##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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(Mark One)

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

For the quarterly period ended March 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



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BV FINANCIAL, INC.

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



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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)



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Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the 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 May 15, 2007, there were 2,563,959 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 March 31, 2007 and June 30, 2006 (unaudited)                          |  | 1       
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Income for the three and nine months ended March 31, 2007 and 2006 (unaudited)               |  | 2       
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2007 and 2006 (unaudited) |  | 3       
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Cash Flows for the nine months ended March 31, 2007 and 2006 (unaudited)                     |  | 4       
|                              |  |         | 
|                              |  |         |  | Notes to Unaudited Consolidated Financial Statements                                                                    |  | 5       
|                              |  |         | 
|                              |  | Item 2. |  | Managements Discussion and Analysis or Plan of Operation                                                               |  | 8       
|                              |  |         | 
|                              |  | Item 3. |  | Controls and Procedures                                                                                                 |  | 18      
|                              | 
|PART II. OTHER INFORMATION    |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Legal Proceedings                                                                                                       |  | 19      
|                              |  |         | 
|                              |  | Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                             |  | 19      
|                              |  |         | 
|                              |  | 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                                                                                                                |  | 20      
|                              | 
|SIGNATURES                    |  |        



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

(unaudited)



|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------- | ------- | - | ------------- | - | ------- | -
|                                                                                                                                                                                     |  | March 31, 2007                                |         |   | June 30, 2006 |  
|                                                                                                                                                                                     |  | (Dollars in thousands, except per share data) |        
|ASSETS                                                                                                                                                                               |  |                                               |         |   |               |   |         |  
|Cash                                                                                                                                                                                 |  | $                                             | 3,368   |   |               | $ | 1,359   |  
|Interest bearing deposits in other banks                                                                                                                                             |  |                                               | 1,743   |   |               |   | 6,363   |  
|Federal funds sold                                                                                                                                                                   |  |                                               | 2,047   |   |               |   | 1,357   |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|Cash and Cash Equivalents                                                                                                                                                            |  |                                               | 7,158   |   |               |   | 9,079   |  
|                                                                                                                                                                                     |  |                                              
|Securities available for sale                                                                                                                                                        |  |                                               | 3,303   |   |               |   | 4,228   |  
|Securities held to maturity                                                                                                                                                          |  |                                               | 3,167   |   |               |   | 3,233   |  
|Loans receivable, net of allowance for loan losses March 31, 2007 -$402; June 30, 2006 - $410                                                                                        |  |                                               | 113,861 |   |               |   | 113,026 |  
|Premises and equipment, net                                                                                                                                                          |  |                                               | 2,434   |   |               |   | 2,485   |  
|Federal Home Loan Bank of Atlanta stock, at cost                                                                                                                                     |  |                                               | 848     |   |               |   | 939     |  
|Investment in life insurance                                                                                                                                                         |  |                                               | 1,955   |   |               |   | 1,889   |  
|Accrued interest receivable                                                                                                                                                          |  |                                               | 505     |   |               |   | 494     |  
|Other assets                                                                                                                                                                         |  |                                               | 701     |   |               |   | 610     |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|Total Assets                                                                                                                                                                         |  | $                                             | 133,932 |   |               | $ | 135,983 |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|LIABILITIES AND STOCKHOLDERS
EQUITY                                                                                                                                                 |  |                                               |         |   |               |   |         |  
|LIABILITIES                                                                                                                                                                          |  |                                               |         |   |               |   |         |  
|Non-interest bearing deposits                                                                                                                                                        |  | $                                             | 3,768   |   |               | $ | 3,887   |  
|Interest bearing deposits                                                                                                                                                            |  |                                               | 96,359  |   |               |   | 93,208  |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|Total deposits                                                                                                                                                                       |  |                                               | 100,127 |   |               |   | 97,095  |  
|Federal Home Loan Bank advances                                                                                                                                                      |  |                                               | 13,500  |   |               |   | 14,500  |  
|Official checks                                                                                                                                                                      |  |                                               | 223     |   |               |   | 3,922   |  
|Advance payments by borrowers for taxes and insurance                                                                                                                                |  |                                               | 844     |   |               |   | 1,145   |  
|Other liabilities                                                                                                                                                                    |  |                                               | 880     |   |               |   | 741     |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|Total Liabilities                                                                                                                                                                    |  | $                                             | 115,574 |   |               | $ | 117,403 |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|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; 2,563,959 and 2,593,158 shares outstanding as of
March 31, 2007 and June 30, 2006, respectively |  |                                               | 26      |   |               |   | 26      |  
|Paid-in capital                                                                                                                                                                      |  |                                               | 11,067  |   |               |   | 10,994  |  
|Unearned employee stock ownership plan shares                                                                                                                                        |  |                                               | (842    | ) |               |   | (894    | )
|Treasury stock, at cost; 81,041 shares and 51,842 shares as of March 31, 2007 and June 30, 2006, respectively                                                                        |  |                                               | (709    | ) |               |   | (418    | )
|Retained earnings                                                                                                                                                                    |  |                                               | 8,856   |   |               |   | 8,938   |  
|Accumulated other comprehensive loss                                                                                                                                                 |  |                                               | (40     | ) |               |   | (66     | )
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|Total Stockholders Equity                                                                                                                                                           |  |                                               | 18,358  |   |               |   | 18,580  |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  
|Total Liabilities and Stockholders Equity                                                                                                                                           |  | $                                             | 133,932 |   |               | $ | 135,983 |  
|                                                                                                                                                                                     |  |                                               |         |   |               |   |         |  

See notes to Unaudited Consolidated Financial Statements.



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##### Table of Contents

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)



|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|--------------------------------------------------- |  | --------------------------------------------- | ----- | --------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                                    |  | Three Months EndedMarch 31,                   |       | Nine Months Ended March 31,
|                                                    |  | 2007                                          |       | 2006                        |   | 2007  |  | 2006
|                                                    |  | (Dollars in thousands, except per share data)
|INTEREST INCOME                                     |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Loans, including fees                               |  | $                                             | 1,766 |                             | $ | 1,671 |  | $    | 5,287 |  | $ | 4,963
|Investment securities                               |  |                                               | 89    |                             |   | 87    |  |      | 276   |  |   | 258  
|Other                                               |  |                                               | 56    |                             |   | 47    |  |      | 154   |  |   | 124  
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Total Interest Income                               |  |                                               | 1,911 |                             |   | 1,805 |  |      | 5,717 |  |   | 5,345
|                                                    |  |                                               |       |                            
|INTEREST EXPENSE                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Deposits                                            |  |                                               | 924   |                             |   | 731   |  |      | 2,737 |  |   | 2,026
|Borrowed funds                                      |  |                                               | 151   |                             |   | 162   |  |      | 492   |  |   | 448  
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Total Interest Expense                              |  |                                               | 1,075 |                             |   | 893   |  |      | 3,229 |  |   | 2,474
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Net Interest Income                                 |  |                                               | 836   |                             |   | 912   |  |      | 2,488 |  |   | 2,871
|PROVISION FOR LOAN LOSSES                           |  |                                               |      |                             |   | 20    |  |      | 5     |  |   | 90   
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Net Interest Income after Provision for Loan Losses |  |                                               | 836   |                             |   | 892   |  |      | 2,483 |  |   | 2,781
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|NON-INTEREST INCOME                                 |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Service fees on deposits                            |  |                                               | 31    |                             |   | 29    |  |      | 88    |  |   | 86   
|Service fees on loans                               |  |                                               | 7     |                             |   | 25    |  |      | 21    |  |   | 39   
|Income from investment in life insurance            |  |                                               | 17    |                             |   | 19    |  |      | 66    |  |   | 57   
|Other income                                        |  |                                               | 13    |                             |   | 10    |  |      | 36    |  |   | 55   
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Total Non-Interest Income                           |  |                                               | 68    |                             |   | 83    |  |      | 211   |  |   | 237  
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|NON-INTEREST EXPENSES                               |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Compensation and related expenses                   |  |                                               | 507   |                             |   | 488   |  |      | 1,535 |  |   | 1,320
|Occupancy                                           |  |                                               | 43    |                             |   | 43    |  |      | 130   |  |   | 122  
|Data processing                                     |  |                                               | 69    |                             |   | 79    |  |      | 217   |  |   | 217  
|Repossessed assets expense                          |  |                                               | 7     |                             |   |      |  |      | 23    |  |   |     
|Telephone and postage                               |  |                                               | 15    |                             |   | 15    |  |      | 47    |  |   | 48   
|Advertising                                         |  |                                               | 26    |                             |   | 39    |  |      | 76    |  |   | 89   
|Professional fees                                   |  |                                               | 49    |                             |   | 44    |  |      | 181   |  |   | 132  
|Equipment                                           |  |                                               | 36    |                             |   | 32    |  |      | 105   |  |   | 96   
|Other                                               |  |                                               | 111   |                             |   | 99    |  |      | 314   |  |   | 311  
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Total Non-Interest Expenses                         |  |                                               | 863   |                             |   | 839   |  |      | 2,628 |  |   | 2,335
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Income before Income Taxes                          |  |                                               | 41    |                             |   | 136   |  |      | 66    |  |   | 683  
|PROVISION FOR INCOME TAXES                          |  |                                               | 19    |                             |   | 54    |  |      | 29    |  |   | 264  
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|Net Income                                          |  | $                                             | 22    |                             | $ | 82    |  | $    | 37    |  | $ | 419  
|                                                    |  |                                               |       |                             |   |       |  |      |       |  |   |      
|BASIC AND DILUTED EARNINGS PER SHARE                |  | $                                             | 0.01  |                             | $ | 0.03  |  | $    | 0.01  |  | $ | 0.17 
|DIVIDENDS DECLARED PER SHARE                        |  | $                                             | 0.05  |                             |   |      |  | $    | 0.10  |  |   |     

See Notes to Unaudited Consolidated Financial Statements.



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##### Table of Contents

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(Unaudited)



|                                                                                                                           |  |                                 |    |      |                                 |    |      |  |      |    |  |   |     |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | -- | ---- | ------------------------------- | -- | ---- |  | ---- | -- |  | - | --- | -
|                                                                                                                           |  | For Three MonthsEnded March 31, |    |      | For Nine Months Ended March 31, |   
|                                                                                                                           |  | 2007                            |    | 2006 |                                 |    | 2007 |  | 2006 |   
|                                                                                                                           |  | (In thousands)                  |   
|Net income                                                                                                                 |  | $                               | 22 |      | $                               | 82 |      |  | $    | 37 |  | $ | 419 |  
|Unrealized net holding gains/(losses) on available-for- sale securities, net of taxes (benefit) of $2, $(1), $19 and $(13) |  |                                 | 3  |      |                                 | (2 | )    |  |      | 26 |  |   | (20 | )
|                                                                                                                           |  |                                 |    |      |                                 |    |      |  |      |    |  |   |     |  
|Comprehensive income                                                                                                       |  | $                               | 25 |      | $                               | 80 |      |  | $    | 63 |  | $ | 399 |  
|                                                                                                                           |  |                                 |    |      |                                 |    |      |  |      |    |  |   |     |  

See Notes to Unaudited Consolidated Financial Statements.



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##### Table of Contents

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                             |        |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                  |  | Nine Months Ended March 31, |       
|                                                                                  |  | 2007                        |        |   | 2006 |  
|                                                                                  |  | (In thousands)              |       
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |                             |        |   |      |   |         |  
|Net income                                                                        |  | $                           | 37     |   |      | $ | 419     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                             |        |   |      |   |         |  
|Net amortization of discounts and premiums                                        |  |                             | 5      |   |      |   | 7       |  
|Provision for loan losses                                                         |  |                             | 5      |   |      |   | 90      |  
|Amortization of deferred loan fees                                                |  |                             | 55     |   |      |   | 96      |  
|Provision for depreciation                                                        |  |                             | 112    |   |      |   | 95      |  
|Increase in cash surrender value of life insurance                                |  |                             | (66    | ) |      |   | (57     | )
|Stock-based compensation expense                                                  |  |                             | 186    |   |      |   | 91      |  
|Increase in other assets                                                          |  |                             | (125   | ) |      |   | (27     | )
|Increase (decrease) in other liabilities                                          |  |                             | 139    |   |      |   | (168    | )
|                                                                                  |  |                             |        |   |      |   |         |  
|Net Cash Provided by Operating Activities                                         |  |                             | 348    |   |      |   | 546     |  
|                                                                                  |  |                             |        |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |                             |        |   |      |   |         |  
|Purchases of securities available for sale                                        |  |                             | (103   | ) |      |   | (76     | )
|Proceeds from maturity of securities available for sale                           |  |                             | 1,000  |   |      |   |        |  
|Principal collected on mortgage backed securities                                 |  |                             | 131    |   |      |   | 232     |  
|Net increase in loans                                                             |  |                             | (504   | ) |      |   | (12,914 | )
|Purchase of loans                                                                 |  |                             | (384   | ) |      |   | (1,219  | )
|Purchase of premises and equipment                                                |  |                             | (61    | ) |      |   | (39     | )
|Net Sale (purchase) of Federal Home Loan Bank stock                               |  |                             | 91     |   |      |   | (442    | )
|                                                                                  |  |                             |        |   |      |   |         |  
|Net Cash Provided by (Used In) Investing Activities                               |  |                             | 170    |   |      |   | (14,458 | )
|                                                                                  |  |                             |        |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |                             |        |   |      |   |         |  
|Decrease in official checks                                                       |  |                             | (3,699 | ) |      |   | (451    | )
|Net increase in deposits                                                          |  |                             | 3,032  |   |      |   | 3,021   |  
|Decrease in advance payments by borrowers for taxes and insurance                 |  |                             | (301   | ) |      |   | (222    | )
|Federal Home Loan Bank advances                                                   |  |                             | 2,000  |   |      |   | 14,000  |  
|Repayment of advances from Federal Home Loan Bank                                 |  |                             | (3,000 | ) |      |   | (4,500  | )
|Purchase of shares of restricted stock                                            |  |                             |       |   |      |   | (437    | )
|Cash dividends paid                                                               |  |                             | (119   | ) |      |   |        |  
|Treasury stock purchased                                                          |  |                             | (352   | ) |      |   |        |  
|                                                                                  |  |                             |        |   |      |   |         |  
|Net Cash (Used In) Provided by Financing Activities                               |  |                             | (2,439 | ) |      |   | 11,411  |  
|                                                                                  |  |                             |        |   |      |   |         |  
|Net Decrease in Cash and Cash Equivalents                                         |  |                             | (1,921 | ) |      |   | (2,501  | )
|CASH AND CASH EQUIVALENTS  BEGINNING                                             |  |                             | 9,079  |   |      |   | 8,336   |  
|                                                                                  |  |                             |        |   |      |   |         |  
|CASH AND CASH EQUIVALENTS  ENDING                                                |  | $                           | 7,158  |   |      | $ | 5,835   |  
|                                                                                  |  |                             |        |   |      |   |         |  
|SUPPLEMENTARY CASH FLOWS INFORMATION                                              |  |                             |        |   |      |   |         |  
|Interest paid                                                                     |  | $                           | 3,226  |   |      | $ | 2,474   |  
|                                                                                  |  |                             |        |   |      |   |         |  
|Income taxes paid                                                                 |  | $                           | 130    |   |      | $ | 421     |  
|                                                                                  |  |                             |        |   |      |   |         |  
|Net loans transferred to foreclosed real estate/repossessed assets                |  | $                           | 7      |   |      | $ | 25      |  
|                                                                                  |  |                             |        |   |      |   |         |  

See Notes to Unaudited Consolidated Financial Statements.



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##### Table of Contents

BV FINANCIAL, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 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 March 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 or BV Financial)
Annual Report on Form 10-KSB for the year ended June 30, 2006.

Principles of Consolidation

The consolidated financial statements at March 31, 2007 and June 30, 2006 and for the three and nine months ended March 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 Per Share

Basic earnings per share is
computed by dividing net income 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. Information related to the calculation of earnings per share is summarized for the three and nine months ended March 31, 2007 and 2006 as follows:



|                                           |  |                              |       |                             |   |       |  |         |       |       |   |         |  |       |       |         |   |       |  |   |       |  |   |      
|------------------------------------------ |  | ---------------------------- | ----- | --------------------------- | - | ----- |  | ------- | ----- | ----- | - | ------- |  | ----- | ----- | ------- | - | ----- |  | - | ----- |  | - | -----
|                                           |  | Three Months Ended March 31, |       | Nine Months Ended March 31,
|                                           |  | 2007                         |       | 2006                        |   | 2007  |  | 2006   
|                                           |  | Basic                        |       | Diluted                     |   | Basic |  | Diluted |       | Basic |   | Diluted |  | Basic |       | Diluted
|                                           |  | In Thousands                 |       | In Thousands               
|Net income                                 |  | $                            | 22    |                             | $ | 22    |  | $       | 82    |       | $ | 82      |  | $     | 37    |         | $ | 37    |  | $ | 419   |  | $ | 419  
|                                           |  |                              |       |                             |   |       |  |         |       |       |   |         |  |       |       |         |   |       |  |   |       |  |   |      
|Weighted average common shares outstanding |  |                              | 2,487 |                             |   | 2,487 |  |         | 2,535 |       |   | 2,535   |  |       | 2,499 |         |   | 2,499 |  |   | 2,505 |  |   | 2,505
|                                           |  |                              |       |                             |   |       |  |        
|Diluted securities:                        |  |                              |       |                             |   |       |  |         |       |       |   |         |  |       |       |         |   |       |  |   |       |  |   |      
|Restricted stock                           |  |                              |      |                             |   |      |  |         |      |       |   |        |  |       |      |         |   | 1     |  |   |      |  |   |     
|Stock options                              |  |                              |      |                             |   |      |  |         |      |       |   |        |  |       |      |         |   |      |  |   |      |  |   |     
|                                           |  |                              |       |                             |   |       |  |         |       |       |   |         |  |       |       |         |   |       |  |   |       |  |   |      
|Adjusted weighted average shares           |  |                              | 2,487 |                             |   | 2,487 |  |         | 2,535 |       |   | 2,535   |  |       | 2,499 |         |   | 2,500 |  |   | 2,505 |  |   | 2,505
|                                           |  |                              |       |                             |   |       |  |         |       |       |   |         |  |       |       |         |   |       |  |   |       |  |   |      



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##### Table of Contents

(3) Equity Incentive Plan

On November 8, 2005, stockholders approved the Plan that enabled the Company to grant stock options and restricted stock awards to employees and directors. The Company had elected to implement early the
requirements of SFAS No. 123R, Share-Based Payment. 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. The Company estimated the grant date fair value of each option awarded in fiscal 2006 using the Black-Scholes
Option-Pricing model with the following assumptions: dividend yield 0%, risk-free interest rate of 4.30%, and expected lives of 6.5 years. The assumption for the expected volatility was 15.977%. The estimated fair value of each option
granted was computed to be $2.64.

The Compensation cost charged against income for the BV Financial, Inc. 2005 Equity Compensation Plan
(the Plan) was $39,000 and $140,000 for the three and nine months ended March 31, 2007, respectively, and $55,000 and $77,000 for the three and nine months ended March 31, 2006, respectively. The total income tax benefit
recognized was $10,000 and $33,000 for the three and nine months ended March 31, 2007, respectively, and $14,000 and $19,000 for the three and nine months ended March 31, 2006, respectively.

At March 31, 2007, there was $357,000 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 3.5 years.

During the three and nine months ended
March 31, 2007, there were no grants of stock options or restricted stock under the Plan. No stock options were exercised during the three and nine months ended March 31, 2007. At March 31, 2007, there were 22,286 stock
options and 8,914 restricted stock shares that had vested under the Companys Plan. At March 31, 2007, the Companys outstanding options have no intrinsic value.

(4) Subsequent Events

On April 12, 2007, BV Financial announced that Bay-Vanguard Federal
entered into a definitive agreement with Greater Atlantic Bank, Reston, Virginia, to purchase Greater Atlantic Banks branch office located in Pasadena, Maryland. Assets and liabilities of significance to be acquired in the transaction are
limited to customer deposits. At March 31, 2007, the deposits at the Pasadena branch office, which will be assumed at an 8.5% premium, totaled approximately $50.9 million. The purchase is expected to be completed during the third quarter of
2007, subject to regulatory approval.

(5) Recent Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments(SFAS No. 155). SFAS No. 155 amends FASB Statement No. 133 and FASB Statement No. 140, and improves the financial reporting of certain hybrid financial instruments by requiring more consistent
accounting that eliminates exemptions and provides a means to simplify the accounting for these instruments. Specifically, SFAS No. 155 allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the
need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entitys
first fiscal year that begins after September 15, 2006. The Company is required to adopt the provisions of SFAS No. 155, as applicable, beginning in fiscal year 2008. The Company has evaluated SFAS No. 155 and determined that it will
have no impact on the Companys financial position or results of operations.



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##### Table of Contents

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial AssetsAn
Amendment of FASB Statement No. 140 (SFAS 156). SFAS 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. The statement permits, but does not
require, the subsequent measurement of servicing assets and servicing liabilities at fair value. SFAS 156 is effective as of the beginning of an entitys first fiscal year that begins after September 15, 2006, which for the Company will be
as of the beginning of fiscal year 2008. The Company does not believe that the adoption of SFAS 156 will have a significant effect on its financial statements.

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 will have 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 is in the process of evaluating FASB Statement No. 157.

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 Principals 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. The disclosures
are 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 our 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 our Company July 1, 2008, unless early adoption is elected as of July 1, 2007. The Company is evaluating the impact that the adoption of SFAS
No. 159 will have on our consolidated financial statements.



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##### Table of Contents

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

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. 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. 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 which 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.

General

BV Financial was organized as a federally
chartered corporation at the direction of Bay-Vanguard Federal Savings Bank (the Bank or 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 55% of the common stock of BV Financial. As part of the reorganization, the Company sold 1,190,250 shares of its common stock at a price of $10.00 per share to members of the Bank in a subscription offering raising
approximately $11.0 million in net proceeds.

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.



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##### Table of Contents

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.

Recent Developments

On April 12, 2007, BV Financial announced that Bay-Vanguard Federal entered into a definitive agreement with Greater Atlantic Bank, Reston, Virginia,
to purchase Greater Atlantic Banks branch office located in Pasadena, Maryland. Under the agreement, Bay-Vanguard Federal will pay an 8.5% premium on the balance of deposits assumed at closing. At March 31, 2007, the deposits at the
Pasadena branch office on which the deposit premium would apply totaled approximately $50.9 million. Bay-Vanguard will also purchase the branch offices fixed assets but will not acquire any loans as part of the transaction. The purchase is
expected to be completed during the third quarter of 2007, subject to regulatory approval.

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 impaired 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. 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.



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##### Table of Contents

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

Total assets decreased $2.1 million, or 1.5%, to $133.9 million at March 31, 2007 from $136.0 million at June 30, 2006 primarily due to a
decrease in interest-bearing deposits, which were used to pay back Federal Home Loan Bank borrowings.

Loans receivable increased
$835,000, or 0.7%, to $113.9 million at March 31, 2007, primarily due to $5.4 million in originations of residential real estate loans, $760,000 of residential construction loans, $1.6 million in non-residential and commercial loans, and $2.1
million of other loans, offset by repayments.The increased originations were due to a strong local real estate market and competitive pricing.

Securities decreased $991,000, or 13.3%, from $7.5 million at June 30, 2006 to $6.5 million at March 31, 2007, due to the maturation of a $1.0 million Federal Home Loan Bank note, the proceeds of
which were used to fund loan growth.

Cash and cash equivalents decreased $1.9 million, or 21.2%, from $9.1 million at
June 30, 2006 to $7.2 million at March 31, 2007, as those funds were used to pay down Federal Home Loan Bank borrowings and fund loan growth.

Deposits increased $3.0 million, or 3.1%, to $100.1 million at March 31, 2007, primarily due to an increase in certificates of deposit of $6.8 million, offset by a decrease of $1.6 million in checking
accounts and a decrease of $2.0 million in savings accounts. The increase in deposits was primarily due to aggressive marketing of higher rate certificates of deposit. Federal Home Loan Bank advances decreased $1.0 million, or 6.9%, to $13.5 million
at March 31, 2007. The repayment of Federal Home Loan Bank advances was also funded by deposit growth.

Total equity decreased
$222,000, or 1.2%, to $18.4 million at March 31, 2007 primarily due to the payment of a dividend to stockholders and the purchase of treasury shares, offset by an increase to paid in capital and a reduction of the offsets to capital for the
allocation of ESOP shares and the vesting of shares of restricted stock.

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

General. Net income decreased $60,000, or 73.2%, to $22,000 for the three months ended March 31, 2007 compared to
the same period in the prior year due primarily to a $76,000 decrease in net interest income and a $24,000 increase in non-interest expenses, offset by a $20,000 decrease in the provision for loan losses and a $35,000 decrease in the provision for
income taxes.



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##### Table of Contents

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



|                                |  |                              |       |      |   |          |  |      |  
|------------------------------- |  | ---------------------------- | ----- | ---- | - | -------- |  | ---- | -
|                                |  | Three Months Ended March 31, |      
|                                |  | 2007                         |       | 2006 |   | % change | 
|                                |  | (Dollars in thousands)       |       |      |  
|Interest Income:                |  |                              |       |      |   |          |  |      |  
|Loans, including fees           |  | $                            | 1,766 |      | $ | 1,671    |  | 5.7  | %
|Investment securities           |  |                              | 89    |      |   | 87       |  | 2.3  |  
|Other                           |  |                              | 56    |      |   | 47       |  | 19.1 |  
|                                |  |                              |       |      |   |          |  |      |  
|Total interest income           |  |                              | 1,911 |      |   | 1,805    |  | 5.9  |  
|Interest Expense:               |  |                              |       |      |   |          |  |      |  
|Deposits                        |  |                              | 924   |      |   | 731      |  | 26.4 |  
|Federal Home Loan Bank advances |  |                              | 151   |      |   | 162      |  | (6.8 | )
|                                |  |                              |       |      |   |          |  |      |  
|Total interest expense          |  |                              | 1,075 |      |   | 893      |  | 20.4 |  
|                                |  |                              |       |      |   |          |  |      |  
|Net interest income             |  | $                            | 836   |      | $ | 912      |  | (8.3 | )
|                                |  |                              |       |      |   |          |  |      |  

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



|                                |  |                              |         |            |      |   |                |   |             |  |      |  
|------------------------------- |  | ---------------------------- | ------- | ---------- | ---- | - | -------------- | - | ----------- |  | ---- | -
|                                |  | Three Months Ended March 31, |        
|                                |  | 2007                         |         |            | 2006 |  
|                                |  | AverageBalance               |         | Yield/Cost |      |   | AverageBalance |   | Yield/ Cost | 
|                                |  | (Dollars in thousands)       |        
|Loans                           |  | $                            | 113,444 |            | 6.23 | % |                | $ | 110,597     |  | 6.04 | %
|Investment securities           |  |                              | 6,997   |            | 5.09 |   |                |   | 7,534       |  | 4.62 |  
|Interest-bearing deposits       |  |                              | 3,428   |            | 4.08 |   |                |   | 3,869       |  | 3.31 |  
|Federal funds sold              |  |                              | 1,614   |            | 5.20 |   |                |   | 1,229       |  | 4.56 |  
|Deposits                        |  |                              | 99,326  |            | 3.72 |   |                |   | 91,936      |  | 3.18 |  
|Federal Home Loan Bank advances |  |                              | 13,673  |            | 4.42 |   |                |   | 14,672      |  | 4.42 |  

Net interest income for the three months ended March 31, 2007 decreased $76,000, or 8.3%,
compared to the same period last year, as a result of a decrease in the interest rate spread to 2.29% from 2.50% offset by an increase in average interest-earning balances.Total interest income increased as a result of the growth in average
interest-earning assets to $125.5 million from $123.2 million, and by an increase in the average yield to 6.09% from 5.86% due to the higher market interest rate environment. Total interest expense increased as a result of a higher average balance
of deposits and an increase in the average interest rate paid on deposits, which increased to 3.72% from 3.18%, due to the higher market interest rate environment and increase in higher costing certificates of deposit, offset by a decrease in the
average balance of Federal Home Loan Bank borrowings to $13.7 million, compared to average borrowings of $14.7 million in 2006.



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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 March 31, 2007 and 2006.



|                                 |  |                              |     |      |   |    
|-------------------------------- |  | ---------------------------- | --- | ---- | - | ---
|                                 |  | Three Months Ended March 31,
|                                 |  | 2007                         |     | 2006
|                                 |  | (In thousands)              
|Allowance at beginning of period |  | $                            | 402 |      | $ | 406
|Provision for loan losses        |  |                              |    |      |   | 20 
|Charge-offs                      |  |                              |    |      |   |   
|Recoveries                       |  |                              |    |      |   |   
|                                 |  |                              |     |      |   |    
|Net charge-offs                  |  |                              |    |      |   |   
|                                 |  |                              |     |      |   |    
|Allowance at end of period       |  | $                            | 402 |      | $ | 426
|                                 |  |                              |     |      |   |    

The provision for loan losses decreased from $20,000 for the three months ended
March 31, 2006 to zero for the three months ended March 31, 2007. The decrease in the provision for loan losses reflects the absence of charge-offs and continued low non-performing assets.

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 March 31, 2007      |      |   | At June 30, 2006 |   |      | % change | 
|                                            |  | (Dollars in thousands) |      |   |                  |  
|Nonaccruing loans:                          |  |                        |      |   |                  |   |      |          |  |      |  
|One- to four-family                         |  | $                      | 197  |   |                  | $ | 165  |          |  | 19.4 | %
|Mobile home                                 |  |                        |     |   |                  |   |     |          |  |     |  
|                                            |  |                        |      |   |                  |   |      |          |  |      |  
|Total                                       |  |                        | 197  |   |                  |   | 165  |          |  | 19.4 |  
|Accruing loans past due 90 days or more     |  |                        |     |   |                  |   |     |          |  |     |  
|Foreclosed real estate                      |  |                        |     |   |                  |   |     |          |  |     |  
|Other repossessed assets                    |  |                        | 57   |   |                  |   | 51   |          |  | 11.8 |  
|                                            |  |                        |      |   |                  |   |      |          |  |      |  
|Total non-performing assets                 |  | $                      | 254  |   |                  | $ | 216  |          |  | 17.6 |  
|                                            |  |                        |      |   |                  |   |      |          |  |      |  
|Total non-performing loans to total loans   |  |                        | 0.17 | % |                  |   | 0.15 | %        |  |      |  
|Total non-performing loans to total assets  |  |                        | 0.15 |   |                  |   | 0.12 |          |  |      |  
|Total non-performing assets to total assets |  |                        | 0.19 |   |                  |   | 0.16 |          |  |      |  



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##### Table of Contents

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



|                                                |  |                             |    |          |   |    |  |       |  
|----------------------------------------------- |  | --------------------------- | -- | -------- | - | -- |  | ----- | -
|                                                |  | Three MonthsEnded March 31, |    | % change |  
|                                                |  | 2007                        |    | 2006     |  
|                                                |  | (Dollars in thousands)      |    |          |  
|Service fees on deposits                        |  | $                           | 31 |          | $ | 29 |  | 6.9   | %
|Service fees on loans                           |  |                             | 7  |          |   | 25 |  | (72.0 | )
|Income from investment in life insurance policy |  |                             | 17 |          |   | 19 |  | (10.5 | )
|Other income                                    |  |                             | 13 |          |   | 10 |  | 30.0  |  
|                                                |  |                             |    |          |   |    |  |       |  
|Total                                           |  | $                           | 68 |          | $ | 83 |  | (18.1 | )
|                                                |  |                             |    |          |   |    |  |       |  

The decrease in non-interest income was due to a decrease in the origination of participations
sold and a decrease in late fees due to a lower level of past due loans.

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



|                                  |  |                             |       |   |          |   |       |   |  |       |  
|--------------------------------- |  | --------------------------- | ----- | - | -------- | - | ----- | - |  | ----- | -
|                                  |  | Three MonthsEnded March 31, |       |   | % change |  
|                                  |  | 2007                        |       |   | 2006     |   |      
|                                  |  | (Dollars in thousands)      |       |   |          |  
|Compensation and related expenses |  | $                           | 507   |   |          | $ | 488   |   |  | 3.9   | %
|Occupancy                         |  |                             | 43    |   |          |   | 43    |   |  |      |  
|Data processing                   |  |                             | 69    |   |          |   | 79    |   |  | (12.7 | )
|Foreclosed assets expense         |  |                             | 7     |   |          |   |      |   |  |      |  
|Telephone and postage             |  |                             | 15    |   |          |   | 15    |   |  |      |  
|Advertising                       |  |                             | 26    |   |          |   | 39    |   |  | (33.3 | )
|Professional fees                 |  |                             | 49    |   |          |   | 44    |   |  | 11.4  |  
|Equipment                         |  |                             | 36    |   |          |   | 32    |   |  | 12.5  |  
|Other                             |  |                             | 111   |   |          |   | 99    |   |  | 12.1  |  
|                                  |  |                             |       |   |          |   |       |   |  |       |  
|Total                             |  | $                           | 863   |   |          | $ | 839   |   |  | 2.9   |  
|                                  |  |                             |       |   |          |   |       |   |  |       |  
|Efficiency ratio (1)              |  |                             | 95.46 | % |          |   | 84.32 | % |  |       |  

---

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

Total non-interest expenses increased $24,000, or 2.9%, primarily as a result of increases in compensation and other miscellaneous expenses.
Compensation expense increased due to the addition of two additional executive officers and increased stock-based compensation expense. Other expenses increased $12,000, or 12.1%, as a result of start-up expenses for the introduction of new debit
cards, increased information technology maintenance expenses and increased insurance bonds. Advertising decreased as the Company was able to attract new loans through aggressive pricing in lieu of additional advertising. Data processing costs
decreased due to a refund received in the 2007 period for certain charges in a previous quarter.



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##### Table of Contents

Income Taxes. Provision for income taxes decreased $35,000, or 64.8%, from $54,000 for the
three months ended March 31, 2006 to $19,000 for the three months ended March 31, 2007. The effective tax rate was 39.7% for the three months ended March 31, 2006 compared to 46.3% for the three months ended March 31, 2007. The
increase in the effective tax rate was due to an increase in non-deductible stock based compensation expense representing a larger percentage of taxable income.

Results of Operations for the Nine Months Ended March 31, 2007 and 2006

General. Net income decreased
$382,000, or 91.2%, to $37,000 for the nine months ended March 31, 2007 compared to the same period in the prior year due primarily to increases in interest expense and non-interest expenses.

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



|                                |  |                            |       |          |   |       |  |       |  
|------------------------------- |  | -------------------------- | ----- | -------- | - | ----- |  | ----- | -
|                                |  | Nine MonthsEnded March 31, |       | % change |  
|                                |  | 2007                       |       | 2006     |  
|                                |  | (Dollars in thousands)     |       |          |  
|Interest Income:                |  |                            |       |          |   |       |  |       |  
|Loans, including fees           |  | $                          | 5,287 |          | $ | 4,963 |  | 6.5   | %
|Investment securities           |  |                            | 276   |          |   | 258   |  | 7.0   |  
|Other                           |  |                            | 154   |          |   | 124   |  | 24.2  |  
|                                |  |                            |       |          |   |       |  |       |  
|Total interest income           |  |                            | 5,717 |          |   | 5,345 |  | 7.0   |  
|Interest Expense:               |  |                            |       |          |   |       |  |       |  
|Deposits                        |  |                            | 2,737 |          |   | 2,026 |  | 35.1  |  
|Federal Home Loan Bank advances |  |                            | 492   |          |   | 448   |  | 9.8   |  
|                                |  |                            |       |          |   |       |  |       |  
|Total interest expense          |  |                            | 3,229 |          |   | 2,474 |  | 30.5  |  
|                                |  |                            |       |          |   |       |  |       |  
|Net interest income             |  | $                          | 2,488 |          | $ | 2,871 |  | (13.3 | )
|                                |  |                            |       |          |   |       |  |       |  

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



|                                |  |                             |         |            |       |                |   |             |  |      |   |  | 
|------------------------------- |  | --------------------------- | ------- | ---------- | ----- | -------------- | - | ----------- |  | ---- | - |  | 
|                                |  | Nine Months Ended March 31, |        
|                                |  | 2007                        |         | 2006       |      
|                                |  | AverageBalance              |         | Yield/Cost |       | AverageBalance |   | Yield/ Cost | 
|                                |  | (Dollars in thousands)      |        
|Loans                           |  | $                           | 113,441 |            | 6.21% |                | $ | 107,420     |  | 6.16 | %
|Investment securities           |  |                             | 7,319   |            | 5.03  |                |   | 7,585       |  | 4.58 |  
|Interest-earning deposits       |  |                             | 3,409   |            | 4.15  |                |   | 3,880       |  | 2.96 |  
|Federal funds                   |  |                             | 1,152   |            | 5.56  |                |   | 1,140       |  | 4.09 |  
|Deposits                        |  |                             | 97,638  |            | 3.74  |                |   | 89,539      |  | 3.02 |  
|Federal Home Loan Bank advances |  |                             | 14,594  |            | 4.49  |                |   | 13,498      |  | 4.43 |  

Net interest income for the nine months ended March 31, 2007 decreased $383,000, or 13.3%,
compared to the same period last year, as a result of a decrease in the interest rate spread to 2.24% from 2.74%, offset by a larger average balance of interest-earning assets. Total interest income increased as a



14



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##### Table of Contents

result of the growth in average interest-earning assets to $125.3 million from $120.0 million and an increase in the average yield to 6.08% from 5.94% due to
the higher market interest rate environment.Total interest expense increased as a result of an increase in the average balance of Federal Home Loan Bank borrowings to $14.6 million, compared to average borrowings of $13.5 million in 2006.
Interest expense on deposits increased due to an increase in the average balance of $8.1 million, or 9.1% and the average interest rate paid on deposits, which increased to 3.74% from 3.02%, due to the higher market interest rate environment.

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



|                                 |  |                            |     |   |      |   |     |  
|-------------------------------- |  | -------------------------- | --- | - | ---- | - | --- | -
|                                 |  | Nine MonthsEnded March 31, |    
|                                 |  | 2007                       |     |   | 2006 |  
|                                 |  | (In thousands)             |    
|Allowance at beginning of period |  | $                          | 410 |   |      | $ | 349 |  
|Provision for loan losses        |  |                            | 5   |   |      |   | 90  |  
|Charge-offs                      |  |                            | (13 | ) |      |   | (25 | )
|Recoveries                       |  |                            |    |   |      |   | 12  |  
|                                 |  |                            |     |   |      |   |     |  
|Net charge-offs                  |  |                            | (13 | ) |      |   | (13 | )
|                                 |  |                            |     |   |      |   |     |  
|Allowance at end of period       |  | $                          | 402 |   |      | $ | 426 |  
|                                 |  |                            |     |   |      |   |     |  

The provision for loan losses decreased $85,000 to $5,000 for the nine months ended
March 31, 2007. The decrease in the provision for loan losses reflects the continued low level of charge-offs and non-performing assets. The charge-off of $13,000 in fiscal 2007 was due to the repossession of one mobile home and the write down
to fair value.

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



|                                         |  |                            |     |          |   |     |  |       |  
|---------------------------------------- |  | -------------------------- | --- | -------- | - | --- |  | ----- | -
|                                         |  | Nine MonthsEnded March 31, |     | % change |  
|                                         |  | 2007                       |     | 2006     |  
|                                         |  | (Dollars in thousands)     |     |          |  
|Service fees on deposits                 |  | $                          | 88  |          | $ | 86  |  | 2.3   | %
|Service fees on loans                    |  |                            | 21  |          |   | 39  |  | (46.2 | )
|Income from investment in life insurance |  |                            | 66  |          |   | 57  |  | 15.8  |  
|Other income                             |  |                            | 36  |          |   | 55  |  | (34.5 | )
|                                         |  |                            |     |          |   |     |  |       |  
|                                         |  | $                          | 211 |          | $ | 237 |  | (11.0 | )
|                                         |  |                            |     |          |   |     |  |       |  

The decrease in noninterest income was due to a decrease in the origination of participations sold
and a decrease in late fees due to a lower level of past due loans.



15



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##### Table of Contents

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



|                                  |  |                            |       |   |          |   |       |   |  |       |  
|--------------------------------- |  | -------------------------- | ----- | - | -------- | - | ----- | - |  | ----- | -
|                                  |  | Nine MonthsEnded March 31, |       |   | % change |  
|                                  |  | 2007                       |       |   | 2006     |   |      
|                                  |  | (Dollars in thousands)     |       |   |          |  
|Compensation and related expenses |  | $                          | 1,535 |   |          | $ | 1,320 |   |  | 16.3  | %
|Occupancy                         |  |                            | 130   |   |          |   | 122   |   |  | 6.6   |  
|Data processing                   |  |                            | 217   |   |          |   | 217   |   |  |      |  
|Repossessed assets expense        |  |                            | 23    |   |          |   |      |   |  | 100   |  
|Telephone and postage             |  |                            | 47    |   |          |   | 48    |   |  | (2.1  | )
|Advertising                       |  |                            | 76    |   |          |   | 89    |   |  | (14.6 | )
|Professional fees                 |  |                            | 181   |   |          |   | 132   |   |  | 37.1  |  
|Equipment expense                 |  |                            | 105   |   |          |   | 96    |   |  | 9.4   |  
|Other                             |  |                            | 314   |   |          |   | 311   |   |  | 1.0   |  
|                                  |  |                            |       |   |          |   |       |   |  |       |  
|Total                             |  | $                          | 2,628 |   |          | $ | 2,335 |   |  | 12.5  |  
|                                  |  |                            |       |   |          |   |       |   |  |       |  
|Efficiency ratio (1)              |  |                            | 97.37 | % |          |   | 75.13 | % |  |       |  

---

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

Total non-interest expenses increased $293,000, or 12.5%, primarily as a result of increases in compensation and related expenses, repossessed assets
expense and professional fees.Compensation expense increased due to the addition of two additional executive officers and additional stock based compensation expense. Repossessed assets expense increased due to repairs made to repossessed
assets to prepare them for sale. Professional fees increased due to higher legal and accounting costs incurred during the year.

Income Taxes. Provision for income taxes decreased $235,000, or 89.0%, from $264,000 for the nine months ended March 31, 2006 to $29,000 for the nine months ended March 31, 2007. The effective tax rate was 43.9% for
the nine months ended March 31, 2007 compared to 38.7% for the nine months ended March 31, 2006. The increase in the effective tax rate was due to an increase in non-deductible stock based compensation expense.

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. Generally, excess liquid assets are invested 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 March 31, 2007, cash and cash equivalents totaled $7.1 million, including interest-bearing deposits of $1.7 million. Securities
classified as available-for-sale, which provide additional sources of liquidity, totaled $3.3 million at March 31, 2007. In addition, at March 31, 2007, we had the ability to borrow a total of approximately $40.2 million from the Federal
Home Loan Bank of Atlanta. On that date, we had advances outstanding of $26.7 million.

At March 31, 2007, we had $1.6 million
in loan commitments outstanding, which included $320,000 in commitments to purchase and originate mobile home loans. In addition to commitments to originate loans, we had $1.0 million in unused lines of credit and $5.4 million of construction loans
in process. Certificates of deposit due within one year of March 31, 2007 totaled $22.2 million, or 22.2% 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 March 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.



|                                                       |  |                            |        |   |      |   |       
|------------------------------------------------------ |  | -------------------------- | ------ | - | ---- | - | ------
|                                                       |  | Nine Months EndedMarch 31,
|                                                       |  | 2007                       |        |   | 2006
|                                                       |  | (In thousands)            
|Investing activities:                                  |  |                            |        |   |      |   |       
|Loan originations                                      |  | $                          | 10,941 |   |      | $ | 30,469
|Loan and participation purchases                       |  |                            | 384    |   |      |   | 1,219 
|Securities purchases                                   |  |                            | 103    |   |      |   | 76    
|Financing activities:                                  |  |                            |        |   |      |   |       
|Increase in deposits                                   |  |                            | 3,032  |   |      |   | 3,021 
|Increase (decrease) in Federal Home Loan Bank advances |  |                            | (1,000 | ) |      |   | 9,500 

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 March 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 nine months ended March 31, 2007 and the year ended June 30, 2006, 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. However, the initial draft of the financial statements are currently prepared by the chief financial officer. The absence of a second level of
review of the financial statements disclosures may result in revisions to the draft financial statement disclosures (which are reflected in, and do not affect the final interim financial statement disclosures) as a result of the review by the
auditors. There have been no changes in the Companys internal control over financial reporting identified in connection with the evaluation required by Rule 13(a)-15(e) that occurred during the Companys last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



18



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##### Table of Contents

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 March 31, 2007.



|                                      |  |                                          |  |                                  |      |                                                                                          |        |                                                                                    |        
|------------------------------------- |  | ---------------------------------------- |  | -------------------------------- | ---- | ---------------------------------------------------------------------------------------- | ------ | ---------------------------------------------------------------------------------- | -------
|Period                                |  | (a) Total Number of Shares Purchased (1) |  | (b) Average Price Paid per Share |      | (c) Total Number of Shares Purchased as Part of
Publicly Announced Plans or Programs (2) |        | (d) Maximum Number of Shares that May Yet Be Purchased
Under the Plans or Programs
|January 1, 2007 to January 31, 2007   |  |                                         |  |                                  |     |                                                                                          |       |                                                                                    | 113,250
|February 1, 2007 to February 28, 2007 |  | 18,500                                   |  | $                                | 9.10 |                                                                                          | 18,500 |                                                                                    | 94,750 
|March 1, 2006 to March 31, 2007       |  |                                         |  |                                  |     |                                                                                          |       |                                                                                    | 94,750 
|                                      |  |                                          |  |                                  |      |                                                                                          |        |                                                                                    |        
|Total                                 |  | 18,500                                   |  | $                                | 9.10 |                                                                                          | 18,500 |                                                                                    |        
|                                      |  |                                          |  |                                  |      |                                                                                          |        |                                                                                    |        

---

|(1) | On April 12, 2006, BV Financial announced the adoption of a stock repurchase program to acquire up to 132,250 shares, or 5.0%, of BV Financials outstanding shares of
common stock. The program will continue until it is completed or terminated by the Board of Directors.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 3. Defaults upon Senior Securities

Not Applicable.

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

Not Applicable.

Item 5. Other Information

None.



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##### Table of Contents

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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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: May 15, 2007 |  | By:                |  | /s/ Carolyn M. Mroz                         
|                    |  |                    |  | Carolyn M. Mroz                             
|                    |  |                    |  | President and Chief Executive Officer       
|                    |  |                    |  | (principal executive officer)               
|                    |  |                   
|Dated: May 15, 2007 |  | By:                |  | /s/ Edmund T. Leonard                       
|                    |  |                    |  | Edmund T. Leonard                           
|                    |  |                    |  | Chairman of the Board                       
|                    |  |                    |  | and Chief Financial Officer                 
|                    |  |                    |  | (principal financial and accounting officer)