----

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| Delaware(State      or other jurisdiction of incorporation or organization)                             | 20-1636029(I.R.S.      Employer Identification Number) |
|---------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|                                                                                                    |                                                   |
| 9226      S. Commercial AvenueChicago,      Illinois 60617(Address      of principal executive offices) |

| Class                              | Outstanding      as of January 30, 2008 |
|------------------------------------|-----------------------------------------|
| Common      Stock, $0.01 par value | 2,555,432                               |

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TABLE OF CONTENTS

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Page   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| PART I – FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| Item 1.  Financial      Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
| Consolidated      Statements of Financial Condition as of December 31, 2007 and      June 30, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 1      |
| Consolidated      Statements of Income (Loss) and Comprehensive Income (Loss) for the three      months and six months ended December 31, 2007 and 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 2      |
| Consolidated      Statements of Stockholders’ Equity for the six months ended      December 31, 2007 and 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 3      |
| Consolidated      Statements of Cash Flows for the six months ended December 31, 2007 and      2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 6      |
| Notes      to Unaudited Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 7      |
| Item 2.  Management’s Discussion and      Analysis of Financial Condition and Results of    Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 10     |
| Item 3.  Controls and      Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 14     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| PART II – OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
| Item 1.  LegalProceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 15     |
| Item 2.  Unregistered Sales of Equity      Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 15     |
| Item 3.  Defaults Upon Senior      Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 15     |
| Item 4.  Submission of Matters to a Vote      of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 15     |
| Item 5.  OtherInformation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 15     |
| Item 6.  Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 15     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| SIGNATURES                                                                                                                              | 16     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| EXHIBIT INDEX                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |

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PART I. – FINANCIAL INFORMATION

Item1. Financial

|                                                                                                                                                       |   | December      31, 2007 |        |   | June 30,      2007 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|-------------|--------|-------------------------|--------|
| ASSETS                                                                                                                                                     |   |                   |        |   |                    |   |
| Cash      and non-interest-bearing balances in financial  institutions                                                                           |   | $                      | 3,241,920   |   |                    | $      | 3,629,356 |   |
| Interest-bearing      balances in financial institutions                                                                                                   |   |                   | 17,252      |   |                    |   | 5,140,346 |   |
| Federal      funds sold                                                                                                                                    |   |                   | 1,271,281   |   |                    |   | 12,626,252 |   |
| Total      cash and cash equivalents                                                                                                                       |   |                   | 4,530,453   |   |                    |   | 21,395,954 |   |
| Securities      available-for-sale                                                                                                                         |   |                   | 13,627,707  |   |                    |   | 15,595,283 |   |
| Loans      receivable, net of allowance for loan losses of $801,924 at      December 31, 2007 and $667,105 at June 30, 2007                      |   |                   | 94,705,044  |   |                    |   | 83,498,883 |   |
| Federal      Home Loan Bank stock, at cost                                                                                                                 |   |                   | 340,500     |   |                    |   | 340,500 |   |
| Cash      surrender value of life insurance                                                                                                                |   |                   | 4,836,760   |   |                    |   | 4,741,698 |   |
| Premises      and equipment, net                                                                                                                           |   |                   | 5,787,983   |   |                    |   | 5,933,862 |   |
| Accrued      interest receivable                                                                                                                           |   |                   | 557,817     |   |                    |   | 508,835 |   |
| Other      assets                                                                                                                                          |   |                   | 359,906     |   |                    |   | 616,696 |   |
| Total      assets                                                                                                                                          |   | $                      | 124,746,170 |   |                    | $      | 132,631,711 |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                            |   |                   |        |   |                    |   |   |   |
| Liabilities                                                                                                                                                |   |                   |        |   |                    |   |   |   |
| Deposits                                                                                                                                                   |   | $                      | 86,165,720  |   |                    | $      | 98,675,891 |   |
|      Advances      from borrowers for taxes and insurance                                                                         |   |                   | 428,468     |   |                    |   | 571,730 |   |
|      Federal      Home Loan Bank advances                                                                                         |   |                   | 5,000,000   |   |                    |   | - |   |
| Accrued      interest payable and other liabilities                                                                                                        |   |                   | 896,799     |   |                    |   | 753,988 |   |
| Common      stock in ESOP subject to contingent repurchase obligation                                                                                      |   |                   | 999,810     |   |                    |   | 968,070 |   |
| Stockholders’      equity                                                                                                                            |   |                   |        |   |                    |   |   |   |
| Preferred      stock, $.01 par value per share, authorized 1,000,000 shares; no issues      are outstanding                                                |   |                   | -           |   |                    |   | - |   |
| Common      stock, $.01 par value per share, authorized 5,000,000 shares; 2,645,000      shares issued at December 31, 2007 and June 30,    2007 |   |                   | 26,450      |   |                    |   | 26,450 |   |
| Additional      paid-in capital                                                                                                                            |   |                   | 24,549,716  |   |                    |   | 24,169,282 |   |
| Retained      earnings                                                                                                                                     |   |                   | 10,725,919  |   |                    |   | 11,510,299 |   |
| Treasury      stock, 85,368 shares and 69,498 shares, at cost                                                                                              |   |                   | (1,289,136  | )      |                    |   | (1,057,698 | ) |
| Accumulated      other comprehensive loss, net of tax                                                                                                      |   |                   | (16,613     | )      |                    |   | (143,372 | ) |
| Unearned      ESOP shares                                                                                                                                  |   |                   | (1,741,153  | )      |                    |   | (1,874,859 | ) |
| Reclassification      of ESOP shares                                                                                                                       |   |                   | (999,810    | )      |                    |   | (968,070 | ) |
| Total      stockholders’ equity                                                                                                                      |   |                   | 31,255,373  |   |                    |   | 31,662,032 |   |
| Total      liabilities and stockholders’ equity                                                                                                      |   | $                      | 124,746,170 |   |                    | $      | 132,631,711 |   |

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Table of Contents

|                                                      |   | Three      Months EndedDecember      31, |      |   | Six      Months EndedDecember      31, |   |
|-----------------------------------------------------------|--------|------------------------------------------|-----------|--------|----------------------------------------|--------|
|                                                      |   | 2007                                     |      |   | 2006                                   |   |   | 2007 |   |   | 2006 |   |
| Interest      income                                      |   |                                     |      |   |                                   |   |   |   |   |   |   |   |
|    Loans                                   |   | $                                        | 1,688,828 |   |                                   | $      | 1,376,353 |   |   | $ | 3,309,420 |   |   | $ | 2,738,537 |   |
|    Securities,      taxable                |   |                                     | 147,645   |   |                                   |   | 186,693 |   |   |   | 308,854 |   |   |   | 381,422 |   |
|    Federal      funds sold and other       |   |                                     | 22,049    |   |                                   |   | 326,360 |   |   |   | 201,574 |   |   |   | 463,233 |   |
| Total      interest income                                |   |                                     | 1,858,522 |   |                                   |   | 1,889,406 |   |   |   | 3,819,848 |   |   |   | 3,583,192 |   |
| Interest      expense                                     |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                  |   |                                     | 605,955   |   |                                   |   | 751,616 |   |   |   | 1,374,051 |   |   |   | 1,317,818 |   |
| Federal      Home Loan Bank advances and other borrowings |   |                                     | 22,724    |   |                                   |   | - |   |   |   | 22,829 |   |   |   | 2,151 |   |
| Total      interest expense                               |   |                                     | 628,679   |   |                                   |   | 751,616 |   |   |   | 1,396,880 |   |   |   | 1,319,969 |   |
|                                                      |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                                  |   |                                     | 1,229,843 |   |                                   |   | 1,137,790 |   |   |   | 2,422,968 |   |   |   | 2,263,223 |   |
|                                                      |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for loan losses                            |   |                                     | 119,944   |   |                                   |   | 30,000 |   |   |   | 143,721 |   |   |   | 60,000 |   |
|                                                      |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income after provision for loan losses  |   |                                     | 1,109,899 |   |                                   |   | 1,107,790 |   |   |   | 2,279,247 |   |   |   | 2,203,223 |   |
|                                                      |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      income                                  |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Service      charges on deposit accounts                  |   |                                     | 68,004    |   |                                   |   | 66,475 |   |   |   | 131,533 |   |   |   | 132,797 |   |
| Earnings      on cash surrender value of life insurance   |   |                                     | 47,481    |   |                                   |   | 48,610 |   |   |   | 95,062 |   |   |   | 92,060 |   |
| Other      income                                         |   |                                     | 14,199    |   |                                   |   | 24,378 |   |   |   | 26,746 |   |   |   | 96,462 |   |
| Total      non-interest income                            |   |                                     | 129,684   |   |                                   |   | 139,463 |   |   |   | 253,341 |   |   |   | 321,319 |   |
| Non-interest      expense                                 |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries      and employee benefits                       |   |                                     | 649,286   |   |                                   |   | 705,107 |   |   |   | 1,366,927 |   |   |   | 1,426,038 |   |
| Occupancy      and equipment                              |   |                                     | 263,499   |   |                                   |   | 281,150 |   |   |   | 579,173 |   |   |   | 599,217 |   |
| Data      processing                                      |   |                                     | 109,581   |   |                                   |   | 91,491 |   |   |   | 215,863 |   |   |   | 166,551 |   |
| Professional      services                                |   |                                     | 175,444   |   |                                   |   | 196,027 |   |   |   | 370,332 |   |   |   | 356,847 |   |
| Investigation      costs                                  |   |                                     | 113,677   |   |                                   |   | - |   |   |   | 414,857 |   |   |   | - |   |
| Director      fees                                        |   |                                     | 35,300    |   |                                   |   | 34,200 |   |   |   | 66,100 |   |   |   | 68,400 |   |
| Supplies                                                  |   |                                     | 12,667    |   |                                   |   | 26,974 |   |   |   | 27,203 |   |   |   | 68,301 |   |
| Advertising                                               |   |                                     | 17,618    |   |                                   |   | 84,188 |   |   |   | 52,022 |   |   |   | 153,520 |   |
| Insurance      premiums                                   |   |                                     | 19,423    |   |                                   |   | 17,406 |   |   |   | 41,458 |   |   |   | 35,231 |   |
| Other                                                     |   |                                     | 80,682    |   |                                   |   | 151,812 |   |   |   | 183,033 |   |   |   | 273,178 |   |
| Total      non-interest expense                           |   |                                     | 1,477,177 |   |                                   |   | 1,588,355 |   |   |   | 3,316,969 |   |   |   | 3,147,283 |   |
|                                                      |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      before income tax expense                       |   |                                     | (237,594  | )      |                                   |   | (341,102 | ) |   |   | (784,380 | ) |   |   | (622,741 | ) |
| Income      tax benefit                                   |   |                                     | -         |   |                                   |   | (127,000 | ) |   |   | - |   |   |   | (233,000 | ) |
| Net      (loss)                                           |   | $                                        | (237,594  | )      |                                   | $      | (214,102 | ) |   | $ | (784,380 | ) |   | $ | (389,741 | ) |
| Basic      and diluted (loss) per share                   |   | $                                        | (0.10     | )      |                                   | $      | (0.09 | ) |   | $ | (0.33 | ) |   | $ | (0.17 | ) |
| Comprehensive      (loss)                                 |   | $                                        | (194,620  | )      |                                   | $      | (188,919 | ) |   | $ | (657,621 | ) |   | $ | (189,099 | ) |
|                                                      |   |                                     |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

| 2006                                                                                                                                                  |   | Common      Stock |    |   | Additional Paid-In      Capital |   |        | Retained      Earning |   |   | Accumulated Other Comprehensive      Income (Loss) |   |   | Unearned ESOP      Shares |     |   | Amount Reclassified on ESOP      Shares |   |          | Treasury      Stock |   |   | Unearned RRP      Shares |   |   | Total  |          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|---------------------------------|--------|-------------|-----------------------|--------|--------|----------------------------------------------------|--------|--------|---------------------------|----------|--------|-----------------------------------------|--------|---------------|---------------------|--------|--------|--------------------------|--------|--------|--------|---------------|
|                                                                                                                                                  |   |              |    |   |                            |   |        |                  |   |   |                                               |   |   |                      |     |   |                                    |   |          |                |   |   |                     |   |   |   |          |
| Balance      at July 1, 2006                                                                                                                          |   | $                 | 26,450  |   |                            | $      | 24,739,005  |                  |   | $      | 12,719,307                                         |   |   | $                         | (393,231 | )      |                                    | $      | (2,140,299    | )                   |   | $      | (617,872                 | )      |   | $      | (783,611      | ) |   | $ | (897,072 | ) |   | $ | 32,652,677 |   |
| Comprehensive      income (loss)                                                                                                                      |   |              |    |   |                            |   |        |                  |   |   |                                               |   |   |                      |     |   |                                    |   |          |                |   |   |                     |   |   |   |          |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                                         |   |              | — |   |                            |   | —     |                  |   |   | (389,741                                           | )      |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | (389,741 | ) |
| Change      in fair value of securities available-for-sale, net                                                                                       |   |              | — |   |                            |   | —     |                  |   |   | —                                            |   |   |                      | 200,642  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | 200,642 |   |
| Total      comprehensive      loss                                                                                                                    |   |              |    |   |                            |   |        |                  |   |   |                                               |   |   |                      |     |   |                                    |   |          |                |   |   |                     |   |   |   |          |   |   |   |   |   |   |   | (189,099 | ) |
| Reclassification      due to release and change in fair value of common stock in ESOP subject to      contingent repurchase obligation of ESOP shares |   |              | — |   |                            |   | —     |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | (80,408                  | )      |   |   | —       |   |   |   | — |   |   |   | (80,408 | ) |
| Release      of 10,500 of unearned             ESOP shares                                                    |   |              | — |   |                            |   | 30,030      |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | 132,720       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | 162,750 |   |
| Reclassification      of RRPs in conjunction with adoption of SFAS 123(R)                                                                             |   |              | — |   |                            |   | (897,072    | )                     |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | 897,072 |   |   |   | — |   |
| Issuance      of 5,000 shares to RRP plan                                                                                                             |   |              | — |   |                            |   | (74,250     | )                     |   |   | —                                            |   |   |                      | —  |   |                                    |   | —  |                |   |   | —                  |   |   |   | 74,250        |   |   |   | — |   |   |   | — |   |
|  Tax      benefit on RRP            shares vested                                                                  |   |              | — |   |                            |   |  7,482 |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —  |   |   |   | — |   |   |   | 7,482 |   |
|  Purchase      of 22,000        treasury      shares        at      cost   |   |              | — |   |                            |   | —     |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | (353,100      | ) |   |   | —  |   |   |   |  (353,100 | ) |
| Stock-based      compensation                                                                                                                         |   |              | — |   |                            |   | 210,921     |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | 210,921 |   |
| Balance      at December 31, 2006                                                                                                                |   | $                 | 26,450  |   |                            | $      | 24,016,166  |                  |   | $      | 12,329,566                                         |   |   | $                         | (192,589 | )      |                                    | $      | (2,007,579    | )                   |   | $      | (698,280                 | )      |   | $      | (1,062,461    | ) |   | $ | — |   |   | $ | 32,411,233 |   |
|                                                                                                                                                  |   |              |    |   |                            |   |        |                  |   |   |                                               |   |   |                      |     |   |                                    |   |          |                |   |   |                     |   |   |   |          |   |   |   |   |   |   |   |   |   |
| 2007                                                                                                                                                  |   |              |    |   |                            |   |        |                  |   |   |                                               |   |   |                      |     |   |                                    |   |          |                |   |   |                     |   |   |   |          |   |   |   |   |   |   |   |   |   |
| Balance      at July 1, 2007                                                                                                                          |   | $                 | 26,450  |   |                            | $      | 24,169,282  |                  |   | $      | 11,510,299                                         |   |   | $                         | (143,372 | )      |                                    | $      | (1,874,859    | )                   |   | $      | (968,070                 | )      |   | $      | (1,057,698    | ) |   | $ | — |   |   | $ | 31,662,032 |   |
| Comprehensive      income (loss)                                                                                                                      |   |              |    |   |                            |   |        |                  |   |   |                                               |   |   |                      |     |   |                                    |   |          |                |   |   |                     |   |   |   |          |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                                         |   |              | — |   |                            |   | —     |                  |   |   | (784,380                                           | )      |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | (784,380 | ) |
| Change      in fair value of securities available-for-sale, net                                                                                       |   |              | — |   |                            |   | —     |                  |   |   | —                                            |   |   |                      | 126,759  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | 126,759 |   |
| Total comprehensive loss                                                                                                                    |   |              |    |   |                            |   |        |                  |   |   |                                               |   |   |                      |     |   |                                    |   |          |                |   |   |                     |   |   |   |          |   |   |   |   |   |   |   | (657,621 | ) |
| Reclassification      due to change in fair value of common stock in ESOP subject to      contingent repurchase obligation                       |   |              | — |   |                            |   | —     |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | (31,740                  | )      |   |   | —       |   |   |   | — |   |   |   | (31,740 | ) |
| Release      of 10,578 of unearned             ESOP shares                                                         |   |              | — |   |                            |   | 17,206      |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | 133,706       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | 150,912 |   |
| Issuance      of 5,290 shares to RRP plan                                                                                                             |   |              | — |   |                            |   | (78,556     | )                     |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | 78,556        |   |   |   | — |   |   |   | — |   |
| Forfeiture      of  21,160 shares from the RRP plan                                                                                         |   |              | — |   |                            |   | 309,994     |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | (309,994      | ) |   |   | — |   |   |   | — |   |
|  Tax      benefit on RRP        shares      vested                                                            |   |              | — |   |                            |   |  5,223 |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | 5,223 |   |
| Stock-based      compensation                                                                                                                         |   |              | — |   |                            |   | 126,567     |                  |   |   | —                                            |   |   |                      | —  |   |                                    |   | —       |                |   |   | —                  |   |   |   | —       |   |   |   | — |   |   |   | 126,567 |   |
| Balance      at December 31, 2007                                                                                                                |   | $                 | 26,450  |   |                            | $      | 24,549,716  |                  |   | $      | 10,725,919                                         |   |   | $                         | (16,613  | )      |                                    | $      | (1,741,153    | )                   |   | $      | (999,810                 | )      |   | $      | (1,289,136    | ) |   | $ | — |   |   | $ | 31,255,373 |   |

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Table of Contents

|                                                                                            |   | 2007   |        |   | 2006   |   |
|-------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Cash      flows from operating activities                                                       |   |   |        |   |   |   |
| Net      (loss)                                                                                 |   | $      | (784,380    | )      |   | $      | (389,741 | ) |
| Adjustments      to reconcile net (loss)  to net cash from operating      activities: |   |   |        |   |   |   |   |   |
| Depreciation                                                                                    |   |   | 240,259     |   |   |   | 199,153 |   |
| Provision      for loan losses                                                                  |   |   | 143,721     |   |   |   | 60,000 |   |
| Earnings      on bank-owned life insurance                                                      |   |   | (95,062     | )      |   |   | (92,060 | ) |
| ESOP      expense                                                                               |   |   | 150,912     |   |   |   | 162,750 |   |
| Stock-based      compensation                                                                   |   |   | 126,567     |   |   |   | 210,921 |   |
| Change      in accrued interest receivable and other assets                                     |   |   | 207,808     |   |   |   | (404,655 | ) |
| Change      in other accrued interest payable and liabilities                                   |   |   | 77,510      |   |   |   | 297,247 |   |
| Net      cash from operating activities                                                         |   |   | 67,335      |   |   |   | 43,615 |   |
|                                                                                            |   |   |        |   |   |   |   |   |
| Cash      flows from investing activities                                                       |   |   |        |   |   |   |   |   |
| Proceeds      from sales, maturities, calls, and paydowns of available for sale      securities |   |   | 2,159,636   |   |   |   | 6,500,144 |   |
| Purchases      of securities available for sale                                                 |   |   | -           |   |   |   | (2,003,129 | ) |
| Change      in loans receivable                                                                 |   |   | (8,349,882  | )      |   |   | 7,945,144 |   |
| Purchase      of loan participations                                                            |   |   | (3,000,000  | )      |   |   | (881,100 | ) |
| Redemption      of Federal Home Loan Bank stock                                                 |   |   | -           |   |   |   | 22,921 |   |
| Purchase      of premises and equipment                                                         |   |   | (94,380     | )      |   |   | (288,315 | ) |
| Net      cash from investing activities                                                         |   |   | (9,284,626  | )      |   |   | 11,295,665 |   |
|                                                                                            |   |   |        |   |   |   |   |   |
| Cash      flows from financing activities                                                       |   |   |        |   |   |   |   |   |
| Net      increase (decrease) in deposits                                                        |   |   | (12,510,171 | )      |   |   | 16,650,643 |   |
| Federal      Home Loan Bank advances                                                            |   |   | 5,000,000   |   |   |   | - |   |
| Net      decrease in federal funds purchased                                                    |   |   | -           |   |   |   | (1,225,404 | ) |
| Change      in advances from borrowers for taxes and insurance                                  |   |   | (143,262    | )      |   |   | (43,086 | ) |
| Purchase      of treasury stock                                                                 |   |   | -           |   |   |   | (353,100 | ) |
| Tax      benefit on RRP shares                                                                  |   |   | 5,223       |   |   |   | 7,482 |   |
| Net      cash from financing activities                                                         |   |   | (7,648,210  | )      |   |   | 15,036,535 |   |
|                                                                                            |   |   |        |   |   |   |   |   |
| Net      change in cash and cash equivalents                                                    |   |   | (16,865,501 | )      |   |   | 26,375,815 |   |
|                                                                                            |   |   |        |   |   |   |   |   |
| Cash      and cash equivalents                                                                  |   |   |        |   |   |   |   |   |
| Beginning      of the year                                                                      |   |   | 21,395,954  |   |   |   | 4,348,220 |   |
|                                                                                            |   |   |        |   |   |   |   |   |
| End      of period                                                                              |   | $      | 4,530,453   |   |   | $      | 30,724,035 |   |

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|                               |   | December      31, 2007 |       |   | June      30, 2007 |   |
|------------------------------------|--------|------------------------|------------|--------|--------------------|--------|
| Real      estate loans             |   |                   |       |   |               |   |
| One-to-four-family                 |   | $                      | 39,807,049 |   |               | $      | 36,756,599 |   |
| Commercial                         |   |                   | 37,064,198 |   |               |   | 32,880,378 |   |
| Multi-family                       |   |                   | 6,391,446  |   |               |   | 4,768,442 |   |
| Total      real estate loans       |   |                   | 83,262,693 |   |               |   | 74,405,419 |   |
| Commercial      loans              |   |                   | 11,562,106 |   |               |   | 9,237,266 |   |
| Consumer      loans                |   |                   |       |   |               |   |   |   |
| Home      equity loans             |   |                   | 526,972    |   |               |   | 342,492 |   |
| Other                              |   |                   | 183,143    |   |               |   | 187,195 |   |
| Total      consumer loans          |   |                   | 710,115    |   |               |   | 529,687 |   |
| Less:                              |   |                   |       |   |               |   |   |   |
| Net      deferred loan fees (cost) |   |                   | 27,947     |   |               |   | 6,384 |   |
| Allowance      for loan losses     |   |                   | 801,924    |   |               |   | 667,105 |   |
| Loans,      net                    |   | $                      | 94,705,044 |   |               | $      | 83,498,883 |   |

|                                  |   | 2007   |                                  |   | 2006   |   |
|---------------------------------------|--------|--------|---------------------------------------|--------|--------|--------|
| BalaBalance      at beginning of year |   |   | 667,105                               |   |   |   | 400,000 |   |
| Pro      Provision for loan loss      |   |   | 143,721                               |   |   |   | 30,000 |   |
| Rec      Charge offs                  |   |   |      (8,902) |   |   |   |                 - |   |
|                                  |   | $      | 801,924                               |   |   | $      | 430,000 |   |

|                                                   |   | December      31, 2007 |      |   | June      30, 2007 |   |
|--------------------------------------------------------|--------|------------------------|-----------|--------|--------------------|--------|
| Total      impaired loans at year end                  |   | $                      | 1,071,000 |   |               | $      | 709,000 |   |
| Amount      of the allowance for loan losses allocated |   |                   | 120,000   |   |               |   | 120,000 |   |
| Interest      income recognized during impairment      |   |                   | 24,000    |   |               |   | 6,700 |   |
| Cash-basis      interest income recognized             |   |                   | -         |   |               |   | 3,700 |   |

|                                                             | December      31, 2007                                                                                               |   | June      30, 2007 |    |
|------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|
| Loa  Loans      past due over 90 days still on accrual | $                   - |   | $                  | 226,000 |   |
| Non  Nonaccrual      loans                             | 1,071,000                                                                                                            |   |               | -       |   |

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|                                            |   | Three      Months EndedDecember 31,      2007 |      |   | Three      Months EndedDecember      31, 2006 |   |      | Six      Months EndedDecember 31,      2007 |   |   | Six      Months EndedDecember      31, 2006 |   |
|-------------------------------------------------|--------|----------------------------------------------------|-----------|--------|-----------------------------------------------|--------|-----------|--------------------------------------------------|--------|--------|---------------------------------------------|--------|
| Basic      and diluted loss per share           |   |                                               |      |   |                                          |   |      |                                             |   |   |                                        |   |
| Net      loss as reported                       |   | $                                                  | (237,594  | )      |                                          | $      | (214,102  | )                                                |   | $      | (784,380                                    | )      |   | $ | (389,741 | ) |
| Weighted      average common shares outstanding |   |                                               | 2,370,390 |   |                                          |   | 2,359,148 |                                             |   |   | 2,367,170                                   |   |   |   | 2,357,948 |   |
| Basic      and diluted loss per share           |   |                                               | (0.10     | )      |                                          |   | (0.09     | )                                                |   |   | (0.33                                       | )      |   |   | (0.17 | ) |

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|                           |   | 2007   |   |   | 2006   |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|
| Risk-free      interest rate   |   |   | 4.65   | %      |   |   | 5.10 | % |
| Expected      term             |   |   | 7      |   |   |   | 7 |   |
| Expected      stock volatility |   |   | 13     | %      |   |   | 20 | % |
| Dividend      yield            |   |   | 0      | %      |   |   | 0 | % |

|                                                                            |   | Shares |                     |   | Weighted      Average Exercise Price |   |   | Weighted      Average Remaining Contractual Term |   |   | Aggregate      Intrinsic Value     |   |
|---------------------------------------------------------------------------------|--------|--------|--------------------------|--------|--------------------------------------|--------|--------|--------------------------------------------------|--------|--------|------------------------------------|--------|
| Out      Outstanding at July 1, 2007                                            |   |   | 163,410                  |   |                                 | $      | 13.99  |                                             |   |   |                               |   |   |   |
| Gra      Granted                                                                |   |   | 13,225                   |   |                                 |   | 13.15  |                                             |   |   |                               |   |   |   |
| Exe      Exercised                                                              |   |   | -                        |   |                                 |   | -      |                                             |   |   |                               |   |   |   |
| For  Forfeited      or expired                                        |   |   |   (13,225      | )      |                                 |   | 13.90  |                                             |   |   |                               |   |   |   |
| Ou  Outstanding      at December 31, 2007                             |   |   |  163,410            |   |                                 | $      | 13.93  |                                             |   |   |      8.55 |   |   | $ | 70,266 |   |
| Exe      Exercisable at December 31, 2007                                       |   |   |    68,770 |   |                                 | $      | 13.93  |                                             |   |   |      8.20 |   |   | $ | 29,571 |   |
| Ves      Vested or expect to vest atSep   December      31, 2007 |   |   |  163,410            |   |                                 | $      | 13.93  |                                             |   |   |      8.55 |   |   | $ | 70,266 |   |

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| Nonvested      Shares               |   | Shares |                     |   | Weighted      Average Grant-Date Fair Value |   |
|-------------------------------------|--------|--------|--------------------------|--------|---------------------------------------------|--------|
| Nonvested      at July 1, 2007 |   |   | 47,320                   |   |                                        | $      | 14.03 |   |
| Granted                             |   |   | 5,290                    |   |                                        |   | 13.15 |   |
| Vested                              |   |   | (9,464                   | )      |                                        |   |              13.97 |   |
| Forfeited                           |   |   |    (4,232 | )      |                                        |   |        13.90 |   |
| Nonvested      at December 31, 2007 |   |   |   38,914       |   |                                        | $      | 13.94 |   |

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Management’s Discussion andAnalysis of Financial Condition and Results ofOperations.

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Item3. Controls

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PART II. – OTHER

Item1. Legal

Item2. Unregistered

Item3. Defaults

Item4. Submission

Item5. Other

Item6. Exhibits

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SIGNATURES

| Date:      February 14, 2008 | ROYAL      FINANCIAL, INC.By:/s/ Leonard      Szwajkowski                                 LeonardSzwajkowskiChief Executive Officer and      President |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |                                                                                                                                                                                                                                                                                          |

| Date:  February      14, 2008 | By:  /s/ Jodi A.      Ojeda                                              Jodi A. OjedaSenior Vice President      andChief Financial      Officer |
|-----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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EXHIBIT INDEX

| 31.1   | Certification      of Chief Executive Officer and Interim Chief Financial Officer pursuant to      Section 302 of the Sarbanes-Oxley Act of 2002.                                                          |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                            |
| 32.1   | Certification      of Chief Executive Officer and Interim Chief Financial Officer pursuant to      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002. |