----

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

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

|   Tennessee(State or other jurisdiction ofincorporation or organization) | 45-0508261(I.R.S. Employer Identification No.) |
|------------------------------------------------------------------------------------|------------------------------------------------|
|                                                                               |                                           |
|     120 Evans Avenue, Morristown, Tennessee                    |                                           |
| (Address of principal executive offices)                                           | (Zip Code)                                     |
|                                                                               |                                           |

|  Title of each class           |   Name of each exchange on which registered |
|-------------------------------------|-------------------------------------------------------|
|  Common Stock, par value $0.01 |  The NASDAQ Stock Market LLC                     |

|   | Large accelerated filer |  ̈ |   | Accelerated filer         |  ̈ |
|--------|-------------------------|--------|--------|---------------------------|--------|
|   |                    |   |   |                      |   |
|   | Non-accelerated filer   |  ̈ |   | Smaller reporting company | x      |

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|     |                                                                                           | Page   |
|----------|------------------------------------------------------------------------------------------------|--------|
|     |                                                                                           |   |
| Item 1.  | Business                                                                                       | 1      |
| Item 1A. | Risk Factors                                                                                   | 15     |
| Item 1B. | Unresolved Staff Comments                                                                      | 19     |
| Item 2.  | Properties                                                                                     | 19     |
| Item 3.  | Legal Proceedings                                                                              | 19     |
| Item 4.  | [Removed and Reserved]                                                                         | 19     |
|     |                                                                                           |   |
| Part II  |                                                                                           |
|     |                                                                                           |   |
| Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer            |   |
|     | Purchases of Equity Securities                                                                 | 19     |
| Item 6.  | Selected Financial Data                                                                        | 21     |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operation     | 22     |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                     | 40     |
| Item 8.  | Financial Statements and Supplementary Data                                                    | 41     |
| Item 9.  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure           | 41     |
| Item 9A. | Controls and Procedures                                                                        | 42     |
| Item 9B. | Other Information                                                                              | 42     |
|     |                                                                                           |   |
| Part III |                                                                                           |
|     |                                                                                           |   |
| Item 10. | Directors, Executive Officers and Corporate Governance                                         | 42     |
| Item 11. | Executive Compensation                                                                         | 42     |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 42     |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                      | 43     |
| Item 14. | Principal Accountant Fees and Services                                                         | 43     |
|     |                                                                                           |   |
| Part IV  |                                                                                           |
|     |                                                                                           |   |
| Item 15. | Exhibits and Financial Statement Schedules                                                     | 44     |

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|   | • |   | The strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations which may be less favorable than expected and may result in, among other things, a deterioration in the credit quality and value of the Company’s assets; |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | The economic impact of past and any future terrorist attacks, acts of war or threats thereof and the response of the United States to any such threats and attacks; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | The effects of, and changes in, federal, state and local laws, regulations and policies affecting banking, securities, insurance and monetary and financial matters; |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | The effects of changes in interest rates (including the effects of changes in the rate of prepayments of the Company’s assets) and the policies of the Board of Governors of the Federal Reserve System; |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | The ability of the Company to compete with other financial institutions as effectively as the Company currently intends due to increases in competitive pressures in the financial services sector; |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | The inability of the Company to obtain new customers and to retain existing customers; |
|--------|---------|--------|----------------------------------------------------------------------------------------|

|   | • |   | The timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Technological changes implemented by the Company and by other parties, including third party vendors, which may be more difficult or more expensive than anticipated or which may have unforeseen consequences to the Company and its customers;  |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • |   | The ability of the Company to develop and maintain secure and reliable electronic systems;                                                                                                                                                             |

|   | • |   | The ability of the Company to retain key executives and employees and the difficulty that the Company may experience in replacing key executives and employees in an effective manner; |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | Consumer spending and saving habits which may change in a manner that affects the Company’s business adversely; |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | • |   | Business combinations and the integration of acquired businesses which may be more difficult or expensive than expected; |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | • |   | The costs, effects and outcomes of existing or future litigation; |
|--------|---------|--------|-------------------------------------------------------------------|

|   | • |   | Changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies and the Financial Accounting Standards Board; and |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • |   | The ability of the Company to manage the risks associated with the foregoing as well as anticipated. |
|--------|---------|--------|------------------------------------------------------------------------------------------------------|

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

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| Name               |   | Age    |                                                | Position |   |
|--------------------|--------|--------|-----------------------------------------------------|----------|--------|
|               |   |   |                                                |
| Anderson L. Smith  | 63     |   | President and Chief Executive Officer               |
| Douglas H. Rouse   | 58     |   | Senior Vice President                               |
| Jane P. Hutton     | 52     |   | Senior Vice President and Chief Financial Officer   |
| Eric S. McDaniel   | 40     |   | Senior Vice President and Chief Information Officer |
| Janet J. Ketner    | 58     |   | Executive Vice President of Retail Banking          |
| Anthony J. Carasso | 52     |   | President—Knoxville Region                    |
|               |   |   |                                                |

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|                                  | Well Capitalized         | Adequately Capitalized | Undercapitalized                   | Significantly Undercapitalized |
|---------------------------------------|--------------------------|------------------------|------------------------------------|--------------------------------|
| Total risk-based                      |                     |                   |                               |                           |
|     capital ratio | 10.0% or more            | 8.0% or more           |    Less than 8.0%   | Less than 6.0%                 |
| Tier 1 risk-based                     |                     |                   |                               |                           |
|     capital ratio |   6.0% or more | 4.0% or more           |    Less than 4.0%   | Less than 3.0%                 |
| Leverage ratio                        |   5.0% or more | 4.0% or more *         |    Less than 4.0% * | Less than 3.0%                 |

----

----

----

RISK FACTORS

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| ·   | supermajority voting requirements for certain business combinations and changes to some provisions of the charter and bylaws; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | limitation on the right to vote shares; |
|--------------------|-----------------------------------------|

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

| ·   | the election of directors to staggered terms of three years; |
|--------------------|--------------------------------------------------------------|

| ·   | provisions regarding the timing and content of shareholder proposals and nominations; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | provisions restricting the calling of special meetings of shareholders; |
|--------------------|-------------------------------------------------------------------------|

| ·   | the absence of cumulative voting by shareholders in the election of directors; and |
|--------------------|------------------------------------------------------------------------------------|

| ·   | the removal of directors only for cause. |
|--------------------|------------------------------------------|

----

UNRESOLVED STAFF 

PER

LEGAL PROCEEDINGS

REMOVED AND 

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

|                     |   | High   |   |   | Low    |   |   | Dividend PaidPer Share |   |
|--------------------------|--------|--------|--------|--------|--------|--------|--------|------------------------|--------|
| Year Ended June 30, 2011 |   |   |   |   |   |   |   |                   |   |
| Fourth quarter           |   | $      | 3.96   |   |   | $      | 3.00   |                   |   | $ | 0.00 |   |
| Third quarter            |   |   | 5.02   |   |   |   | 3.00   |                   |   |   | 0.00 |   |
| Second quarter           |   |   | 3.71   |   |   |   | 2.75   |                   |   |   | 0.00 |   |
| First quarter            |   |   | 4.39   |   |   |   | 3.05   |                   |   |   | 0.00 |   |
|                     |   |   |   |   |   |   |   |                   |   |   |   |   |
| Year Ended June 30, 2010 |   |   |   |   |   |   |   |                   |   |   |   |   |
| Fourth quarter           |   | $      | 4.84   |   |   | $      | 3.70   |                   |   | $ | 0.00 |   |
| Third quarter            |   |   | 5.48   |   |   |   | 3.42   |                   |   |   | 0.00 |   |
| Second quarter           |   |   | 5.70   |   |   |   | 4.21   |                   |   |   | 0.03 |   |
| First quarter            |   |   | 7.28   |   |   |   | 4.75   |                   |   |   | 0.00 |   |

----

| Period                               |   | (a)Total number of Shares (or Units) Purchased |    |   | (b)Average Price Paid per Share(or Unit) |   |   | (c)Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs |   |   | (d)Maximum Number (or Appropriate Dollar Value) of Shares (or units) that May Yet Be Purchased Under the Plans or Programs |   |
|--------------------------------------|--------|------------------------------------------------|---------|--------|------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------|--------|
| April 1, 2011 through April 30, 2011 |   |                                           | — |   |                                     | $      | 0.00   |                                                                                           |   |   | —                                                                                                                    |   |   |   | 440,522 | (1) |
| May 1, 2011 through May 31, 2011     |   |                                           | — |   |                                     | $      | 0.00   |                                                                                           |   |   | —                                                                                                                    |   |   |   | 440,522 | (1) |
| June 1, 2011 through June 30, 2011   |   |                                           | 236     |   |                                     | $      | 3.22   |                                                                                           |   |   | 236                                                                                                                        |   |   |   | 440,286 | (1) |
| Total                                |   |                                           | 236     |   |                                     | $      | 3.22   |                                                                                           |   |   | 236                                                                                                                        |   |   |   | 440,286 |   |

----

| (1) | On November 13, 2008, the Company announced a stock repurchase program under which the Company may repurchase up to 620,770 shares of the Company’s common stock, from time to time, subject to market conditions.  The repurchase program will continue until completed or terminated by the Board of Directors. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                                                                  |   | At or For the Year Ended June 30, |    |
|-----------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                  |   | 2011                              |    |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                  |   |                              |    |
| Financial Condition Data:                                             |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                          |   | $                                 | 561,189 |   |   | $ | 630,770 |   |   | $ | 662,655 |   |   | $ | 330,265 |   |   | $ | 339,703 |   |
| Loans receivable, net                                                 |   |                              | 378,587 |   |   |   | 434,378 |   |   |   | 498,107 |   |   |   | 282,483 |   |   |   | 274,881 |   |
| Cash and cash equivalents,   interest-bearing deposits |   |                              | 40,548  |   |   |   | 69,303 |   |   |   | 44,108 |   |   |   | 17,616 |   |   |   | 7,734 |   |
| Investment securities                                                 |   |                              | 74,780  |   |   |   | 62,989 |   |   |   | 36,544 |   |   |   | 3,478 |   |   |   | 27,278 |   |
| Borrowings                                                            |   |                              | 38,887  |   |   |   | 85,778 |   |   |   | 91,098 |   |   |   | 33,000 |   |   |   | 44,800 |   |
| Deposits                                                              |   |                              | 454,262 |   |   |   | 479,183 |   |   |   | 482,167 |   |   |   | 223,552 |   |   |   | 220,082 |   |
| Stockholders’ equity                                            |   |                              | 55,919  |   |   |   | 56,523 |   |   |   | 79,505 |   |   |   | 72,777 |   |   |   | 73,644 |   |
|                                                                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Data:                                                       |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                       |   | $                                 | 26,334  |   |   | $ | 30,043 |   |   | $ | 28,175 |   |   | $ | 20,846 |   |   | $ | 21,004 |   |
| Interest expense                                                      |   |                              | 8,030   |   |   |   | 11,593 |   |   |   | 11,619 |   |   |   | 9,248 |   |   |   | 9,660 |   |
| Net interest income                                                   |   |                              | 18,304  |   |   |   | 18,450 |   |   |   | 16,556 |   |   |   | 11,598 |   |   |   | 11,344 |   |
| Provision for loan losses                                             |   |                              | 4,447   |   |   |   | 8,809 |   |   |   | 910 |   |   |   | 451 |   |   |   | 30 |   |
| Net interest income after   provision for loan losses  |   |                              | 13,857  |   |   |   | 9,641 |   |   |   | 15,646 |   |   |   | 11,147 |   |   |   | 11,314 |   |
| Noninterest income                                                    |   |                              | 3,233   |   |   |   | 4,034 |   |   |   | 3,185 |   |   |   | 1,520 |   |   |   | 1,355 |   |
| Noninterest expense                                                   |   |                              | 17,411  |   |   |   | 39,657 |   |   |   | 14,683 |   |   |   | 9,889 |   |   |   | 10,070 |   |
| Earnings before income taxes                                          |   |                              | (321    | ) |   |   | (25,982 | ) |   |   | 4,148 |   |   |   | 2,778 |   |   |   | 2,599 |   |
| Total income taxes                                                    |   |                              | (351    | ) |   |   | (1,982 | ) |   |   | 1,518 |   |   |   | 1,531 |   |   |   | 908 |   |
| Net earnings                                                          |   | $                                 | 30      |   |   | $ | (24,000 | ) |   | $ | 2,630 |   |   | $ | 1,247 |   |   | $ | 1,691 |   |
|                                                                  |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per Share Data:                                                       |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per share, basic                                             |   | $                                 | 0.00    |   |   | $ | (3.85 | ) |   | $ | 0.43 |   |   | $ | 0.22 |   |   | $ | 0.28 |   |
| Earnings per share, diluted                                           |   | $                                 | 0.00    |   |   | $ | (3.85 | ) |   | $ | 0.43 |   |   | $ | 0.22 |   |   | $ | 0.28 |   |
| Dividends per share                                                   |   | $                                 | 0.00    |   |   | $ | 0.03 |   |   | $ | 0.24 |   |   | $ | 0.24 |   |   | $ | 0.24 |   |

----

|                                                                    |   | At or For the Year Ended June 30, |   |
|-------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                    |   | 2011                              |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                    |   |                              |   |   |   |   |
| Performance Ratios:                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on average assets                                                |   |                              | 0.00   | % |   |   | (3.65 | )% |   |   | 0.48 | % |   |   | 0.37 | % |   |   | 0.51 | % |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return on average equity                                                |   |                              | 0.05   |   |   |   | (29.65 | ) |   |   | 3.40 |   |   |   | 1.69 |   |   |   | 2.28 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate spread (1)                                                |   |                              | 3.34   |   |   |   | 3.18 |   |   |   | 3.23 |   |   |   | 3.00 |   |   |   | 2.93 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest margin (2)                                                 |   |                              | 3.44   |   |   |   | 3.30 |   |   |   | 3.46 |   |   |   | 3.73 |   |   |   | 3.73 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest expense to average assets (5)                               |   |                              | 2.86   |   |   |   | 2.72 |   |   |   | 2.67 |   |   |   | 2.94 |   |   |   | 3.05 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Efficiency ratio (3) (5)                                                |   |                              | 85.71  |   |   |   | 83.93 |   |   |   | 76.57 |   |   |   | 75.38 |   |   |   | 79.11 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average interest-earning assets to average interest-bearing liabilities |   |                              | 106.81 |   |   |   | 105.97 |   |   |   | 110.52 |   |   |   | 124.75 |   |   |   | 125.18 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividend payout ratio (4)                                               |   |                              | 0.00   |   |   |   | N/M |   |   |   | 55.81 |   |   |   | 109.09 |   |   |   | 85.71 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital Ratios:                                                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tangible capital                                                        |   |                              | 8.50   |   |   |   | 7.29 |   |   |   | 7.85 |   |   |   | 19.57 |   |   |   | 19.33 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Core capital                                                            |   |                              | 11.74  |   |   |   | 10.35 |   |   |   | 9.57 |   |   |   | 19.57 |   |   |   | 19.33 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk-based capital                                                      |   |                              | 13.00  |   |   |   | 11.61 |   |   |   | 10.49 |   |   |   | 24.16 |   |   |   | 25.45 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average equity to average assets                                        |   |                              | 9.35   |   |   |   | 12.33 |   |   |   | 14.09 |   |   |   | 21.87 |   |   |   | 22.48 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset Quality Ratios:                                                   |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses as a percent of total gross loans        |   |                              | 2.11   |   |   |   | 2.17 |   |   |   | 0.94 |   |   |   | 0.65 |   |   |   | 0.71 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance for loan losses as a percent of nonperforming loans      |   |                              | 99.19  |   |   |   | 51.38 |   |   |   | 78.30 |   |   |   | 609.97 |   |   |   | 778.88 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net charge-offs to average outstanding loans during the period          |   |                              | 1.42   |   |   |   | 0.83 |   |   |   | 0.14 |   |   |   | 0.20 |   |   |   | 0.09 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming loans as a percent of total loans                         |   |                              | 2.13   |   |   |   | 4.22 |   |   |   | 1.20 |   |   |   | 0.11 |   |   |   | 0.09 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming assets as a percent of total assets                  |   |                              | 3.25   |   |   |   | 4.18 |   |   |   | 1.43 |   |   |   | 0.23 |   |   |   | 0.15 |   |

----

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

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

| (3) | Represents noninterest expense divided by the sum of net interest income and noninterest income, excluding gains or losses on the sale of securities. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Reflects dividends per share declared in the period divided by earnings per share for the period. |
|-----|---------------------------------------------------------------------------------------------------|

| (5) | 2010 ratios exclude a goodwill impairment charge of $21.8 million. |
|-----|--------------------------------------------------------------------|

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

----

----

|                            |   | 2011                                         |   |   | 2010   |   |
|---------------------------------|--------|----------------------------------------------|--------|--------|--------|--------|
|                            |   | (Dollars in thousands,except per share data) |   |   |
| Net earnings                    |   | $                                            | 30     |   |   | $      | (24,000 | ) |
| Net earnings per share, basic   |   | $                                            | 0.00   |   |   | $      | (3.85 | ) |
| Net earnings per share, diluted |   | $                                            | 0.00   |   |   | $      | (3.85 | ) |
| Return on average assets        |   |                                         | 0.00   | %      |   |   | (3.65 | )% |
| Return on average equity        |   |                                         | 0.05   | %      |   |   | (29.65 | )% |

----

|                                     |   | Year EndedJune 30, |   |   | % Change |   |
|------------------------------------------|--------|--------------------|--------|--------|----------|--------|
|                                     |   | 2011               |   |   | 2010     |   |   |   | 2011/2010 |   |
|                                     |   |               |   |   |     |   |   |   |   |   |
| Interest income:                         |   |               |   |   |     |   |   |   |   |   |
| Loans                                    |   | $                  | 24,251 |   |     | $      | 27,038 |   |   |   | (10.3 | )% |
| Investment securities                    |   |               | 1,696  |   |     |   | 2,730 |   |   |   | (37.9 | )% |
| Interest-earning deposits                |   |               | 180    |   |     |   | 56 |   |   |   | 221.4 | % |
| FHLB stock                               |   |               | 207    |   |     |   | 219 |   |   |   | (5.5 | )% |
|    Total interest income  |   |               | 26,334 |   |     |   | 30,043 |   |   |   | (12.3 | )% |
|                                     |   |               |   |   |     |   |   |   |   |   |   |   |
| Interest expense:                        |   |               |   |   |     |   |   |   |   |   |   |   |
| Deposits                                 |   |               | 5,601  |   |     |   | 8,052 |   |   |   | (30.4 | )% |
| Borrowings                               |   |               | 2,111  |   |     |   | 3,217 |   |   |   | (34.4 | )% |
| Subordinated debentures                  |   |               | 318    |   |     |   | 324 |   |   |   | (1.9 | )% |
|    Total interest expense |   |               | 8,030  |   |     |   | 11,593 |   |   |   | (30.7 | )% |
|                                     |   |               |   |   |     |   |   |   |   |   |   |   |
| Net interest income                      |   | $                  | 18,304 |   |     | $      | 18,450 |   |   |   | (0.8 | )% |

----

|                                                                                                                                                                                                                                                       |   | Year Ended June 30,    |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                                                                                                                                                       |   | 2011                   |    |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                                                                                                                       |   | AverageBalance         |    |   | InterestandDividends |   |   | Yield/Cost |   |   | AverageBalance |   |   | InterestandDividends |   |   | Yield/Cost |   |   | AverageBalance |   |   | InterestandDividends |   |   | Yield/Cost |   |
|                                                                                                                                                                                                                                                       |   | (Dollars in thousands) |    |
|                                                                                                                                                                                                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets:                                                                                                                                                                                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Loans(1)                                                                                                                                                                                                                                 |   | $                      | 401,960 |   |   | $ | 24,251 |   |   |   | 6.03 | % |   | $ | 435,450 |   |   | $ | 27,038 |   |   |   | 5.96 | % |   | $ | 431,016 |   |   | $ | 25,637 |   |   |   | 5.95 | % |
|    Investment securities                                                                                                                                                                                                                    |   |                   | 55,013  |   |   |   | 1,696 |   |   |   | 3.23 |   |   |   | 52,771 |   |   |   | 2,730 |   |   |   | 5.32 |   |   |   | 28,076 |   |   |   | 2,308 |   |   |   | 8.49 |   |
|    Daily interest deposits                                                                                                                                                                                                                  |   |                   | 72,804  |   |   |   | 180 |   |   |   | 0.25 |   |   |   | 49,710 |   |   |   | 56 |   |   |   | 0.11 |   |   |   | 17,836 |   |   |   | 40 |   |   |   | 0.22 |   |
|    Other earning assets                                                                                                                                                                                                                     |   |                   | 4,735   |   |   |   | 207 |   |   |   | 4.37 |   |   |   | 4,735 |   |   |   | 219 |   |   |   | 4.63 |   |   |   | 3,782 |   |   |   | 190 |   |   |   | 5.02 |   |
|          Total interest-earning assets                                                                                                                                                                        |   |                   | 534,512 |   |   |   | 26,334 |   |   |   | 4.94 |   |   |   | 560,666 |   |   |   | 30,043 |   |   |   | 5.37 |   |   |   | 480,710 |   |   |   | 28,175 |   |   |   | 5.88 |   |
|                                                                                                                                                                                                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning assets                                                                                                                                                                                                                                 |   |                   | 73,559  |   |   |   | — |   |   |   | — |   |   |   | 96,075 |   |   |   | — |   |   |   | — |   |   |   | 68,282 |   |   |   | — |   |   |   | — |   |
|                                                                                                                                                                                                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Total assets                                                                                                                                                                                         |   | $                      | 608,071 |   |   |   | — |   |   |   |   |   |   | $ | 656,741 |   |   |   | — |   |   |   |   |   |   | $ | 548,992 |   |   |   | — |   |   |   |   |   |
|                                                                                                                                                                                                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:                                                                                                                                                                                                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Passbook accounts                                                                                                                                                                                                                        |   | $                      | 86,581  |   |   |   | 651 |   |   |   | 0.75 | % |   | $ | 84,063 |   |   |   | 943 |   |   |   | 1.12 | % |   | $ | 50,506 |   |   |   | 640 |   |   |   | 1.27 | % |
|    NOW accounts                                                                                                                                                                                                                             |   |                   | 49,609  |   |   |   | 145 |   |   |   | 0.29 |   |   |   | 52,364 |   |   |   | 220 |   |   |   | 0.42 |   |   |   | 35,119 |   |   |   | 142 |   |   |   | 0.40 |   |
|    Money market accounts                                                                                                                                                                                                                    |   |                   | 56,113  |   |   |   | 521 |   |   |   | 0.93 |   |   |   | 52,292 |   |   |   | 705 |   |   |   | 1.35 |   |   |   | 49,924 |   |   |   | 800 |   |   |   | 1.60 |   |
|    Certificates of deposit                                                                                                                                                                                                                  |   |                   | 239,551 |   |   |   | 4,284 |   |   |   | 1.79 |   |   |   | 242,793 |   |   |   | 6,184 |   |   |   | 2.55 |   |   |   | 226,738 |   |   |   | 7,071 |   |   |   | 3.12 |   |
|          Total interest-bearing deposits                                                                                                                                                                      |   |                   | 431,854 |   |   |   | 5,601 |   |   |   | 1.30 |   |   |   | 431,512 |   |   |   | 8,052 |   |   |   | 1.87 |   |   |   | 362,287 |   |   |   | 8,653 |   |   |   | 2.39 |   |
|                                                                                                                                                                                                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Borrowings                                      |   |                   | 61,512  |   |   |   | 2,111 |   |   |   | 3.43 |   |   |   | 90,619 |   |   |   | 3,217 |   |   |   | 3.55 |   |   |   | 72,765 |   |   |   | 2,641 |   |   |   | 3.63 |   |
|    Subordinated debentures                                                                                                                                                                                                                  |   |                   | 7,073   |   |   |   | 318 |   |   |   | 4.50 |   |   |   | 6,962 |   |   |   | 324 |   |   |   | 4.65 |   |   |   | 4,578 |   |   |   | 325 |   |   |   | 7.10 |   |
|          Total interest-bearing liabilities                                                                                                                                                                   |   |                   | 500,439 |   |   |   | 8,030 |   |   |   | 1.60 |   |   |   | 529,093 |   |   |   | 11,593 |   |   |   | 2.19 |   |   |   | 439,630 |   |   | $ | 11,619 |   |   |   | 2.64 |   |
|                                                                                                                                                                                                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Noninterest-bearing deposits                                                                                                                                                                                                             |   |                   | 49,503  |   |   |   |   |   |   |   |   |   |   |   | 45,431 |   |   |   |   |   |   |   |   |   |   |   | 29,244 |   |   |   |   |   |   |   |   |   |
|    Other noninterest-bearing liabilities                                                                                                                                                                                                    |   |                   | 1,284   |   |   |   |   |   |   |   |   |   |   |   | 1,266 |   |   |   |   |   |   |   |   |   |   |   | 2,747 |   |   |   |   |   |   |   |   |   |
|          Total liabilities                                                                                                                                                                                    |   |                   | 551,226 |   |   |   |   |   |   |   |   |   |   |   | 575,791 |   |   |   |   |   |   |   |   |   |   |   | 471,621 |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                       |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Stockholders’ equity                                                                                                                                                                                                               |   |                   | 56,845  |   |   |   |   |   |   |   |   |   |   |   | 80,951 |   |   |   |   |   |   |   |   |   |   |   | 77,371 |   |   |   |   |   |   |   |   |   |
|          Total liabilities and         stockholders’ equity                                                                                                |   | $                      | 608,071 |   |   |   |   |   |   |   |   |   |   | $ | 656,741 |   |   |   |   |   |   |   |   |   |   | $ | 548,992 |   |   |   |   |   |   |   |   |   |
|    Net interest income                                                                                                                                                                                                                 |   |                   |    |   |   | $ | 18,304 |   |   |   |   |   |   |   |   |   |   | $ | 18,450 |   |   |   |   |   |   |   |   |   |   | $ | 16,556 |   |   |   |   |   |
|    Interest rate spread                                                                                                                                                                                                                     |   |                   |    |   |   |   |   |   |   |   | 3.34 | % |   |   |   |   |   |   |   |   |   |   | 3.18 | % |   |   |   |   |   |   |   |   |   |   | 3.23 | % |
|    Net interest margin                                                                                                                                                                                                                      |   |                   |    |   |   |   |   |   |   |   | 3.44 | % |   |   |   |   |   |   |   |   |   |   | 3.30 | % |   |   |   |   |   |   |   |   |   |   | 3.46 | % |
|    Ratio of average interest-earning      assets to average interest-      bearing liabilities                                                                                  |   |                   |    |   |   |   |   |   |   |   | 106.81 | % |   |   |   |   |   |   |   |   |   |   | 105.97 | % |   |   |   |   |   |   |   |   |   |   | 109.34 | % |

----

|                                                                                     |   | 2011 Compared to 2010     |   |   | 2010 Compared to 2009 |   |
|------------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|-----------------------|--------|
|                                                                                     |   | Increase (Decrease)Due to |   |   |                  |   |   | Increase (Decrease)Due to |   |   |   |   |
|                                                                                     |   | Volume                    |   |   | Rate                  |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
|                                                                                     |   | (In Thousands)            |   |
| Interest income:                                                                         |   |                      |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Loans receivable                                                       |   | $                         | (3,111 | )      |                  | $      | 324 |   |   | $ | (2,787 | ) |   | $ | 1,338 |   |   | $ | 63 |   |   | $ | 1,401 |   |
|    Investment securities                                                  |   |                      | (51    | )      |                  |   | (983 | ) |   |   | (1,034 | ) |   |   | 649 |   |   |   | (227 | ) |   |   | 422 |   |
|    Daily interest-bearing deposits and other interest-earning assets |   |                      | 35     |   |                  |   | 77 |   |   |   | 112 |   |   |   | 64 |   |   |   | (19 | ) |   |   | 45 |   |
|          Total interest-earning assets      |   |                      | (3,127 | )      |                  |   | (582 | ) |   |   | (3,709 | ) |   |   | 2,051 |   |   |   | (183 | ) |   |   | 1,868 |   |
|                                                                                     |   |                      |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense:                                                                        |   |                      |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits                                                               |   |                      | 6      |   |                  |   | (2,457 | ) |   |   | (2,451 | ) |   |   | 4,152 |   |   |   | (4,753 | ) |   |   | (601 | ) |
|    Borrowings                                                             |   |                      | (1,007 | )      |                  |   | (99 | ) |   |   | (1,106 | ) |   |   | 632 |   |   |   | (56 | ) |   |   | 576 |   |
|    Subordinated debentures                                                |   |                      | 5      |   |                  |   | (11 | ) |   |   | (6 | ) |   |   | (3 | ) |   |   | 2 |   |   |   | (1 | ) |
|          Total interest-bearing liabilities |   |                      | (996   | )      |                  |   | (2,567 | ) |   |   | (3,563 | ) |   |   | 4,781 |   |   |   | (4,807 | ) |   |   | ( 26 | ) |
|    Net change in interest income                                          |   | $                         | (2,131 | )      |                  | $      | 1,984 |   |   | $ | (147 | ) |   | $ | (2,730 | ) |   | $ | 4,624 |   |   | $ | 1,894 |   |

----

|                                                         |   | 2011                   |    |   | 2010   |   |    | % Change2011/2010 |   |
|--------------------------------------------------------------|--------|------------------------|---------|--------|--------|--------|---------|-------------------|--------|
|                                                         |   | (Dollars in Thousands) |    |
| Mortgage origination fees                                    |   | $                      | 481     |   |   | $      | 397     |              |   |   | 21.2 | % |
| Service charges and fees                                     |   |                   | 1,288   |   |   |   | 1,619   |              |   |   | (20.4 | ) |
| Gain on sale of investment securities                        |   |                   | 2,057   |   |   |   | 1,188   |              |   |   | 73.1 |   |
| Impairment on investment securities                          |   |                   | (835    | )      |   |   | — |              |   |   | — |   |
| Gain on sale of fixed assets                                 |   |                   | — |   |   |   | (92     | )                 |   |   | N/M |   |
| Loss on foreclosed real estate                               |   |                   | (681    | )      |   |   | (67     | )                 |   |   | 916.4 |   |
| BOLI increase in cash value                                  |   |                   | 235     |   |   |   | 236     |              |   |   | (0.4 | ) |
| Other                                                        |   |                   | 688     |   |   |   | 753     |              |   |   | (8.6 | ) |
|       Total noninterest income |   | $                      | 3,233   |   |   | $      | 4,034   |              |   |   | (19.9 | )% |

|                                                                   |   | 2011                   |    |   | 2010   |   |    | % Change2011/2010 |   |
|------------------------------------------------------------------------|--------|------------------------|---------|--------|--------|--------|---------|-------------------|--------|
|                                                                   |   | (Dollars in Thousands) |    |
| Compensation and benefits                                              |   | $                      | 6,687   |   |   | $      | 7,112   |              |   |   | (6.0 | )% |
| Occupancy                                                              |   |                   | 1,374   |   |   |   | 2,054   |              |   |   | (33.1 | ) |
| Equipment and data processing                                          |   |                   | 2,498   |   |   |   | 2,539   |              |   |   | (1.6 | ) |
| Deposit insurance premiums                                             |   |                   | 664     |   |   |   | 666     |              |   |   | (0.3 | ) |
| Advertising                                                            |   |                   | 376     |   |   |   | 226     |              |   |   | 66.4 |   |
| Goodwill impairment                                                    |   |                   | — |   |   |   | 21,783  |              |   |   | (100.0 | ) |
| Professional services                                                  |   |                   | 449     |   |   |   | 649     |              |   |   | (30.8 | ) |
| Valuation adjustment and expenses     on OREO |   |                   | 1,841   |   |   |   | 1,107   |              |   |   | 66.3 |   |
| Loss on early extinguishment of     debt      |   |                   | 775     |   |   |   | — |              |   |   | — |   |
| Amortization of intangible assets                                      |   |                   | 497     |   |   |   | 553     |              |   |   | (10.1 | ) |
| Other                                                                  |   |                   | 2,250   |   |   |   | 2,968   |              |   |   | (24.2 | ) |
|       Total noninterest expense          |   | $                      | 17,411  |   |   | $      | 39,657  |              |   |   | (56.1 | ) |

----

----

|                                                                              |   | At June 30,            |    |
|-----------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                              |   | 2011                   |    |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                              |   | Amount                 |    |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |   | Amount |   |   | Percent |   |
|                                                                              |   | (Dollars in thousands) |    |
| Real estate loans:                                                                |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Residential one- to four-family                                 |   | $                      | 110,046 |   |   |   | 28.4 | % |   | $ | 136,430 |   |   |   | 30.7 | % |   | $ | 144,659 |   |   |   | 28.7 | % |   | $ | 63,340 |   |   |   | 22.3 | % |   | $ | 69,693 |   |   |   | 25.1 | % |
|    Home equity lines of credit                                     |   |                   | 20,029  |   |   |   | 5.2 |   |   |   | 19,768 |   |   |   | 4.4 |   |   |   | 22,467 |   |   |   | 4.5 |   |   |   | 5,723 |   |   |   | 2.0 |   |   |   | 5,470 |   |   |   | 2.0 |   |
|    Commercial                                                      |   |                   | 144,519 |   |   |   | 37.3 |   |   |   | 140,024 |   |   |   | 31.5 |   |   |   | 159,608 |   |   |   | 31.7 |   |   |   | 90,933 |   |   |   | 32.0 |   |   |   | 86,929 |   |   |   | 31.4 |   |
|    Multi-family                                                    |   |                   | 14,062  |   |   |   | 3.6 |   |   |   | 16,536 |   |   |   | 3.7 |   |   |   | 6,584 |   |   |   | 1.3 |   |   |   | 4,219 |   |   |   | 1.5 |   |   |   | 8,182 |   |   |   | 3.0 |   |
|    Construction                                                    |   |                   | 2,171   |   |   |   | 0.6 |   |   |   | 21,073 |   |   |   | 4.7 |   |   |   | 40,831 |   |   |   | 8.1 |   |   |   | 19,553 |   |   |   | 6.9 |   |   |   | 21,634 |   |   |   | 7.8 |   |
|    Land                                                            |   |                   | 30,053  |   |   |   | 7.8 |   |   |   | 37,135 |   |   |   | 8.4 |   |   |   | 46,987 |   |   |   | 9.3 |   |   |   | 40,862 |   |   |   | 14.4 |   |   |   | 33,604 |   |   |   | 12.1 |   |
|          Total real estate loans     |   |                   | 320,880 |   |   |   | 82.9 |   |   |   | 370,966 |   |   |   | 83.5 |   |   |   | 421,136 |   |   |   | 83.7 |   |   |   | 224,630 |   |   |   | 78.9 |   |   |   | 225,512 |   |   |   | 81.4 |   |
|                                                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial business loans                                                         |   |                   | 60,497  |   |   |   | 15.6 |   |   |   | 66,699 |   |   |   | 15.0 |   |   |   | 73,467 |   |   |   | 14.6 |   |   |   | 52,037 |   |   |   | 18.3 |   |   |   | 41,667 |   |   |   | 15.0 |   |
|                                                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-real estate loans:                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Automobile loans                                                |   |                   | 1,237   |   |   |   | 0.3 |   |   |   | 1,848 |   |   |   | 0.4 |   |   |   | 2,754 |   |   |   | 0.5 |   |   |   | 3,973 |   |   |   | 1.4 |   |   |   | 6,423 |   |   |   | 2.3 |   |
|    Mobile home loans                                               |   |                   | 13      |   |   |   | 0.0 |   |   |   | 23 |   |   |   | 0.0 |   |   |   | 43 |   |   |   | 0.0 |   |   |   | 60 |   |   |   | 0.0 |   |   |   | 82 |   |   |   | 0.0 |   |
|    Loans secured by deposits                                       |   |                   | 1,268   |   |   |   | 0.3 |   |   |   | 1,372 |   |   |   | 0.3 |   |   |   | 1,322 |   |   |   | 0.3 |   |   |   | 930 |   |   |   | 0.3 |   |   |   | 978 |   |   |   | 0.4 |   |
|    Other consumer loans                                            |   |                   | 3,235   |   |   |   | 0.8 |   |   |   | 3,566 |   |   |   | 0.8 |   |   |   | 4,609 |   |   |   | 0.9 |   |   |   | 2,961 |   |   |   | 1.0 |   |   |   | 2,540 |   |   |   | 0.9 |   |
|          Total non-real estate loans |   |                   | 5,753   |   |   |   | 1.5 |   |   |   | 6,809 |   |   |   | 1.5 |   |   |   | 8,728 |   |   |   | 1.7 |   |   |   | 7,924 |   |   |   | 2.8 |   |   |   | 10,023 |   |   |   | 3.6 |   |
|                                                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Total gross loans           |   |                   | 387,130 |   |   |   | 100.0 | % |   |   | 444,474 |   |   |   | 100.0 | % |   |   | 503,331 |   |   |   | 100.00 | % |   |   | 284,591 |   |   |   | 100.00 | % |   |   | 277,202 |   |   |   | 100.0 | % |
|                                                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Less:                                                                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred loan fees, net                                                           |   |                   | (362    | ) |   |   |   |   |   |   | (447 | ) |   |   |   |   |   |   | (502 | ) |   |   |   |   |   |   | (272 | ) |   |   |   |   |   |   | (366 | ) |   |   |   |   |
| Allowance for losses                                                              |   |                   | (8,181  | ) |   |   |   |   |   |   | (9,649 | ) |   |   |   |   |   |   | (4,722 | ) |   |   |   |   |   |   | (1,836 | ) |   |   |   |   |   |   | (1,955 | ) |   |   |   |   |
|          Total loans receivable, net |   | $                      | 378,587 |   |   |   |   |   |   | $ | 434,378 |   |   |   |   |   |   | $ | 498,107 |   |   |   |   |   |   | $ | 282,483 |   |   |   |   |   |   | $ | 274,881 |   |   |   |   |   |

----

|                                            |   | Real EstateLoans |    |   | CommercialBusiness Loans |   |    | ConsumerLoans |   |   | TotalLoans |   |
|-------------------------------------------------|--------|------------------|---------|--------|--------------------------|--------|---------|---------------|--------|--------|------------|--------|
| Amounts due in:                                 |   | (In thousands)   |    |
|    One year or less              |   | $                | 79,462  |   |                     | $      | 38,211  |          |   | $      | 3,295      |   |   | $ | 120,968 |   |
|    More than one to three years  |   |             | 67,886  |   |                     |   | 13,387  |          |   |   | 2,123      |   |   |   | 83,396 |   |
|    More than three to five years |   |             | 56,331  |   |                     |   | 8,037   |          |   |   | 319        |   |   |   | 64,687 |   |
|    More than five to 15 years    |   |             | 45,221  |   |                     |   | 862     |          |   |   | 16         |   |   |   | 46,099 |   |
|    More than 15 years            |   |             | 71,980  |   |                     |   | — |          |   |   | —    |   |   |   | 71,980 |   |
|       Total       |   | $                | 320,880 |   |                     | $      | 60,497  |          |   | $      | 5,753      |   |   | $ | 387,130 |   |

|                                          |   |  Fixed-Rates |   |   | Floating orAdjustable Rates |   |    |  Total |   |
|-----------------------------------------------|--------|-------------------|--------|--------|-----------------------------|--------|---------|-------------|--------|
|                                          |   | (In thousands)    |   |
| Real estate loans:                            |   |              |   |   |                        |   |    |        |   |
|    One- to four-family         |   | $                 | 24,588 |   |                        | $      | 74,045  |        |   | $ | 98,633 |   |
|    Home equity lines of credit |   |              | 6      |   |                        |   | 19,097  |        |   |   | 19,103 |   |
|    Commercial                  |   |              | 46,972 |   |                        |   | 59,385  |        |   |   | 106,357 |   |
|    Multi-family                |   |              | 1,220  |   |                        |   | 4,073   |        |   |   | 5,293 |   |
|    Construction                |   |              | 230    |   |                        |   | 1,055   |        |   |   | 1,285 |   |
|    Land                        |   |              | 9,530  |   |                        |   | 1,217   |        |   |   | 10,747 |   |
| Commercial business loans                     |   |              | 12,382 |   |                        |   | 9,904   |        |   |   | 22,286 |   |
| Consumer loans                                |   |              | 1,990  |   |                        |   | 468     |        |   |   | 2,458 |   |
|       Total     |   | $                 | 96,918 |   |                        | $      | 169,244 |        |   | $ | 266,162 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                              |   | Year Ended June 30, |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2011                |    |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                              |   | (In thousands)      |    |
|                                                                                                                                                                                                                                                                                                                                                                                                              |   |                |    |   |   |   |   |   |   |
| Total loans at beginning of period                                                                                                                                                                                                                                                                                                                                                                                |   | $                   | 444,474 |   |   | $ | 503,331 |   |   | $ | 284,591 |   |
| Loans acquired in acquisition                                                               |   |                | — |   |   |   | — |   |   |   | 222,756 |   |
| Loans originated:                                                                                                                                                                                                                                                                                                                                                                                                 |   |                |    |   |   |   |   |   |   |   |   |   |
|    Real estate                                                                                                                                                                                                                                                                                                                                                                                     |   |                | 25,706  |   |   |   | 27,420 |   |   |   | 82,244 |   |
|    Commercial business                                                                                                                                                                                                                                                                                                                                                                             |   |                | 14,051  |   |   |   | 23,210 |   |   |   | 41,908 |   |
|    Consumer                                                                                                                                                                                                                                                                                                                                                                                        |   |                | 1,387   |   |   |   | 2,008 |   |   |   | 5,054 |   |
|          Total loans originated                                                                                                                                                                                                                                                                                                                                      |   |                | 41,144  |   |   |   | 52,638 |   |   |   | 129,206 |   |
| Loan principal repayments                                                                                                                                                                                                                                                                                                                                                                                         |   |                | (98,488 | ) |   |   | (111,495 | ) |   |   | (133,222 | ) |
| Net loan activity                                                                                                                                                                                                                                                                                                                                                                                                 |   |                | (57,344 | ) |   |   | (58,857 | ) |   |   | (4,016 | ) |
| Total gross loans at end of period                                                                                                                                                                                                                                                                                                                                                                                |   | $                   | 387,130 |   |   | $ | 444,474 |   |   | $ | 503,331 |   |

----

|                                      |   | At June 30,            |   |
|-------------------------------------------|--------|------------------------|--------|
|                                      |   | 2011                   |   |   | 2010 |   |   | 2009 |   |
|                                      |   | AmortizedCost          |   |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |
|                                      |   | (Dollars in thousands) |   |
|                                      |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal agency securities                 |   | $                      | 43,721 |   |   | $ | 43,949 |   |   | $ | 31,975 |   |   | $ | 32,107 |   |   | $ | 4,206 |   |   | $ | 4,147 |   |
| Mortgage-backed securities                |   |                   | 24,551 |   |   |   | 25,356 |   |   |   | 5,650 |   |   |   | 24,313 |   |   |   | 4,523 |   |   |   | 4,467 |   |
| Municipal securities                      |   |                   | 5,150  |   |   |   | 5,237 |   |   |   | 21,812 |   |   |   | 5,764 |   |   |   | 23,088 |   |   |   | 23,521 |   |
| Other securities                          |   |                   | 613    |   |   |   | 238 |   |   |   | 1,597 |   |   |   | 805 |   |   |   | 4,483 |   |   |   | 4,309 |   |
|       Total |   | $                      | 74,035 |   |   | $ | 74,780 |   |   | $ | 61,034 |   |   | $ | 62,989 |   |   | $ | 36,300 |   |   | $ | 36,544 |   |

|                                                        |   | More thanOne Year toFive Years |    |   | More thanFive Years toTen Years |   |   | More thanTen Years |   |   | Total                |   |
|-------------------------------------------------------------|--------|--------------------------------|---------|--------|---------------------------------|--------|--------|--------------------|--------|--------|----------------------|--------|
|                                                        |   | CarryingValue                  |    |   | WeightedAverageYield            |   |   | CarryingValue      |   |   | WeightedAverageYield |   |   | CarryingValue |   |   | WeightedAverageYield |   |   | CarryingValue |   |   | WeightedAverageYield |   |
|                                                        |   |                           |    |   |                            |   |   |               |   |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal agency securities                                   |   | $                              | 30,897  |   |                            |   | 1.14   | %                  |   | $      | 10,054               |   |   |   | 2.43 | % |   | $ | 2,998 |   |   |   | 2.32 | % |   | $ | 43,949 |   |   |   | 1.54 | % |
| Mortgage-backed securities                                  |   |                           | 129     |   |                            |   | 4.14   |               |   |   | 3,628                |   |   |   | 1.30 |   |   |   | 21,597 |   |   |   | 4.02 |   |   |   | 25,354 |   |   |   | 3.62 |   |
| Municipal securities                                        |   |                           | 744     |   |                            |   | 3.92   |               |   |   | 1,507                |   |   |   | 3.26 |   |   |   | 2,793 |   |   |   | 3.63 |   |   |   | 5,044 |   |   |   | 3.57 |   |
| Other securities                                            |   |                           | — |   |                            |   | 0.00   |               |   |   | —              |   |   |   | 0.00 |   |   |   | 238 |   |   |   | 0.00 |   |   |   | 238 |   |   |   | 0.00 |   |
|          Total |   | $                              | 31,770  |   |                            |   | 1.22   | %                  |   | $      | 15,189               |   |   |   | 2.24 | % |   | $ | 27,626 |   |   |   | 3.70 | % |   | $ | 74,585 |   |   |   | 2.34 | % |

|                                      |   | At June 30,    |    |
|-------------------------------------------|--------|----------------|---------|
|                                      |   | 2011           |    |   | 2010 |   |   | 2009 |   |
|                                      |   | (In thousands) |    |
| Noninterest-bearing accounts              |   | $              | 54,340  |   |   | $ | 41,653 |   |   | $ | 48,913 |   |
| NOW accounts                              |   |           | 46,134  |   |   |   | 58,257 |   |   |   | 43,795 |   |
| Passbook accounts                         |   |           | 91,637  |   |   |   | 82,830 |   |   |   | 69,074 |   |
| Money market deposit accounts             |   |           | 51,252  |   |   |   | 56,247 |   |   |   | 48,332 |   |
| Certificates of deposit                   |   |           | 210,899 |   |   |   | 240,196 |   |   |   | 272,053 |   |
|       Total |   | $              | 454,262 |   |   | $ | 479,183 |   |   | $ | 482,167 |   |

----

|                                |   | Certificatesof Deposit |   |
|-------------------------------------|--------|------------------------|--------|
| Maturity Period                     |   | (In thousands)         |   |
|                                |   |                   |   |
| Three months or less                |   | $                      | 32,190 |   |
| Over three through six months       |   |                   | 22,959 |   |
| Over six through twelve months      |   |                   | 18,471 |   |
| Over twelve months                  |   |                   | 16,039 |   |
|      Total |   | $                      | 89,659 |   |

|   |               | At June 30,    |    |
|--------|--------------------|----------------|---------|
|   |               | 2011           |    |   | 2010 |   |   | 2009 |   |
|   |               | (In thousands) |    |
|   | 0.01 – 1.00% |           | $       | 82,706 |   |   | $ | — |   |   | $ | — |   |
|   | 1.01 – 2.00% |           |    | 108,257 |   |   |   | 183,723 |   |   |   | 28,992 |   |
|   | 2.01 – 3.00% |           |    | 8,046 |   |   |   | 22,211 |   |   |   | 58,920 |   |
|   | 3.01 – 4.00% |           |    | 4,963 |   |   |   | 22,273 |   |   |   | 108,640 |   |
|   | 4.01 – 5.00% |           |    | 6,927 |   |   |   | 11,989 |   |   |   | 69,225 |   |
|   | 5.01 – 6.00% |           |    | — |   |   |   | — |   |   |   | 6,276 |   |
| Total  |               | $              | 210,899 |   |   | $ | 240,196 |   |   | $ | 272,053 |   |

|   |               |   | At June 30, 2011  |    |
|--------|--------------------|--------|-------------------|---------|
|   |               |   | Less ThanOne Year |    |   | 1-2Years |   |   | 2-3Years |   |   | 3-4Years |   |   | 4 or MoreYears |   |   | Total |   |   | Percent of Total Certificate Accounts |   |
|   |               |   | (In Thousands)    |    |
|   | 0.01 – 1.00% |   |              | $       | 75,076 |   |   | $ | 7,557 |   |   | $ | 28 |   |   | $ | — |   |   | $ | 45 |   |   | $ | 82,706 |   |   |   | 39.2 | % |
|   | 1.01 – 2.00% |   |              |    | 82,768 |   |   |   | 7,084 |   |   |   | 17,513 |   |   |   | 286 |   |   |   | 606 |   |   |   | 108,257 |   |   |   | 51.3 |   |
|   | 2.01 – 3.00% |   |              |    | 5,466 |   |   |   | 1,845 |   |   |   | 531 |   |   |   | 204 |   |   |   | — |   |   |   | 8,046 |   |   |   | 3.8 |   |
|   | 3.01 – 4.00% |   |              |    | 4,901 |   |   |   | 29 |   |   |   | 33 |   |   |   | — |   |   |   | — |   |   |   | 4,963 |   |   |   | 2.4 |   |
|   | 4.01 – 5.00% |   |              |    | 4,965 |   |   |   | 1,340 |   |   |   | 622 |   |   |   | — |   |   |   | — |   |   |   | 6,927 |   |   |   | 3.3 |   |
| Total  |               |   | $                 | 173,176 |   |   | $ | 17,855 |   |   | $ | 18,727 |   |   | $ | 490 |   |   | $ | 651 |   |   | $ | 210,899 |   |   |   | 100.0 | % |

|                                                         |   | Year Ended June 30,    |   |
|--------------------------------------------------------------|--------|------------------------|--------|
|                                                         |   | 2011                   |   |   | 2010 |   |   | 2009 |   |
|                                                         |   | (Dollars in thousands) |   |
|                                                         |   |                   |   |   |   |   |   |   |   |
| Maximum amount of advances outstanding at any month end |   | $                      | 85,104 |   |   | $ | 90,269 |   |   | $ | 91,506 |   |
| Average advances outstanding                                 |   | $                      | 60,459 |   |   | $ | 89,241 |   |   | $ | 71,929 |   |
| Weighted average interest rate during the period             |   |                   | 3.48   | % |   |   | 3.59 | % |   |   | 3.65 | % |
| Balance outstanding at end of period                         |   | $                      | 37,942 |   |   | $ | 84,834 |   |   | $ | 90,309 |   |
| Weighted average interest rate at end of period              |   |                   | 2.77   | % |   |   | 4.08 | % |   |   | 4.14 | % |

----

----

|                                                                     |   | Year Ended June 30,    |    |
|--------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                     |   | 2011                   |    |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                     |   | (Dollars in thousands) |    |
|                                                                     |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance at beginning of period                                         |   | $                      | 9,649   |   |   | $ | 4,722 |   |   | $ | 1,836 |   |   | $ | 1,955 |   |   | $ | 2,172 |   |
| Provision for loan losses                                                |   |                   | 4,447   |   |   |   | 8,809 |   |   |   | 910 |   |   |   | 451 |   |   |   | 30 |   |
| Reserve for acquired bank                                                |   |                   | — |   |   |   | — |   |   |   | 2,577 |   |   |   | – |   |   |   | – |   |
| Recoveries:                                                              |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Real estate loans                                      |   |                   | 110     |   |   |   | 7 |   |   |   | 22 |   |   |   | 28 |   |   |   | 32 |   |
|    Commercial business loans                              |   |                   | 91      |   |   |   | 3 |   |   |   | 29 |   |   |   | 12 |   |   |   | 30 |   |
|    Consumer loans                                         |   |                   | 18      |   |   |   | 51 |   |   |   | 63 |   |   |   | 75 |   |   |   | 65 |   |
|          Total recoveries   |   |                   | 219     |   |   |   | 61 |   |   |   | 114 |   |   |   | 115 |   |   |   | 127 |   |
| Charge offs:                                                             |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Real estate loans                                      |   |                   | (3,853  | ) |   |   | (1,955 | ) |   |   | (220 | ) |   |   | (497 | ) |   |   | (159 | ) |
|    Commercial business loans                              |   |                   | (2,150  | ) |   |   | (1,869 | ) |   |   | (327 | ) |   |   | (30 | ) |   |   | (25 | ) |
|    Consumer loans                                         |   |                   | (131    | ) |   |   | ( 119 | ) |   |   | (168 | ) |   |   | (158 | ) |   |   | (190 | ) |
|          Total charge-offs  |   |                   | (6,134  | ) |   |   | (3,943 | ) |   |   | (715 | ) |   |   | (685 | ) |   |   | (374 | ) |
| Net charge-offs                                                          |   |                   | (5,915  | ) |   |   | (3,882 | ) |   |   | (601 | ) |   |   | (570 | ) |   |   | (247 | ) |
|                                                                     |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Allowance at end of period                             |   | $                      | 8,181   |   |   | $ | 9,649 |   |   | $ | 4,722 |   |   | $ | 1,836 |   |   | $ | 1,955 |   |
|                                                                     |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance to nonperforming loans                                         |   |                   | 99.19   | % |   |   | 51.38 | % |   |   | 78.30 | % |   |   | 609.97 | % |   |   | 778.88 | % |
| Allowance to total gross loans outstanding at the end of the period |   |                   | 2.11    | % |   |   | 2.17 | % |   |   | 0.94 | % |   |   | 0.65 | % |   |   | 0.71 | % |
| Net charge-offs to average loans outstanding during the period      |   |                   | 1.42    | % |   |   | 0.83 | % |   |   | 0.14 | % |   |   | 0.20 | % |   |   | 0.09 | % |

|                                 |   | At June 30, |    |
|--------------------------------------|--------|-------------|---------|
|                                 |   | 2011        |    |   | 2010 |   |
|                                 |   | Amount      |    |   | % ofAllowanceto TotalAllowance |   |   | % ofLoans inCategoryto TotalLoans |   |   | Amount |   |   | % ofAllowanceto TotalAllowance |   |   | % ofLoans inCategoryto TotalLoans |   |
|                                 |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                          |   | $           | 6,941   |   |   |   | 84.8 | % |   |   | 80.8 | % |   | $ | 7,857 |   |   |   | 81.4 | % |   |   | 83.5 | % |
| Commercial business                  |   |        | 1,197   |   |   |   | 14.6 |   |   |   | 17.7 |   |   |   | 1,675 |   |   |   | 17.4 |   |   |   | 15.0 |   |
| Consumer                             |   |        | 43      |   |   |   | 0.5 |   |   |   | 1.5 |   |   |   | 117 |   |   |   | 1.2 |   |   |   | 1.5 |   |
| Unallocated                          |   |        | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total allowance for loan losses |   | $           | 8,181   |   |   |   | 100.0 | % |   |   | 100.0 | % |   | $ | 9,649 |   |   |   | 100.0 | % |   |   | 100.0 | % |

----

|                                 |   | At June 30, |    |
|--------------------------------------|--------|-------------|---------|
|                                 |   | 2009        |    |   | 2008 |   |   | 2007 |   |
|                                 |   | Amount      |    |   | % ofAllowanceto TotalAllowance |   |   | % ofLoans inCategoryto TotalLoans |   |   | Amount |   |   | % ofAllowanceto TotalAllowance |   |   | % of Loans inCategoryto TotalLoans |   |   | Amount |   |   | % ofAllowanceto TotalAllowance |   |   | % ofLoans inCategoryto TotalLoans |   |
|                                 |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate                          |   | $           | 3,819   |   |   |   | 80.9 | % |   |   | 83.7 | % |   | $ | 1,448 |   |   |   | 78.9 | % |   |   | 78.9 | % |   | $ | 1,445 |   |   |   | 73.9 | % |   |   | 81.4 | % |
| Commercial business                  |   |        | 755     |   |   |   | 16.0 |   |   |   | 14.6 |   |   |   | 235 |   |   |   | 12.8 |   |   |   | 18.3 |   |   |   | 273 |   |   |   | 14.0 |   |   |   | 15.0 |   |
| Consumer                             |   |        | 148     |   |   |   | 3.1 |   |   |   | 1.7 |   |   |   | 153 |   |   |   | 8.3 |   |   |   | 2.8 |   |   |   | 237 |   |   |   | 12.1 |   |   |   | 3.6 |   |
| Unallocated                          |   |        | — |   |   |   | — |   |   |   | — |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |
| Total allowance for loan losses |   | $           | 4,722   |   |   |   | 100.0 | % |   |   | 100.0 | % |   | $ | 1,836 |   |   |   | 100.0 | % |   |   | 100.0 | % |   | $ | 1,955 |   |   |   | 100.0 | % |   |   | 100.0 | % |

----

|                                                                                      |   | At June 30,            |    |
|-------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                      |   | 2011                   |    |   | 2010 |   |   | 2009 |   |   | 2008 |   |   | 2007 |   |
|                                                                                      |   | (Dollars in thousands) |    |
| Nonaccrual loans:                                                                         |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Real estate                                                                   |   | $                      | 5,401   |   |   | $ | 17,367 |   |   | $ | 5,724 |   |   | $ | 139 |   |   | $ | 251 |   |
|   Commercial business                                                           |   |                   | 848     |   |   |   | 1,309 |   |   |   | 252 |   |   |   | 162 |   |   |   | – |   |
|   Consumer                                                                      |   |                   | 41      |   |   |   | 103 |   |   |   | 55 |   |   |   | – |   |   |   | – |   |
|          Total nonaccrual loans              |   |                   | 6,290   |   |   |   | 18,779 |   |   |   | 6,031 |   |   |   | 301 |   |   |   | 251 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonaccrual restructured loans:                                                            |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Real estate                                                                   |   |                   | 1,531   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|   Commercial business                                                           |   |                   | 427     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|   Consumer                                                                      |   |                   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|          Total nonaccrual restructured loans |   |                   | 1,958   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
|          Total nonperforming loans           |   |                   | 8,248   |   |   |   | 18,779 |   |   |   | 6,031 |   |   |   | 301 |   |   |   | 251 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonaccrual investments                                                                    |   |                   | 464     |   |   |   | 731 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Real estate owned                                                                         |   |                   | 9,498   |   |   |   | 6,865 |   |   |   | 3,328 |   |   |   | 462 |   |   |   | 275 |   |
| Other nonperforming assets(1)                                                        |   |                   | 1       |   |   |   | — |   |   |   | 106 |   |   |   | 5 |   |   |   | – |   |
|          Total nonperforming assets          |   | $                      | 18,211  |   |   | $ | 26,375 |   |   | $ | 9,465 |   |   | $ | 768 |   |   | $ | 526 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing restructured loans                                                               |   | $                      | 13,821  |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing restructured loans and nonperforming loans                                  |   | $                      | 22,069  |   |   | $ | 18,779 |   |   | $ | 6,031 |   |   | $ | 301 |   |   | $ | 251 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total nonperforming loans to total loans                                             |   |                   | 2.13    | % |   |   | 4.22 | % |   |   | 1.20 | % |   |   | 0.11 | % |   |   | 0.09 | % |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total nonperforming loans to total assets                                                 |   |                   | 1.47    | % |   |   | 2.98 | % |   |   | 0.91 | % |   |   | 0.09 | % |   |   | 0.07 | % |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total nonperforming assets to total assets                                                |   |                   | 3.25    | % |   |   | 4.18 | % |   |   | 1.43 | % |   |   | 0.23 | % |   |   | 0.15 | % |

----

----

|   | The following table shows the aggregate amounts of our classified assets at the dates indicated. |
|--------|--------------------------------------------------------------------------------------------------|

|                                      |   | At June 30,    |    |
|-------------------------------------------|--------|----------------|---------|
|                                      |   | 2011           |    |   | 2010 |   |   | 2009 |   |
|                                      |   | (In thousands) |    |
|                                      |   |           |    |   |   |   |   |   |   |
| Substandard assets                        |   | $              | 35,153  |   |   | $ | 30,747 |   |   | $ | 33,165 |   |
| Doubtful assets                           |   |           | — |   |   |   | — |   |   |   | 99 |   |
| Loss assets                               |   |           | — |   |   |   | — |   |   |   | – |   |
|    Total classified assets |   | $              | 35,153  |   |   | $ | 30,747 |   |   | $ | 33,264 |   |

|                          |   | At June 30,        |   |
|-------------------------------|--------|--------------------|--------|
|                          |   | 2011               |   |   | 2010 |   |   | 2009 |   |
|                          |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |
|                          |   | (In thousands)     |   |
|                          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real estate loans             |   | $                  | 3,006  |   |   | $ | 449 |   |   | $ | 2,665 |   |   |   | 1,612 |   |   | $ | 1,032 |   |   | $ | 2,228 |   |
| Commercial business loans     |   |               | 137    |   |   |   | 808 |   |   |   | 647 |   |   |   | 207 |   |   |   | 631 |   |   |   | 421 |   |
| Consumer loans                |   |               | 24     |   |   |   | — |   |   |   | 104 |   |   |   | 7 |   |   |   | 60 |   |   |   | 19 |   |
|     Total |   |               | 3,167  |   |   | $ | 1,257 |   |   | $ | 3,416 |   |   | $ | 1,826 |   |   | $ | 1,755 |   |   | $ | 2,668 |   |

----

|                            |   |           |    |   | Payments due by period |   |
|---------------------------------|--------|----------------|---------|--------|------------------------|--------|
| Contractual Obligations         |   | Total          |    |   | Less than1 year        |   | 1-3 years |   |   | 3-5 years |   |   | More than 5 years |   |
|                            |   | (In thousands) |    |
| Federal Home Loan Bank advances |   | $              | 37,942  |   |                   | $      | 24 |   |   | $ | 27,043 |   |   | $ | 5,170 |   |   | $ | 5,705 |   |
| Subordinated debentures         |   |           | 10,001  |   |                   |   | — |   |   |   | — |   |   |   | — |   |   |   | 10,001 |   |
| Capital lease obligations       |   |           | — |   |                   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Operating lease obligations     |   |           | 44      |   |                   |   | 44 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Purchase obligations            |   |           | 3,690   |   |                   |   | 1,026 |   |   |   | 2,048 |   |   |   | 616 |   |   |   | — |   |
| Total                           |   | $              | 51,677  |   |                   | $      | 1,152 |   |   | $ | 29,210 |   |   | $ | 5,747 |   |   | $ | 15,568 |   |

----

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

----

|                                      |   |    |   | Change In:          |   |
|-------------------------------------------|--------|---------|--------|---------------------|--------|
|                                      |   |    |   | Net Interest Income |   |   | Economic Value of Equity |   |
| Change in Interest Rates(In Basis Points) |   |    |   | $ Change            |   |   | % Change |   |   | Market Value |   |   | Change |   |
|                                      |   |    |   |                |   |   |   |   |   |   |   |   |   |   |
|                                      | 300    |    |   |                |   | 20,748 |   |   |   | 8.1 | % |   |   | 62,030 |   |   |   | (8.2 | ) |
|                                      | 200    |    |   |                |   | 19,651 |   |   |   | 2.4 |   |   |   | 62,819 |   |   |   | (7.1 | ) |
|                                      | 100    |    |   |                |   | 19,136 |   |   |   | (0.3 | ) |   |   | 64,873 |   |   |   | (4.0 | ) |
| No change                                 |   |    |   |                | 19,192 |   |   |   | 0.0 |   |   |   | 67,591 |   |   |   | 0.0 |   |
|                                      | (100   | )  |   |                |   | 19,331 |   |   |   | 0.7 |   |   |   | 70,017 |   |   |   | 3.6 |   |

ATEME

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

----

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

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

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

OMP

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

|   | (a) | Security Ownership of Certain Beneficial Owners.  The information required by this item is incorporated herein by reference to the section captioned “Stock Ownership” in the Proxy Statement. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Security Ownership of Management.  The information required by this item is incorporated herein by reference to the section captioned “Stock Ownership” in the Proxy Statement. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Changes in Control.  Management of Jefferson Bancshares knows of no arrangements, including any pledge by any person of securities of Jefferson Bancshares, the operation of which may at a subsequent date result in a change in control of the registrant. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (d) | Equity Compensation Plan Information. |
|--------|-----|---------------------------------------|

| Plan category                                              | Number of securitiesto be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights  (b) | Number of securitiesremaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(c) |
|------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| Equity compensation plans approved by security holders     | 525,287                                                                                             | $12.69                                                                                     | 358,112                                                                                                                                       |
| Equity compensation plans not approved by security holders | —                                                                                             | —                                                                                    | —                                                                                                                                       |
|  Total                                                | 525,287                                                                                             | $12.69                                                                                     | 358,112                                                                                                                                       |

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

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

----

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

|   | (a) | (1) | The exhibits and financial statement schedules filed as a part of this report are as follows: |
|--------|-----|-----|-----------------------------------------------------------------------------------------------|

|   |      • | Report of Independent Registered Public Accounting Firm. |
|--------|---------------------------------------|----------------------------------------------------------|

|   |      • | Consolidated Balance Sheets for the Years Ended June 30, 2011 and 2010. |
|--------|---------------------------------------|-------------------------------------------------------------------------|

|   |      • | Consolidated Statements of Earnings for the Years Ended June 30, 2011 and 2010. |
|--------|---------------------------------------|---------------------------------------------------------------------------------|

|   |      • | Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2011 and 2010. |
|--------|---------------------------------------|-------------------------------------------------------------------------------------------------------------------|

|   |      • | Consolidated Statements of Cash Flows for the Years Ended June 30, 2011 and 2010. |
|--------|---------------------------------------|-----------------------------------------------------------------------------------|

|   |      • | Notes to Consolidated Financial Statements. |
|--------|---------------------------------------|---------------------------------------------|

|   | (2) | All schedules are omitted as the required information either is not applicable or is included in the financial statements or related notes. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.1 | Charter of Jefferson Bancshares, Inc. (1) |
|--------|-----|-------------------------------------------|

|   | 3.2 | Bylaws of Jefferson Bancshares, Inc. (2) |
|--------|-----|------------------------------------------|

|   | 4.1 | Specimen Stock Certificate of Jefferson Bancshares, Inc. (1) |
|--------|-----|--------------------------------------------------------------|

|   | 4.2 | No long-term debt instrument issued by Jefferson Bancshares, Inc. exceeds 10% of consolidated assets or is registered. In accordance with paragraph 4(iii) of Item 601(b) of Regulation S-K, Jefferson Bancshares, Inc. will furnish the Securities and Exchange Commission copies of long-term debt instruments and related agreements upon request. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | Employment Agreement between Anderson L. Smith, Jefferson Bancshares, Inc. and     Jefferson Federal Bank* (3) |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | Amendment to Employment Agreement between Anderson L. Smith, Jefferson Bancshares, Inc. and Jefferson Federal Bank* (4) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | Jefferson Federal Savings and Loan Association of Morristown Employee Severance Compensation Plan* (1) |
|--------|------|--------------------------------------------------------------------------------------------------------|

|   | 10.4 | 1995 Jefferson Federal Savings and Loan Association Stock Option Plan* (1) |
|--------|------|----------------------------------------------------------------------------|

|   | 10.5 | Jefferson Federal Bank Supplemental Executive Retirement Plan* (1) |
|--------|------|--------------------------------------------------------------------|

|   | 10.6 | Jefferson Bancshares, Inc. 2004 Stock-Based Incentive Plan* (5) |
|--------|------|-----------------------------------------------------------------|

|   | 11.0 | Statement re: computation of per share earnings (6) |
|--------|------|-----------------------------------------------------|

|   | 21.0 | List of Subsidiaries |
|--------|------|----------------------|

|   | 23.0 | Consent of Craine, Thompson & Jones, P.C. |
|--------|------|-----------------------------------------------|

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

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

|   | 32.0 | Section 1350 Certifications |
|--------|------|-----------------------------|

|   | ____________________ |
|--------|----------------------|

|   | * | Management contract or compensatory plan, contract or arrangement. |
|--------|---|--------------------------------------------------------------------|

|   | (1) | Incorporated herein by reference from the Exhibits to Registration Statement on Form S-1 and amendments thereto, initially filed on March 21, 2003, Registration No. 333-103961. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Incorporated herein by reference from the Exhibits to the Current Report on Form 8-K, filed on October 26, 2007. |
|--------|-----|------------------------------------------------------------------------------------------------------------------|

|   | (3) | Incorporated herein by reference from the Exhibits to the Annual Report on Form 10-K, filed on September 29, 2003. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

|   | (4) | Incorporated herein by reference from the Exhibits to the Annual Report on Form 10-K, filed on September 13, 2004. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

|   | (5) | Incorporated herein by reference from Appendix A to the Company’s definitive proxy statement filed on December 1, 2003. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Incorporated herein by reference to Note 3 to the Company’s Audited Financial Statements beginning  on page F-11. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------|

----

|                     | JEFFERSON BANCSHARES, INC. |                                                             |
|--------------------------|----------------------------|------------------------------------------------------------------|
|                     |                       |                                                             |   |
|                     |                       |                                                             |   |
|                     |                       |                                                             |   |
| Date: September 27, 2011 | By:                        | /s/ Anderson L. Smith                                            |   |
|                     |                       | Anderson L. SmithPresident, Chief Executive Officer and Director |   |

| Name                     |   | Title                         | Date               |
|--------------------------|--------|-------------------------------|--------------------|
|                     |   |                          |               |
|                     |   |                          |               |
| /s/ Anderson L. Smith    |   | President, Chief Executive    | September 27, 2011 |
| Anderson L. Smith        |   | Officer and Director          |               |
|                     |   | (principal executive officer) |               |
|                     |   |                          |               |
|                     |   |                          |               |
| /s/ Jane P. Hutton       |   | Chief Financial Officer,      | September 27, 2011 |
| Jane P. Hutton           |   | Treasurer and Secretary       |               |
|                     |   | (principal financial and      |               |
|                     |   | accounting officer)           |               |
|                     |   |                          |               |
|                     |   |                          |               |
|                     |   |                          |               |
| /s/ H. Scott Reams       |   | Director                      | September 27, 2011 |
| H. Scott Reams           |   |                          |               |
|                     |   |                          |               |
|                     |   |                          |               |
|                     |   |                          |               |
| /s/ Dr. Jack E. Campbell |   | Director                      | September 27, 2011 |
| Dr. Jack E. Campbell     |   |                          |               |
|                     |   |                          |               |
|                     |   |                          |               |
|                     |   |                          |               |
| /s/ Dr. Terry M. Brimer  |   | Director                      | September 27, 2011 |
| Dr. Terry M. Brimer      |   |                          |               |
|                     |   |                          |               |
|                     |   |                          |               |
|                     |   |                          |               |
| /s/ William T. Hale      |   | Director                      | September 27, 2011 |

----

----

----

|                                                                                    |   | June 30, |    |
|-----------------------------------------------------------------------------------------|--------|----------|---------|
|                                                                                    |   | 2011     |    |   | 2010 |   |
|                                                                                    |   |     |    |   |   |   |
| Assets                                                                                  |   |     |    |   |   |   |
|                                                                                    |   |     |    |   |   |   |
| Cash and cash equivalents                                                               |   | $        | 5,327   |   |   | $ | 5,071 |   |
| Interest-earning deposits                                                               |   |     | 35,221  |   |   |   | 59,232 |   |
| Fed funds sold                                                                          |   |     | -       |   |   |   | 5,000 |   |
| Investment securities classified as available for sale, net                             |   |     | 74,780  |   |   |   | 62,989 |   |
| Federal Home Loan Bank stock                                                            |   |     | 4,735   |   |   |   | 4,735 |   |
| Bank owned life insurance                                                               |   |     | 6,625   |   |   |   | 6,390 |   |
| Loans receivable, net of allowance for loan losses of $8,181 and $9,649                 |   |     | 378,587 |   |   |   | 434,378 |   |
| Loans held-for-sale                                                                     |   |     | -       |   |   |   | 1,153 |   |
| Premises and equipment, net                                                             |   |     | 26,617  |   |   |   | 27,555 |   |
| Foreclosed real estate, net                                                             |   |     | 9,498   |   |   |   | 6,851 |   |
| Accrued interest receivable:                                                            |   |     |    |   |   |   |   |   |
| Investments                                                                             |   |     | 311     |   |   |   | 256 |   |
| Loans receivable                                                                        |   |     | 1,521   |   |   |   | 1,744 |   |
| Deferred tax asset, net                                                                 |   |     | 9,009   |   |   |   | 8,524 |   |
| Goodwill and other intangibles                                                          |   |     | 1,978   |   |   |   | 2,475 |   |
| Other assets                                                                            |   |     | 6,980   |   |   |   | 4,417 |   |
|                                                                                    |   |     |    |   |   |   |   |   |
| Total Assets                                                                            |   | $        | 561,189 |   |   | $ | 630,770 |   |
|                                                                                    |   |     |    |   |   |   |   |   |
| Liabilities and Stockholders' Equity                                                    |   |     |    |   |   |   |   |   |
|                                                                                    |   |     |    |   |   |   |   |   |
| Deposits                                                                                |   |     |    |   |   |   |   |   |
| Noninterest-bearing                                                                     |   | $        | 54,340  |   |   | $ | 41,653 |   |
| Interest-bearing                                                                        |   |     | 399,922 |   |   |   | 437,530 |   |
| Repurchase agreements                                                                   |   |     | 945     |   |   |   | 944 |   |
| Federal Home Loan Bank advances                                                         |   |     | 37,942  |   |   |   | 84,834 |   |
| Subordinated debentures                                                                 |   |     | 7,133   |   |   |   | 7,021 |   |
| Other liabilities                                                                       |   |     | 4,988   |   |   |   | 2,265 |   |
| Accrued income taxes                                                                    |   |     | -       |   |   |   | - |   |
| Total liabilities                                                                       |   |     | 505,270 |   |   |   | 574,247 |   |
|                                                                                    |   |     |    |   |   |   |   |   |
| Commitments and contingent liabilities                                                  |   |     | -       |   |   |   | - |   |
|                                                                                    |   |     |    |   |   |   |   |   |
| Stockholders' equity:                                                                   |   |     |    |   |   |   |   |   |
| Preferred stock, $.01 par value; 10,000,000 shares                                      |   |     |    |   |   |   |   |   |
|   authorized; no shares issued or outstanding                                 |   |     | -       |   |   |   | - |   |
| Common stock, $.01 par value; 30,000,000 shares authorized;                             |   |     |    |   |   |   |   |   |
| 9,182,372 shares issued and 6,634,523  and 6,659,212 shares                   |   |     |    |   |   |   |   |   |
| outstanding at June 30, 2011 and 2010, respectively                                     |   |     | 92      |   |   |   | 92 |   |
| Additional paid-in capital                                                              |   |     | 78,895  |   |   |   | 79,175 |   |
| Unearned ESOP shares                                                                    |   |     | (3,241  | ) |   |   | (3,673 | ) |
| Unearned compensation                                                                   |   |     | (1,019  | ) |   |   | (1,053 | ) |
| Accumulated other comprehensive income                                                  |   |     | 459     |   |   |   | 1,206 |   |
| Retained earnings                                                                       |   |     | 12,067  |   |   |   | 12,023 |   |
| Treasury stock, at cost (2,547,849 and 2,523,160 shares)                                |   |     | (31,334 | ) |   |   | (31,247 | ) |
|      Total stockholders' equity                                |   |     | 55,919  |   |   |   | 56,523 |   |
|                                                                                    |   |     |    |   |   |   |   |   |
| Total liabilities and stockholders' equity                                              |   | $        | 561,189 |   |   | $ | 630,770 |   |
|                                                                                    |   |     |    |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |

----

|                                                                                                                |   |                |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|--------|--------|
|                                                                                                                |   | Year Ended June 30, |   |
|                                                                                                                |   | 2011                |   |   | 2010   |   |
|                                                                                                                |   |                |   |   |   |   |
| Interest income:                                                                                                    |   |                |   |   |   |   |
|      Interest on loans receivable                                                          |   | $                   | 24,251 |   |   | $      | 27,038 |   |
|      Interest on investment securities                                                     |   |                | 1,696  |   |   |   | 2,730 |   |
|      Other interest                                                                        |   |                | 387    |   |   |   | 275 |   |
|                Total interest income     |   |                | 26,334 |   |   |   | 30,043 |   |
|                                                                                                                |   |                |   |   |   |   |   |   |
| Interest expense:                                                                                                   |   |                |   |   |   |   |   |   |
|      Deposits                                                                              |   |                | 5,601  |   |   |   | 8,052 |   |
|      Securities sold under repurchase agreements                                           |   |                | 6      |   |   |   | 9 |   |
|      Advances from FHLB                                                                    |   |                | 2,105  |   |   |   | 3,208 |   |
|      Subordinated debentures                                                               |   |                | 318    |   |   |   | 324 |   |
|                Total interest expense    |   |                | 8,030  |   |   |   | 11,593 |   |
|                                                                   |   |                |   |   |   |   |   |   |
|                Net interest income       |   |                | 18,304 |   |   |   | 18,450 |   |
|      Provision for loan losses                                                             |   |                | 4,447  |   |   |   | 8,809 |   |
|      Net interest income after provision for loan losses                                   |   |                | 13,857 |   |   |   | 9,641 |   |
|                                                                                                                |   |                |   |   |   |   |   |   |
| Noninterest income:                                                                                                 |   |                |   |   |   |   |   |   |
|      Mortgage origination income                                                           |   |                | 481    |   |   |   | 397 |   |
|      Service charges and fees                                                              |   |                | 1,288  |   |   |   | 1,619 |   |
|      Loss on sale of fixed assets                                                          |   |                | -      |   |   |   | (92 | ) |
|      Gain (loss) on sale of investment securities, net                                     |   |                | 2,057  |   |   |   | 1,188 |   |
|      Impairment of investment securities                                                   |   |                | (835   | )      |   |   | - |   |
|      Loss on sale of foreclosed real estate, net                                           |   |                | (681   | )      |   |   | (67 | ) |
|      BOLI increase in cash value                                                           |   |                | 235    |   |   |   | 236 |   |
|      Other                                                                                 |   |                | 688    |   |   |   | 753 |   |
|                Total noninterest income  |   |                | 3,233  |   |   |   | 4,034 |   |
|                                                                                                                |   |                |   |   |   |   |   |   |
| Noninterest expense:                                                                                                |   |                |   |   |   |   |   |   |
|      Compensation and benefits                                                             |   |                | 6,687  |   |   |   | 7,112 |   |
|      Occupancy expense                                                                     |   |                | 1,374  |   |   |   | 2,054 |   |
|      Equipment and data processing expense                                                 |   |                | 2,498  |   |   |   | 2,539 |   |
|      DIF deposit insurance premiums                                                        |   |                | 664    |   |   |   | 666 |   |
|      Advertising                                                                           |   |                | 376    |   |   |   | 226 |   |
|      Goodwill impairment                                                                   |   |                | -      |   |   |   | 21,783 |   |
|      Professional services                                                                 |   |                | 449    |   |   |   | 649 |   |
|      Valuation adjustment and expenses on other real estate owned                          |   |                | 1,841  |   |   |   | 1,107 |   |
|      Amortization of intangible assets                                                     |   |                | 497    |   |   |   | 553 |   |
|      Loss on early extinguishment of debt                                                  |   |                | 775    |   |   |   | - |   |
|      Other                                                                                 |   |                | 2,250  |   |   |   | 2,968 |   |
|                Total noninterest expense |   |                | 17,411 |   |   |   | 39,657 |   |
|                                                                                                                |   |                |   |   |   |   |   |   |
|      Earnings (loss) before income taxes                                                   |   |                | (321   | )      |   |   | (25,982 | ) |
|                                                                                                                |   |                |   |   |   |   |   |   |
| Income taxes (benefit) expense:                                                                                     |   |                |   |   |   |   |   |   |
|      Current                                                                               |   |                | (14    | )      |   |   | 14 |   |
|      Deferred                                                                              |   |                | (337   | )      |   |   | (1,996 | ) |
|                Total income taxes        |   |                | (351   | )      |   |   | (1,982 | ) |
|                                                                                                                |   |                |   |   |   |   |   |   |
| Net earnings (loss)                                                                                                 |   | $                   | 30     |   |   | $      | (24,000 | ) |
|                                                                                                                |   |                |   |   |   |   |   |   |
| Net earnings (loss) per share, basic                                                                                |   | $                   | -      |   |   | $      | (3.85 | ) |
| Net earnings (loss) per share, diluted                                                                              |   | $                   | -      |   |   | $      | (3.85 | ) |
|                                                                                                                |   |                |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements.                             |   |

----

|                                                                             |   |   |   |   |       |   |   | Unallocated |   |   |         |   |   | Accumulated   |   |   |     |   |   |     |   |   |          |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------------|--------|--------|----------|--------|--------|----------|--------|--------|---------------|--------|
|                                                                             |   |   |   |   | Additional |   |   | Common      |   |   |         |   |   | Other         |   |   |     |   |   |     |   |   | Total         |   |
|                                                                             |   | Common |   |   | Paid-in    |   |   | Stock in    |   |   | Unearned     |   |   | Comprehensive |   |   | Retained |   |   | Treasury |   |   | Stockholders' |   |
|                                                                             |   | Stock  |   |   | Capital    |   |   | ESOP        |   |   | Compensation |   |   | Income        |   |   | Earnings |   |   | Stock    |   |   | Equity        |   |
| Balance at June 30, 2009                                                         |   | $      | 92     |   |       | $      | 79,394 |        |   | $      | (4,105       | )      |   | $             | (1,121 | )      |     | $      | 150    |     |   | $      | 36,140        |   |   | $ | (31,045 | ) |   | $ | 79,505 |   |
|                                                                             |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                            |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
|    Net loss                                                       |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | (24,000       | )      |   |   | - |   |   |   | (24,000 | ) |
|    Change in net unrealized gain (loss)                           |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
|       on securities available for sale, net        |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
|       of taxes of $655                             |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | 1,056  |     |   |   | -             |   |   |   | - |   |   |   | 1,056 |   |
| Total comprehensive income                                                       |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | -             |   |   |   | - |   |   |   | (22,944 | ) |
|                                                                             |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
| Dividends                                                                        |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | (200          | )      |   |   | - |   |   |   | (200 | ) |
| Dividends used for ESOP payment                                                  |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | 78            |   |   |   | - |   |   |   | 78 |   |
| Dividends used for MRP and ESOP expenses                                         |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | 5             |   |   |   | - |   |   |   | 5 |   |
| Shares committed to be released by the ESOP                                      |   |   | -      |   |       |   | (219   | )           |   |   | 432          |   |   |          | -      |   |     |   | -      |     |   |   | -             |   |   |   | - |   |   |   | 213 |   |
| Earned portion of stock grants                                                   |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | 68     |   |     |   | -      |     |   |   | -             |   |   |   | - |   |   |   | 68 |   |
| Purchase of common stock (47,277 shares)                                         |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | -             |   |   |   | (202 | ) |   |   | (202 | ) |
|                                                                             |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2010                                                         |   |   | 92     |   |       |   | 79,175 |        |   |   | (3,673       | )      |   |          | (1,053 | )      |     |   | 1,206  |     |   |   | 12,023        |   |   |   | (31,247 | ) |   |   | 56,523 |   |
|                                                                             |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
| Comprehensive income:                                                            |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
|    Net earnings                                                   |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | 30            |   |   |   | - |   |   |   | 30 |   |
|    Investment securities for sale;                                |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
|       Unrealized gain during period, net of        |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
|        taxes of ($692)                        |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   | (1,115 | )        |   |   |          |   |   |   |   |   |   |   | (1,115 | ) |
|       Reclassification of realized losses included |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
|        in net income, net of taxes of $228    |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   | 368    |     |   |   |          |   |   |   |   |   |   |   | 368 |   |
| Total comprehensive income                                                       |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | -             |   |   |   | - |   |   |   | (717 | ) |
|                                                                             |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
| Dividends used for ESOP payment                                                  |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | 14            |   |   |   | - |   |   |   | 14 |   |
| Dividends used for MRP and ESOP expenses                                         |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | -             |   |   |   | - |   |   |   | - |   |
| Shares committed to be released by the ESOP                                      |   |   | -      |   |       |   | (280   | )           |   |   | 432          |   |   |          | -      |   |     |   | -      |     |   |   | -             |   |   |   | - |   |   |   | 152 |   |
| Earned portion of stock grants                                                   |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | 34     |   |     |   | -      |     |   |   | -             |   |   |   | - |   |   |   | 34 |   |
| Purchase of common stock (24,689 shares)                                         |   |   | -      |   |       |   | -      |        |   |   | -            |   |   |          | -      |   |     |   | -      |     |   |   | -             |   |   |   | (87 | ) |   |   | (87 | ) |
|                                                                             |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2011                                                         |   | $      | 92     |   |       | $      | 78,895 |        |   | $      | (3,241       | )      |   | $             | (1,019 | )      |     | $      | 459    |     |   | $      | 12,067        |   |   | $ | (31,334 | ) |   | $ | 55,919 |   |
|                                                                             |   |   |   |   |       |   |   |        |   |   |         |   |   |          |   |   |     |   |   |     |   |   |          |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                      |   | Years Ended June 30, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|
|                                                                                                                                                      |   | 2011                 |    |   | 2010 |   |
| Cash flows from operating activities:                                                                                                                     |   |                 |    |   |   |   |
|      Net earnings (loss)                                                                                                         |   | $                    | 30      |   |   | $ | (24,000 | ) |
|      Adjustments to reconcile net earnings (loss) to net cash provided by (used for)                                             |   |                 |    |   |   |   |   |   |
|          operating activities:                                                                               |   |                 |    |   |   |   |   |   |
|            Allocated ESOP shares                                                                   |   |                 | 152     |   |   |   | 211 |   |
|            Depreciation and amortization expense                                                   |   |                 | 1,236   |   |   |   | 1,641 |   |
|            Charge for goodwill impairment                                                          |   |                 | -       |   |   |   | 21,783 |   |
|            Amortization of premiums (discounts), net on investment securities                      |   |                 | 97      |   |   |   | (703 | ) |
|            Provision for loan losses                                                               |   |                 | 4,447   |   |   |   | 8,809 |   |
|            (Gain) loss on sale of fixed assets                                                     |   |                 | (1      | ) |   |   | 92 |   |
|            (Gain) on sale of investment securities and mortgage-backed securities, net             |   |                 | (395    | ) |   |   | (1,188 | ) |
|            Amortization of deferred loan fees, net                                                 |   |                 | (271    | ) |   |   | (296 | ) |
|            Loss on sale of foreclosed real estate, net                                             |   |                 | 680     |   |   |   | 67 |   |
|            Deferred tax benefit                                                                    |   |                 | (338    | ) |   |   | (1,996 | ) |
|            Originations of mortgage loans held for sale                                            |   |                 | (18,393 | ) |   |   | (17,748 | ) |
|            Proceeds from sale of mortgage loans                                                    |   |                 | 19,546  |   |   |   | 17,476 |   |
|            Increase in cash value of life insurance                                                |   |                 | (235    | ) |   |   | (235 | ) |
|            Earned portion of MRP                                                                   |   |                 | 35      |   |   |   | 68 |   |
|            Decrease (increase) in:                                                                 |   |                 |    |   |   |   |   |   |
|                Accrued interest receivable                                     |   |                 | 168     |   |   |   | 258 |   |
|                Other assets                                                    |   |                 | (2,562  | ) |   |   | (2,421 | ) |
|            Increase (decrease) in other liabilities and accrued income taxes                       |   |                 | 2,722   |   |   |   | (308 | ) |
|                Net cash provided by (used for) operating activities            |   |                 | 6,918   |   |   |   | 1,510 |   |
|                                                                                                                                                      |   |                 |    |   |   |   |   |   |
|                                                                                                                                                      |   |                 |    |   |   |   |   |   |
| Cash flows used for investing activities:                                                                                                                 |   |                 |    |   |   |   |   |   |
|      Loan originations, net of principal collections                                                                             |   |                 | 43,588  |   |   |   | 49,603 |   |
|      Investment securities classified as available for sale:                                                                     |   |                 |    |   |   |   |   |   |
|                Purchased                                                       |   |                 | (82,500 | ) |   |   | (64,294 | ) |
|                Proceeds from sale                                              |   |                 | 12,406  |   |   |   | 5,636 |   |
|                Proceeds from maturities, calls and prepayments                 |   |                 | 57,390  |   |   |   | 35,815 |   |
|      Purchase of premises and equipment                                                                                          |   |                 | (201    | ) |   |   | (192 | ) |
|      Proceeds from the sale of fixed assets                                                                                      |   |                 | 23      |   |   |   | 3,323 |   |
|      Proceeds from sale of (additions to) foreclosed real estate, net                                                            |   |                 | 4,901   |   |   |   | 2,032 |   |
|                Net cash provided by (used for) investing  activities |   |                 | 35,607  |   |   |   | 31,923 |   |

----

|                                                                                                                                           | Years Ended June 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|--------|
|                                                                                                                                           | 2011                 |   |   |   | 2010  |
|                                                                                                                                           |                 |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                          |                 |   |   |   |   |   |   |   |
|      Net increase (decrease) in deposits                                                                              |                 | $      | (24,871 | ) |   | $ | (2,554 | ) |
|      Net increase (decrease) in repurchase agreements                                                                 |                 |   | 1 |   |   |   | 155 |   |
|      Proceeds from advances from FHLB                                                                                 |                 |   | 309 |   |   |   | - |   |
|      Repayment of FHLB advances                                                                                       |                 |   | (46,632 | ) |   |   | (5,034 | ) |
|      Purchase of treasury stock                                                                                       |                 |   | (87 | ) |   |   | (202 | ) |
|      Dividends paid                                                                                                   |                 |   | - |   |   |   | (603 | ) |
|                Net cash provided by (used for) financing activities |                 |   | (71,280 | ) |   |   | (8,238 | ) |
|                                                                                                                                           |                 |   |   |   |   |   |   |   |
| Net increase (decrease) in cash, cash equivalents and interest-earning deposits                                                                |                 |   | (28,755 | ) |   |   | 25,195 |   |
| Cash, cash equivalents and interest-earning deposits at beginning of period                                                                    |                 |   | 69,303 |   |   |   | 44,108 |   |
|                                                                                                                                           |                 |   |   |   |   |   |   |   |
| Cash, cash equivalents and interest-earning deposits at end of period                                                                          |                 | $      | 40,548 |   |   | $ | 69,303 |   |
|                                                                                                                                           |                 |   |   |   |   |   |   |   |

| Supplemental disclosures of cash flow information:                                    |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|      Cash paid during period for:                            |   |   |   |   |   |   |
|        Interest on deposits                        |   | $      | 5,555  |   |   | $      | 7,812 |   |
|        Interest on borrowed funds                  |   | $      | 2,372  |   |   | $      | 3,101 |   |
|        Income taxes                                |   | $      | 206    |   |   | $      | 410 |   |
|        Real estate acquired in settlement of loans |   | $      | 12,269 |   |   | $      | 6,406 |   |
|        Interest on subordinated debentures         |   | $      | 206    |   |   | $      | 213 |   |
|                                                                                  |   |   |   |   |   |   |   |   |

----

|   | a. | For purposes of reporting cash flows, cash and cash equivalents include cash and balances due from depository institutions, interest-bearing deposits in other depository institutions and fed funds sold with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $35,221 and $64,232 at June 30, 2011 and 2010, respectively. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Investments in debt securities are classified as "held-to-maturity" or "available-for-sale" depending upon the intent of management with respect to the particular investments.  Investments classified as "held-to-maturity" are carried at cost while those identified as "available-for-sale" are carried at fair value.  All securities are adjusted for amortization of premiums and accretion of discounts over the term of the security using the interest method.  Management has the positive intent and ability to carry those securities classified as "held-to-maturity" to maturity for long-term investment purposes and, accordingly, such securities are not adjusted for temporary declines in market value.  "Available-for-sale" securities are adjusted for changesin fair value through a direct entry to a separate component of stockholders' equity (i.e., other comprehensive income).  Investments in equity securities are carried at the lower of cost or market.  The cost of securities sold is determined by specific identification. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | c. | Loans receivable, net, which management has the intent and ability to hold until maturity or pay-off, are generally carried at unpaid principal balances less loans in process, net deferred loan fees, unearned discount on loans and allowances for losses. Loan origination and commitment fees and certain direct loan origination costs are deferred and amortized to interest income over the contractual life of the loan using the interest method. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The accrual of interest on all loans is discontinued at the time the loan is 90 days delinquent.  All interest accrued but not collected for loans considered impaired, placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost-recovery method until the loan is returned to accrual status. Loans are returned to accrual status when future payments are reasonably assured. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | Beginning in January 2005, the Company began originating mortgage loans conforming to guidelines for sale in the secondary mortgage market. Because commitment letters are only given to the borrower after an underwriter agrees to purchase the loan according to the stated terms, the Company’s maximum time between funding the loan and completing the sale to the underwriter is generally three weeks.  The loans are carried at the lower of aggregate cost or fair market value as determined by the amount committed to by the underwriter. The loans are sold without recourse and the mortgage servicing rights are sold as part of the loan package. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e. | The allowance for loan and lease losses is an estimate of the losses that are inherent in the loan and lease portfolio.  The allowance is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.  The Bank’s charge-off policy is consistent with bank regulatory standards.  Generally, loans are charged off when the loan becomes over 120 days delinquent.  Real estate acquired as a result of foreclosure is initially recorded at the lower of theamount of the loan or the fair value, less estimated selling costs. Any write-down to fair value is charged to the allowance for loan and lease losses.  Any subsequent write-down of foreclosed real estate is charged against earnings. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | f. | Credit related financial instruments arising in the ordinary course of business consist primarily of commitments to extend credit.  Such financial instruments are recorded when they are funded. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g. | Premises and equipment are carried at cost, less accumulated depreciation. Expenditures for assets with a life greater than one year and costing more than $1,000 are generally capitalized.  Depreciation of premises and equipment is computed using the straight-line and accelerated methods based on the estimated useful lives of the related assets. Estimated lives for buildings, leasehold improvements, equipment and furniture are thirty-nine, thirty- nine, five and seven years, respectively.  Estimated lives for building improvements are evaluated on a case-by-case basis and depreciated over the estimated remaining life of the improvement. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | h.  | Foreclosed real estate is initially recorded, and subsequently carried, at the lower of cost or fair value less estimated selling costs.  Costs related to improvement of foreclosed real estate are capitalized. |
|--------|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | i. | Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method.  Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | j. | GAAP requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award - the requisite service period. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                          |   | Year Ended    |            |   | Year Ended    |   |
|---------------------------------------------------------------|--------|---------------|-----------------|--------|---------------|--------|
|                                                          |   | June 30, 2011 |            |   | June 30, 2010 |   |
|                                                          |   |          |            |   |          |   |
|                                                          |   |          |            |   |          |   |
| Weighted average number of                                    |   |          |            |   |          |   |
|   common shares used in computing                   |   |          |            |   |          |   |
|   basic earnings per common share                   |   |          | 6,216,249       |   |          |   | 6,226,921 |   |
|                                                          |   |          |            |   |          |   |   |   |
| Effect of dilutive stock options                              |   |          | -               |   |          |   | - |   |
|                                                          |   |          |            |   |          |   |   |   |
| Weighted average number of                                    |   |          |            |   |          |   |   |   |
|    common shares and dilutive potential        |   |          |            |   |          |   |   |   |
|   common shares used in computing                   |   |          |            |   |          |   |   |   |
|   earniings per common share assuming dilution |   |          | 6,216,249  |   |          |   | 6,226,921  |   |
|                                                     |   |          |            |   |          |   |   |   |

----

----

|                                                                                    |   |                   |   |   |       |   |   |       |   |   |   |   |
|-----------------------------------------------------------------------------------------|--------|------------------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|
|                                                                                    |   | June 30, 2011          |   |
|                                                                                    |   | Amortized              |   |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|                                                                                    |   | Cost                   |   |   | Gains      |   |   | Losses     |   |   | Value  |   |
|                                                                                    |   | (Dollars in thousands) |   |   |       |   |   |       |   |
| Securities Available-for-Sale                                                           |   |                   |   |   |       |   |   |       |   |   |   |   |
|   Debt securities:                                                            |   |                   |   |   |       |   |   |       |   |   |   |   |
|      Federal agency securities                                 |   | $                      | 43,721 |   |       | $      | 228    |       |   | $      | -      |   |   | $ | 43,949 |   |
|      Mortgage-backed securities                                |   |                   | 24,551 |   |       |   | 861    |       |   |   | (56    | )      |   |   | 25,356 |   |
|      Municipal securities                                      |   |                   | 5,150  |   |       |   | 112    |       |   |   | (25    | )      |   |   | 5,237 |   |
|      Other securities                                          |   |                   | 613    |   |       |   | -      |       |   |   | (375   | )      |   |   | 238 |   |
|           Total securities available- |   |                   |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|           for-sale **                 |   | $                      | 74,035 |   |       | $      | 1,201  |       |   | $      | (456   | )      |   | $ | 74,780 |   |
|                                                                                    |   |                   |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|   Weighted-average rate                                                       |   |                   | 2.35   | %      |       |   |   |       |   |   |   |   |   |   |   |   |

|                                                                                    |   | June 30, 2010          |   |
|-----------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                    |   | Amortized              |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                                    |   | Cost                   |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                                                                    |   | (Dollars in thousands) |   |   |   |   |   |   |   |
| Securities Available-for-Sale                                                           |   |                   |   |   |   |   |   |   |   |   |   |   |
|   Debt securities:                                                            |   |                   |   |   |   |   |   |   |   |   |   |   |
|      Federal agency securities                                 |   | $                      | 31,975 |   |   | $ | 132 |   |   | $ | - |   |   | $ | 32,107 |   |
|      Mortgage-backed securities                                |   |                   | 21,812 |   |   |   | 2,643 |   |   |   | (142 | ) |   |   | 24,313 |   |
|      Municipal securities                                      |   |                   | 5,650  |   |   |   | 126 |   |   |   | (12 | ) |   |   | 5,764 |   |
|      Other securities                                          |   |                   | 1,597  |   |   |   | 183 |   |   |   | (975 | ) |   |   | 805 |   |
|           Total securities available- |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           for-sale                    |   | $                      | 61,034 |   |   | $ | 3,084 |   |   | $ | (1,129 | ) |   | $ | 62,989 |   |
|                                                                                    |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Weighted-average rate                                                       |   |                   | 3.73   | % |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                     |   | Less than 12 months |   |   | 12 months or more |   |   | Total  |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|-------------------|--------|--------|--------|--------|
|                                                     |   | Fair                |   |   | Unrealized        |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                                     |   | Value               |   |   | Losses            |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| June 30, 2011                                            |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Federal agency securities  |   | $                   | -      |   |              | $      | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|      Mortgage-backed securities |   |                | 1,412  |   |              |   | (15    | )      |   |   | 727 |   |   |   | (41 | ) |   |   | 2,139 |   |   |   | (56 | ) |
|      Municipal securities       |   |                | 1,457  |   |              |   | (25    | )      |   |   | - |   |   |   | - |   |   |   | 1,457 |   |   |   | (25 | ) |
|      Other securities           |   |                | -      |   |              |   | -      |   |   |   | 233 |   |   |   | (375 | ) |   |   | 233 |   |   |   | (375 | ) |
|                                                     |   | $                   | 2,869  |   |              | $      | (40    | )      |   | $ | 960 |   |   | $ | (416 | ) |   | $ | 3,829 |   |   | $ | (456 | ) |
|                                                     |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| June 30, 2010                                            |   |                |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Federal agency securities  |   | $                   | -      |   |              | $      | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|      Mortgage-backed securities |   |                | 1,944  |   |              |   | (137   | )      |   |   | 264 |   |   |   | (5 | ) |   |   | 2,208 |   |   |   | (142 | ) |
|      Municipal securities       |   |                | 1,455  |   |              |   | (12    | )      |   |   | - |   |   |   | - |   |   |   | 1,455 |   |   |   | (12 | ) |
|      Other securities           |   |                | 507    |   |              |   | (975   | )      |   |   | - |   |   |   | - |   |   |   | 507 |   |   |   | (975 | ) |
|                                                     |   | $                   | 3,906  |   |              | $      | (1,124 | )      |   | $ | 264 |   |   | $ | (5 | ) |   | $ | 4,170 |   |   | $ | (1,129 | ) |

----

|                           |   |   |   |   |   |   |   | Weighted |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|
|                           |   |   |   |   | Fair   |   |   | Average  |   |
|                           |   | Cost   |   |   | Value  |   |   | Yield    |   |
|                           |   |   |   |   |   |   |   |     |   |
| Within 1 year                  |   | $      | 192    |   |   | $      | 195    |     |   |   | 3.06 | % |
| Over 1 year through 5 years    |   |   | 31,589 |   |   |   | 31,769 |     |   |   | 1.22 | % |
| After 5 years through 10 years |   |   | 15,023 |   |   |   | 15,189 |     |   |   | 2.24 | % |
| Over 10 years                  |   |   | 27,231 |   |   |   | 27,627 |     |   |   | 3.70 | % |
|                           |   |   |   |   |   |   |   |     |   |   |   |   |
|                           |   | $      | 74,035 |   |   | $      | 74,780 |     |   |   | 2.35 | % |

|                  |   | Years ended June 30, |   |
|-----------------------|--------|----------------------|--------|
|                  |   | 2011                 |   |   | 2010 |   |
|                  |   |                 |   |   |   |   |
| Proceeds from sales   |   | $                    | 13,110 |   |   | $ | 5,636 |   |
|                  |   |                 |   |   |   |   |   |   |
| Gross realized gains  |   |                 | 1,269  |   |   |   | 1,224 |   |
| Gross realized losses |   |                 | (40    | ) |   |   | (36 | ) |
| Net gains (losses)    |   | $                    | 1,229  |   |   | $ | 1,188 |   |

----

|                                                                                                  |   | June 30 |    |
|-------------------------------------------------------------------------------------------------------|--------|---------|---------|
|                                                                                                  |   | 2011    |    |   | 2010 |   |
| Real estate loans:                                                                                    |   |    |    |   |   |   |
|      Residential one-to four-family                                          |   | $       | 110,046 |   |   | $ | 136,430 |   |
|      Multi-family                                                            |   |    | 14,062  |   |   |   | 16,536 |   |
|      Construction                                                            |   |    | 2,171   |   |   |   | 21,073 |   |
|      Commercial                                                              |   |    | 144,519 |   |   |   | 140,024 |   |
|      Land                                                                    |   |    | 30,053  |   |   |   | 37,135 |   |
|      Home equity line of credit                                              |   |    | 20,029  |   |   |   | 19,768 |   |
|                                                                                                  |   |    |    |   |   |   |   |   |
|              Total real estate loans |   |    | 320,880 |   |   |   | 370,966 |   |
|                                                                                                  |   |    |    |   |   |   |   |   |
| Commercial business loans                                                                             |   |    | 60,497  |   |   |   | 66,699 |   |
|                                                                                                  |   |    |    |   |   |   |   |   |
| Consumer Loans:                                                                                       |   |    |    |   |   |   |   |   |
|      Loans secured by deposit accounts                                       |   |    | 1,268   |   |   |   | 1,372 |   |
|      Other consumer loans                                                    |   |    | 3,235   |   |   |   | 3,566 |   |
|      Loans secured by automobiles                                            |   |    | 1,237   |   |   |   | 1,848 |   |
|      Mobile home loans                                                       |   |    | 13      |   |   |   | 23 |   |
|                                                                                                  |   |    |    |   |   |   |   |   |
|              Total consumer          |   |    | 5,753   |   |   |   | 6,809 |   |
|                                                                                                  |   |    |    |   |   |   |   |   |
|              Sub-total               |   |    | 387,130 |   |   |   | 444,474 |   |
|                                                                                                  |   |    |    |   |   |   |   |   |
| Less:                                                                                                 |   |    |    |   |   |   |   |   |
|      Deferred loan fees, net                                                 |   |    | (362    | ) |   |   | (447 | ) |
|      Allowance for losses                                                    |   |    | (8,181  | ) |   |   | (9,649 | ) |
| Loans receivable, net                                                                                 |   | $       | 378,587 |   |   | $ | 434,378 |   |
|                                                                                                  |   |    |    |   |   |   |   |   |
| Weighted average rate                                                                                 |   |    | 6.00    | % |   |   | 6.02 | % |

|                                         |   | June 30 |   |
|----------------------------------------------|--------|---------|--------|
|                                         |   | 2011    |   |   | 2010 |   |
|                                         |   |    |   |   |   |   |
| Impaired loans without a valuation allowance |   | $       | 10,659 |   |   | $ | 14,340 |   |
| Impaired loans with a valution allowance     |   |    | 20,544 |   |   |   | 20,952 |   |
| Total impaired loans                         |   | $       | 31,203 |   |   | $ | 35,292 |   |
|                                         |   |    |   |   |   |   |   |   |
| Valuation allowance for impaired loans       |   | $       | 5,688  |   |   | $ | 5,476 |   |
|                                         |   |    |   |   |   |   |   |   |
| Total non-accrual loans                      |   | $       | 8,248  |   |   | $ | 18,779 |   |
|                                         |   |    |   |   |   |   |   |   |
| Average investment in impaired loans         |   | $       | 33,955 |   |   | $ | 28,749 |   |
| Interest income recognized on impaired loans |   | $       | 1,068  |   |   | $ | 807 |   |

----

|                                   |   | Resid. Mortgage |    |   | Multi-family |   |   | Const and land dev. |   |   | Non-resid. real estate |   |   | Owner occupied |   |   | Comm'l |   |   | Consumer |   |   | Total  |   |
|----------------------------------------|--------|-----------------|---------|--------|--------------|--------|--------|---------------------|--------|--------|------------------------|--------|--------|----------------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
|                                   |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |
|                                   |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |
| Allowance for Credit Losses:           |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |
| Balance at June 30, 2010               |   | $               | 1,812   |   |         | $      | 468    |                |   | $      | 1,162                  |   |   | $              | 2,408  |   |   | $      | 2,000  |     |   | $      | 1,733  |   |   | $ | 66 |   |   | $ | 9,649 |   |
| Charge Offs                            |   |            | (1,004  | )      |         |   | (740   | )                   |   |   | (1,139                 | )      |   |           | (222   | )      |   |   | (748   | )        |   |   | (2,150 | )      |   |   | (131 | ) |   |   | (6,134 | ) |
| Recoveries                             |   |            | 105     |   |         |   | -      |                |   |   | -                      |   |   |           | 4      |   |   |   | -      |     |   |   | 91     |   |   |   | 19 |   |   |   | 219 |   |
| Provision                              |   |            | 630     |   |         |   | 2,130  |                |   |   | 780                    |   |   |           | (256   | )      |   |   | (449   | )        |   |   | 1,523  |   |   |   | 89 |   |   |   | 4,447 |   |
|                                   |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2011               |   | $               | 1,543   |   |         | $      | 1,858  |                |   | $      | 803                    |   |   | $              | 1,934  |   |   | $      | 803    |     |   | $      | 1,197  |   |   | $ | 43 |   |   | $ | 8,181 |   |
|                                   |   | `               |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance, Individually Evaluated |   | $               | 685     |   |         | $      | 1,791  |                |   | $      | 657                    |   |   | $              | 1,483  |   |   | $      | 285    |     |   | $      | 787    |   |   | $ | - |   |   | $ | 5,688 |   |
| Ending balance, Collectively Evaluated |   | $               | 858     |   |         | $      | 67     |                |   | $      | 146                    |   |   | $              | 451    |   |   | $      | 518    |     |   | $      | 410    |   |   | $ | 43 |   |   | $ | 2,493 |   |
|                                   |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans:                                 |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2011               |   | $               | 135,948 |   |         | $      | 14,061 |                |   | $      | 32,420                 |   |   | $              | 55,577 |   |   | $      | 74,774 |     |   | $      | 68,597 |   |   | $ | 5,753 |   |   | $ | 387,130 |   |
|                                   |   |            |    |   |         |   |   |                |   |   |                   |   |   |           |   |   |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Ending balance, Individually Evaluated |   | $               | 7,481   |   |         | $      | 6,540  |                |   | $      | 3,899                  |   |   | $              | 6,589  |   |   | $      | 2,116  |     |   | $      | 4,578  |   |   | $ | - |   |   | $ | 31,203 |   |
| Ending balance, Collectively Evaluated |   | $               | 128,467 |   |         | $      | 7,521  |                |   | $      | 28,521                 |   |   | $              | 48,988 |   |   | $      | 72,658 |     |   | $      | 64,019 |   |   | $ | 5,753 |   |   | $ | 355,927 |   |

| Loan Type                     |   | 30-59 days past due |   |   | 60-89 days past due |   |   | Greater than 90 days |   |   | Total past due |   |   | Total Current |   |   | Total loans receivable |   |
|-------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|----------------------|--------|--------|----------------|--------|--------|---------------|--------|--------|------------------------|--------|
|                          |   |                |   |   |                |   |   |                 |   |   |           |   |   |          |   |   |                   |   |
|                          |   |                |   |   |                |   |   |                 |   |   |           |   |   |          |   |   |                   |   |
| Residential Mortgage          |   | $                   | 2,564  |   |                | $      | 372    |                 |   | $      | 2,323          |   |   | $             | 5,259  |   |                   | $      | 130,689 |   |   | $ | 135,948 |   |
| Multi-family                  |   |                | -      |   |                |   | -      |                 |   |   | -              |   |   |          | -      |   |                   |   | 14,061 |   |   |   | 14,061 |   |
| Construction/land development |   |                | 341    |   |                |   | 28     |                 |   |   | 583            |   |   |          | 952    |   |                   |   | 31,468 |   |   |   | 32,420 |   |
| Non-residential real estate   |   |                | 101    |   |                |   | -      |                 |   |   | 811            |   |   |          | 1,315  |   |                   |   | 54,262 |   |   |   | 55,577 |   |
| Owner occupied                |   |                | -      |   |                |   | -      |                 |   |   | 973            |   |   |          | 1,260  |   |                   |   | 73,514 |   |   |   | 74,774 |   |
| Commercial                    |   |                | 137    |   |                |   | 808    |                 |   |   | 348            |   |   |          | 2,251  |   |                   |   | 66,346 |   |   |   | 68,597 |   |
| Consumer                      |   |                | 24     |   |                |   | 49     |                 |   |   | 5              |   |   |          | 252    |   |                   |   | 5,501 |   |   |   | 5,753 |   |
|                          |   |                |   |   |                |   |   |                 |   |   |           |   |   |          |   |   |                   |   |   |   |   |   |   |   |
| Total                         |   | $                   | 3,167  |   |                | $      | 1,257  |                 |   | $      | 5,043          |   |   | $             | 9,467  |   |                   | $      | 375,841 |   |   | $ | 387,130 |   |

----

|            |   | Residential Mortgage |    |   | Multi-family |   |   | Construction and land development |   |   | Non-residential real estate |   |   | Owner occupied |   |   | Commercial |   |   | Consumer |   |   | Total  |   |
|-----------------|--------|----------------------|---------|--------|--------------|--------|--------|-----------------------------------|--------|--------|-----------------------------|--------|--------|----------------|--------|--------|------------|--------|--------|----------|--------|--------|--------|--------|
| Grade:          |   |                 |    |   |         |   |   |                              |   |   |                        |   |   |           |   |   |       |   |   |     |   |   |   |   |
| Pass            |   | $                    | 120,571 |   |         | $      | 5,634  |                              |   | $      | 29,209                      |   |   | $              | 39,462 |   |       | $      | 70,617 |     |   | $      | 58,937 |   |   | $ | 5,753 |   |   | $ | 330,183 |   |
| Special mention |   |                 | 4,090   |   |         |   | -      |                              |   |   | 837                         |   |   |           | 9,610  |   |       |   | 2,128  |     |   |   | 5,305  |   |   |   | - |   |   |   | 21,970 |   |
| Substandard     |   |                 | 11,287  |   |         |   | 8,427  |                              |   |   | 2,374                       |   |   |           | 6,505  |   |       |   | 2,029  |     |   |   | 4,355  |   |   |   | - |   |   |   | 34,977 |   |
| Doubtful        |   |                 | -       |   |         |   | -      |                              |   |   | -                           |   |   |           | -      |   |       |   |   |     |   |   | -      |   |   |   | - |   |   |   | - |   |
| Loss            |   |                 | -       |   |         |   | -      |                              |   |   | -                           |   |   |           | -      |   |       |   | -      |     |   |   | -      |   |   |   | - |   |   |   | - |   |
|            |   |                 |    |   |         |   |   |                              |   |   |                        |   |   |           |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Total:          |   | $                    | 135,948 |   |         | $      | 14,061 |                              |   | $      | 32,420                      |   |   | $              | 55,577 |   |       | $      | 74,774 |     |   | $      | 68,597 |   |   | $ | 5,753 |   |   | $ | 387,130 |   |
|            |   |                 |    |   |         |   |   |                              |   |   |                        |   |   |           |   |   |       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |

|                              |   | Recorded investment |   |   | Unpaid principal balance |   |   | Specific allowance |   |   | Interest income recognized |   |
|-----------------------------------|--------|---------------------|--------|--------|--------------------------|--------|--------|-------------------------|--------|--------|----------------------------|--------|
|                              |   |                |   |   |                     |   |   |                    |   |   |                       |   |
| With an allowance recorded:       |   |                |   |   |                     |   |   |                    |   |   |                       |   |
| Residential Mortgage              |   | $                   | 3,606  |   |                     | $      | 3,606  |                    |   | $      | 685                        |   |   | $ | 100 |   |
| Multi-family                      |   |                | 5,900  |   |                     |   | 5,900  |                    |   |   | 1,791                      |   |   |   | 297 |   |
| Construction and land development |   |                | 2,490  |   |                     |   | 2,490  |                    |   |   | 657                        |   |   |   | 87 |   |
| Non-residential real estate       |   |                | 3,755  |   |                     |   | 3,755  |                    |   |   | 1,483                      |   |   |   | 190 |   |
| Owner occupied                    |   |                | 1,096  |   |                     |   | 1,096  |                    |   |   | 285                        |   |   |   | 2 |   |
| Commercial                        |   |                | 3,697  |   |                     |   | 3,697  |                    |   |   | 787                        |   |   |   | 62 |   |
| Consumer                          |   |                | -      |   |                     |   | -      |                    |   |   | -                          |   |   |   | - |   |
| Total                             |   | $                   | 20,544 |   |                     | $      | 20,544 |                    |   | $      | 5,688                      |   |   | $ | 738 |   |
|                              |   |                |   |   |                     |   |   |                    |   |   |                       |   |   |   |   |   |
| With no related allowance:        |   |                |   |   |                     |   |   |                    |   |   |                       |   |   |   |   |   |
| Residential Mortgage              |   | $                   | 3,875  |   |                     | $      | 3,875  |                    |   | $      | -                          |   |   | $ | 148 |   |
| Multi-family                      |   |                | 640    |   |                     |   | 640    |                    |   |   | -                          |   |   |   | 20 |   |
| Construction and land development |   |                | 1,409  |   |                     |   | 1,409  |                    |   |   | -                          |   |   |   | 79 |   |
| Non-residential real estate       |   |                | 2,834  |   |                     |   | 2,834  |                    |   |   | -                          |   |   |   | 33 |   |
| Owner occupied                    |   |                | 1,020  |   |                     |   | 1,020  |                    |   |   | -                          |   |   |   | 42 |   |
| Commercial                        |   |                | 881    |   |                     |   | 881    |                    |   |   | -                          |   |   |   | 8 |   |
| Consumer                          |   |                | -      |   |                     |   | -      |                    |   |   | -                          |   |   |   | - |   |
| Total                             |   | $                   | 10,659 |   |                     | $      | 10,659 |                    |   | $      | -                          |   |   | $ | 330 |   |
|                              |   |                |   |   |                     |   |   |                    |   |   |                       |   |   |   |   |   |
| Total:                            |   |                |   |   |                     |   |   |                    |   |   |                       |   |   |   |   |   |
| Residential Mortgage              |   | $                   | 7,481  |   |                     | $      | 7,481  |                    |   | $      | 685                        |   |   | $ | 248 |   |
| Multi-family                      |   |                | 6,540  |   |                     |   | 6,540  |                    |   |   | 1,791                      |   |   |   | 317 |   |
| Construction and land development |   |                | 3,899  |   |                     |   | 3,899  |                    |   |   | 657                        |   |   |   | 166 |   |
| Non-residential real estate       |   |                | 6,589  |   |                     |   | 6,589  |                    |   |   | 1,483                      |   |   |   | 223 |   |
| Owner occupied                    |   |                | 2,116  |   |                     |   | 2,116  |                    |   |   | 285                        |   |   |   | 44 |   |
| Commercial                        |   |                | 4,578  |   |                     |   | 4,578  |                    |   |   | 787                        |   |   |   | 70 |   |
| Consumer                          |   |                | -      |   |                     |   | -      |                    |   |   | -                          |   |   |   | - |   |
| Total                             |   | $                   | 31,203 |   |                     | $      | 31,203 |                    |   | $      | 5,688                      |   |   | $ | 1,068 |   |

----

| NOTE 6 – LOANS RECEIVABLE, NET (CONTINUED) |
|--------------------------------------------------|

| Balance at June 30, 2010 |   | $      | 1,325  |   |
|--------------------------|--------|--------|--------|--------|
|                     |   |   |   |   |
| Additions                |   |   | -      |   |
| Reclassifications        |   |   | -      |   |
| Repayments               |   |   | (580   | )      |
|                     |   |   |   |   |
| Balance at June 30, 2011 |   | $      | 745    |   |

|                                                       |   | June 30 |   |
|------------------------------------------------------------|--------|---------|--------|
|                                                       |   | 2011    |   |   | 2010 |   |
|                                                       |   |    |   |   |   |   |
| Land                                                       |   | $       | 6,239  |   |   | $ | 6,239 |   |
| Office building                                            |   |    | 21,862 |   |   |   | 21,790 |   |
| Leasehold improvements                                     |   |    | -      |   |   |   | - |   |
| Furniture and equipment                                    |   |    | 5,625  |   |   |   | 5,537 |   |
|                                                       |   |    | 33,726 |   |   |   | 33,566 |   |
| Less:  accumulated depreciation and amortization |   |    | 7,109  |   |   |   | 6,011 |   |
|                                                       |   | $       | 26,617 |   |   | $ | 27,555 |   |

| For the Year Ended |   |   |   |
|--------------------|--------|--------|--------|
| 2012               |   | $      | 44     |   |
|               |   |   |   |   |
|               |   | $      | 44     |   |

----

| For the Year Ended |   |                                                                              |
|--------------------|--------|-----------------------------------------------------------------------------------|
| 2012               |   |  $       1,026                            |
| 2013               |   |           1,026                 |
| 2014               |   |           1,022                 |
| 2015               |   |              616 |
|               |   |                                                                              |
|               |   |  $       3,690                            |

|                                                 |   | June 30, |    |
|------------------------------------------------------|--------|----------|---------|
|                                                 |   | 2011     |    |   | 2010 |   |
|                                                 |   |     |    |   |   |   |
| Non-interest bearing accounts                        |   | $        | 54,340  |   |   | $ | 41,653 |   |
| NOW accounts, 0.26% and 0.39%, respectively          |   |     | 46,134  |   |   |   | 58,257 |   |
| Savings accounts, 0.67% and 0.97%, respectively      |   |     | 91,637  |   |   |   | 82,830 |   |
| Money market accounts, 0.79% and 1.25%, respectively |   |     | 51,252  |   |   |   | 56,247 |   |
|    Total transaction accounts         |   |     | 243,363 |   |   |   | 238,987 |   |
| Certificates:                                        |   |     |    |   |   |   |   |   |
|   0.00 - 1.00%                             |   |     | 82,706  |   |   |   | - |   |
|   1.01 - 2.00%                             |   |     | 108,257 |   |   |   | 183,723 |   |
|   2.01 - 3.00%                             |   |     | 8,046   |   |   |   | 22,211 |   |
|   3.01 - 4.00%                             |   |     | 4,963   |   |   |   | 22,273 |   |
|   4.01 - 5.00%                             |   |     | 6,927   |   |   |   | 11,989 |   |
|   5.01 - 6.00%                             |   |     | -       |   |   |   | - |   |
| Total Certificates, 1.46% and 2.12%, respectively    |   |     | 210,899 |   |   |   | 240,196 |   |
| Total Deposits                                       |   | $        | 454,262 |   |   | $ | 479,183 |   |
|                                                 |   |     |    |   |   |   |   |   |
| Weighted-average rate - deposits                     |   |     | 0.92    | % |   |   | 1.42 | % |
|                                                 |   |     |    |   |   |   |   |   |

----

| 2012   |   | $      | 173,176 |   |
|--------|--------|--------|---------|--------|
| 2013   |   |   | 17,855  |   |
| 2014   |   |   | 18,727  |   |
| 2015   |   |   | 490     |   |
| 2016   |   |   | 651     |   |
|   |   |   |    |   |
| Total  |   | $      | 210,899 |   |

|                       |   | Years Ending June 30, |   |
|----------------------------|--------|-----------------------|--------|
|                       |   | 2011                  |   |   | 2010 |   |
|                       |   |                  |   |   |   |   |
| NOW                        |   | $                     | 145    |   |   | $ | 220 |   |
| Savings                    |   |                  | 651    |   |   |   | 943 |   |
| MMA                        |   |                  | 521    |   |   |   | 705 |   |
| Certificates               |   |                  | 4,284  |   |   |   | 6,184 |   |
|                       |   |                  | 5,601  |   |   |   | 8,052 |   |
| Less:  penalties |   |                  | -      |   |   |   | - |   |
|                       |   |                  |   |   |   |   |   |   |
| Total                      |   | $                     | 5,601  |   |   | $ | 8,052 |   |

----

|                          |   |   |   |   |         |   |   | Weighted |   |
|-------------------------------|--------|--------|--------|--------|--------------|--------|--------|----------|--------|
|                          |   | Amount |   |   | Average Rate |   |
|                          |   | 2011   |   |   | 2010         |   |   | 2011     |   |   | 2010 |   |
|                          |   |   |   |   |         |   |   |     |   |   |   |   |
| Fixed Rate Advances Maturing: |   |   |   |   |         |   |   |     |   |   |   |   |
|                          |   |   |   |   |         |   |   |     |   |   |   |   |
| Less than 1 year              |   | $      | -      |   |         | $      | 26,135 |     |   |   | 0.00 | % |   |   | 4.42 | % |
| 1 to 2 years                  |   |   | -      |   |         |   | 15,199 |     |   |   | 0.00 | % |   |   | 4.57 | % |
| 2 to 3 years                  |   |   | 26,989 |   |         |   | 22,183 |     |   |   | 2.35 | % |   |   | 3.86 | % |
| 3 to 4 years                  |   |   | 5,115  |   |         |   | 9,986  |     |   |   | 3.93 | % |   |   | 3.51 | % |
| 4 to 5 years                  |   |   | -      |   |         |   | 5,147  |     |   |   | 0.00 | % |   |   | 3.93 | % |
| 5 to 10 years                 |   |   | 5,159  |   |         |   | 5,183  |     |   |   | 3.90 | % |   |   | 3.90 | % |
| After 10 years                |   |   | 679    |   |         |   | 1,001  |     |   |   | 2.66 | % |   |   | 2.65 | % |
|                          |   |   |   |   |         |   |   |     |   |   |   |   |   |   |   |   |
| Total FHLB Advances           |   | $      | 37,942 |   |         | $      | 84,834 |     |   |   | 2.77 | % |   |   | 4.11 | % |

|                                         |   | Years Ending June 30 |   |
|----------------------------------------------|--------|----------------------|--------|
|                                         |   | 2011                 |   |   | 2010 |   |
| Current taxes:                               |   |                 |   |   |   |   |
|      Federal income |   | $                    | (14    | ) |   | $ | 14 |   |
|      State excise   |   |                 | -      |   |   |   | - |   |
|                                         |   |                 | (14    | ) |   |   | 14 |   |
|                                         |   |                 |   |   |   |   |   |   |
| Deferred taxes                               |   |                 |   |   |   |   |   |   |
|      Federal income |   |                 | (299   | ) |   |   | (1,751 | ) |
|      State excise   |   |                 | (38    | ) |   |   | (245 | ) |
|                                         |   |                 | (337   | ) |   |   | (1,996 | ) |
|                                         |   |                 |   |   |   |   |   |   |
|                                         |   | $                    | (351   | ) |   | $ | (1,982 | ) |

----

|                                                     |   | Percentage of Earnings |    |
|----------------------------------------------------------|--------|------------------------|---------|
|                                                     |   | Before Income Taxes    |    |
|                                                     |   | Years Ending June 30   |    |
|                                                     |   | 2011                   |    |   | 2010 |   |
|                                                     |   |                   |    |   |   |   |
| Tax at statutory rate                                    |   |                   | (34.0   | %) |   |   | (34.0 | %) |
| Increase (decrease) in taxes:                            |   |                   |    |   |   |   |   |   |
|    State income taxes, net of federal tax |   |                   |    |   |   |   |   |   |
|       benefit              |   |                   | -       |   |   |   | - |   |
| Increase in BOLI cash value                              |   |                   | (24.9   | ) |   |   | (0.5 | ) |
| Additional ESOP compensation                             |   |                   | (46.0   | ) |   |   | (0.3 | ) |
| Goodwill impairment                                      |   |                   | -       |   |   |   | 28.5 |   |
| Other, net                                               |   |                   | (4.6    | ) |   |   | (1.3 | ) |
|                                                     |   |                   |    |   |   |   |   |   |
| Effective tax rate                                       |   |                   | (109.46 | %) |   |   | (7.60 | %) |

----

|                                                            |   | June 30, |   |
|-----------------------------------------------------------------|--------|----------|--------|
|                                                            |   | 2011     |   |   | 2010 |   |
| Deferred tax liabilities:                                       |   |     |   |   |   |   |
|    FHLB stock dividends                          |   | $        | (960   | ) |   | $ | (959 | ) |
|    Depreciation                                  |   |     | (94    | ) |   |   | (181 | ) |
|    FHLB advance restructuring penalty            |   |     | (289   | ) |   |   | - |   |
|    Allowance for "available-for-sale" securities |   |     | (285   | ) |   |   | (749 | ) |
|                                                            |   |     | (1,628 | ) |   |   | (1,889 | ) |
|                                                            |   |     |   |   |   |   |   |   |
| Deferred tax assets:                                            |   |     |   |   |   |   |   |   |
|    Fair value adjustment from acquisition,net    |   |     | 672    |   |   |   | 1,868 |   |
|    Subsequent writedowns on foreclosed property  |   |     | 168    |   |   |   | 73 |   |
|    Deferred interest income                      |   |     | 55     |   |   |   | 64 |   |
|    NOL carryforward                              |   |     | 5,848  |   |   |   | 3,867 |   |
|    Deferred loan fees, net                       |   |     | 138    |   |   |   | 171 |   |
|    MRP compensation                              |   |     | 21     |   |   |   | 21 |   |
|    Stock options                                 |   |     | 169    |   |   |   | 169 |   |
|    Deferred compensation                         |   |     | 50     |   |   |   | 47 |   |
|    Allowance for losses on loans                 |   |     | 3,472  |   |   |   | 4,089 |   |
|    Capital loss on Silverton Bank Stock          |   |     | 141    |   |   |   | 141 |   |
|    Charge-offs not recognized for tax purposes   |   |     | 44     |   |   |   | 44 |   |
|      Gross deferred tax asets          |   |     | 10,778 |   |   |   | 10,554 |   |
|      Valuation allowance               |   |     | (141   | ) |   |   | (141 | ) |
|      Deferred tax asset                |   |     | 10,637 |   |   |   | 10,413 |   |
|                                                            |   |     |   |   |   |   |   |   |
| Net deferred tax asset                                          |   | $        | 9,009  |   |   | $ | 8,524 |   |

----

----

|                                   |   | 2011   |    |   | 2010           |   |
|----------------------------------------|--------|--------|---------|--------|----------------|--------|
|                                   |   |   |    |   | Weighted       |   |   |   |   |   | Weighted |   |
|                                   |   |   |    |   | average        |   |   |   |   |   | average |   |
|                                   |   | Shares |    |   | exercise price |   |   | Shares |   |   | exercise price |   |
|                                   |   |   |    |   |           |   |   |   |   |   |   |   |
| Outstanding at beginning of period     |   |   | 551,490 |   |           | $      | 12.74 |   |   |   | 577,693 |   |   | $ | 12.78 |   |
| Granted during the twelve-month period |   |   | -       |   |           |   | - |   |   |   | - |   |   |   | - |   |
| Options exercised                      |   |   | -       |   |           |   |   |   |   |   | - |   |   |   |   |   |
| Options forfeited                      |   |   | (26,203 | )      |           |   | 13.69 |   |   |   | (26,203 | ) |   |   | 13.69 |   |
| Outstanding at end of year             |   |   | 525,287 |   |           | $      | 12.69 |   |   |   | 551,490 |   |   | $ | 12.74 |   |
| Options exercisable at end of year     |   |   | 525,287 |   |           | $      | 12.69 |   |   |   | 551,490 |   |   | $ | 12.74 |   |

|                     |   | Options Outstanding |    |   | Options Exercisable |   |
|--------------------------|--------|---------------------|---------|--------|---------------------|--------|
|                     |   |                |    |   | Weighted            |   |   |   |   |   |   |   |   |   |   |
|                     |   |                |    |   | Average             |   |   | Weighted |   |   |   |   |   |   |   |
|                     |   |                |    |   | Remaining           |   |   | Average |   |   |   |   |   | Weighted |   |
|                     |   | Number              |    |   | Contractual         |   |   | Exercise |   |   | Number |   |   | Average |   |
| Range of Exercise Prices |   | Outstanding         |    |   | Life                |   |   | Price |   |   | Exercisable |   |   | Exercise Price |   |
| $10.00 - $11.00          |   |                | 161,141 |   |                |   | 0.34 |   |   | $ | 10.47 |   |   |   | 161,141 |   |   | $ | 10.47 |   |
| $11.01 - $12.00          |   |                | -       |   |                |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| $12.01 - $13.00          |   |                | -       |   |                |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| $13.01 - $14.00          |   |                | 364,146 |   |                |   | 2.44 |   |   | $ | 13.68 |   |   |   | 364,146 |   |   | $ | 13.68 |   |

----

|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   | Minimum To Be Well |   |
|---------------------------------------------|--------|--------|--------|--------|--------|------------------------|--------|--------|------------------|-------------------|--------|--------|-------------------|--------|--------|--------------------|--------|
|                                        |   |   |   |   |   |                   |   |   | Minimum Required |              |   |   | Capitalized Under |   |
|                                        |   |   |   |   |   |                   |   |   | For Capital      |              |   |   | Prompt Corrective |   |
|                                        |   | Actual |   |   |   | Adequacy Purposes      |   |   |             | Action Provisions |   |
|                                        |   | Amount |   |   | Ratio  |                   |   |   | Amount           |              |   | Ratio  |              |   |   | Amount             |   |   | Ratio |   |
|                                        |   |   |   |   |   | (Dollars in thousands) |   |   |             |              |   |   |              |   |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |
| At June 30, 2011                            |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |
| Total Risk-Based Capital                    |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |
|    (To Risk Weighted Assets) |   | $      | 52,254 |   |   |                   | 13.00  | %      |             |              | $      | 32,168 | >              |   |   | 8.0                | %      |   |   | $ | 40,210 | > |   |   | 10.0 | % |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital                              |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|    (To Risk Weighted Assets) |   |   | 47,189 |   |   |                   | 11.74  | %      |             |              |   | 16,084 | >              |   |   | 4.0                | %      |   |   |   | 24,126 | > |   |   | 6.0 | % |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital                              |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|     (To Average Assets) |   |   | 47,189 |   |   |                   | 8.50   | %      |             |              |   | 22,208 | >              |   |   | 4.0                | %      |   |   |   | 27,760 | > |   |   | 5.0 | % |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
| At June 30, 2010                            |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Total Risk-Based Capital                    |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|    (To Risk Weighted Assets) |   | $      | 52,352 |   |   |                   | 11.61  | %      |             |              | $      | 36,073 | >              |   |   | 8.0                | %      |   |   | $ | 45,092 | > |   |   | 10.0 | % |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital                              |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|    (To Risk Weighted Assets) |   |   | 46,666 |   |   |                   | 10.35  | %      |             |              |   | 18,037 | >              |   |   | 4.0                | %      |   |   |   | 27,055 | > |   |   | 6.0 | % |
|                                        |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital                              |   |   |   |   |   |                   |   |   |             |              |   |   |              |   |   |               |   |   |   |   |   |   |   |   |   |   |
|     (To Average Assets) |   |   | 46,666 |   |   |                   | 7.29   | %      |             |              |   | 25,609 | >              |   |   | 4.0                | %      |   |   |   | 32,011 |  > |   |   | 5.0 | % |

----

|                                      |   | Bank     |   |
|-------------------------------------------|--------|----------|--------|
|                                      |   | June 30, |   |
|                                      |   | 2011     |   |   | 2010 |   |
|                                      |   |     |   |   |   |   |
| GAAP Capital                              |   | $        | 59,337 |   |   | $ | 59,649 |   |
| Adjustments:                              |   |     |   |   |   |   |   |   |
| Deferred Taxes                            |   |     | (9,711 | ) |   |   | (9,302 | ) |
| Unrealized gains                          |   |     | (459   | ) |   |   | (1,206 | ) |
| Disallowed goodwill and other intangibles |   |     | (1,978 | ) |   |   | (2,475 | ) |
|                                      |   |     |   |   |   |   |   |   |
| Core, Tangible and Tier 1 Capital         |   |     | 47,189 |   |   |   | 46,666 |   |
|                                      |   |     |   |   |   |   |   |   |
| Adjustments:                              |   |     |   |   |   |   |   |   |
| Allowance for losses                      |   |     | 5,065  |   |   |   | 5,686 |   |
|                                      |   |     |   |   |   |   |   |   |
| Total Capital                             |   | $        | 52,254 |   |   | $ | 52,352 |   |

----

----

| Balance Sheet                                                      |   | June 30, 2011 |   |
|--------------------------------------------------------------------|--------|---------------|--------|
|                                                               |   |          |   |
| Asset                                                              |   |          |   |
| Cash and due from banks                                            |   | $             | 392    |   |
| Investment securities classified as available for sale, net        |   |          | 2      |   |
| Investment in common stock of Jefferson Federal Bank               |   |          | 59,338 |   |
| Investment in common stock of State of Franklin Statutory Trust II |   |          | 1      |   |
| Loan receivable from ESOP                                          |   |          | 3,958  |   |
| Other assets                                                       |   |          | 97     |   |
| Total assets                                                       |   | $             | 63,788 |   |
|                                                               |   |          |   |   |
|                                                               |   |          |   |   |
| Liabilities and Stockholders' Equity                               |   |          |   |   |
| Accrued expenses                                                   |   | $             | 33     |   |
| Other liabilities                                                  |   |          | 702    |   |
| Subordinated debentures                                            |   |          | 7,134  |   |
| Stockholders' equity                                               |   |          | 55,919 |   |
| Total liabilities and stockholders' equity                         |   | $             | 63,788 |   |
|                                                               |   |          |   |   |
|                                                               |   |          |   |   |
|                                                               |   |          |   |   |
|                                                               |   | Year Ended    |   |
| Statement of Income                                                |   | June 30, 2011 |   |
|                                                               |   |          |   |   |
|                                                               |   |          |   |   |
| Dividends from Jefferson Federal Bank                              |   | $             | -      |   |
| Interest income                                                    |   |          | 167    |   |
| Other income                                                       |   |          | 6      |   |
|   Total income                                                |   |          | 173    |   |
|                                                               |   |          |   |   |
| Interest expense                                                   |   |          | 325    |   |
| Other operating expenses                                           |   |          | 140    |   |
|                                                               |   |          |   |   |
| Loss before income taxes and equity in undistributed               |   |          |   |   |
|    net income of Jefferson Federal Bank             |   |          | (292   | ) |
|                                                               |   |          |   |   |
| Income tax benefit                                                 |   |          | (86    | ) |
|                                                               |   |          | (206   | ) |
|                                                               |   |          |   |   |
| Equity in undistributed earnings of subsidiaries                   |   |          | 236    |   |
|                                                               |   |          |   |   |
| Net Income                                                         |   | $             | 30     |   |

----

|                                               |   | Year Ended    |   |
|----------------------------------------------------|--------|---------------|--------|
| Statement of Cash Flows                            |   | June 30, 2011 |   |
|                                               |   |          |   |
|                                               |   |          |   |
| Cash flows from operating activities:              |   |          |   |
| Net income                                         |   | $             | 30     |   |
| Adjustments to reconcile net income to net         |   |          |   |   |
|   cash provided by operating activities: |   |          |   |   |
|                                               |   |          |   |   |
| Equity in undistributed (earnings) of subsidiaries |   |          | (236   | ) |
| Deferred tax expense                               |   |          | (86    | ) |
| Amortization/accretion of intangibles              |   |          | 112    |   |
| Increase in other assets                           |   |          | 14     |   |
| Increase in other liabilities                      |   |          | (4     | ) |
|                                               |   |          |   |   |
| Net cash used in operations                        |   |          | (170   | ) |
|                                               |   |          |   |   |
| Cash flows from investing activities:              |   |          |   |   |
| Return of principal on loan to ESOP                |   |          | 413    |   |
|                                               |   |          |   |   |
| Net cash provided by investing activities          |   |          | 413    |   |
|                                               |   |          |   |   |
| Cash flows from financing activities:              |   |          |   |   |
| Purchase of treasury stock                         |   |          | (87    | ) |
|                                               |   |          |   |   |
| Net cash used in financial activities              |   |          | (87    | ) |
|                                               |   |          |   |   |
| Net increase in cash and cash equivalents          |   |          | 156    |   |
| Cash and cash equivalents at beginning of year     |   |          | 236    |   |
|                                               |   |          |   |   |
| Cash and cash equivalents at end of year           |   | $             | 392    |   |
|                                               |   |          |   |   |

----

|                                                                |   | Three Months Ended |   |
|---------------------------------------------------------------------|--------|--------------------|--------|
|                                                                |   | September 30       |   |   | December 31 |   |   | March 31 |   |   | June 30 |   |
|                                                                |   | 2010               |   |   | 2010 |   |   | 2011 |   |   | 2011 |   |
|                                                                |   |               |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                     |   | $                  | 6,856  |   |   | $ | 6,630 |   |   | $ | 6,565 |   |   | $ | 6,283 |   |
| Interest expense                                                    |   |               | 2,508  |   |   |   | 2,198 |   |   |   | 1,818 |   |   |   | 1,506 |   |
|    Net interest income                               |   |               | 4,348  |   |   |   | 4,432 |   |   |   | 4,747 |   |   |   | 4,777 |   |
|                                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                           |   |               | -      |   |   |   | 950 |   |   |   | 1,400 |   |   |   | 2,097 |   |
|    Net interest income after                         |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        provision for loan losses |   |               | 4,348  |   |   |   | 3,482 |   |   |   | 3,347 |   |   |   | 2,680 |   |
| Noninterest income                                                  |   |               | 390    |   |   |   | 1,444 |   |   |   | 1,697 |   |   |   | (298 | ) |
| Noninterest expense                                                 |   |               | 4,353  |   |   |   | 4,387 |   |   |   | 4,635 |   |   |   | 4,036 |   |
|    Earnings before income taxes                      |   |               | 385    |   |   |   | 539 |   |   |   | 409 |   |   |   | (1,654 | ) |
| Income taxes                                                        |   |               | 126    |   |   |   | 180 |   |   |   | 149 |   |   |   | (806 | ) |
|    Net earnings                                      |   | $                  | 259    |   |   | $ | 359 |   |   | $ | 260 |   |   | $ | (848 | ) |
|                                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per share, basic                                           |   | $                  | 0.04   |   |   | $ | 0.06 |   |   | $ | 0.04 |   |   | $ | (0.14 | ) |
| Earnings per share, diluted                                         |   | $                  | 0.04   |   |   | $ | 0.06 |   |   | $ | 0.04 |   |   | $ | (0.14 | ) |

|                                                                |   | Three Months Ended |   |
|---------------------------------------------------------------------|--------|--------------------|--------|
|                                                                |   | September 30       |   |   | December 31 |   |   | March 31 |   |   | June 30 |   |
|                                                                |   | 2009               |   |   | 2009 |   |   | 2010 |   |   | 2010 |   |
|                                                                |   |               |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                     |   | $                  | 7,945  |   |   | $ | 7,555 |   |   | $ | 7,430 |   |   | $ | 7,113 |   |
| Interest expense                                                    |   |               | 3,250  |   |   |   | 3,105 |   |   |   | 2,716 |   |   |   | 2,522 |   |
|    Net interest income                               |   |               | 4,695  |   |   |   | 4,450 |   |   |   | 4,714 |   |   |   | 4,591 |   |
|                                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                           |   |               | 300    |   |   |   | 1,509 |   |   |   | 1,500 |   |   |   | 5,500 |   |
|    Net interest income after                         |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        provision for loan losses |   |               | 4,395  |   |   |   | 2,941 |   |   |   | 3,214 |   |   |   | (909 | ) |
| Noninterest income                                                  |   |               | 898    |   |   |   | 804 |   |   |   | 1,747 |   |   |   | 585 |   |
| Noninterest expense                                                 |   |               | 4,601  |   |   |   | 4,345 |   |   |   | 4,671 |   |   |   | 26,040 |   |
|    Earnings (loss) before income taxes               |   |               | 692    |   |   |   | (600 | ) |   |   | 290 |   |   |   | (26,364 | ) |
| Income taxes                                                        |   |               | 208    |   |   |   | (185 | ) |   |   | (33 | ) |   |   | (1,972 | ) |
|    Net earnings (loss)                               |   | $                  | 484    |   |   | $ | (415 | ) |   | $ | 323 |   |   | $ | (24,392 | ) |
|                                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share, basic                                    |   | $                  | 0.08   |   |   | $ | (0.07 | ) |   | $ | 0.05 |   |   | $ | (3.91 | ) |
| Earnings (loss) per share, diluted                                  |   | $                  | 0.08   |   |   | $ | (0.07 | ) |   | $ | 0.05 |   |   | $ | (3.91 | ) |

----

----

|                          | June 30, 2011                                                                                |
|-------------------------------|----------------------------------------------------------------------------------------------|
|                          |                                                                                         |   |   |   |   |   | Total Carrying |   |   |
|                          |                                                                                         |   |   |   |   |   | Amount in |   | Assets/Liabilities |
|                          | Fair Value Measurement Using                                                                 |   | Statement of |   | Measured at |
| Description                   | Level 1                                                                                      |   | Level 2 |   | Level 3 |   | Financial Condition |   | Fair Value |
|                          |                                                                                         |   |   |   |   |   |   |   |   |
| Securities available for sale |  $              - |   |  $    71,532 |   |  $      3,248 |   |  $                     74,780 |   |  $             74,780 |

----

|                           |   |          |   |   |       |   |   | Other         |   |   |   |   |   | Transfers  |   |   |          |   |
|--------------------------------|--------|---------------|--------|--------|------------|--------|--------|---------------|--------|--------|--------|--------|--------|------------|--------|--------|---------------|--------|
|                           |   | Balance at    |   |   |       |   |   | Comprehensive |   |   |   |   |   | In or Out  |   |   | Balance at    |   |
|                           |   | June 30, 2010 |   |   | Net Income |   |   | Income        |   |   | Sales  |   |   | of Level 3 |   |   | June 30, 2011 |   |
|                           |   |          |   |   |       |   |   |          |   |   |   |   |   |       |   |   |          |   |
| Securities, available for sale |   | $             | 7,004  |   |       | $      | (835   | )             |   | $      | 781    |   |   | $          | (4,470 | )      |          | $      | 768 |   |   | $ | 3,248 |   |

|           |   | June 30, 2011                                                                                |
|----------------|--------|----------------------------------------------------------------------------------------------|
|           |   | Fair Value Measurement Using                                                                 |   | Total Gains |
| Description    |   | Level 1                                                                                      |   | Level 2 |   | Level 3 |   | (Losses) |
|           |   |                                                                                         |   |   |   |   |   |   |
| Impaired Loans |   |  $              - |   |  $    25,515 |   |  $              - |   |  $     (4,020) |

----

|                                                          |   | June 30, 2011 |    |   | June 30, 2010 |   |
|---------------------------------------------------------------|--------|---------------|---------|--------|---------------|--------|
|                                                          |   | Carrying      |    |   | Fair          |   |   | Carrying |   |   | Fair |   |
|                                                          |   | Amount        |    |   | Value         |   |   | Amount |   |   | Value |   |
|                                                          |   |          |    |   |          |   |   |   |   |   |   |   |
| Financial assets:                                             |   |          |    |   |          |   |   |   |   |   |   |   |
|    Cash and due from banks and                 |   |          | 40,548  |   |          |   | 40,548 |   |   |   | 69,303 |   |   |   | 69,303 |   |
|       interest-earning deposits |   |          |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
|       with banks                |   |          |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
|    Available-for-sale securities               |   |          | 75,008  |   |          |   | 75,008 |   |   |   | 62,989 |   |   |   | 62,989 |   |
|    Federal Home Loan Bank stock                |   |          | 4,735   |   |          |   | 4,735 |   |   |   | 4,735 |   |   |   | 4,735 |   |
|    Loans receivable                            |   |          | 387,130 |   |          |   | 388,330 |   |   |   | 444,474 |   |   |   | 445,655 |   |
|    Accrued interest receivable                 |   |          | 1,832   |   |          |   | 1,832 |   |   |   | 2,000 |   |   |   | 2,000 |   |
|    Loans held-for-sale                         |   |          | -       |   |          |   | - |   |   |   | 1,153 |   |   |   | 1,153 |   |
|                                                          |   |          |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities:                                        |   |          |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits                                    |   |          | 454,262 |   |          |   | 446,115 |   |   |   | 479,183 |   |   |   | 471,821 |   |
|    Borrowed funds                              |   |          | 38,887  |   |          |   | 40,718 |   |   |   | 85,778 |   |   |   | 87,972 |   |
|                                                          |   |          |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Off-balance sheet assets (liabilities):                       |   |          |    |   |          |   |   |   |   |   |   |   |   |   |   |   |
|    Commitments to extend credit                |   |          |    |   |          |   | 11,932 |   |   |   |   |   |   |   | 18,023 |   |
|    Unused letters of credit                    |   |          |    |   |          |   | 4,809 |   |   |   |   |   |   |   | 5,320 |   |
|    Unused lines of credit                      |   |          |    |   |          |   | 34,362 |   |   |   |   |   |   |   | 36,192 |   |

|                                         |   | 2011   |   |   | 2010   |   |
|----------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                         |   |   |   |   |   |   |
| Beginning balance of core deposit intangible |   | $      | 2,475  |   |   | $      | 3,028 |   |
| Less:  Accumulated amortization    |   |   | (497   | )      |   |   | (553 | ) |
|                                         |   |   |   |   |   |   |   |   |
| Core deposit intangible, net                 |   |   | 1,978  |   |   |   | 2,475 |   |
| Beginning balance of goodwill                |   |   | -      |   |   |   | 21,783 |   |
| Less:  Goodwill impairment         |   |   | -      |   |   |   | (21,783 | ) |
|                                         |   |   |   |   |   |   |   |   |
| Total intangibles                            |   | $      | 1,978  |   |   | $      | 2,475 |   |

----

| Year Ending June 30, |   |   |   |
|----------------------|--------|--------|--------|
|                 |   |   |   |
| 2012                 |   | $      | 441    |   |
| 2013                 |   |   | 386    |   |
| 2014                 |   |   | 330    |   |
| 2015                 |   |   | 275    |   |
| 2016                 |   |   | 219    |   |

----