dilutive effects of:                                                  |   |              |      |   |              |   |   |   |
| Stock Options                                                         |   |              | 167       |   |              |   | 17,782 |   |
| Unvested shares not considered particpating securtities               |   |              | —   |   |              |   | — |   |
|                                                                  |   |              | 1,757,377 |   |              |   | 1,809,538 |   |
|                                                                  |   |              |      |   |              |   |   |   |
| Diluted EPS                                                           |   | $                 | 1.06      |   |              | $      | 1.01 |   |

----

----

----

|                                |   | December 31, 2010 |        |
|-------------------------------------|--------|-------------------|-------------|
|                                |   | Amortized Cost    |        |   | Unrealized Gains |   |   | Unrealized Losses |   |   | Fair Value |   |
|                                |   |              |        |   |   |   |   |   |   |   |   |   |
| FNMA MBS - Residential              |   | $                 | 3,428,696   |   |   | $ | 142,521 |   |   | $ | — |   |   | $ | 3,571,217 |   |
| GNMA MBS - Residential              |   |              | 4,092,912   |   |   |   | 65,164 |   |   |   | (76,964 | ) |   |   | 4,081,112 |   |
| Whole Loan MBS - Residential        |   |              | 1,212,246   |   |   |   | 23,255 |   |   |   | — |   |   |   | 1,235,501 |   |
| Collateralized mortgage obligations |   |              | 109,921,495 |   |   |   | 2,906,359 |   |   |   | (407,777 | ) |   |   | 112,420,077 |   |
|                                |   | $                 | 118,655,349 |   |   | $ | 3,137,299 |   |   | $ | (484,741 | ) |   | $ | 121,307,907 |   |

|                                |   | December 31, 2009 |        |
|-------------------------------------|--------|-------------------|-------------|
|                                |   | Amortized Cost    |        |   | Unrealized Gains |   |   | Unrealized Losses |   |   | Fair Value |   |
|                                |   |              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FNMA MBS - Residential              |   | $                 | 4,855,213   |   |   | $ | 185,607 |   |   | $ | — |   |   | $ | 5,040,820 |   |
| GNMA MBS - Residential              |   |              | 1,265,428   |   |   |   | 55,812 |   |   |   | — |   |   |   | 1,321,240 |   |
| Whole Loan MBS - Residential        |   |              | 1,860,603   |   |   |   | 15,135 |   |   |   | (18,845 | ) |   |   | 1,856,893 |   |
| Collateralized mortgage obligations |   |              | 102,933,529 |   |   |   | 3,085,224 |   |   |   | (325,302 | ) |   |   | 105,693,451 |   |
|                                |   | $                 | 110,914,773 |   |   | $ | 3,341,778 |   |   | $ | (344,147 | ) |   | $ | 113,912,404 |   |

|                                   |   | December 31, 2010 |        |
|----------------------------------------|--------|-------------------|-------------|
|                                   |   | Amortized         |        |   | Fair |   |
|                                   |   | Cost              |        |   | Value |   |
|                                   |   |              |        |   |   |   |   |   |
| Less than one year                     |   | $                 | 576,009     |   |   | $ | 579,799 |   |
| Due after one year through five years  |   |              | 1,431,034   |   |   |   | 1,456,140 |   |
| Due after five years through ten years |   |              | 28,365,421  |   |   |   | 29,772,512 |   |
| Due after ten years                    |   |              | 88,282,885  |   |   |   | 89,499,456 |   |
|                                   |   | $                 | 118,655,349 |   |   | $ | 121,307,907 |   |

----

| December 31, 2010                   |   | Less than 12 months |       |   | More than 12 months |   |     | Total      |   |
|-------------------------------------|--------|---------------------|------------|--------|---------------------|--------|----------|------------|--------|
|                                |   | Fair Value          |       |   | Unrealized Loss     |   |     | Fair Value |   |   | Unrealized Loss |   |   | Fair Value |   |   | Unrealized Loss |   |
|                                |   |                |       |   |                |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FNMA MBS                            |   | $                   | —    |   |                | $      | —  |       |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| GNMA MBS                            |   |                | 2,991,961  |   |                |   | (76,964  | )          |   |   | — |   |   |   | — |   |   |   | 2,991,961 |   |   |   | (76,964 | ) |
| Whole Loan MBS                      |   |                | —    |   |                |   | —  |       |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Collateralized mortgage obligations |   |                | 20,223,509 |   |                |   | (407,777 | )          |   |   | — |   |   |   | — |   |   |   | 20,223,509 |   |   |   | (407,777 | ) |
|                                |   | $                   | 23,215,470 |   |                | $      | (484,741 | )          |   | $ | — |   |   | $ | — |   |   | $ | 23,215,470 |   |   | $  | (484,741 | )  |

| December 31, 2009                   |   | Less than 12 months |       |   | More than 12 months |   |     | Total      |   |
|-------------------------------------|--------|---------------------|------------|--------|---------------------|--------|----------|------------|--------|
|                                |   | Fair Value          |       |   | Unrealized Loss     |   |     | Fair Value |   |   | Unrealized Loss |   |   | Fair Value |   |   | Unrealized Loss |   |
|                                |   |                |       |   |                |   |     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FNMA MBS                            |   | $                   | —    |   |                | $      | —  |       |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
| GNMA MBS                            |   |                | —    |   |                |   | —  |       |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Whole Loan MBS                      |   |                | —    |   |                |   | —  |       |   |   | 433,666 |   |   |   | (18,845 | ) |   |   | 433,666 |   |   |   | (18,845 | ) |
| Collateralized mortgage obligations |   |                | 10,036,242 |   |                |   | (280,961 | )          |   |   | 1,750,950 |   |   |   | (44,341 | ) |   |   | 11,787,192 |   |   |   | (325,302 | ) |
|                                |   | $                   | 10,036,242 |   |                | $      | (280,961 | )          |   | $ | 2,184,616 |   |   | $ | (63,186 | ) |   | $ | 12,220,858 |   |   | $ | (344,147 | ) |

----

|                                                                                     |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Commercial loans (principally variable rate):                                            |   |   |       |   |   |   |
| Secured                                                                                  |   | $      | 1,393,532  |   |   | $      | 1,138,308 |   |
| Unsecured                                                                                |   |   | 12,924,378 |   |   |   | 10,966,874 |   |
| Total commercial loans                                                                   |   |   | 14,317,910 |   |   |   | 12,105,182 |   |
|                                                                                     |   |   |       |   |   |   |   |   |
| Real estate loans:                                                                       |   |   |       |   |   |   |   |   |
| Commercial                                                                               |   |   | 58,204,596 |   |   |   | 48,767,729 |   |
| Residential                                                                              |   |   | 2,460,114  |   |   |   | 2,914,956 |   |
| Total real estate loans                                                                  |   |   | 60,664,710 |   |   |   | 51,682,685 |   |
|                                                                                     |   |   |       |   |   |   |   |   |
| Construction loans (net of undisbursed funds of $2,672,000 and $3,168,000, respectively) |   |   | 5,874,500  |   |   |   | 13,258,000 |   |
|                                                                                     |   |   |       |   |   |   |   |   |
| Consumer loans                                                                           |   |   | 533,860    |   |   |   | 532,498 |   |
| Other loans                                                                              |   |   | 386,750    |   |   |   | 1,455,224 |   |
|                                                                                     |   |   | 920,610    |   |   |   | 1,987,722 |   |
| Total loans receivable                                                                   |   |   | 81,777,730 |   |   |   | 79,033,589 |   |
|                                                                                     |   |   |       |   |   |   |   |   |
| Less:                                                                                    |   |   |       |   |   |   |   |   |
| Unearned loans fees, net                                                                 |   |   | (239,506   | )      |   |   | (199,433 | ) |
| Allowance for loan losses                                                                |   |   | (1,277,220 | )      |   |   | (1,063,454 | ) |
|                                                                                     |   |   |       |   |   |   |   |   |
| Total                                                                                    |   | $      | 80,261,004 |   |   | $      | 77,770,702 |   |

|                       |   | 2010   |      |   | 2009   |   |
|----------------------------|--------|--------|-----------|--------|--------|--------|
| Nonaccrual loans:          |   |   |      |   |   |   |
| Unsecured commercial loans |   | $      | 37,706    |   |   | $      | 41,037 |   |
| Commercial real estate     |   |   | 4,064,281 |   |   |   | 1,176,114 |   |
| Residential real estate    |   |   | 2,276,306 |   |   |   | — |   |
| Construction               |   |   | —   |   |   |   | 480,000 |   |
| Total nonaccrual loans     |   | $      | 6,378,293 |   |   | $      | 1,697,151 |   |

|                                                                                                                                        |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                                                                        |   |   |    |   |   |   |   |   |
| Interest income that would have been recorded during the year on nonaccrual loans outstanding at year-end in accordance with original terms |   | $      | 469,484 |   |   | $      | 108,719 |   |

----

|               |   | Total  |       |   | 30-59 Days Past Due |   |      | 60-89 Days Past Due |   |   | Greater than90 DaysPast Due |   |   | TotalPast Due |      |   | Loans Not Past Due |   |
|--------------------|--------|--------|------------|--------|---------------------|--------|-----------|---------------------|--------|--------|-----------------------------|--------|--------|---------------|-----------|--------|--------------------|--------|
| Commercial loans:  |   |   |       |   |                |   |      |                |   |   |                        |   |   |          |      |   |               |   |
| Unsecured          |   | $      | 12,924,378 |   |                | $      | 46,562    |                |   | $      | 42,708                      |   |   | $             | 37,706    |   |               | $      | 126,976 |   |   | $ | 12,797,402 |   |
| Secured            |   |   | 1,393,532  |   |                |   | —   |                |   |   | —                     |   |   |          | —   |   |               |   | — |   |   |   | 1,393,532 |   |
| Real Estate loans  |   |   |       |   |                |   |      |                |   |   |                        |   |   |          |      |   |               |   |   |   |   |   |   |   |
| Commercial         |   |   | 58,204,596 |   |                |   | 3,103,589 |                |   |   | 277,960                     |   |   |          | 4,064,281 |   |               |   | 7,445,830 |   |   |   | 50,758,766 |   |
| Residential        |   |   | 2,460,114  |   |                |   | —   |                |   |   | —                     |   |   |          | 2,276,306 |   |               |   | 2,276,306 |   |   |   | 183,808 |   |
| Construction loans |   |   | 5,874,500  |   |                |   | 795,000   |                |   |   | —                     |   |   |          | —   |   |               |   | 795,000 |   |   |   | 5,079,500 |   |
| Consumer loans     |   |   | 533,860    |   |                |   | 11,277    |                |   |   | —                     |   |   |          | —   |   |               |   | 11,277 |   |   |   | 522,583 |   |
| Other loans        |   |   | 386,750    |   |                |   | 2,279     |                |   |   | —                     |   |   |          | —   |   |               |   | 2,279 |   |   |   | 384,471 |   |
| Total loans        |   | $      | 81,777,730 |   |                | $      | 3,958,707 |                |   | $      | 320,668                     |   |   | $             | 6,378,293 |   |               | $      | 10,657,668 |   |   | $ | 71,120,062 |   |

|                                                        |   | 2010   |      |   | 2009   |   |
|-------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                        |   |   |      |   |   |   |
| Year-end loans with no allocated allowance for loan losses: |   |   |      |   |   |   |
| Construction                                                |   | $      | —   |   |   | $      | 480,000 |   |
| Commercial real estate                                      |   |   | 39,377    |   |   |   | 820,469 |   |
| Year-end loans with allocated allowance for loan losses:    |   |   |      |   |   |   |   |   |
| Commercial and financial                                    |   |   | 36,837    |   |   |   | 41,037 |   |
| Commercial real estate                                      |   |   | 3,448,695 |   |   |   | — |   |
|                                                        |   | $      | 3,524,909 |   |   | $      | 1,341,506 |   |
|                                                        |   |   |      |   |   |   |   |   |
| Amount of the allowance for loan losses allocated:          |   |   |      |   |   |   |   |   |
| Commercial and financial                                    |   | $      | 7,367     |   |   | $      | 8,207 |   |
| Commercial real estate                                      |   |   | 83,459    |   |   |   | — |   |
|                                                        |   | $      | 90,826    |   |   | $      | 8,207 |   |

----

|                                                                                                          |   | 2010   |    |   | 2009   |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                                          |   |   |    |   |   |   |   |   |
| Average of individually impaired loans during year                                                            |   | $      | 813,419 |   |   | $      | 1,371,850 |   |
|                                                                                                          |   |   |    |   |   |   |   |   |
| Interest income recognized during time period that loans were impaired, using cash-basis method of accounting |   | $      | — |   |   | $      | — |   |

|                      |   | At December 31, 2010 |      |
|---------------------------|--------|----------------------|-----------|
|                      |   | Special              |      |   |   |   |   |   |   |
|                      |   | Mention              |      |   | Substandard |   |   | Doubtful |   |
| Classification of assets: |   |                 |      |   |   |   |   |   |   |
| Commercial Loans:         |   |                 |      |   |   |   |   |   |   |
| Unsecured                 |   | $                    | 459,160   |   |   | $ | 37,706 |   |   | $ | — |   |
| Commercial Real Estate    |   |                 | 4,250,511 |   |   |   | 5,623,816 |   |   |   | — |   |
| Residential Real Estate   |   |                 | —   |   |   |   | 2,276,306 |   |   |   | — |   |
| Consumer                  |   |                 | 18,117    |   |   |   | — |   |   |   | — |   |
| Other                     |   |                 | 12,096    |   |   |   | — |   |   |   | — |   |
| Total loans               |   | $                    | 4,739,884 |   |   | $ | 7,937,828 |   |   | $ | — |   |

----

|              |   | 2010   |      |   | 2009   |   |
|-------------------|--------|--------|-----------|--------|--------|--------|
|              |   |   |      |   |   |   |
| Beginning balance |   | $      | 1,063,454 |   |   | $      | 987,876 |   |
| Charge-offs       |   |   | (22,713   | )      |   |   | (556,639 | ) |
| Recoveries        |   |   | 96,479    |   |   |   | 72,217 |   |
| Provision         |   |   | 140,000   |   |   |   | 560,000 |   |
|              |   |   |      |   |   |   |   |   |
| Ending balance    |   | $      | 1,277,220 |   |   | $      | 1,063,454 |   |

|                                           |   | Commercial |       | Commercial |   |         |   | Commerical  |      | Residential |   | Other      |   |   |      |   |
|------------------------------------------------|--------|------------|------------|------------|--------|--------------|--------|-------------|-----------|-------------|--------|------------|--------|--------|-----------|--------|
|                                           |   | Unsecured  |       | Secured    |   | Construction |   | Real Estate |      | Real Estate |   | Loans      |   |   | Total     |   |
|                                           |   |       |       |       |   |         |   |        |      |        |   |       |   |   |      |   |
| Allowance for loan losses:                     |   |       |       |       |   |         |   |        |      |        |   |       |   |   |      |   |
| Ending allowance balance attributable to loans |   |       |       |       |   |         |   |        |      |        |   |       |   |   |      |   |
| Individually evaluated for impairment          |   | $          | 7,541      |       | $      | —      |   | $           | —   |        | $      | 132,511    |   | $      | 1,717     |   | $ | — |   |   | $ | 141,769 |   |
| Collectively evaluated for impairment          |   |       | 513,412    |       |   | 13,486       |   |        | 52,138    |        |   | 520,851    |   |   | 5,457     |   |   | 30,107 |   |   |   | 1,135,451 |   |
| Total ending allowance balance                 |   | $          | 520,953    |       | $      | 13,486       |   | $           | 52,138    |        | $      | 653,362    |   | $      | 7,174     |   | $ | 30,107 |   |   | $ | 1,277,220 |   |
|                                           |   |       |       |       |   |         |   |        |      |        |   |       |   |   |      |   |   |   |   |   |   |   |   |
| Loans:                                         |   |       |       |       |   |         |   |        |      |        |   |       |   |   |      |   |   |   |   |   |   |   |   |
| Individually evaluated for impairment          |   | $          | 37,706     |       | $      | —      |   | $           | —   |        | $      | 5,623,816  |   | $      | 2,276,306 |   | $ | — |   |   | $ | 7,937,828 |   |
| Collectively evaluated for impairment          |   |       | 12,886,672 |       |   | 1,393,532    |   |        | 5,874,500 |        |   | 52,580,780 |   |   | 183,808   |   |   | 920,610 |   |   |   | 73,839,902 |   |
| Total ending loans balance                     |   | $          | 12,924,378 |       | $      | 1,393,532    |   | $           | 5,874,500 |        | $      | 58,204,596 |   | $      | 2,460,114 |   | $ | 920,610 |   |   | $ | 81,777,730 |   |

|                                      |   | 2010   |    |   | 2009   |   |
|-------------------------------------------|--------|--------|---------|--------|--------|--------|
| Due from banks                            |   | $      | 1,871   |   |   | $      | — |   |
| Loans receivable                          |   |   | 292,916 |   |   |   | 313,203 |   |
| Investment securities, available for sale |   |   | 379,180 |   |   |   | 409,025 |   |
|                                      |   |   |    |   |   |   |   |   |
| Total                                     |   | $      | 673,967 |   |   | $      | 722,228 |   |

|                                           |   | 2010   |       |   | 2009   |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                           |   |   |       |   |   |   |   |   |
| Leasehold improvements                         |   | $      | 3,775,068  |   |   | $      | 3,823,772 |   |
| Computer equipment and software                |   |   | 329,739    |   |   |   | 376,178 |   |
| Furniture, fixtures and equipment              |   |   | 1,120,591  |   |   |   | 1,092,349 |   |
| Other                                          |   |   | 52,697     |   |   |   | 52,697 |   |
|                                           |   |   | 5,278,095  |   |   |   | 5,344,996 |   |
| Less accumulated depreciation and amortization |   |   | (2,545,866 | )      |   |   | (2,140,933 | ) |
|                                           |   |   |       |   |   |   |   |   |
| Total                                          |   | $      | 2,732,229  |   |   | $      | 3,204,063 |   |

----

| Year Ending  |   |   |      |
|--------------|--------|--------|-----------|
| December 31, |   | Amount |      |
| 2011         |   | $      | 413,067   |   |
| 2012         |   |   | 420,988   |   |
| 2013         |   |   | 425,980   |   |
| 2014         |   |   | 384,187   |   |
| 2015         |   |   | 365,834   |   |
| Thereafter   |   |   | 1,040,319 |   |
|         |   |   |      |   |
| Total        |   | $      | 3,050,375 |   |

|                                    |   | 2010   |      |   | 2009   |   |
|-----------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                    |   |   |      |   |   |   |   |   |
| Accounts receivable and other assets    |   | $      | 47,675    |   |   | $      | 61,286 |   |
| Security deposit receivable             |   |   | 11,200    |   |   |   | 11,200 |   |
| Prepaid assets                          |   |   | 956,252   |   |   |   | 1,189,203 |   |
| Equity securities, primarily FHLB stock |   |   | 347,700   |   |   |   | 345,400 |   |
| Income tax receivable                   |   |   | 103,493   |   |   |   | 9,422 |   |
| Late charges receivable                 |   |   | 47,285    |   |   |   | 57,045 |   |
|                                    |   |   |      |   |   |   |   |   |
|                                    |   | $      | 1,513,605 |   |   | $      | 1,673,556 |   |

----

|                       |   | 2010   |        |   | 2009    |   |
|----------------------------|--------|--------|-------------|--------|---------|--------|
|                       |   | Amount |        |   | Percent |   | Weighted Average Stated Rate |   |   | Amount |   |   | Percent |   |   | Weighted Average Stated Rate |   |
|                       |   |   |        |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Checking                   |   | $      | 66,407,225  |   |    | 32.02  | % |   | — | % |   | $ | 70,372,448 |   |   | 33.36 | % |   | — | % |
| Variable-rate money market |   |   | 27,057,632  |   |    | 13.05  |   |   | 0.59 |   |   |   | 28,124,315 |   |   | 13.33 |   |   | 0.68 |   |
| Statement savings          |   |   | 14,938,440  |   |    | 7.20   |   |   | 0.30 |   |   |   | 15,001,936 |   |   | 7.11 |   |   | 0.34 |   |
| Interest-bearing checking  |   |   | 35,138,867  |   |    | 16.94  |   |   | 0.19 |   |   |   | 32,501,930 |   |   | 15.40 |   |   | 0.23 |   |
|                       |   |   |        |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   |   | 143,542,164 |   |    | 69.21  |   |   | 0.19 |   |   |   | 146,000,629 |   |   | 69.20 |   |   | 0.22 |   |
| Time deposits:             |   |   |        |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less than six months       |   |   | 15,557,955  |   |    | 7.50   |   |   | 0.59 |   |   |   | 17,999,752 |   |   | 8.53 |   |   | 0.91 |   |
| Six months to one year     |   |   | 41,842,379  |   |    | 20.17  |   |   | 1.14 |   |   |   | 41,590,066 |   |   | 19.71 |   |   | 1.49 |   |
| More than one year         |   |   | 6,244,629   |   |    | 3.01   |   |   | 2.23 |   |   |   | 5,079,310 |   |   | 2.41 |   |   | 1.84 |   |
|                       |   |   |        |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   |   | 63,644,963  |   |    | 30.68  |   |   | 1.11 |   |   |   | 64,669,128 |   |   | 30.65 |   |   | 1.36 |   |
|                       |   |   |        |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other deposits             |   |   | 219,530     |   |    | 0.11   |   |   | — |   |   |   | 316,329 |   |   | 0.15 |   |   | — |   |
|                       |   |   |        |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                      |   | $      | 207,406,657 |   |    | 100.00 | % |   | 0.47 | % |   | $ | 210,986,086 |   |   | 100.00 | % |   | 0.57 | % |

|                           |   | Amount |       |   | Percent |   |
|--------------------------------|--------|--------|------------|--------|---------|--------|
|                           |   |   |       |   |    |   |
| Within six months              |   | $      | 54,219,713 |   |    |   | 85.19 | % |
| Six months to one year         |   |   | 3,827,516  |   |    |   | 6.01 |   |
| Over one year to two years     |   |   | 1,115,217  |   |    |   | 1.75 |   |
| Over two years to three years  |   |   | 873,163    |   |    |   | 1.37 |   |
| Over three years to four years |   |   | 1,397,132  |   |    |   | 2.20 |   |
| Over four years to five years  |   |   | 2,212,222  |   |    |   | 3.48 |   |
|                           |   |   |       |   |    |   |   |   |
| Total                          |   | $      | 63,644,963 |   |    |   | 100.00 | % |

----

|            |   | 2010   |      |   | 2009   |   |
|-----------------|--------|--------|-----------|--------|--------|--------|
|            |   |   |      |   |   |   |
| Current:        |   |   |      |   |   |   |
| Federal         |   | $      | 1,048,801 |   |   | $      | 877,307 |   |
| State and local |   |   | 621,458   |   |   |   | 495,715 |   |
|            |   |   | 1,670,259 |   |   |   | 1,373,022 |   |
| Deferred:       |   |   |      |   |   |   |   |   |
| Federal         |   |   | (52,386   | )      |   |   | 72,698 |   |
| State and local |   |   | (31,738   | )      |   |   | 44,044 |   |
|            |   |   | (84,124   | )      |   |   | 116,742 |   |
|            |   | $      | 1,586,135 |   |   | $      | 1,489,764 |   |

|                                     |   | 2010   |       |   | 2009   |   |
|------------------------------------------|--------|--------|------------|--------|--------|--------|
| Deferred tax assets:                     |   |   |       |   |   |   |
| Deferred loan fees                       |   | $      | 108,432    |   |   | $      | 89,991 |   |
| Excess book allowance for loan losses    |   |   | 393,403    |   |   |   | 328,927 |   |
| Other                                    |   |   | 480,121    |   |   |   | 478,914 |   |
|                                     |   |   |       |   |   |   |   |   |
|                                     |   |   | 981,956    |   |   |   | 897,832 |   |
| Deferred tax liabilities:                |   |   |       |   |   |   |   |   |
| Unrealized gain on investment securities |   |   | (1,213,545 | )      |   |   | (1,371,416 | ) |
|                                     |   |   |       |   |   |   |   |   |
| Net deferred tax liability:              |   | $      | (231,589   | )      |   | $      | (473,584 | ) |

----

|                                                     |   | 2010   |      |   | 2009   |   |
|----------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal income tax provision at statutory rates          |   | $      | 1,178,700 |   |   |   | 34.0 | % |   | $ | 1,126,094 |   |   |   | 34.0 | % |
| State and local taxes, net of Federal income tax benefit |   |   | 407,345   |   |   |   | 11.8 |   |   |   | 356,240 |   |   |   | 11.0 |   |
| Other                                                    |   |   | 90        |   |   |   | 0.0 |   |   |   | 7,429 |   |   |   | 0.0 |   |
|                                                     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                     |   | $      | 1,586,135 |   |   |   | 45.8 | % |   | $ | 1,489,763 |   |   |   | 45.0 | % |

----

|                        |   | Actual |       | For capital adequacy purposes |   | To be well-capitalized under prompt corrective action provisions |
|-----------------------------|--------|--------|------------|-------------------------------|--------|------------------------------------------------------------------|
|                        |   | Amount |       | Ratio                         |   | Amount                                                           |   | Ratio |   | Amount |   | Ratio |
|                        |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |
| As of December 31, 2010:    |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |
|   Tier 1 Capital  |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Average Assets)         |   | $      | 24,062,000 |                          | 9.96   | %                                                                |   | $ | 9,664,133 |   | 4.00 | % |   | $ | 12,080,167 |   | 5.00 | % |
|   Tier 1 Capital  |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets)   |   |   | 24,062,000 |                          | 24.63  |                                                             |   |   | 3,907,400 |   | 4.00 |   |   |   | 5,861,100 |   | 6.00 |   |
|   Total Capital   |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets)   |   |   | 25,284,000 |                          | 25.88  |                                                             |   |   | 7,814,800 |   | 8.00 |   |   |   | 9,768,500 |   | 10.00 |   |

|                        |   | Actual |       | For capital adequacy purposes |   | To be well-capitalized under prompt corrective action provisions |
|-----------------------------|--------|--------|------------|-------------------------------|--------|------------------------------------------------------------------|
|                        |   | Amount |       | Ratio                         |   | Amount                                                           |   | Ratio |   | Amount |   | Ratio |
|                        |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |
| As of December 31, 2009:    |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |
|   Tier 1 Capital  |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Average Assets)         |   | $      | 22,468,000 |                          | 9.51   | %                                                                |   | $ | 9,454,548 |   | 4.00 | % |   | $ | 11,818,185 |   | 5.00 | % |
|   Tier 1 Capital  |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets)   |   |   | 22,468,000 |                          | 21.94  |                                                             |   |   | 4,095,720 |   | 4.00 |   |   |   | 6,143,580 |   | 6.00 |   |
|   Total Capital   |   |   |       |                          |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (to Risk Weighted Assets)   |   |   | 23,531,000 |                          | 22.98  |                                                             |   |   | 8,191,440 |   | 8.00 |   |   |   | 10,239,300 |   | 10.00 |   |

----

|   |                    |   |       |   |   | Exercise  |
|--------|-------------------------|--------|------------|--------|--------|-----------|
|   |                    |   | 2010       |   | Rate   |
|   |                    |   |       |   |   |      |
|   | Dividend yield          |   | 2.08       | %      |   |      |
|   | Expected volatility     |   | 7.76       |   |   |      |
|   | Risk-free interest rate |   | 2.96       |   |   |      |
|   | Expected life           |   | 8.27 Years |   |   |  100 | % |

----

|                                                                                      |   | 2010   |    |
|-------------------------------------------------------------------------------------------|--------|--------|---------|
|                                                                                      |   | Shares |    |   | Weighted Average Exercise Price |   |   | Aggregate Intrinsic Value |   |
|                                                                                      |   |   |    |   |   |   |   |   |   |   |   |
| Options outstanding at the beginning of the year                                          |   |   | 116,748 |   |   | $ | 12.16 |   |   |   |   |
| Granted                                                                                   |   |   | 52,050  |   |   |   | 11.56 |   |   |   |   |
| Exercised                                                                                 |   |   | (44,375 | ) |   |   | 4.77 |   |   |   |   |
|                                                                                      |   |   |    |   |   |   |   |   |   |   |   |   |
| Options outstanding at the end of the year                                                |   |   | 124,423 |   |   | $ | 14.28 |   |   | $ | (347,140 | ) |
|                                                                                      |   |   |    |   |   |   |   |   |   |   |   |   |
| Options exercisable at the end of the year                                                |   |   | 72,373  |   |   | $ | 16.87 |   |   | $ | (389,367 | ) |
|                                                                                      |   |   |    |   |   |   |   |   |   |   |   |
| Weighted average remaining contractual life of options outstanding at the end of the year |   |   |    |   |   | 5.5 Years |   |   |   |   |   |

| Nonvested Options              |   | Shares |    |   | Weighted Average Grant Date Fair Value |   |
|--------------------------------|--------|--------|---------|--------|----------------------------------------|--------|
|                           |   |   |    |   |                                   |   |   |   |
| Nonvested at January 1, 2010   |   |   | 1,950   |   |                                   | $      | 1.18 |   |
| Granted                        |   |   | 52,050  |   |                                   |   | 1.25 |   |
| Vested                         |   |   | 1,950   |   |                                   |   | 1.18 |   |
| Forfeited                      |   |   | — |   |                                   |   |   |   |
|                           |   |   |    |   |                                   |   |   |   |
| Nonvested at December 31, 2010 |   |   | 52,050  |   |                                   | $      | 1.25 |   |

|                                             |   | 2010   |    |   | 2009   |   |
|--------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                             |   |   |    |   |   |   |   |   |
| Intrinsic value of options exercised             |   | $      | 311,956 |   |   | $      | 145,350 |   |
| Cash received from option exercise               |   | $      | 211,531 |   |   | $      | 106,625 |   |
| Tax benefit realized from option exercise        |   | $      | 80,680  |   |   | $      | 12,002 |   |
| Weighted average fair value of options exercised |   | $      | 7.03    |   |   | $      | 6.84 |   |

----

| Plan Description                 |   | Number of Exercisable Shares |    |   | Weighted Average Exercise Price |   |    | Weighted Average Contractual Life |   |
|----------------------------------|--------|------------------------------|---------|--------|---------------------------------|--------|---------|-----------------------------------|--------|
|                             |   |                         |    |   |                            |   |    |                              |   |   |   |   |
| 1998 Director Stock Option Plan  |   |                         | — |   |                            | $      | — |                              |   |   | — |   |
|                             |   |                         |    |   |                            |   |    |                              |   |   |   |   |
| 1998 Incentive Stock Option Plan |   |                         | 3,250   |   |                            |   | 11.75   |                              |   |   | 6.92 |   |
|                             |   |                         |    |   |                            |   |    |                              |   |   |   |   |
| 2000 Director Stock Option Plan  |   |                         | — |   |                            |   | — |                              |   |   | — |   |
|                             |   |                         |    |   |                            |   |    |                              |   |   |   |   |
| 2000 Incentive Stock Option Plan |   |                         | 26,350  |   |                            |   | 14.58   |                              |   |   | 4.36 |   |
|                             |   |                         |    |   |                            |   |    |                              |   |   |   |   |
| 2004 Director Stock Option Plan  |   |                         | 60,750  |   |                            |   | 16.51   |                              |   |   | 4.19 |   |
|                             |   |                         |    |   |                            |   |    |                              |   |   |   |   |
| 2010 Incentive Stock Option Plan |   |                         | 34,073  |   |                            |   | 11.45   |                              |   |   | 9.17 |   |
|                             |   |                         |    |   |                            |   |    |                              |   |   |   |   |
| All Plans                        |   |                         | 124,423 |   |                            | $      | 14.28   |                              |   |   | 5.48 |   |

|                                           |   | 2010   |       |   | 2009   |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                           |   | Amount |       |   | Amount |   |
|                                           |   |   |       |   |   |   |
| Commitments to fund secured construction loans |   | $      | 2,672,000  |   |   | $      | 3,168,000 |   |
| Commitments to fund all other commercial loans |   |   | 24,987,651 |   |   |   | 20,794,679 |   |
|                                           |   | $      | 27,659,651 |   |   | $      | 23,962,679 |   |

----

|                                      |   | December 31, 2010 |        |   | December 31, 2009 |   |
|-------------------------------------------|--------|-------------------|-------------|--------|-------------------|--------|
|                                      |   | Carrying          |        |   | Fair              |   |   | Carrying |   |   | Fair |   |
|                                      |   | Amount            |        |   | Value             |   |   | Amount |   |   | Value |   |
| Financial Assets:                         |   |              |        |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                 |   | $                 | 28,764,987  |   |              | $      | 28,764,987 |   |   | $ | 39,716,919 |   |   | $ | 39,716,919 |   |
| Investment securities, available for sale |   |              | 121,307,907 |   |              |   | 121,307,907 |   |   |   | 113,912,404 |   |   |   | 113,912,404 |   |
| Loans receivable                          |   |              | 80,261,004  |   |              |   | 81,526,941 |   |   |   | 77,770,702 |   |   |   | 78,515,058 |   |
| Other financial assets                    |   |              | 673,967     |   |              |   | 673,967 |   |   |   | 722,228 |   |   |   | 722,228 |   |
|                                      |   |              |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total Financial Assets                    |   | $                 | 231,007,865 |   |              | $      | 232,273,802 |   |   | $ | 232,122,253 |   |   | $ | 232,866,609 |   |
| Financial Liabilities:                    |   |              |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest bearing deposits             |   | $                 | 66,626,755  |   |              | $      | 66,626,755 |   |   | $ | 70,688,777 |   |   | $ | 70,688,777 |   |
| Interest bearing deposits                 |   |              | 140,779,902 |   |              |   | 140,634,427 |   |   |   | 140,297,309 |   |   |   | 140,258,492 |   |
| Other liabilities                         |   |              | 19,039      |   |              |   | 19,039 |   |   |   | 45,695 |   |   |   | 45,695 |   |
|                                      |   |              |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total Financial Liabilities               |   | $                 | 207,425,696 |   |              | $      | 207,280,221 |   |   | $ | 211,031,781 |   |   | $ | 210,992,964 |   |

----

|                                |   | Fair Value Measurements at December 31, 2010 Using |        |
|-------------------------------------|--------|----------------------------------------------------|-------------|
|                                |   | Total                                              |        |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Assets:                             |   |                                               |        |   |   |   |   |   |   |   |   |   |
| FNMA MBS - Residential              |   | $                                                  | 3,571,217   |   |   | $ | — |   |   | $ | 3,571,217 |   |   | $ | — |   |
| GNMA MBS - Residential              |   |                                               | 4,081,112   |   |   |   | — |   |   |   | 4,081,112 |   |   |   | — |   |
| Whole Loan MBS-Residential          |   |                                               | 1,235,501   |   |   |   | — |   |   |   | 1,235,501 |   |   |   | — |   |
| Collateralized mortgage obligations |   |                                               | 112,420,077 |   |   |   | — |   |   |   | 112,420,077 |   |   |   | — |   |
| Total Available for sale Securities |   | $                                                  | 121,307,907 |   |   | $ | — |   |   | $ | 121,307,907 |   |   | $ | — |   |

|                                |   | Fair Value Measurements at December 31, 2009 Using |        |
|-------------------------------------|--------|----------------------------------------------------|-------------|
|                                |   | Total                                              |        |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |
| Assets:                             |   |                                               |        |   |   |   |   |   |   |   |   |   |
| FNMA MBS - Residential              |   | $                                                  | 5,040,820   |   |   | $ | — |   |   | $ | 5,040,820 |   |   | $ | — |   |
| GNMA MBS - Residential              |   |                                               | 1,321,240   |   |   |   | — |   |   |   | 1,321,240 |   |   |   | — |   |
| Whole Loan MBS-Residential          |   |                                               | 1,856,893   |   |   |   | — |   |   |   | 1,856,893 |   |   |   | — |   |
| Collateralized mortgage obligations |   |                                               | 105,693,451 |   |   |   | — |   |   |   | 105,693,451 |   |   |   | — |   |
| Total Available for sale Securities |   | $                                                  | 113,912,404 |   |   | $ | — |   |   | $ | 113,912,404 |   |   | $ | — |   |

----

|           |   | Fair Value Measurements at December 31, 2010 Using |    |
|----------------|--------|----------------------------------------------------|---------|
|           |   | Total                                              |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs (Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
| Assets:        |   |                                               |    |   |   |   |   |   |   |   |   |   |
| Impaired loans |   | $                                                  | 643,758 |   |   |   | — |   |   |   | — |   |   | $ | 643,758 |   |

|           |   | Fair Value Measurements at December 31, 2009 Using |   |
|----------------|--------|----------------------------------------------------|--------|
|           |   | Total                                              |   |   | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
| Assets:        |   |                                               |   |   |   |   |   |   |   |   |   |   |
| Impaired loans |   | $                                                  | 43,505 |   |   |   | — |   |   |   | — |   |   | $ | 43,505 |   |

----

|              |   | 2010   |    |   | 2009   |   |
|-------------------|--------|--------|---------|--------|--------|--------|
|              |   |   |    |   |   |   |
| Beginning balance |   | $      | 91,010  |   |   | $      | 159,664 |   |
| Originations      |   |   | 50      |   |   |   | 81,187 |   |
| Payments          |   |   | (79,065 | )      |   |   | (149,841 | ) |
|              |   |   |    |   |   |   |   |   |
| Ending balance    |   | $      | 11,995  |   |   | $      | 91,010 |   |

----

----

|                                                                                                                                                                                           |   | 2010   |       |   | 2009   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| ASSETS                                                                                                                                                                                         |   |   |       |   |   |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                                      |   | $      | 9          |   |   | $      | - |   |
| Money market                                                                                                                                                                                   |   |   | 463,823    |   |   |   | 297,496 |   |
| Investment in subsidiaries                                                                                                                                                                     |   |   | 25,500,560 |   |   |   | 24,093,862 |   |
| Deferred taxes                                                                                                                                                                                 |   |   | 54,896     |   |   |   | 30,922 |   |
| Other assets                                                                                                                                                                                   |   |   | 39,093     |   |   |   | 78,007 |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Total assets                                                                                                                                                                                   |   | $      | 26,058,381 |   |   | $      | 24,500,287 |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                     |   |   |       |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| LIABILITIES:                                                                                                                                                                                   |   |   |       |   |   |   |   |   |
| Accounts payable, accrued expenses and other liabilities                                                                                                                                       |   | $      | 13,525     |   |   | $      | 16,338 |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Total liabilities                                                                                                                                                                              |   |   | 13,525     |   |   |   | 16,338 |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| COMMITMENTS AND CONTINGENT LIABILITIES                                                                                                                                                         |   |   |       |   |   |   |   |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| STOCKHOLDERS’ EQUITY                                                                                                                                                                     |   |   |       |   |   |   |   |   |
| Common stock ($.0001 par value, 3,000,000 shares authorized, 1,989,509 issued and 1,825,009 outstanding at December 31, 2010; 1,945,134 issued and 1,762,191 outstanding at December 31, 2009) |   |   | 199        |   |   |   | 195 |   |
| Additional paid-in capital                                                                                                                                                                     |   |   | 9,249,600  |   |   |   | 9,317,719 |   |
| Retained earnings                                                                                                                                                                              |   |   | 17,563,435 |   |   |   | 16,112,741 |   |
| Treasury stock, at cost (164,500 shares at December 31, 2010 and 182,943 shares at December 31, 2009)                                                                                          |   |   | (1,643,797 | )      |   |   | (1,840,249 | ) |
| Unearned Employee Stock Ownership Plan shares                                                                                                                                                  |   |   | (563,594   | )      |   |   | (732,672 | ) |
| Accumulated other comprehensive gain, net of taxes of $1,213,545 and $1,371,416, respectively                                                                                                  |   |   | 1,439,013  |   |   |   | 1,626,215 |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Total stockholders’ equity                                                                                                                                                               |   |   | 26,044,856 |   |   |   | 24,483,949 |   |
|                                                                                                                                                                                           |   |   |       |   |   |   |   |   |
| Total liabilities and stockholders’ equity                                                                                                                                               |   | $      | 26,058,381 |   |   | $      | 24,500,287 |   |

----

----

|                                           |   | 2010   |      |   | 2009   |   |
|------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| INTEREST INCOME:                               |   |   |      |   |   |   |
| Loans recievable                               |   | $      | 29,288    |   |   | $      | 36,051 |   |
| Other interest income                          |   |   | 3,472     |   |   |   | 4,710 |   |
| Total interest income                          |   |   | 32,760    |   |   |   | 40,761 |   |
|                                           |   |   |      |   |   |   |   |   |
| INTEREST EXPENSE:                              |   |   |      |   |   |   |   |   |
| Subordinated debt                              |   |   | —   |   |   |   | — |   |
| Total interest expense                         |   |   | —   |   |   |   | — |   |
|                                           |   |   |      |   |   |   |   |   |
| Net interest income                            |   |   | 32,760    |   |   |   | 40,761 |   |
|                                           |   |   |      |   |   |   |   |   |
| NON-INTEREST INCOME:                           |   |   |      |   |   |   |   |   |
| Dividend income                                |   |   | 400,000   |   |   |   | 1,500,000 |   |
| Other                                          |   |   | —   |   |   |   | — |   |
|                                           |   |   | 400,000   |   |   |   | 1,500,000 |   |
|                                           |   |   |      |   |   |   |   |   |
| NON-INTEREST EXPENSES:                         |   |   |      |   |   |   |   |   |
| Salaries and benefits                          |   |   | 70,811    |   |   |   | — |   |
| Legal fees                                     |   |   | 57,500    |   |   |   | 38,000 |   |
| Other                                          |   |   | 84,005    |   |   |   | 74,763 |   |
| Total non-interest expenses                    |   |   | 212,316   |   |   |   | 112,763 |   |
|                                           |   |   |      |   |   |   |   |   |
| INCOME BEFORE INCOME TAXES                     |   |   | 220,444   |   |   |   | 1,427,998 |   |
|                                           |   |   |      |   |   |   |   |   |
| PROVISION/(BENEFIT) FROM INCOME TAXES:         |   |   |      |   |   |   |   |   |
| Current                                        |   |   | (71,600   | )      |   |   | (49,678 | ) |
| Deferred                                       |   |   | (23,974   | )      |   |   | 371 |   |
|                                           |   |   |      |   |   |   |   |   |
| Total income taxes                             |   |   | (95,574   | )      |   |   | (49,307 | ) |
|                                           |   |   |      |   |   |   |   |   |
| EQUITY IN UNDISTRIBUTED EARNINGS, NET OF TAXES |   |   | 1,564,611 |   |   |   | 344,972 |   |
|                                           |   |   |      |   |   |   |   |   |
| NET INCOME                                     |   | $      | 1,880,629 |   |   | $      | 1,822,277 |   |

----

----

|                                                                             |   | 2010   |       |   | 2009   |   |
|----------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                            |   |   |       |   |   |   |
| Net income                                                                       |   | $      | 1,880,629  |   |   | $      | 1,822,277 |   |
| Adjustments to reconcile net income to net cash used in operating activities:    |   |   |       |   |   |   |   |   |
| Changes in operating assets and liabilities:                                     |   |   |       |   |   |   |   |   |
| ESOP compensation expense                                                        |   |   | (67,013    | )      |   |   | (73,431 | ) |
| Stock-based compensation expense                                                 |   |   | 70,811     |   |   |   | — |   |
| Undistributed (loss) income of subsidiaries                                      |   |   | (1,564,611 | )      |   |   | (344,972 | ) |
| Decrease/ (increase) in other assets                                             |   |   | 38,914     |   |   |   | (57,675 | ) |
| (Increase)/decrease in deferred income taxes                                     |   |   | (23,974    | )      |   |   | 371 |   |
| (Decrease)/increase in accounts payable, accrued expenses, and other liabilities |   |   | (640       | )      |   |   | 34,345 |   |
| Net cash provided by operating activities                                        |   |   | 334,116    |   |   |   | 1,380,915 |   |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                            |   |   |       |   |   |   |   |   |
| Net decrease in loan receivable                                                  |   |   | 169,078    |   |   |   | 169,078 |   |
| Net decrease/(increase) in money market deposit                                  |   |   | (166,327   | )      |   |   | 198,875 |   |
| Net cash provided by investing activities                                        |   |   | 2,751      |   |   |   | 367,953 |   |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                            |   |   |       |   |   |   |   |   |
| Exercise stock option                                                            |   |   | 292,211    |   |   |   | 118,627 |   |
| Purchase of treasury stock, at cost                                              |   |   | (199,134   | )      |   |   | (1,444,358 | ) |
| Payment of dividends                                                             |   |   | (429,935   | )      |   |   | (423,679 | ) |
| Net cash used in financing activities                                            |   |   | (336,858   | )      |   |   | (1,749,410 | ) |
|                                                                             |   |   |       |   |   |   |   |   |
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                             |   |   | 9          |   |   |   | (542 | ) |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                     |   |   | —    |   |   |   | 542 |   |
|                                                                             |   |   |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS, END OF YEAR                                           |   | $      | 9          |   |   | $      | — |   |
|                                                                             |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                |   |   |       |   |   |   |   |   |
| Cash paid during the period for:                                                 |   |   |       |   |   |   |   |   |
| Interest                                                                         |   | $      | —    |   |   | $      | — |   |
| Income taxes                                                                     |   | $      | —    |   |   | $      | — |   |

----

|                             |   | 2010   |    |   | 2009   |   |
|----------------------------------|--------|--------|---------|--------|--------|--------|
|                             |   |   |    |   |   |   |
| Shares allocated to participants |   |   | 65,336  |   |   |   | 56,396 |   |
| Shares released to participants  |   |   | (6,688  | )      |   |   | (5,070 | ) |
| Unearned shares                  |   |   | 27,564  |   |   |   | 36,504 |   |
|                             |   |   |    |   |   |   |   |   |
| Total ESOP Shares                |   |   | 86,212  |   |   |   | 87,830 |   |
| Fair value of unearned shares    |   | $      | 316,710 |   |   | $      | 432,937 |   |

| For the Year Ended December 31, 2010: |   |
|---------------------------------------|--------|
|                                  |   |   |   | Weighted Average |   |
|                                  |   | Shares |   | Grant Date Share Value |   |
|                                  |   |   |   |   |   |
| Non vested at beginning of period     |   |   | — |   | $ | — |   |
| Granted                               |   |   | 35,500 |   |   | 11.46 |   |
| Vested                                |   |   | — |   |   | — |   |
| Non vested at end of period           |   |   | 35,500 |   | $ | 11.46 |   |

----

----

| Report of Independent Registered Public Accounting Firm                                              | F-1 |
|------------------------------------------------------------------------------------------------------|-----|
| Consolidated Statements of Financial Condition as of December 31, 2010 and 2009                      | F-2 |
| Consolidated Statements of Earnings for the Years Ended December 31, 2010 and 2009                   | F-3 |
| Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2010 and 2009 | F-4 |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009                 | F-5 |
| Notes to Consolidated Financial Statements                                                           | F-6 |

----

| Exhibit No. |   | Title of Exhibit                                                                           |
|-------------|--------|--------------------------------------------------------------------------------------------|
|        |   |                                                                                       |
| 3.1         |   | Restated Certificate of Incorporation of VSB Bancorp, Inc.*                                |
| 3.2         |   | Amended Bylaws of VSB Bancorp, Inc.****                                                    |
| 10.1        |   | VSB Bancorp, Inc. Restated 2000 Incentive Stock Option Plan*                               |
| 10.2        |   | VSB Bancorp, Inc. Restated 2000 Directors Stock Option Plan*                               |
| 10.3        |   | VSB Bancorp, Inc. Restated 1998 Incentive Stock Option Plan*                               |
| 10.4        |   | VSB Bancorp, Inc. Restated 1998 Directors Stock Option Plan*                               |
| 10.5        |   | VSB Bancorp, Inc. 2004 Directors Stock Option Plan**                                       |
| 10.6        |   | VSB Bancorp, Inc. 2010 Retention and Recognition Plan *****                                |
| 10.7        |   | VSB Bancorp, Inc. 2010 Incentive Stock Option Plan *****                                   |
| 10.8        |   | Employment Agreement among Raffaele M. Branca, VSB Bancorp, Inc. and Victory State Bank*** |
| 21.         |   | Subsidiaries of the Registrant                                                             |
| 23.         |   | Consent of Independent Registered Public Accounting Firm                                   |
| 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 Principal Accounting Officer                     |
| 32.1        |   | Certification by CEO pursuant to 18 U.S.C. 1350                                            |
| 32.2        |   | Certification by Principal Accounting Officer pursuant to 18 U.S.C. 1350                   |

----

|                 | VSB Bancorp, Inc. |
|----------------------|-------------------|
|                 | (Registrant)      |
| Date: March 14, 2011 |              |   |
|                 | By:               | /s/Raffaele M. Branca |
|                 |              | Raffaele M. Branca, President & CEO, |
|                 |              | Principal Executive Officer and |
|                 |              | Principal Financial Officer |
|                 |              |   |
| Date: March 14, 2011 |              | /s/ Jonathan B. Lipschitz |
|                 |              | Jonathan B. Lipschitz |
|                 |              | Vice President, Controller and Principal Accounting Officer |

| /s/ Raffaele M. Branca                            |   | March 14, 2011 |
|---------------------------------------------------|--------|----------------|
| Raffaele M. Branca, President and Chief Executive |   | Date           |
| Officer and Director                              |   |           |
|                                              |   |           |
| /s/ Joseph J. LiBassi                             |   | March 14, 2011 |
| Joseph J, LiBassi, Chairman of the Board          |   | Date           |
|                                              |   |           |
| /s/ Joan Nerlino Caddell                          |   | March 14, 2011 |
| Joan Nerlino Caddell, Director                    |   | Date           |
|                                              |   |           |
| /s/ Robert S. Cutrona, Sr.                        |   | March 14, 2011 |
| Robert S. Cutrona, Sr., Director                  |   | Date           |
|                                              |   |           |
| /s/ Chaim Farkas                                  |   | March 14, 2011 |
| Chaim Farkas, Director                            |   | Date           |
|                                              |   |           |
| /s/ Alfred C. Johnsen                             |   | March 14, 2011 |
| Alfred C. Johnsen, Director                       |   | Date           |
|                                              |   |           |
| /s/ Robert P. Moore                               |   | March 14, 2011 |
| Robert P. Moore, Director                         |   | Date           |
|                                              |   |           |
| /s/ Carlos Perez                                  |   | March 14, 2011 |
| Carlos Perez, Director                            |   | Date           |
|                                              |   |           |
| /s/ Bruno Savo                                    |   | March 14, 2011 |
| Bruno Savo, Director                              |   | Date           |

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