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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-QSB





(Mark One)

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

For the quarterly period ended December 31, 2007

OR



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

For the transition period from  to

Commission file number: 0-51014





BV FINANCIAL,
INC.

(Exact name of small business issuer as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Federal                                                        |  | 14-1920944                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

7114 North Point Road, Baltimore, Maryland 21219

(Address of principal executive offices)

(410) 477-5000

(Issuers telephone number)

Not Applicable

(Former name, former address and former fiscal year, if
changed since last report)





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

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

As of February 12, 2008, there were 2,434,462 shares of the registrants common stock outstanding.









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##### Table of Contents

BV FINANCIAL, INC.

Form 10-QSB

Table of Contents



|                              |  |                                                                                                                                  |  |   
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | --
|                              |  | Page No.                                                                                                                        
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                 
|                              |  |                                                                                                                                 
|Item 1.                       |  | Financial Statements                                                                                                             |  |   
|                              |  |                                                                                                                                 
|                              |  | Consolidated Statements of Financial Condition at December 31, 2007 and June 30, 2007 (unaudited)                                |  | 1 
|                              |  |                                                                                                                                 
|                              |  | Consolidated Statements of Operations for the three and six months ended December 31, 2007 and 2006 (unaudited)                  |  | 2 
|                              |  |                                                                                                                                 
|                              |  | Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended December 31, 2007 and 2006 (unaudited) |  | 3 
|                              |  |                                                                                                                                 
|                              |  | Consolidated Statements of Cash Flows for the six months ended December 31, 2007 and 2006 (unaudited)                            |  | 4 
|                              |  |                                                                                                                                 
|                              |  | Notes to Unaudited Consolidated Financial Statements                                                                             |  | 5 
|                              |  |                                                                                                                                 
|Item 2.                       |  | Managements Discussion and Analysis                                                                                             |  | 8 
|                              |  |                                                                                                                                 
|Item 3.                       |  | Controls and Procedures                                                                                                          |  | 18
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                                 
|                              |  |                                                                                                                                 
|Item 1.                       |  | Legal Proceedings                                                                                                                |  | 18
|                              |  |                                                                                                                                 
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                      |  | 18
|                              |  |                                                                                                                                 
|Item 3.                       |  | Defaults upon Senior Securities                                                                                                  |  | 19
|                              |  |                                                                                                                                 
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                              |  | 19
|                              |  |                                                                                                                                 
|Item 5.                       |  | Other Information                                                                                                                |  | 19
|                              |  |                                                                                                                                 
|Item 6.                       |  | Exhibits                                                                                                                         |  | 19
|                              |  |                                                                                                                                 
|Signatures                    |  |                                                                                                                                  |  |   



i



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

(Unaudited)



|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | -------- | - | ------- | -
|                                                                                                                                                                                        |  | December 31,           |         |   | June 30, |  
|                                                                                                                                                                                        |  | 2007                   |         |   | 2007     |  
|                                                                                                                                                                                        |  | (Dollars in thousands, |        
|                                                                                                                                                                                        |  | except per share data) |        
|ASSETS                                                                                                                                                                                  |  |                        |         |   |          |   |         |  
|Cash                                                                                                                                                                                    |  | $                      | 1,715   |   |          | $ | 1,547   |  
|Interest bearing deposits in other banks                                                                                                                                                |  |                        | 786     |   |          |   | 199     |  
|Federal funds sold                                                                                                                                                                      |  |                        | 18,472  |   |          |   | 3,810   |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|Cash and Cash Equivalents                                                                                                                                                               |  |                        | 20,973  |   |          |   | 5,556   |  
|Securities available for sale                                                                                                                                                           |  |                        | 3,366   |   |          |   | 3,300   |  
|Securities held to maturity                                                                                                                                                             |  |                        | 8,312   |   |          |   | 2,656   |  
|Loans receivable, net of allowance for loan losses                                                                                                                                      |  |                        |         |   |          |   |         |  
|December 31, 2007 - $440; June 30, 2007 - $ 402                                                                                                                                         |  |                        | 119,658 |   |          |   | 116,051 |  
|Goodwill                                                                                                                                                                                |  |                        | 3,940   |   |          |   |        |  
|Premises and equipment, net                                                                                                                                                             |  |                        | 2,401   |   |          |   | 2,404   |  
|Federal Home Loan Bank of Atlanta stock, at cost                                                                                                                                        |  |                        | 600     |   |          |   | 848     |  
|Investment in life insurance                                                                                                                                                            |  |                        | 2,013   |   |          |   | 1,978   |  
|Accrued interest receivable                                                                                                                                                             |  |                        | 625     |   |          |   | 538     |  
|Other assets                                                                                                                                                                            |  |                        | 1,216   |   |          |   | 679     |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|Total Assets                                                                                                                                                                            |  | $                      | 163,104 |   |          | $ | 134,010 |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                    |  |                        |         |   |          |   |         |  
|LIABILITIES                                                                                                                                                                             |  |                        |         |   |          |   |         |  
|Non-interest bearing deposits                                                                                                                                                           |  | $                      | 6,074   |   |          | $ | 3,571   |  
|Interest bearing deposits                                                                                                                                                               |  |                        | 129,731 |   |          |   | 94,921  |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|Total Deposits                                                                                                                                                                          |  |                        | 135,805 |   |          |   | 98,492  |  
|                                                                                                                                                                                        |  |                       
|Federal Home Loan Bank advances                                                                                                                                                         |  |                        | 8,000   |   |          |   | 13,500  |  
|Official checks                                                                                                                                                                         |  |                        | 398     |   |          |   | 1,779   |  
|Advance payments by borrowers for taxes and insurance                                                                                                                                   |  |                        | 422     |   |          |   | 1,139   |  
|Other liabilities                                                                                                                                                                       |  |                        | 1,038   |   |          |   | 882     |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|Total Liabilities                                                                                                                                                                       |  | $                      | 145,663 |   |          | $ | 115,792 |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                           |  |                        |         |   |          |   |         |  
|                                                                                                                                                                                        |  |                       
|STOCKHOLDERS EQUITY                                                                                                                                                                    |  |                        |         |   |          |   |         |  
|Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding                                                                                               |  |                        |        |   |          |   |        |  
|Common stock, $0.01 par value; 9,000,000 shares authorized; 2,645,000 shares issued; 2,455,362 and 2,541,859 shares outstanding as of
December 31, 2007 and June 30, 2007, respectively |  |                        | 26      |   |          |   | 26      |  
|Paid-in capital                                                                                                                                                                         |  |                        | 11,112  |   |          |   | 11,083  |  
|Unearned employee stock ownership plan shares                                                                                                                                           |  |                        | (790    | ) |          |   | (825    | )
|Treasury stock, at cost; 189,638 shares and 103,141 shares as of December 31, 2007 and June 30, 2007, respectively                                                                      |  |                        | (1,596  | ) |          |   | (878    | )
|Retained earnings                                                                                                                                                                       |  |                        | 8,734   |   |          |   | 8,866   |  
|Accumulated other comprehensive loss                                                                                                                                                    |  |                        | (45     | ) |          |   | (54     | )
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|Total Stockholders Equity                                                                                                                                                              |  |                        | 17,441  |   |          |   | 18,218  |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  
|Total Liabilities and Stockholders Equity                                                                                                                                              |  | $                      | 163,104 |   |          | $ | 134,010 |  
|                                                                                                                                                                                        |  |                        |         |   |          |   |         |  

See Notes to Unaudited Consolidated Financial Statements.



1



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##### Table of Contents

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Operations

(Unaudited)



|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|--------------------------------------------------- |  | --------------------------------------------- | ----- | - | ---------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | -----
|                                                    |  | Three Months EndedDecember 31,                |       |   | Six Months EndedDecember 31,
|                                                    |  | 2007                                          |       |   | 2006                         |   |       | 2007 |  |   | 2006 
|                                                    |  | (Dollars in thousands, except per share data)
|INTEREST INCOME                                     |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Loans, including fees                               |  | $                                             | 1,890 |   |                              | $ | 1,766 |      |  | $ | 3,770 |   |  | $ | 3,521
|Investment securities                               |  |                                               | 101   |   |                              |   | 94    |      |  |   | 187   |   |  |   | 186  
|Other                                               |  |                                               | 303   |   |                              |   | 62    |      |  |   | 526   |   |  |   | 99   
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Total Interest Income                               |  |                                               | 2,294 |   |                              |   | 1,922 |      |  |   | 4,483 |   |  |   | 3,806
|INTEREST EXPENSE                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Deposits                                            |  |                                               | 1,302 |   |                              |   | 925   |      |  |   | 2,381 |   |  |   | 1,813
|Federal Home Loan Bank Advances                     |  |                                               | 95    |   |                              |   | 178   |      |  |   | 289   |   |  |   | 341  
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Total Interest Expense                              |  |                                               | 1,397 |   |                              |   | 1,103 |      |  |   | 2,670 |   |  |   | 2,154
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Net Interest Income                                 |  |                                               | 897   |   |                              |   | 819   |      |  |   | 1,813 |   |  |   | 1,652
|PROVISION FOR LOAN LOSSES                           |  |                                               | 24    |   |                              |   |      |      |  |   | 44    |   |  |   | 5    
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Net Interest Income after Provision for Loan Losses |  |                                               | 873   |   |                              |   | 819   |      |  |   | 1,769 |   |  |   | 1,647
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|NON-INTEREST INCOME                                 |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Service fees on deposits                            |  |                                               | 33    |   |                              |   | 27    |      |  |   | 64    |   |  |   | 57   
|Service fees on loans                               |  |                                               | 6     |   |                              |   | 7     |      |  |   | 14    |   |  |   | 14   
|Income from investment in life insurance            |  |                                               | 18    |   |                              |   | 19    |      |  |   | 35    |   |  |   | 49   
|Other income                                        |  |                                               | 23    |   |                              |   | 11    |      |  |   | 39    |   |  |   | 23   
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Total Non-Interest Income                           |  |                                               | 80    |   |                              |   | 64    |      |  |   | 152   |   |  |   | 143  
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|NON-INTEREST EXPENSES                               |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Compensation and related expenses                   |  |                                               | 580   |   |                              |   | 511   |      |  |   | 1,116 |   |  |   | 1,028
|Occupancy                                           |  |                                               | 62    |   |                              |   | 42    |      |  |   | 117   |   |  |   | 87   
|Data processing                                     |  |                                               | 99    |   |                              |   | 82    |      |  |   | 174   |   |  |   | 148  
|Telephone and postage                               |  |                                               | 16    |   |                              |   | 15    |      |  |   | 33    |   |  |   | 32   
|Advertising                                         |  |                                               | 32    |   |                              |   | 26    |      |  |   | 62    |   |  |   | 50   
|Professional fees                                   |  |                                               | 56    |   |                              |   | 65    |      |  |   | 117   |   |  |   | 132  
|Equipment                                           |  |                                               | 45    |   |                              |   | 36    |      |  |   | 87    |   |  |   | 69   
|Other                                               |  |                                               | 140   |   |                              |   | 132   |      |  |   | 253   |   |  |   | 219  
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Total Non-Interest Expenses                         |  |                                               | 1,030 |   |                              |   | 909   |      |  |   | 1,959 |   |  |   | 1,765
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|(Loss) Income before Income Taxes                   |  |                                               | (77   | ) |                              |   | (26   | )    |  |   | (38   | ) |  |   | 25   
|PROVISION FOR INCOME TAXES (BENEFIT)                |  |                                               | (28   | ) |                              |   | (11   | )    |  |   | (11   | ) |  |   | 10   
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|Net (Loss) Income                                   |  | $                                             | (49   | ) |                              | $ | (15   | )    |  | $ | (27   | ) |  | $ | 15   
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|BASIC AND DILUTED EARNINGS (LOSS) PER
SHARE         |  | $                                             | (0.02 | ) |                              | $ | (0.01 | )    |  | $ | (0.01 | ) |  | $ | 0.01 
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      
|DIVIDENDS DECLARED PER SHARE                        |  | $                                             | 0.05  |   |                              | $ | 0.05  |      |  | $ | 0.10  |   |  | $ | 0.05 
|                                                    |  |                                               |       |   |                              |   |       |      |  |   |       |   |  |   |      

See Notes to Unaudited Consolidated Financial Statements.



2



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##### Table of Contents

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)



|                                                                                                  |  |                                   |     |   |                                 |   |     |      |  |   |      |   |  |   |   
|------------------------------------------------------------------------------------------------- |  | --------------------------------- | --- | - | ------------------------------- | - | --- | ---- |  | - | ---- | - |  | - | --
|                                                                                                  |  | For Three MonthsEndedDecember 31, |     |   | For Six MonthsEndedDecember 31,
|                                                                                                  |  | 2007                              |     |   | 2006                            |   |     | 2007 |  |   | 2006
|                                                                                                  |  | (In thousands)                   
|Net Income (Loss)                                                                                 |  | $                                 | (49 | ) |                                 | $ | (15 | )    |  | $ | (27  | ) |  | $ | 15
|Unrealized net holding gains on available-for-sale securities, net of taxes of $3, $1, $4 and $14 |  |                                   | 9   |   |                                 |   | 7   |      |  |   | 9    |   |  |   | 23
|                                                                                                  |  |                                   |     |   |                                 |   |     |      |  |   |      |   |  |   |   
|Comprehensive Income (Loss)                                                                       |  | $                                 | (40 | ) |                                 | $ | (8  | )    |  | $ | (18  | ) |  | $ | 38
|                                                                                                  |  |                                   |     |   |                                 |   |     |      |  |   |      |   |  |   |   

See Notes to Unaudited Consolidated Financial Statements.



3



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BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                                   |  |                              |         |   |      |   |        |  
|-------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------ | -
|                                                                                                   |  | Six months endedDecember 31, |        
|                                                                                                   |  | 2007                         |         |   | 2006 |  
|                                                                                                   |  | (In thousands)               |        
|CASH FLOWS FROM OPERATING ACTIVITIES                                                               |  |                              |         |   |      |   |        |  
|Net income (Loss)                                                                                  |  | $                            | (27     | ) |      | $ | 15     |  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                              |         |   |      |   |        |  
|Net amortization of discounts and premiums                                                         |  |                              |        |   |      |   | 5      |  
|Provision for loan losses                                                                          |  |                              | 44      |   |      |   | 5      |  
|Amortization of deferred loan fees/costs                                                           |  |                              | 35      |   |      |   | 42     |  
|Provision for depreciation                                                                         |  |                              | 82      |   |      |   | 37     |  
|Increase in cash surrender value of life insurance                                                 |  |                              | (35     | ) |      |   | (49    | )
|Stock-based compensation expense                                                                   |  |                              | 101     |   |      |   | 132    |  
|Amortization of core deposit intangible                                                            |  |                              | 49      |   |      |   |       |  
|Increase in other assets                                                                           |  |                              | (687    | ) |      |   | (151   | )
|Increase in other liabilities                                                                      |  |                              | 156     |   |      |   | 72     |  
|                                                                                                   |  |                              |         |   |      |   |        |  
|Net Cash (Used in) Provided by Operating Activities                                                |  |                              | (282    | ) |      |   | 108    |  
|                                                                                                   |  |                              |         |   |      |   |        |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                               |  |                              |         |   |      |   |        |  
|Purchases of securities available for sale                                                         |  |                              | (76     | ) |      |   | (68    | )
|Purchases of securities held to maturity                                                           |  |                              | (6,205  | ) |      |   |       |  
|Proceeds from maturity of securities held to maturity                                              |  |                              | 500     |   |      |   |       |  
|Principal collected on mortgage backed securities                                                  |  |                              | 74      |   |      |   | 78     |  
|Net (increase) decrease in loans                                                                   |  |                              | (1,414  | ) |      |   | 193    |  
|Purchase of loans                                                                                  |  |                              | (2,272  | ) |      |   | (181   | )
|Purchase of premises and equipment                                                                 |  |                              | (79     | ) |      |   | (18    | )
|Purchase of Federal Home Loan Bank stock                                                           |  |                              |        |   |      |   | (45    | )
|Proceeds from the sale of Federal Home Loan Bank stock                                             |  |                              | 248     |   |      |   |       |  
|Net cash received in branch acquisition                                                            |  |                              | 43,002  |   |      |   |       |  
|                                                                                                   |  |                              |         |   |      |   |        |  
|Net Cash Used in (Provided by) Investing Activities                                                |  |                              | 33,778  |   |      |   | (41    | )
|                                                                                                   |  |                              |         |   |      |   |        |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                               |  |                              |         |   |      |   |        |  
|Decrease in official checks                                                                        |  |                              | (1,381  | ) |      |   | (2,907 | )
|Net (decrease) increase in deposits                                                                |  |                              | (9,621  | ) |      |   | 1,610  |  
|Decrease in advance payments by borrowers for taxes and insurance                                  |  |                              | (717    | ) |      |   | (695   | )
|Advances from Federal Home Loan Bank                                                               |  |                              | 7,500   |   |      |   | 2,000  |  
|Repayment of advances from Federal Home Loan Bank                                                  |  |                              | (13,000 | ) |      |   | (2,500 | )
|Cash dividend paid                                                                                 |  |                              | (105    | ) |      |   | (59    | )
|Treasury stock repurchased                                                                         |  |                              | (755    | ) |      |   | (183   | )
|                                                                                                   |  |                              |         |   |      |   |        |  
|Net Cash Used In Financing Activities                                                              |  |                              | (18,079 | ) |      |   | (2,734 | )
|                                                                                                   |  |                              |         |   |      |   |        |  
|Net Increase (Decrease) in Cash and Cash Equivalents                                               |  |                              | 15,417  |   |      |   | (2,667 | )
|CASH AND CASH EQUIVALENTS -
BEGINNING                                                              |  |                              | 5,556   |   |      |   | 9,079  |  
|                                                                                                   |  |                              |         |   |      |   |        |  
|CASH AND CASH EQUIVALENTS -
ENDING                                                                 |  | $                            | 20,973  |   |      | $ | 6,412  |  
|                                                                                                   |  |                              |         |   |      |   |        |  
|SUPPLEMENTARY CASH FLOWS INFORMATION                                                               |  |                              |         |   |      |   |        |  
|Interest paid                                                                                      |  | $                            | 2,380   |   |      | $ | 2,146  |  
|                                                                                                   |  |                              |         |   |      |   |        |  
|Income taxes paid                                                                                  |  | $                            | 63      |   |      | $ | 130    |  
|                                                                                                   |  |                              |         |   |      |   |        |  
|Net loans transferred to foreclosed real estate/repossessed assets                                 |  | $                            |        |   |      | $ | 7      |  
|                                                                                                   |  |                              |         |   |      |   |        |  

See Notes to Unaudited Consolidated Financial Statements.



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BV FINANCIAL, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

December 31, 2007



|(1) | Basis of Presentation
|--- | ---------------------

The accompanying unaudited
consolidated financial statements have been prepared in accordance with instructions for Form 10-QSB and, therefore, do not include all disclosures necessary for a complete presentation of the financial statements in conformity with accounting
principles generally accepted in the United States of America. However, all adjustments that are, in the opinion of management, necessary for the fair presentation of the interim financial statements have been included. Such adjustments were of a
normal recurring nature. The results of operations for the period ended December 31, 2007 are not necessarily indicative of the results that may be expected for the entire year. These unaudited consolidated financial statements should be read
in conjunction with BV Financial Inc.s (the Company) Annual Report on Form 10-KSB for the year ended June 30, 2007.

Principles
of Consolidation

The consolidated financial statements at December 31, 2007 and June 30, 2007 and for the three and six
months ended December 31, 2007 include the accounts of the Company, Bay-Vanguard Federal Savings Bank (the Bank) and its wholly-owned subsidiary, Housing Recovery Corporation. All intercompany balances and transactions have been
eliminated in consolidation.



|(2) | Earnings (Loss) Per Share
|--- | -------------------------

Basic earnings (loss)
per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the appropriate period. Unearned shares under the Bay-Vanguard Federal Savings Bank Employee Stock Ownership Plan (ESOP)
are not included in outstanding shares. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding as adjusted for the dilutive effect of stock options and unvested stock awards based on the
treasury stock method. The dilutive effect of stock options and unvested stock awards are not considered in the computation of diluted loss per share as such instruments would be anti-dilutive. Information related to the calculation of
earnings or loss per share is summarized for the three and six months ended December 31, 2007 and 2006 as follows:



|                                           |  |                                        |       |   |                               |   |       |       |  |   |         |   |  |       |       |   |         |   |       |       |  |         |       |   |  |   |       |  |   |      
|------------------------------------------ |  | -------------------------------------- | ----- | - | ----------------------------- | - | ----- | ----- |  | - | ------- | - |  | ----- | ----- | - | ------- | - | ----- | ----- |  | ------- | ----- | - |  | - | ----- |  | - | -----
|                                           |  | Three Months Ended December 31,        |       |   | Six Months Ended December 31,
|                                           |  | 2007                                   |       |   | 2006                          |   |       | 2007  |  |   | 2006   
|                                           |  | Basic                                  |       |   | Diluted                       |   |       | Basic |  |   | Diluted |   |  | Basic |       |   | Diluted |   |       | Basic |  | Diluted
|                                           |  | In thousands, except per share amounts
|Net income (loss)                          |  | $                                      | (49   | ) |                               | $ | (49   | )     |  | $ | (15     | ) |  | $     | (15   | ) |         | $ | (27   | )     |  | $       | (27   | ) |  | $ | 15    |  | $ | 15   
|                                           |  |                                        |       |   |                               |   |       |       |  |   |         |   |  |       |       |   |         |   |       |       |  |         |       |   |  |   |       |  |   |      
|Weighted average common shares Outstanding |  |                                        | 2,391 |   |                               |   | 2,391 |       |  |   | 2,507   |   |  |       | 2,507 |   |         |   | 2,397 |       |  |         | 2,397 |   |  |   | 2,510 |  |   | 2,510
|                                           |  |                                        |       |   |                               |   |       |      
|Dilutive securities:                       |  |                                        |       |   |                               |   |       |       |  |   |         |   |  |       |       |   |         |   |       |       |  |         |       |   |  |   |       |  |   |      
|Restricted stock                           |  |                                        |      |   |                               |   |      |       |  |   |        |   |  |       |      |   |         |   |      |       |  |         |      |   |  |   |      |  |   | 1    
|Stock options                              |  |                                        |      |   |                               |   |      |       |  |   |        |   |  |       |      |   |         |   |      |       |  |         |      |   |  |   |      |  |   | 2    
|                                           |  |                                        |       |   |                               |   |       |       |  |   |         |   |  |       |       |   |         |   |       |       |  |         |       |   |  |   |       |  |   |      
|Adjusted weighted average shares           |  |                                        | 2,391 |   |                               |   | 2,391 |       |  |   | 2,507   |   |  |       | 2,507 |   |         |   | 2,397 |       |  |         | 2,397 |   |  |   | 2,510 |  |   | 2,513
|                                           |  |                                        |       |   |                               |   |       |       |  |   |         |   |  |       |       |   |         |   |       |       |  |         |       |   |  |   |       |  |   |      
|Per share amount                           |  | $                                      | (0.02 | ) |                               | $ | (0.02 | )     |  | $ | (0.01   | ) |  | $     | (0.01 | ) |         | $ | (0.01 | )     |  | $       | (0.01 | ) |  | $ | 0.01  |  | $ | 0 .01
|                                           |  |                                        |       |   |                               |   |       |       |  |   |         |   |  |       |       |   |         |   |       |       |  |         |       |   |  |   |       |  |   |      



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|(3) | Branch Acquisition
|--- | ------------------

On August 24, 2007, the
Bank acquired a branch office located at 8070 Ritchie Highway in Pasadena, Maryland from Greater Atlantic Bank. The Bank paid a premium of $4.4 million on the net liabilities, primarily on the deposits assumed at closing. The premium primarily
constitutes goodwill, which will not be amortized and a Core Deposit Intangible of $506,000 which will be amortized over seven years. At the time of closing, the branch office had $51.5 million in deposits.



|(4) | Equity Incentive Plan
|--- | ---------------------

On November 8, 2005,
stockholders approved the BV Financial, Inc. 2005 Equity Compensation Plan (the Plan) that enabled the Company to grant stock options and restricted stock awards to employees and directors. On November 14, 2005, the Company
granted stock options covering 111,456 shares of common stock to certain employees and directors of the Company. The options were granted at the then fair market value of the stock of $8.94, vest over five years and expire ten years from the
date of grant. In addition, the Company awarded 44,577 shares of restricted stock to certain employees and directors. The restricted stock vests over five years.

The Compensation cost charged against income for the Plan was $34,000 and $73,000 for the three and six months ended December 31, 2007, respectively, and $46,000 and $101,000 for the three and six months ended
December 31, 2006, respectively. The total income tax benefit recognized was $11,000 and $21,000 for the three and six months ended December 31, 2007, respectively, and $12,000 and $23,000 for the three and six months ended
December 31, 2006, respectively.

At December 31, 2007, there was $310,000 of total unrecognized compensation cost related to
unvested share-based compensation arrangements granted under the Plan. The cost is expected to be recognized over a weighted average period of 2.8 years.



|(5) | Recent Accounting Pronouncements
|--- | --------------------------------

In July 2006, the
FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation
requires that companies recognize in their financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective
for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company has analyzed FIN 48 and determined that upon adoption, it
had no impact on our financial statements.

In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements,
which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. FASB Statement No. 157 applies to other accounting pronouncements that require or permit fair value
measurements. The new guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years. The company has evaluated FASB Statement No. 157 and
determined that it will not have a significant impact on our consolidated financial position, results of operations and cash flows.

In
December 2007, the FASB issued proposed FASB Staff Position (FSP) 157-b, Effective Date of FASB Statement No. 157, that would permit a one-year deferral in applying the measurement provisions of Statement No. 157 to
non-financial assets and non-financial liabilities (non-financial items)



6



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##### Table of Contents

that are not recognized or disclosed at fair value in an entitys financial statements on a recurring basis (at least annually). Therefore, if the
change in fair value of a non-financial item is not required to be recognized or disclosed in the financial statements on an annual basis or more frequently, the effective date of application of Statement 157 to that item is deferred until fiscal
years beginning after November 15, 2008 and interim periods within those fiscal years. This deferral does not apply, however, to an entity that applies Statement 157 in interim or annual financial statements before proposed FSP 157-b is
finalized. The Company is currently evaluating the impact, if any, that the adoption of FSP 157-b will have on the Companys operating income or net earnings.

In September 2006, the FASBs Emerging Issues Task Force (EITF) issued EITF Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split Dollar Life
Insurance Arrangements (EITF 06-4). EITF 06-4 requires the recognition of a liability related to the postretirement benefits covered by an endorsement split-dollar life insurance arrangement. The consensus highlights that the
employer (who is also the policyholder) has a liability for the benefit it is providing to its employee. As such, if the policyholder has agreed to maintain the insurance policy in force for the employees benefit during his or her retirement,
then the liability recognized during the employees active service period should be based on the future cost of insurance to be incurred during the employees retirement. Alternatively, if the policy holder has agreed to provide the
employee with a death benefit, then the liability for the future death benefit should be recognized by following the guidance in SFAS No. 106 or Accounting Principles Board (APB) Opinion No. 12, as appropriate. For transition, an entity
can choose to apply the guidance using either of the following approaches: (a) a change in accounting principle through retrospective application to all periods presented or (b) a change in accounting principle through a cumulative-effect
adjustment to the balance in retained earnings at the beginning of the year of adoption. Implementation is required in fiscal years beginning after December 15, 2007, with early adoption permitted. The Company is evaluating the impact that the
adoption of EITF 06-4 will have on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value.
Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for the Company July 1, 2008. The Company is evaluating the
impact that the adoption of SFAS No. 159 will have on its consolidated financial statements.

FASB Statement No. 141(R)
Business Combinations was issued in December 2007. This Statement establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of
the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a companys fiscal year beginning after December 15, 2008. The Company believes
that this new pronouncement will have an immaterial impact on the Companys financial statements in future periods.

FASB Statement
No. 160 Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No. 51 was issued in December 2007. This Statement establishes accounting and reporting standards for the noncontrolling interest in
a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective as of the beginning of a companys fiscal year beginning after December 15, 2008. The Company believes that this new pronouncement will have an
immaterial impact on the Companys financial statements in future periods.



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Staff Accounting Bulletin No. 110 (SAB 110) amends and replaces Question 6 of Section
D.2 of Topic 14,Share-Based Payment, of the Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff regarding the use of the simplified method in developing an estimate
of expected term of plain vanilla share options and allows usage of the simplified method for share option grants prior to December 31, 2007. SAB 110 allows public companies which do not have historically sufficient
experience to provide a reasonable estimate to continue use of the simplified method for estimating the expected term of plain vanilla share option grants after December 31, 2007. SAB 110 is effective January 1,
2008.

In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 06-11, Accounting for
Income Tax Benefits of Dividends on Share-Based Payment Awards (EITF 06-11). EITF 06-11 states that an entity should recognize a realized tax benefit associated with dividends on nonvested equity shares, nonvested equity share
units and outstanding equity share options charged to retained earnings as an increase in additional paid in capital. The amount recognized in additional paid in capital should be included in the pool of excess tax benefits available to absorb
potential future tax deficiencies on share-based payment awards. EITF 06-11 should be applied prospectively to income tax benefits of dividends on equity-classified share-based payment awards that are declared in fiscal years beginning after
December 15, 2007. The Company expects that EITF 06-11 will not have an impact on its consolidated financial statements.



|Item 2. | Managements Discussion and Analysis
|------- | ------------------------------------

Managements discussion and analysis of the financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of BV Financial, Inc. (the Company or
BV Financial). The information contained in this section should be read in conjunction with the Unaudited Consolidated Financial Statements and footnotes appearing in Part I, Item 1 of this document.

Forward-Looking Statements

This quarterly report
contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of Bay-Vanguard, M.H.C., BV Financial and Bay-Vanguard Federal Savings Bank (the Bank or Bay-Vanguard
Federal). These forward-looking statements are generally identified by use of the words believe, expect, intend, anticipate, estimate, project or similar expressions.

Bay-Vanguard, M.H.C., BV Financial and Bay-Vanguard Federals ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors that could have a material adverse effect on the operations of BV Financial and its subsidiary include, but are not limited to, changes in interest rates, national and regional economic conditions,
legislative and regulatory changes, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan
products, deposit flows, competition, demand for financial services in BV Financial and Bay-Vanguards market area, changes in real estate market values in BV Financial and Bay-Vanguards market area, and changes in relevant accounting
principles and guidelines.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance
should not be placed on such statements. Except as required by applicable law or regulation, BV Financial does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any
forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.



8



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##### Table of Contents

General

BV Financial was organized as a federally chartered corporation at the direction of Bay-Vanguard Federal in January 2005 to become the mid-tier stock holding company for Bay-Vanguard Federal upon the completion of its reorganization into
the mutual holding company form of organization. Pursuant to the Plan of Reorganization, the Bank converted to stock form with all of its stock owned by BV Financial and organized Bay-Vanguard, M.H.C. as a federally chartered mutual holding company
that owns a majority of the common stock of BV Financial.

Bay-Vanguard Federal is headquartered in Baltimore, Maryland and is a
community-oriented financial institution offering traditional financial services to its local communities. The Bank is engaged primarily in the business of attracting deposits from the general public using such funds to originate one-to four-family
real estate, mobile home, construction, multi-family and commercial real estate and consumer loans.

The Banks savings accounts are
insured up to the applicable legal limits by the Federal Deposit Insurance Corporation. Bay-Vanguard Federal is a member of the Federal Home Loan Bank System.

Critical Accounting Policies

The Company considers accounting policies involving significant judgments and assumptions by
management that have, or could have, a material impact on the carrying value of certain assets and liabilities or income and expense to be critical accounting policies. The Company considers the allowance for loan losses to be a critical accounting
policy.

Allowance for Loan Losses. The allowance for loan losses is the amount estimated by management as necessary to cover
losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses, which is charged to income. Determining the amount of the allowance for loan losses necessarily involves a high
degree of judgment. Among the material estimates required to establish the allowance are: loss exposure at default; the amount and timing of future cash flows on impacted loans; the value of collateral; and the determination of loss factors to be
applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. However, historically, the Companys estimates and assumptions have provided results that did not differ materially from actual
results.

Management reviews the level of the allowance on a quarterly basis, at a minimum, and establishes the provision for loan losses
based on an evaluation of the portfolio, past loss experience, economic conditions and business conditions affecting its primary market area, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio,
the duration of the current business cycle, bank regulatory examination results and other factors related to the collectibility of the loan portfolio. Although the Company believes that it uses the best information available to establish the
allowance for loan losses, future additions to the allowance may be necessary if certain future events occur that cause actual results to differ from the assumptions used in making the evaluation. For example, a downturn in the local economy could
cause increases in nonperforming loans. Additionally, a decline in real estate values could cause some of the Companys loans to become inadequately collateralized. In either case, this may require the Company to increase its provisions for
loan losses, which would negatively impact earnings. Although the Company has seen some signs of a slowing of the local economy and declines in real estate values in the Companys market area, neither of these factors



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##### Table of Contents

are sufficient enough to require additions to the loan loss allowance at this time. Further, the Office of Thrift Supervision, as an integral part of its
examination process, periodically reviews the Companys allowance for loan losses. Such agency may require the Company to recognize adjustments to the allowance based on its judgments about information available to it at the time of its
examination. An increase to the allowance required to be made by the Office of Thrift Supervision would negatively impact the Companys earnings. Additionally, a large loss could deplete the allowance and require increased provisions to
replenish the allowance, which would negatively affect earnings.

Comparison of Financial Condition at December 31, 2007 and June 30, 2007

Total assets increased $29.0 million, or 21.7%, to $163.1 million at December 31, 2007 from $134.0 million at June 30, 2007
primarily due to the proceeds from the acquisition of a branch office from Greater Atlantic Bank on August 24, 2007. At the time of the closing, the branch office had $51.5 million in deposits. Federal Home Loan Bank stock decreased $248,000,
or 29.3%, to $600,000 at December 31, 2007 as the Company sold stock as borrowings were paid off.

Loans receivable increased $3.6
million, or 3.1%, to $119.7 million at December 31, 2007 from $116.1 million at June 30, 2007 primarily due to a $1.2 million increase in non-residential loans, a $1.6 million increase in construction loans and a $925,000 increase in
residential loans.Non-residential loans increased due to the Banks focus on shorter-term higher-rate loan products. Residential loans increased due to competitive rates and marketing efforts in our local communities.

Securities increased $5.7 million, or 214.9% to $11.7 million at December 31, 2007 from $6.0 million at June 30, 2007 primarily due to the
purchase of a $2.0 million note from the Federal Home Loan Bank with a five-year duration and $4.2 million in mortgage-backed securities with medium-to long-term durations with excess funds from the branch acquisition, offset by the maturity of a
$500,000 investment security.

Cash and cash equivalents increased $15.4 million, or 277.5%, to $21.0 million at December 31, 2007
from $5.6 million at June 30, 2007, due to the receipt of funds in connection with the branch acquisition.

Deposits increased $37.3
million, or 37.9%, to $135.8 million at December 31, 2007, primarily due to the branch acquisition. The increase in deposits was offset primarily by a $7.3 million reduction in certificates of deposit and a $1.5 million reduction in money
market accounts as the Bank continued its efforts to reduce the cost of funds by reducing the rates paid on deposits. Federal Home Loan Bank advances decreased $5.5 million, or 40.7%, to $8.0 million at December 31, 2007 as funds from the
branch acquisition were used to pay down borrowings.

Total equity decreased $777,000, or 4.3%, to $17.4 million at December 31, 2007
primarily as a result of the repurchase of 98,423 shares of BV Financial stock at an average price of $7.67, the payment of dividends and by the net loss for the period.

Results of Operations for the Three Months Ended December 31, 2007 and 2006

General. Net loss increased $34,000, or 226.7%, to a loss of $49,000 for the three months ended December 31, 2007 compared to the same period in the prior year due primarily to a $121,000 increase in non-interest
expenses, offset by a $78,000 increase in net interest income.



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##### Table of Contents

Net Interest Income.The following table summarizes interest income and expense for the
three months ended December 31, 2007 and 2006.



|                                |  |                                |       |      |   |          |  |       |  
|------------------------------- |  | ------------------------------ | ----- | ---- | - | -------- |  | ----- | -
|                                |  | Three MonthsEnded December 31, |      
|                                |  | 2007                           |       | 2006 |   | % change | 
|                                |  | (Dollars in thousands)         |      
|Interest Income:                |  |                                |       |      |   |          |  |       |  
|Loans, including fees           |  | $                              | 1,890 |      | $ | 1,766    |  | 7.0   | %
|Investment securities           |  |                                | 101   |      |   | 94       |  | 7.5   |  
|Other                           |  |                                | 303   |      |   | 62       |  | 388.7 |  
|                                |  |                                |       |      |   |          |  |       |  
|Total interest income           |  |                                | 2,294 |      |   | 1,922    |  | 19.4  |  
|                                |  |                                |      
|Interest Expense:               |  |                                |       |      |   |          |  |       |  
|Deposits                        |  |                                | 1,302 |      |   | 925      |  | 40.8  |  
|Federal Home Loan Bank advances |  |                                | 95    |      |   | 178      |  | (46.6 | )
|                                |  |                                |       |      |   |          |  |       |  
|Total interest expense          |  |                                | 1,397 |      |   | 1,103    |  | 26.7  |  
|                                |  |                                |       |      |   |          |  |       |  
|Net interest income             |  | $                              | 897   |      | $ | 819      |  | 9.5   | %
|                                |  |                                |       |      |   |          |  |       |  

The following table summarizes average balances and average yield and costs for the three months
ended December 31, 2007 and 2006.



|                                |  |                                 |         |            |      |   |                |   |            |  |      |  
|------------------------------- |  | ------------------------------- | ------- | ---------- | ---- | - | -------------- | - | ---------- |  | ---- | -
|                                |  | Three months ended December 31, |        
|                                |  | 2007                            |         |            | 2006 |  
|                                |  | AverageBalance                  |         | Yield/Cost |      |   | AverageBalance |   | Yield/Cost | 
|                                |  | (Dollars in thousands)          |        
|Loans                           |  | $                               | 119,665 |            | 6.32 | % |                | $ | 113,534    |  | 6.22 | %
|Investment securities           |  |                                 | 7,364   |            | 5.49 |   |                |   | 7,492      |  | 5.02 |  
|Interest-earning deposits       |  |                                 | 812     |            | 4.93 |   |                |   | 4,680      |  | 4.19 |  
|Federal funds sold              |  |                                 | 25,848  |            | 4.53 |   |                |   | 1,152      |  | 4.51 |  
|Interest-bearing deposits       |  |                                 | 132,561 |            | 3.93 |   |                |   | 98,313     |  | 3.76 |  
|Federal Home Loan Bank advances |  |                                 | 8,000   |            | 4.75 |   |                |   | 15,435     |  | 4.61 |  

Net interest income for the three months ended December 31, 2007 increased $78,000, or 9.5%,
compared to the same period last year, as a result of an increase in federal funds sold due to the proceeds from the branch acquisition and a decrease in interest expense due to a decrease in Federal Home Loan Bank advances offset by a larger
average balance of interest-bearing deposits. Total interest income increased as a result of the growth in average interest-earning assets to $153.7 million from $126.9 million. The growth in average interest-earning assets was mainly due to an
increase in federal funds sold, attributable to the assumption of deposits in the branch acquisition. Total interest expense increased as a result of an increase in the average balance of deposits to $132.6 million, compared to average deposits of
$98.3 million in 2006. Interest expense on deposits increased due to a higher average balance of deposits and an increase in the average interest rate paid on deposits, which increased to 3.93% from 3.76%, due to a higher interest rate environment.



11



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##### Table of Contents

Provision for Loan Losses. The following table summarizes the activity in the allowance for
loan losses for the three months ended December 31, 2007 and 2006.



|                                 |  |                                |     |   |      |   |    
|-------------------------------- |  | ------------------------------ | --- | - | ---- | - | ---
|                                 |  | Three MonthsEnded December 31,
|                                 |  | 2007                           |     |   | 2006
|                                 |  | (In thousands)                
|Allowance at beginning of period |  | $                              | 422 |   |      | $ | 402
|Provision for loan losses        |  |                                | 24  |   |      |   |   
|Charge-offs                      |  |                                | (6  | ) |      |   |   
|                                 |  |                                |     |   |      |   |    
|Allowance at end of period       |  | $                              | 440 |   |      | $ | 402
|                                 |  |                                |     |   |      |   |    

The allowance for loan losses increased $18,000 to $440,000 for the three months ended
December 31, 2007. Provision expense was $24,000 for the three months ended December 31, 2007 versus $0 for the same period in 2006. The increase in the provision for loan losses reflects an increase in the loan portfolio and nonperforming
assets in 2007.

The following table provides information with respect to our nonperforming assets at the dates indicated. The Company did
not have any accruing loans past due 90 days or more or foreclosed real estate at the dates presented.



|                                            |  |                        |      |   |                 |   |      |          |  |         |  
|------------------------------------------- |  | ---------------------- | ---- | - | --------------- | - | ---- | -------- |  | ------- | -
|                                            |  | At December 31,2007    |      |   | At June 30,2007 |   |      | % change | 
|                                            |  | (Dollars in thousands) |     
|Nonaccruing loans:                          |  |                        |      |   |                 |   |      |          |  |         |  
|One- to four-family                         |  | $                      | 51   |   |                 | $ | 149  |          |  | 65.8    | %
|Other Consumer                              |  |                        | 135  |   |                 |   | 3    |          |  | 4,400.0 |  
|                                            |  |                        |      |   |                 |   |      |          |  |         |  
|Total                                       |  |                        | 186  |   |                 |   | 152  |          |  | 22.4    |  
|                                            |  |                        |      |   |                 |   |      |          |  |         |  
|Troubled debt restructuring (1)             |  |                        | 64   |   |                 |   | 64   |          |  |        |  
|Other repossessed assets                    |  |                        | 20   |   |                 |   | 44   |          |  | (54.6   | )
|                                            |  |                        |      |   |                 |   |      |          |  |         |  
|Total non-performing assets                 |  | $                      | 270  |   |                 | $ | 260  |          |  | 3.9     |  
|                                            |  |                        |      |   |                 |   |      |          |  |         |  
|Total non-performing loans to total loans   |  |                        | 0.15 | % |                 |   | 0.13 | %        |  | 15.4    |  
|Total non-performing loans to total assets  |  |                        | 0.11 |   |                 |   | 0.11 |          |  |        |  
|Total non-performing assets to total assets |  |                        | 0.17 |   |                 |   | 0.15 |          |  | 13.3    |  



|(1) | As defined in Statement of Financial Accounting Standards No. 15.
|--- | -----------------------------------------------------------------

Nonperforming assets increased $10,000, or 3.9%, primarily due to an increase in nonaccruing mobile home loans (four loans totaling $135,000), offset by a decrease in nonaccruing one- to four-family loans and other
repossessed assets.



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##### Table of Contents

Noninterest Income. The following table summarizes noninterest income for the three months
ended December 31, 2007 and 2006.



|                                                |  |                                |    |      |   |          |  |       |  
|----------------------------------------------- |  | ------------------------------ | -- | ---- | - | -------- |  | ----- | -
|                                                |  | Three MonthsEnded December 31, |    |      |  
|                                                |  | 2007                           |    | 2006 |   | % change | 
|                                                |  | (Dollars in thousands)         |    |      |  
|Service fees on deposits                        |  | $                              | 33 |      | $ | 27       |  | 22.2  | %
|Service fees on loans                           |  |                                | 6  |      |   | 7        |  | (14.3 | )
|Income from investment in life insurance policy |  |                                | 18 |      |   | 19       |  | (5.3  | )
|Other income                                    |  |                                | 23 |      |   | 11       |  | 109.1 |  
|                                                |  |                                |    |      |   |          |  |       |  
|                                                |  | $                              | 80 |      | $ | 64       |  | 25.0  |  
|                                                |  |                                |    |      |   |          |  |       |  

The increase in other income of $12,000, or 109.1%, was due primarily to an increase in
miscellaneous fees.

Noninterest Expenses. The following table summarizes noninterest expenses for the three months ended
December 31, 2007 and 2006.



|                                  |  |                                |       |   |      |   |       |          |  |       |  
|--------------------------------- |  | ------------------------------ | ----- | - | ---- | - | ----- | -------- |  | ----- | -
|                                  |  | Three MonthsEnded December 31, |       |   |      |  
|                                  |  | 2007                           |       |   | 2006 |   |       | % change | 
|                                  |  | (Dollars in thousands)         |       |   |      |  
|Compensation and related expenses |  | $                              | 580   |   |      | $ | 511   |          |  | 13.5  | %
|Occupancy                         |  |                                | 62    |   |      |   | 42    |          |  | 47.6  |  
|Data processing                   |  |                                | 99    |   |      |   | 82    |          |  | 20.7  |  
|Telephone and postage             |  |                                | 16    |   |      |   | 15    |          |  | 6.7   |  
|Advertising                       |  |                                | 32    |   |      |   | 26    |          |  | 23.1  |  
|Professional fees                 |  |                                | 56    |   |      |   | 65    |          |  | (13.9 | )
|Equipment expense                 |  |                                | 45    |   |      |   | 36    |          |  | 25.0  |  
|Other                             |  |                                | 140   |   |      |   | 132   |          |  | 6.1   |  
|                                  |  |                                |       |   |      |   |       |          |  |       |  
|Total                             |  | $                              | 1,030 |   |      | $ | 909   |          |  | 13.3  |  
|                                  |  |                                |       |   |      |   |       |          |  |       |  
|Efficiency ratio (1)              |  |                                | 105.4 | % |      |   | 102.9 | %        |  |       |  



|(1) | Computed as noninterest expenses divided by the sum of net interest income and other income.
|--- | --------------------------------------------------------------------------------------------

Total non-interest expenses increased $121,000, or 13.3%. Compensation and related expenses increased $69,000, or 13.5%, primarily as a result of
increases in personnel related to the new branch. Occupancy expenses increased primarily due to increase in rental expense related to the new branch. Other expenses increased $20,000, or 16.7%, as a result of increases in office supplies,
information technology expenses, bank charges and insurance mainly as a result of the acquisition of a new branch. Advertising increased as the Company increased its loan product promotions. Data processing costs increased due to additional charges
related to the branch acquisition.

Income Taxes. Provision for income taxes (benefit) increased $17,000, or 154.6%, from a
benefit of $11,000 for the three months ended December 31, 2006 to $28,000 for the three months ended December 31, 2007. The effective tax rate was 42.3% for the three months ended December 31, 2006 compared to 36.4% for the three
months ended December 31, 2007. The increase in the effective tax rate was due to the change in the Maryland income tax rate and the impact this had on deferred tax balances.



13



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##### Table of Contents

Results of Operations for the Six Months Ended December 31, 2007 and 2006

General. Net income decreased $42,000, or 280.0%, to a loss of $27,000 for the six months ended December 31, 2007 compared to net
income of $15,000 for the same period in the prior year due primarily to an increase in provision for loan losses and non-interest expenses which were partially offset by an increase in net interest income.

Net Interest Income.The following table summarizes changes in interest income and expense for the six months ended December 31, 2007
and 2006.



|                                |  |                              |       |      |   |          |  |       |  
|------------------------------- |  | ---------------------------- | ----- | ---- | - | -------- |  | ----- | -
|                                |  | Six MonthsEnded December 31, |       |      |  
|                                |  | 2007                         |       | 2006 |   | % change | 
|                                |  | (Dollars in thousands)       |       |      |  
|Interest Income:                |  |                              |       |      |   |          |  |       |  
|Loans, including fees           |  | $                            | 3,770 |      | $ | 3,521    |  | 7.1   | %
|Investment securities           |  |                              | 187   |      |   | 186      |  | 0.5   |  
|Other                           |  |                              | 526   |      |   | 99       |  | 431.3 |  
|                                |  |                              |       |      |   |          |  |       |  
|Total interest income           |  |                              | 4,483 |      |   | 3,806    |  | 17.8  |  
|                                |  |                              |      
|Interest Expense:               |  |                              |       |      |   |          |  |       |  
|Deposits                        |  |                              | 2,381 |      |   | 1,813    |  | 31.3  |  
|Federal Home Loan Bank advances |  |                              | 289   |      |   | 341      |  | (15.3 | )
|                                |  |                              |       |      |   |          |  |       |  
|Total interest expense          |  |                              | 2,670 |      |   | 2,154    |  | 24.0  |  
|                                |  |                              |       |      |   |          |  |       |  
|Net interest income             |  | $                            | 1,813 |      | $ | 1,652    |  | 9.8   |  
|                                |  |                              |       |      |   |          |  |       |  

The following table summarizes average balances and average yield and costs for the six months
ended December 31, 2007 and 2006.



|                                |  |                               |         |            |      |   |                |   |            |  |      |  
|------------------------------- |  | ----------------------------- | ------- | ---------- | ---- | - | -------------- | - | ---------- |  | ---- | -
|                                |  | Six Months Ended December 31, |        
|                                |  | 2007                          |         |            | 2006 |  
|                                |  | AverageBalance                |         | Yield/Cost |      |   | AverageBalance |   | Yield/Cost | 
|                                |  | (Dollars in thousands)        |        
|Loans                           |  | $                             | 119,138 |            | 6.33 | % |                | $ | 113,435    |  | 6.21 | %
|Investment securities           |  |                               | 6,597   |            | 5.70 |   |                |   | 7,482      |  | 4.97 |  
|Interest-earning deposits       |  |                               | 567     |            | 4.94 |   |                |   | 3,627      |  | 3.97 |  
|Federal funds                   |  |                               | 20,621  |            | 4.96 |   |                |   | 1,152      |  | 4.65 |  
|Deposits                        |  |                               | 121,323 |            | 3.93 |   |                |   | 97,638     |  | 3.71 |  
|Federal Home Loan Bank advances |  |                               | 11,595  |            | 4.98 |   |                |   | 14,946     |  | 4.56 |  

Net interest income for the six months ended December 31, 2007 increased $161,000, or 9.8%,
compared to the same period last year, as a result of an increase in federal funds sold due to the proceeds from the branch acquisition and a decrease in interest expense for Federal Home Loan Bank advances, offset by a larger average balance of
interest-bearing deposits. Total interest income increased as a result of the growth in average interest-earning assets to $146.9 million from $125.7 million. The growth in average interest-earning assets was mainly due to an increase in federal
funds sold, attributable to the assumption of deposits in the branch acquisition, and, to a lesser extent, loan growth.



14



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##### Table of Contents

Total interest expense increased as a result of an increase in the average balance of deposits to $121.3
million, compared to average deposits of $112.6 million in 2006. Interest expense on deposits increased due to a higher average balance of deposits and an increase in the average interest rate paid on deposits, which increased to 3.93% from 3.71% in
2006, due to a higher interest rate environment.

Provision for Loan Losses. The following table summarizes the
activity in the allowance for loan losses for the six months ended December 31, 2007 and 2006.



|                                 |  |                              |     |   |      |   |     |  
|-------------------------------- |  | ---------------------------- | --- | - | ---- | - | --- | -
|                                 |  | Six MonthsEnded December 31, |    
|                                 |  | 2007                         |     |   | 2006 |  
|                                 |  | (In thousands)               |    
|Allowance at beginning of period |  | $                            | 402 |   |      | $ | 410 |  
|Provision for loan losses        |  |                              | 44  |   |      |   | 5   |  
|Charge-offs                      |  |                              | (6  | ) |      |   | (13 | )
|                                 |  |                              |     |   |      |   |     |  
|Allowance at end of period       |  | $                            | 440 |   |      | $ | 402 |  
|                                 |  |                              |     |   |      |   |     |  

The provision for loan losses increased $39,000 to $44,000 for the six months ended
December 31, 2007. The increase in the provision for loan losses reflects an increase in the loan portfolio and non-performing assets.

Noninterest Income. The following table summarizes noninterest income for the six months ended December 31, 2007 and 2006.



|                                         |  |                              |     |      |   |          |  |       |  
|---------------------------------------- |  | ---------------------------- | --- | ---- | - | -------- |  | ----- | -
|                                         |  | Six MonthsEnded December 31, |     |      |  
|                                         |  | 2007                         |     | 2006 |   | % change | 
|                                         |  | (Dollars in thousands)       |     |      |  
|Service fees on deposits                 |  | $                            | 64  |      | $ | 57       |  | 21.3  | %
|Service fees on loans                    |  |                              | 14  |      |   | 14       |  |      |  
|Income from investment in life insurance |  |                              | 35  |      |   | 49       |  | (28.6 | )
|Other income                             |  |                              | 39  |      |   | 23       |  | 69.6  |  
|                                         |  |                              |     |      |   |          |  |       |  
|                                         |  | $                            | 152 |      | $ | 143      |  | 6.3   |  
|                                         |  |                              |     |      |   |          |  |       |  

The increase in noninterest income was due to increases in service fees on deposits and other
income offset by decreases in income from life insurance. The increase in other income of $16,000 or 69.6%, was due primarily to an increase in ATM charges and debit card fees. Income from investment in life insurance decreased $14,000 or 28.6% due
to a decrease in the return on the life insurance policies and a decrease in the cost of funds spread.



15



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##### Table of Contents

Noninterest Expenses. The following table summarizes noninterest expenses for the six
months ended December 31, 2007 and 2006.



|                                  |  |                              |       |   |      |   |       |          |  |       |  
|--------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ----- | -------- |  | ----- | -
|                                  |  | Six MonthsEnded December 31, |       |   |      |  
|                                  |  | 2007                         |       |   | 2006 |   |       | % change | 
|                                  |  | (Dollars in thousands)       |       |   |      |  
|Compensation and related expenses |  | $                            | 1,116 |   |      | $ | 1,028 |          |  | 8.6   | %
|Occupancy                         |  |                              | 117   |   |      |   | 87    |          |  | 34.5  |  
|Data processing                   |  |                              | 174   |   |      |   | 148   |          |  | 17.6  |  
|Telephone and postage             |  |                              | 33    |   |      |   | 32    |          |  | 3.1   |  
|Advertising                       |  |                              | 62    |   |      |   | 50    |          |  | 24.0  |  
|Professional fees                 |  |                              | 117   |   |      |   | 132   |          |  | (11.4 | )
|Equipment expense                 |  |                              | 87    |   |      |   | 69    |          |  | 26.1  |  
|Other                             |  |                              | 253   |   |      |   | 219   |          |  | 15.5  |  
|                                  |  |                              |       |   |      |   |       |          |  |       |  
|Total                             |  | $                            | 1,959 |   |      | $ | 1,765 |          |  | 11.0  |  
|                                  |  |                              |       |   |      |   |       |          |  |       |  
|Efficiency ratio (1)              |  |                              | 99.7  | % |      |   | 98.3  | %        |  |       |  



|(1) | Computed as noninterest expenses divided by the sum of net interest income and other income.
|--- | --------------------------------------------------------------------------------------------

Total non-interest expenses increased $194,000, or 11.0%, primarily as a result of increases in compensation and related expenses, occupancy, and data
processing expenses. Occupancy expenses increased primarily due to increase in rental expense related to the new branch. Other expenses increased $58,000, or 28.6%, as a result of increases in office supplies, information technology expenses, bank
charges and insurance mainly as a result of the acquisition of a new branch. Advertising increased as the Company increased its loan product promotions. Data processing costs increased due to additional charges related to the branch acquisition.

Income Taxes. Provision for income taxes (benefit) decreased $21,000, or 210.0%, from $10,000 for the six months ended
December 31, 2006 to a benefit of $11,000 for the six months ended December 31, 2007. The effective tax rate was 28.9% for the six months ended December 31, 2007 compared to 40.0 % for the six months ended December 31, 2006.
The decrease in the effective tax rate was due to the change in the Maryland income tax rate and the impact this had on deferred tax balances.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term
nature. Our primary sources of funds consist of deposit inflows, loan repayments and maturities and sales of investment securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows
and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

We regularly adjust our
investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities and (4) the objectives of our asset/liability
management program. Excess liquid assets are invested generally in interest-earning deposits and short- and intermediate-term U.S. Treasury and federal agency securities.



16



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##### Table of Contents

Our most liquid assets are cash and cash equivalents and interest-bearing deposits. The levels of these
assets depend on our operating, financing, lending and investing activities during any given period. At December 31, 2007, cash and cash equivalents totaled $20.1 million, including federal funds sold of $18.5 million. Securities classified as
available-for-sale, which provide additional sources of liquidity, totaled $3.4 million at December 31, 2007. In addition, at December 31, 2007, we had the ability to borrow a total of approximately $40.9 million from the Federal Home Loan
Bank of Atlanta. On that date, we had advances outstanding of $8.0 million.

At December 31, 2007, we had $1.8 million in loan
commitments outstanding, which included $832,000 in commitments to purchase mobile home loans. In addition to commitments to originate loans, we had $2.5 million in unused lines of credit and $3.3 million of construction loans in process.
Certificates of deposit due within one year of December 31, 2007 totaled $41.1 million, or 30.3% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of
deposit and lines of credit. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before December 31, 2007. We believe,
however, based on past experience, that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in
deposit accounts. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. We generally manage the pricing of our deposits to be competitive and to
increase core deposits. Occasionally, we offer promotional rates on certain deposit products to attract deposits.



|                                                       |  |                              |        |   |      |   |      
|------------------------------------------------------ |  | ---------------------------- | ------ | - | ---- | - | -----
|                                                       |  | Six monthsended December 31,
|                                                       |  | 2007                         |        |   | 2006
|                                                       |  | (In thousands)              
|Investing activities:                                  |  |                              |        |   |      |   |      
|Loan originations                                      |  | $                            | 9,771  |   |      | $ | 2,563
|Loan and participation purchases                       |  |                              | 2,272  |   |      |   | 181  
|Securities purchases                                   |  |                              | 6,281  |   |      |   | 68   
|                                                       |  |                             
|Financing activities:                                  |  |                              |        |   |      |   |      
|Increase in deposits                                   |  |                              | 37,313 |   |      |   | 1,610
|(Decrease) Increase in Federal Home Loan Bank advances |  |                              | (5,500 | ) |      |   | 2,000

We are subject to various regulatory capital requirements administered by the Office of Thrift
Supervision, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad
risk categories. At December 31, 2007, we exceeded all of our regulatory capital requirements. We are considered well capitalized under regulatory guidelines.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of
financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such
transactions are used primarily to manage customers requests for funding and take the form of loan commitments and lines of credit.



17



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##### Table of Contents

For the six months ended December 31, 2007 and the year ended June 30, 2007, we did not engage
in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.



|Item 3. | Controls and Procedures
|------- | -----------------------

The Companys
management, including the Companys principal executive officer and principal financial officer, have evaluated the effectiveness of the Companys disclosure controls and procedures, as such term is defined in Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by
this report, the Companys disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities
and Exchange Commission (the SEC) (1) is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and (2) is accumulated and communicated to the Companys
management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Part II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

BV Financial is not involved in
any pending legal proceedings. Bay-Vanguard Federal is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by
management to be immaterial to its financial condition and results of operations.



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

The following table sets forth information regarding the Companys repurchases of its common stock during the quarter ended December 31, 2007.



|                                      |  |                                  |  |                               |      |                                                                             |        |                                                                              |       
|------------------------------------- |  | -------------------------------- |  | ----------------------------- | ---- | --------------------------------------------------------------------------- | ------ | ---------------------------------------------------------------------------- | ------
|Period                                |  | (a)TotalNumber ofSharesPurchased |  | (b)AveragePrice Paidper Share |      | (c)Total Numberof SharesPurchasedas Part ofPubliclyAnnouncedPlansorPrograms |        | (d)MaximumNumber of Sharesthat May Yet BePurchased Underthe Plans
orPrograms
|October 1, 2007 to October 31, 2007   |  |                                 |  | $                             |     |                                                                             |       |                                                                              | 50,277
|                                      |  |                                  |  |                              
|November 1, 2007 to November 31, 2007 |  | 8,923                            |  |                               | 7.13 |                                                                             | 8,923  |                                                                              | 41,354
|                                      |  |                                  |  |                              
|December 1, 2007 to December 31, 2007 |  | 16,850                           |  |                               | 7.03 |                                                                             | 16,850 |                                                                              | 24,504
|                                      |  |                                  |  |                               |      |                                                                             |        |                                                                              |       
|Total                                 |  | 25,773                           |  | $                             | 7.06 |                                                                             | 25,773 |                                                                              |       
|                                      |  |                                  |  |                               |      |                                                                             |        |                                                                              |       



18



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##### Table of Contents

|Item 3. | Defaults upon Senior Securities
|------- | -------------------------------

Not Applicable.



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

The Annual Meeting of Stockholders of the Company was held on November 1, 2007. The results of the vote on the matters presented at the meeting are as follows:



| | 1. | The following individuals were elected as directors, each for a three-year term:
| | -- | --------------------------------------------------------------------------------



|                    |  |           |  |               
|------------------- |  | --------- |  | --------------
|                    |  | Votes for |  | Votes Withheld
|Robert R. Kern, Jr. |  | 2,351,402 |  | 150,378       
|Edmund T. Leonard   |  | 2,352,246 |  | 149,534       
|Frank W. Dingle     |  | 2,351,115 |  | 150,665       
|Carolyn M. Mroz     |  | 2,352,246 |  | 149,534       



| | 2. | The appointment of Beard Miller Company LLP as auditor for the Company for the fiscal year ending June 30, 2008 was ratified by stockholders by the following vote:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



|               |  |                 |  |               
|-------------- |  | --------------- |  | --------------
|For: 2,476,027 |  | Against: 23,031 |  | Abstain: 2,722



|Item 5. | Other Information
|------- | -----------------

None.



|Item 6. | Exhibits
|------- | --------



|     |  |                                                                  
|---- |  | -----------------------------------------------------------------
|3.1  |  | Charter of BV Financial, Inc. (1)                                
|3.2  |  | Bylaws of BV Financial, Inc. (1)                                 
|4.0  |  | Stock Certificate of BV Financial, Inc. (1)                      
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|32.0 |  | Section 1350 Certification                                       



|(1) | Incorporated by reference into this document from the Exhibits filed with the Securities and Exchange Commission on the Registration Statement on Form SB-2, and any amendments
thereto, Registration No. 333-119083.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19



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##### Table of Contents

SIGNATURES

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



|                         |  |                    |  |                                             
|------------------------ |  | ------------------ |  | --------------------------------------------
|                         |  | BV FINANCIAL, INC.
|                         |  |                   
|Dated: February 12, 2008 |  | By:                |  | /s/ Carolyn M. Mroz                         
|                         |  |                    |  | Carolyn M. Mroz                             
|                         |  |                    |  | President and Chief Executive Officer       
|                         |  |                    |  | (principal executive officer)               
|                         |  |                   
|Dated: February 12, 2008 |  | By:                |  | /s/ Edmund T. Leonard                       
|                         |  |                    |  | Edmund T. Leonard                           
|                         |  |                    |  | Chairman of the Board and                   
|                         |  |                    |  | Chief Financial Officer                     
|                         |  |                    |  | (principal financial and accounting officer)