| Maryland                                                                      | 65-1310069                           |
|-------------------------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction ofincorporation or organization)                 | (I.R.S. Employer Identification No.) |
|                                                                          |                                 |
| 12724 Gran Bay Parkway, Suite 150Jacksonville, Florida                        |  32258                          |
| (Address of principal executive offices)                                      | (Zip Code)                           |
|                                                                          |
| Registrant's telephone number, including area code:  (800) 342-2824 |

| Class                         | Outstanding at May 11, 2011 |
|-------------------------------|-----------------------------|
| Common Stock, $0.01 Par Value | 2,629,181 shares            |

----

|                                  |                                                                                        | Page Number |
|---------------------------------------|---------------------------------------------------------------------------------------------|------------------|
|                                  |                                                                                        |             |
| PART I. FINANCIAL INFORMATION         |
|                                  |                                                                                        |             |
| Item 1.                               | Financial Statements                                                                        | 3                |
| Item 2.                               | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 40               |
| Item 3.                               | Quantitative and Qualitative Disclosures about Market Risk                                  | 56               |
| Item 4.                               | Controls and Procedures                                                                     | 57               |
|                                  |                                                                                        |             |
| PART II.  OTHER INFORMATION |
|                                  |                                                                                        |             |
| Item 1.                               | Legal Proceedings                                                                           | 58               |
| Item 1A.                              | Risk Factors                                                                                | 58               |
| Item 2.                               | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 58               |
| Item 3.                               | Defaults upon Senior Securities                                                             | 58               |
| Item 4.                               | Removed and reserved                                                                        | 58               |
| Item 5.                               | Other Information                                                                           | 58               |
| Item 6.                               | Exhibits                                                                                    | 58               |
|                                  |                                                                                        |             |
| Form 10-Q                             | Signature Page                                                                              | 59               |
|                                  |                                                                                        |             |
| Ex-31.1                               | Section 302 Certification of CEO                                                            |             |
| Ex-31.2                               | Section 302 Certification of CFO                                                            |             |
| Ex-32                                 | Section 906 Certification of CEO and CFO                                                    |             |

----

|                                                                                                                                                                                |   | 2011   |    |   | 2010   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| ASSETS                                                                                                                                                                              |   |   |    |   |   |   |
| Cash and due from financial institutions                                                                                                                                            |   | $      | 5,421   |   |   | $      | 4,072 |   |
| Short-term interest-earning deposits                                                                                                                                                |   |   | 6,397   |   |   |   | 4,478 |   |
| Total cash and cash equivalents                                                                                                                                                     |   |   | 11,818  |   |   |   | 8,550 |   |
| Securities available for sale                                                                                                                                                       |   |   | 156,995 |   |   |   | 149,090 |   |
| Loans held for sale                                                                                                                                                                 |   |   | 35,011  |   |   |   | 49,318 |   |
| Loans, net of allowance of $13,563 at March 31, 2011 and $13,344 at December 31, 2010                                                                                               |   |   | 537,734 |   |   |   | 549,752 |   |
| Federal Home Loan Bank stock, at cost                                                                                                                                               |   |   | 10,158  |   |   |   | 10,158 |   |
| Land, premises and equipment, net                                                                                                                                                   |   |   | 15,676  |   |   |   | 15,857 |   |
| Bank owned life insurance                                                                                                                                                           |   |   | 23,766  |   |   |   | 23,578 |   |
| Other real estate owned                                                                                                                                                             |   |   | 9,213   |   |   |   | 9,940 |   |
| Accrued interest receivable                                                                                                                                                         |   |   | 2,727   |   |   |   | 2,842 |   |
| Other assets                                                                                                                                                                        |   |   | 7,003   |   |   |   | 8,357 |   |
|                                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Total assets                                                                                                                                                                        |   | $      | 810,101 |   |   | $      | 827,442 |   |
|                                                                                                                                                                                |   |   |    |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                |   |   |    |   |   |   |   |   |
| Deposits                                                                                                                                                                            |   |   |    |   |   |   |   |   |
| Non-interest-bearing demand                                                                                                                                                         |   | $      | 37,166  |   |   | $      | 35,941 |   |
| Interest-bearing demand                                                                                                                                                             |   |   | 75,343  |   |   |   | 71,710 |   |
| Savings and money market                                                                                                                                                            |   |   | 183,432 |   |   |   | 181,788 |   |
| Time                                                                                                                                                                                |   |   | 211,765 |   |   |   | 239,058 |   |
| Total deposits                                                                                                                                                                      |   |   | 507,706 |   |   |   | 528,497 |   |
| Securities sold under agreement to repurchase                                                                                                                                       |   |   | 92,800  |   |   |   | 92,800 |   |
| Federal Home Loan Bank advances                                                                                                                                                     |   |   | 145,000 |   |   |   | 150,000 |   |
| Other borrowings                                                                                                                                                                    |   |   | 3,309   |   |   |   | 5,000 |   |
| Accrued expenses and other liabilities                                                                                                                                              |   |   | 6,419   |   |   |   | 6,354 |   |
| Total liabilities                                                                                                                                                                   |   |   | 755,234 |   |   |   | 782,651 |   |
|                                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Commitments and contingent liabilities                                                                                                                                              |   |   | -       |   |   |   | - |   |
|                                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Preferred stock: $0.01 par value; 25,000,000 shares authorized at March 31, 2011, 2,000,000 authorized December 31, 2010, none issued                                               |   |   | -       |   |   |   | - |   |
| Common stock: $0.01 par value; 100,000,000 shares authorized, shares issued 2,629,181 at March 31, 2011; 18,000,000 shares authorized, shares issed 14,813,469 at December 31, 2010 |   |   | 26      |   |   |   | 148 |   |
| Additional paid in capital                                                                                                                                                          |   |   | 56,230  |   |   |   | 61,406 |   |
| Unearned employee stock ownership plan (ESOP) shares of 95,807 at March 31, 2011 and 139,656 at December 31, 2010                                                                   |   |   | (2,055  | )      |   |   | (1,397 | ) |
| Retained earnings                                                                                                                                                                   |   |   | (842    | )      |   |   | 2,581 |   |
| Accumulated other comprehensive income related to AFS securities                                                                                                                    |   |   | 542     |   |   |   | 689 |   |
| Accumulated other comprehensive income related to OTTI non credit issues                                                                                                            |   |   | 1,417   |   |   |   | 1,252 |   |
| Treasury stock, at cost, 45,146 shares at March 31, 2011 and 1,398,503 at December 31, 2010                                                                                    |   |   | (451    | )      |   |   | (19,888 | ) |
| Total stockholders' equity                                                                                                                                                          |   |   | 54,867  |   |   |   | 44,791 |   |
|                                                                                                                                                                                |   |   |    |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                                                                                          |   | $      | 810,101 |   |   | $      | 827,442 |   |

----

|                                                                     |   | 2011   |   |   | 2010   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Interest and dividend income                                             |   |   |   |   |   |   |
| Loans, including fees                                                    |   | $      | 8,562  |   |   | $      | 9,190 |   |
| Securities and interest-earning deposits in other financial institutions |   |   | 1,232  |   |   |   | 2,012 |   |
| Total interest and dividend income                                       |   |   | 9,794  |   |   |   | 11,202 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Interest expense                                                         |   |   |   |   |   |   |   |   |
| Deposits                                                                 |   |   | 1,689  |   |   |   | 2,820 |   |
| Federal Home Loan Bank advances                                          |   |   | 1,411  |   |   |   | 1,554 |   |
| Securities sold under agreements to repurchase                           |   |   | 1,173  |   |   |   | 1,148 |   |
| Other borrowings                                                         |   |   | 216    |   |   |   | 45 |   |
| Total interest expense                                                   |   |   | 4,489  |   |   |   | 5,567 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Net interest income                                                      |   |   | 5,305  |   |   |   | 5,635 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                |   |   | 2,797  |   |   |   | 3,722 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Net interest income after provision for loan losses                      |   |   | 2,508  |   |   |   | 1,913 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Non-interest income                                                      |   |   |   |   |   |   |   |   |
| Service charges and fees                                                 |   |   | 914    |   |   |   | 869 |   |
| Gain on sale of loans held for sale                                      |   |   | 395    |   |   |   | 104 |   |
| Loss on sale of portfolio loans                                          |   |   | -      |   |   |   | (273 | ) |
| Gain on sale of securities available for sale                            |   |   | 129    |   |   |   | - |   |
| Other than temporary impairment loss:                                    |   |   |   |   |   |   |   |   |
| Total impairment loss                                                    |   |   | (275   | )      |   |   | (700 | ) |
| Portion of loss recognized in other comprehensive income                 |   |   | 165    |   |   |   | 625 |   |
| Net impairment loss recognized in earnings                               |   |   | (110   | )      |   |   | (75 | ) |
| Bank owned life insurance earnings                                       |   |   | 188    |   |   |   | 178 |   |
| Interchange fees                                                         |   |   | 249    |   |   |   | 222 |   |
| Other                                                                    |   |   | 124    |   |   |   | 64 |   |
| Total non-interest income                                                |   |   | 1,889  |   |   |   | 1,089 |   |
| Non-interest expense                                                     |   |   |   |   |   |   |   |   |
| Compensation and benefits                                                |   |   | 3,972  |   |   |   | 2,570 |   |
| Occupancy and equipment                                                  |   |   | 583    |   |   |   | 554 |   |
| FDIC insurance premiums                                                  |   |   | 396    |   |   |   | 449 |   |
| Foreclosed assets, net                                                   |   |   | (42    | )      |   |   | 92 |   |
| Data processing                                                          |   |   | 393    |   |   |   | 255 |   |
| Outside professional services                                            |   |   | 489    |   |   |   | 359 |   |
| Collection expense                                                       |   |   | 899    |   |   |   | 393 |   |
| Other                                                                    |   |   | 1,130  |   |   |   | 1,089 |   |
| Total non-interest expense                                               |   |   | 7,820  |   |   |   | 5,761 |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Loss before income tax expense                                           |   |   | (3,423 | )      |   |   | (2,759 | ) |
|                                                                     |   |   |   |   |   |   |   |   |
| Income tax expense                                                       |   |   | -      |   |   |   | - |   |
|                                                                     |   |   |   |   |   |   |   |   |
| Net loss                                                                 |   | $      | (3,423 | )      |   | $      | (2,759 | ) |
|                                                                     |   |   |   |   |   |   |   |   |
| Loss per common share:                                                   |   |   |   |   |   |   |   |   |
| Basic                                                                    |   | $      | (1.36  | )      |   | $      | (1.07 | ) |
| Diluted                                                                  |   | $      | (1.36  | )      |   | $      | (1.07 | ) |
|                                                                     |   |   |   |   |   |   |   |   |
| Dividends declared per common share                                      |   | $      | -      |   |   | $      | - |   |

----

|                                                                                                                                                                                         |   |   |   |   |       |   |   |     |   |   |     |   |   | ACCUMULATED   |   |   |     |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|----------|--------|--------|----------|--------|--------|---------------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                                                                                                                              |   |   |   |   | ADDITIONAL |   |   | UNEARNED |   |   |     |   |   | OTHER         |   |   |     |   |   |   |   |
|                                                                                                                                                                                              |   | COMMON |   |   | PAID IN    |   |   | ESOP     |   |   | RETAINED |   |   | COMPREHENSIVE |   |   | TREASURY |   |   | TOTAL  |   |
|                                                                                                                                                                                              |   | STOCK  |   |   | CAPITAL    |   |   | SHARES   |   |   | EARNINGS |   |   | INCOME (LOSS) |   |   | STOCK    |   |   | EQUITY |   |
| For the three months ended March 31, 2011                                                                                                                                                         |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |
| Balance at January 1, 2011                                                                                                                                                                        |   | $      | 148    |   |       | $      | 61,406 |     |   | $      | (1,397   | )      |   | $             | 2,581  |   |     | $      | 1,941  |   |   | $ | (19,888 | ) |   | $ | 44,791 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Second-step conversion and offering                                                                                                                                                               |   |   | (122   | )      |       |   | (5,223 | )        |   |   | (684     | )      |   |          | -      |   |     |   | -      |   |   |   | 19,799 |   |   |   | 13,770 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| ESOP shares earned, 1,198 shares                                                                                                                                                                  |   |   | -      |   |       |   | (14    | )        |   |   | 26       |   |   |          | -      |   |     |   | -      |   |   |   | - |   |   |   | 12 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Management restricted stock expense                                                                                                                                                               |   |   | -      |   |       |   | 31     |     |   |   | -        |   |   |          | -      |   |     |   | -      |   |   |   | - |   |   |   | 31 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Stock options expense                                                                                                                                                                             |   |   | -      |   |       |   | 16     |     |   |   | -        |   |   |          | -      |   |     |   | -      |   |   |   | - |   |   |   | 16 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Shares purchased for Rabbi Trust                                                                                                                                                                  |   |   | -      |   |       |   | 14     |     |   |   | -        |   |   |          | -      |   |     |   | -      |   |   |   | (362 | ) |   |   | (348 | ) |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss):                                                                                                                                                                      |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                          |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | (3,423 | )      |     |   | -      |   |   |   | - |   |   |   | (3,423 | ) |
| Other comprehensive income (loss) Net change in unrealized losses on securities available-for-sale net of reclassification and taxes                                                              |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | -      |   |     |   | (147   | )      |   |   | - |   |   |   | (147 | ) |
| Change in unrealized gains (losses) on securities available-for-sale for which a portion of an other-than-temporary impairment has been recognized in earnings, net of reclassification and taxes |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | -      |   |     |   | 165    |   |   |   | - |   |   |   | 165 |   |
| Total comprehensive income (loss)                                                                                                                                                                 |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | (3,423 | )      |     |   | 18     |   |   |   | - |   |   |   | (3,405 | ) |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Balance at March 31, 2011                                                                                                                                                                         |   | $      | 26     |   |       | $      | 56,230 |     |   | $      | (2,055   | )      |   | $             | (842   | )      |     | $      | 1,959  |   |   | $ | (451 | ) |   | $ | 54,867 |   |

----

|                                                                                                                                                                                         |   |   |   |   |       |   |   |     |   |   |     |   |   | ACCUMULATED   |   |   |     |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|----------|--------|--------|----------|--------|--------|---------------|--------|--------|----------|--------|--------|--------|--------|
|                                                                                                                                                                                              |   |   |   |   | ADDITIONAL |   |   | UNEARNED |   |   |     | OTHER  |   |          |   |   |     |   |   |
|                                                                                                                                                                                              |   | COMMON |   |   | PAID IN    |   |   | ESOP     |   |   | RETAINED |   |   | COMPREHENSIVE |   |   | TREASURY |   |   | TOTAL  |   |
|                                                                                                                                                                                              |   | STOCK  |   |   | CAPITAL    |   |   | SHARES   |   |   | EARNINGS |   |   | INCOME (LOSS) |   |   | STOCK    |   |   | EQUITY |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |
| For the three months ended March 31, 2010                                                                                                                                                         |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |
| Balance at January 1, 2010                                                                                                                                                                        |   | $      | 148    |   |       | $      | 61,225 |     |   | $      | (1,862   | )      |   | $             | 16,777 |   |     | $      | 152    |   |   | $ | (19,899 | ) |   | $ | 56,541 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| ESOP shares earned, 34,914 shares                                                                                                                                                                 |   |   | -      |   |       |   | (64    | )        |   |   | 116      |   |   |          | -      |   |     |   | -      |   |   |   | - |   |   |   | 52 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Management restricted stock expense                                                                                                                                                               |   |   | -      |   |       |   | 161    |     |   |   | -        |   |   |          | -      |   |     |   | -      |   |   |   | - |   |   |   | 161 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Stock options expense                                                                                                                                                                             |   |   | -      |   |       |   | 79     |     |   |   | -        |   |   |          | -      |   |     |   | -      |   |   |   | - |   |   |   | 79 |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Director's deferred compensation                                                                                                                                                                  |   |   | -      |   |       |   | 17     |     |   |   | -        |   |   |          | -      |   |     |   | -      |   |   |   | (17 | ) |   |   | - |   |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Treasury stock  purchased at cost, 22,500 shares                                                                                                                                        |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | -      |   |     |   | -      |   |   |   | (34 | ) |   |   | (34 | ) |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss):                                                                                                                                                                      |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                          |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | (2,759 | )      |     |   | -      |   |   |   | - |   |   |   | (2,759 | ) |
| Other comprehensive income (loss) Net change in unrealized gains on securities available-for-sale net of reclassification and taxes                                                               |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | -      |   |     |   | 1,706  |   |   |   | - |   |   |   | 1,706 |   |
| Change in unrealized gains (losses) on securities available-for-sale for which a portion of an other-than-temporary impairment has been recognized in earnings, net of reclassification and taxes |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | -      |   |     |   | 625    |   |   |   | - |   |   |   | 625 |   |
| Total comprehensive income                                                                                                                                                                        |   |   | -      |   |       |   | -      |     |   |   | -        |   |   |          | (2,759 | )      |     |   | 2,331  |   |   |   | - |   |   |   | (428 | ) |
|                                                                                                                                                                                              |   |   |   |   |       |   |   |     |   |   |     |   |   |          |   |   |     |   |   |   |   |   |   |   |   |   |   |   |
| Balance at March 31, 2010                                                                                                                                                                         |   | $      | 148    |   |       | $      | 61,418 |     |   | $      | (1,746   | )      |   | $             | 14,018 |   |     | $      | 2,483  |   |   | $ | (19,950 | ) |   | $ | 56,371 |   |

----

----

|                                                                        |   | 2011   |     |   | 2010   |   |
|-----------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                        |   |   |     |   |   |   |
| Cash flows from operating activities                                        |   |   |     |   |   |   |
| Net loss                                                                    |   | $      | (3,423   | )      |   | $      | (2,759 | ) |
| Adjustments to reconcile net loss to to net cash from operating activities: |   |   |     |   |   |   |   |   |
| Provision for loan losses                                                   |   |   | 2,797    |   |   |   | 3,722 |   |
| Gain on sale of loans held for sale                                         |   |   | (395     | )      |   |   | (104 | ) |
| Loss on sale of portfolio loans                                             |   |   | -        |   |   |   | 273 |   |
| Loans originated for sale                                                   |   |   | (108,836 | )      |   |   | (17,632 | ) |
| Proceeds from loan sales                                                    |   |   | 123,536  |   |   |   | 21,480 |   |
| Foreclosed assets, net                                                      |   |   | (42      | )      |   |   | 92 |   |
| Gain on sale of securities available for sale                               |   |   | (129     | )      |   |   | - |   |
| Other than temporary impairment loss on AFS securities                      |   |   | 110      |   |   |   | 75 |   |
| ESOP compensation expense                                                   |   |   | 12       |   |   |   | 52 |   |
| Share-based compensation expense                                            |   |   | 47       |   |   |   | 240 |   |
| Accretion of discounts on securities and loans                              |   |   | 341      |   |   |   | 366 |   |
| Depreciation expense                                                        |   |   | 258      |   |   |   | 236 |   |
| Net change in accrued interest receivable                                   |   |   | 115      |   |   |   | 35 |   |
| Net change in cash surrender value of bank owned life insurance             |   |   | (188     | )      |   |   | (177 | ) |
| Net change in other assets                                                  |   |   | 1,354    |   |   |   | 548 |   |
| Net change in accrued expenses and other liabilities                        |   |   | 65       |   |   |   | (642 | ) |
| Net cash from operating activites                                           |   |   | 15,622   |   |   |   | 5,805 |   |
|                                                                        |   |   |     |   |   |   |   |   |
| Cash flows from investing activities                                        |   |   |     |   |   |   |   |   |
| Proceeds from maturities and payments of securites available for sale       |   |   | 11,478   |   |   |   | 15,256 |   |
| Proceeds from the sales of securities available for sale                    |   |   | 11,295   |   |   |   | - |   |
| Purchase of securities available for sale                                   |   |   | (31,032  | )      |   |   | (39,691 | ) |
| Proceeds from sale of portfolio loans                                       |   |   | -        |   |   |   | 866 |   |
| Net change in portfolio loans                                               |   |   | 8,680    |   |   |   | 8,781 |   |
| Expenditures on premises and equipment                                      |   |   | (77      | )      |   |   | (156 | ) |
| Proceeds from the sale of other real estate owned                           |   |   | 1,363    |   |   |   | 718 |   |
| Net cash from (used in) investing activities                                |   |   | 1,707    |   |   |   | (14,226 | ) |

----

----

|                                                               |   | 2011   |    |   | 2010   |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                               |   |   |    |   |   |   |
| Cash flows from financing activities                               |   |   |    |   |   |   |
| Net (decrease) increase in deposits                                |   | $      | (20,791 | )      |   | $      | 29,248 |   |
| Proceeds from FHLB advances                                        |   |   | 1,450   |   |   |   | - |   |
| Repayment of FHLB advances                                         |   |   | (6,450  | )      |   |   | (9,976 | ) |
| Repayment of other borrowings                                      |   |   | (5,000  | )      |   |   | (10,000 | ) |
| Proceeds from other borrowings                                     |   |   | 3,309   |   |   |   | - |   |
| Proceeds from sale of stock in second-step conversion and offering |   |   | 13,770  |   |   |   | - |   |
| Treasury stock repurchased                                         |   |   | -       |   |   |   | (34 | ) |
| Purchase of shares for Rabbi Trust                                 |   |   | (349    | )      |   |   | - |   |
| Net cash (used in) from financing activities                       |   |   | (14,061 | )      |   |   | 9,238 |   |
|                                                               |   |   |    |   |   |   |   |   |
| Net change in cash and cash equivalents                            |   |   | 3,268   |   |   |   | 817 |   |
|                                                               |   |   |    |   |   |   |   |   |
| Cash and equivalents beginning of period                           |   |   | 8,550   |   |   |   | 37,144 |   |
|                                                               |   |   |    |   |   |   |   |   |
| Cash and equivalents at end of period                              |   | $      | 11,818  |   |   | $      | 37,961 |   |
|                                                               |   |   |    |   |   |   |   |   |
| Supplemental information:                                          |   |   |    |   |   |   |   |   |
| Interest paid                                                      |   | $      | 4,512   |   |   | $      | 5,641 |   |
| Income tax paid                                                    |   |   | -       |   |   |   | 15 |   |
|                                                               |   |   |    |   |   |   |   |   |
| Supplemental noncash disclosures:                                  |   |   |    |   |   |   |   |   |
| Loans transferred to other real estate                             |   | $      | 596     |   |   | $      | 823 |   |

----

----

----

|                                           |   | AmortizedCost |    |   | UnrealizedGains        |                   |   | UnrealizedLosses |   |   | Fair Value |   |
|------------------------------------------------|--------|---------------|---------|--------|------------------------|------------------------|--------|------------------|--------|--------|-----------------|--------|
| March 31, 2011                                 |   |          |    |   | (Dollars in Thousands) |                   |
| U.S. Government-sponsored enterprises          |   | $             | -       |   |                   | $                      | -      |             |   | $      | -               |   |   | $ | - |   |
| State and municipal                            |   |          | 945     |   |                   |                   | -      |             |   |   | (79             | )      |   |   | 866 |   |
| Mortgage-backed securities residential         |   |          | 51,207  |   |                   |                   | 1,042  |             |   |   | (242            | )      |   |   | 52,007 |   |
| Collateralized mortgage obligations U.S. Govt. |   |          | 98,237  |   |                   |                   | 1,279  |             |   |   | (266            | )      |   |   | 99,250 |   |
| Collateralized mortgage obligations - other    |   |          | 4,647   |   |                   |                   | 231    |             |   |   | (6              | )      |   |   | 4,872 |   |
|                                           |   |          |    |   |                   |                   |   |             |   |   |            |   |   |   |   |   |
|                                           |   | $             | 155,036 |   |                   | $                      | 2,552  |             |   | $      | (593            | )      |   | $ | 156,995 |   |
|                                           |   |          |    |   |                   |                   |   |             |   |   |            |   |   |   |   |   |
| December 31, 2010                              |   |          |    |   |                   | (Dollars in Thousands) |   |
| U.S. Government-sponsored enterprises          |   | $             | -       |   |                   | $                      | -      |             |   | $      | -               |   |   | $ | - |   |
| State and municipal                            |   |          | 945     |   |                   |                   | -      |             |   |   | (81             | )      |   |   | 864 |   |
| Mortgage-backed securities residential         |   |          | 41,167  |   |                   |                   | 947    |             |   |   | (311            | )      |   |   | 41,803 |   |
| Collateralized mortgage obligations U.S. Govt. |   |          | 98,460  |   |                   |                   | 1,471  |             |   |   | (242            | )      |   |   | 99,689 |   |
| Collateralized mortgage obligations - other    |   |          | 6,577   |   |                   |                   | 269    |             |   |   | (112            | )      |   |   | 6,734 |   |
|                                           |   |          |    |   |                   |                   |   |             |   |   |            |   |   |   |   |   |
|                                           |   | $             | 147,149 |   |                   | $                      | 2,687  |             |   | $      | (746            | )      |   | $ | 149,090 |   |

----

|                                                  |   | March 31, 2011         |    |
|-------------------------------------------------------|--------|------------------------|---------|
|                                                  |   | (Dollars in Thousands) |    |
|                                                  |   | Amortized              |    |   | Fair |   |
|                                                  |   | Cost                   |    |   | Value |   |
| Due in one year or less                               |   | $                      | -       |   |   | $ | - |   |
| Due from one to five years                            |   |                   | -       |   |   |   | - |   |
| Due from five to ten years                            |   |                   | -       |   |   |   | - |   |
| Due after ten years                                   |   |                   | 945     |   |   |   | 866 |   |
| Mortgage-backed securities - residential              |   |                   | 51,207  |   |   |   | 52,007 |   |
| Collateralized mortgage obligations - U.S. Government |   |                   | 98,237  |   |   |   | 99,250 |   |
| Collateralized mortgage obligations - other           |   |                   | 4,647   |   |   |   | 4,872 |   |
|                                                  |   |                   |    |   |   |   |   |   |
| Total                                                 |   | $                      | 155,036 |   |   | $ | 156,995 |   |

|                                        |   |                |   |   | (Dollars in Thousands) |   |   |   |   |
|--------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------|--------|
|                                             |   | Less than 12 Months |   |   | 12 Months or More      |   |   | Total  |   |
|                                             |   | Fair                |   |   | Unrealized             |   |   | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| Description of Securities                        |   | Value               |   |   | Losses                 |   |   | Value  |   |   | Losses |   |   | Value |   |   | Losses |   |
| March 31, 2011                                   |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government-sponsored enterprises                 |   | $                   | -      |   |                   | $      | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| State and municipal                              |   |                | -      |   |                   |   | -      |   |   |   | 866 |   |   |   | (79 | ) |   |   | 866 |   |   |   | (79 | ) |
| Mortgage-backed securities - residential         |   |                | 22,869 |   |                   |   | (242   | )      |   |   | - |   |   |   | - |   |   |   | 22,869 |   |   |   | (242 | ) |
| Collateralized mortgage obligations - U.S. Govt. |   |                | 29,299 |   |                   |   | (266   | )      |   |   | - |   |   |   | - |   |   |   | 29,299 |   |   |   | (266 | ) |
| Collateralized mortgage obligations - other      |   |                | 76     |   |                   |   | (6     | )      |   |   | - |   |   |   | - |   |   |   | 76 |   |   |   | (6 | ) |
|                                             |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   | $                   | 52,244 |   |                   | $      | (514   | )      |   | $ | 866 |   |   | $ | (79 | ) |   | $ | 53,110 |   |   | $ | (593 | ) |
|                                             |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2010                                |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Government-sponsored enterprises                 |   | $                   | -      |   |                   | $      | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| State and municipal                              |   |                | 463    |   |                   |   | (20    | )      |   |   | 401 |   |   |   | (61 | ) |   |   | 864 |   |   |   | (81 | ) |
| Mortgage-backed securities - residential         |   |                | 14,154 |   |                   |   | (311   | )      |   |   | - |   |   |   | - |   |   |   | 14,154 |   |   |   | (311 | ) |
| Collateralized mortgage obligations - U.S. Govt. |   |                | 27,700 |   |                   |   | (242   | )      |   |   | - |   |   |   | - |   |   |   | 27,700 |   |   |   | (242 | ) |
| Collateralized mortgage obligations - other      |   |                | 595    |   |                   |   | (112   | )      |   |   | - |   |   |   | - |   |   |   | 595 |   |   |   | (112 | ) |
|                                             |   |                |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   | $                   | 42,912 |   |                   | $      | (685   | )      |   | $ | 401 |   |   | $ | (61 | ) |   | $ | 43,313 |   |   | $ | (746 | ) |

----

----

|                                                                                                                                                                                       |   | March 31,              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                                                                                                                       |   | 2011                   |   |   | 2010 |   |
|                                                                                                                                                                                       |   | (Dollars in Thousands) |   |
|                                                                                                                                                                                       |   |                   |   |   |   |   |
| Beginning balance, January 1                                                                                                                                                               |   | $                      | 1,498  |   |   | $ | 4,467 |   |
|                                                                                                                                                                                       |   |                   |   |   |   |   |   |   |
| Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized                                                                                  |   |                   | -      |   |   |   | - |   |
| Amounts realized for securities sold during the period                                                                                                                                     |   |                   | -      |   |   |   | - |   |
| Amounts related to securities for which the company intends to sell or that it will be more likely than not the company will be required to sell prior to recovery of amortized cost basis |   |                   | -      |   |   |   | - |   |
| Reductions for increase in cash flows expected to be collected that are recognized over the remaining life of the security                                                                 |   |                   | -      |   |   |   | - |   |
| Increases (decreases) to the amount related to the credit loss for which other-than-temporary impairment was previously recognized                                                         |   |                   | 110    |   |   |   | 75 |   |
|                                                                                                                                                                                       |   |                   |   |   |   |   |   |   |
| Ending balance, March 31                                                                                                                                                                   |   | $                      | 1,608  |   |   | $ | 4,542 |   |

----

|                                    |   | March 31, 2011 |    |   | % of totalloans |   |   | December 31,2010 |   |   | % of totalloans |   |
|-----------------------------------------|--------|--------------------------|---------|--------|---------------------------|--------|--------|-----------------------|--------|--------|---------------------------|--------|
| Real estate loans:                      |   |                     |    |   | (Dollars in Thousands)    |   |
| One-to-four family                      |   | $                        | 252,016 |   |                      |   | 46.3   | %                     |   | $      | 256,729                   |   |   |   | 46.2 | % |
| Commercial                              |   |                     | 71,456  |   |                      |   | 13.1   | %                     |   |   | 72,048                    |   |   |   | 13.0 | % |
| Other ( land and multi-family)          |   |                     | 29,661  |   |                      |   | 5.5    | %                     |   |   | 29,868                    |   |   |   | 5.4 | % |
| Total real estate loans                 |   |                     | 353,133 |   |                      |   | 64.9   | %                     |   |   | 358,645                   |   |   |   | 64.5 | % |
|                                    |   |                     |    |   |                      |   |   |                  |   |   |                      |   |   |   |   |   |
| Real estate construction loans:         |   |                     |    |   |                      |   |   |                  |   |   |                      |   |   |   |   |   |
| One-to-four family                      |   |                     | 8,672   |   |                      |   | 1.6    | %                     |   |   | 7,589                     |   |   |   | 1.4 | % |
| Commercial                              |   |                     | 5,858   |   |                      |   | 1.1    | %                     |   |   | 5,825                     |   |   |   | 1.0 | % |
| Acquisition and development             |   |                     | 1,352   |   |                      |   | 0.2    | %                     |   |   | 1,652                     |   |   |   | 0.3 | % |
| Total real estate construction loans    |   |                     | 15,882  |   |                      |   | 2.9    | %                     |   |   | 15,066                    |   |   |   | 2.7 | % |
|                                    |   |                     |    |   |                      |   |   |                  |   |   |                      |   |   |   |   |   |
| Other loans:                            |   |                     |    |   |                      |   |   |                  |   |   |                      |   |   |   |   |   |
| Home equity                             |   |                     | 81,295  |   |                      |   | 14.9   | %                     |   |   | 85,082                    |   |   |   | 15.3 | % |
| Consumer                                |   |                     | 73,086  |   |                      |   | 13.4   | %                     |   |   | 75,745                    |   |   |   | 13.6 | % |
| Commercial                              |   |                     | 20,773  |   |                      |   | 3.8    | %                     |   |   | 21,268                    |   |   |   | 3.8 | % |
| Total other loans                       |   |                     | 175,154 |   |                      |   | 32.2   | %                     |   |   | 182,095                   |   |   |   | 32.8 | % |
|                                    |   |                     |    |   |                      |   |   |                  |   |   |                      |   |   |   |   |   |
| Total loans                             |   |                     | 544,169 |   |                      |   | 100    | %                     |   |   | 555,806                   |   |   |   | 100 | % |
|                                    |   |                     |    |   |                      |   |   |                  |   |   |                      |   |   |   |   |   |
| Allowance for loan losses               |   |                     | (13,563 | )      |                      |   |   |                  |   |   | (13,344                   | )      |   |   |   |   |
| Net deferred loan costs                 |   |                     | 7,249   |   |                      |   |   |                  |   |   | 7,407                     |   |   |   |   |   |
| Premiums (discounts) on purchased loans |   |                     | (121    | )      |                      |   |   |                  |   |   | (117                      | )      |   |   |   |   |
|                                    |   |                     |    |   |                      |   |   |                  |   |   |                      |   |   |   |   |   |
| Loans, net                              |   | $                        | 537,734 |   |                      |   |   |                  |   | $      | 549,752                   |   |   |   |   |   |

----

|                                 |   | Current                |    |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |   | >90 DaysPast Due |   |   | Total PastDue |   |   | Total  |   |
|--------------------------------------|--------|------------------------|---------|--------|------------------------------|--------|--------|------------------------------|--------|--------|-------------------------------|--------|--------|--------------------|--------|--------|--------|--------|
|                                 |   | (Dollars in Thousands) |    |
| Real estate loans:                   |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |
| One-to-four family                   |   | $                      | 236,241 |   |                         | $      | 2,807  |                         |   | $      | 2,333                         |   |   | $                  | 10,635 |   |   | $      | 15,775 |   |   | $ | 252,016 |   |
| Commercial                           |   |                   | 60,236  |   |                         |   | 107    |                         |   |   | 3,945                         |   |   |               | 7,168  |   |   |   | 11,220 |   |   |   | 71,456 |   |
| Other ( land and multi-family)       |   |                   | 25,553  |   |                         |   | 717    |                         |   |   | -                             |   |   |               | 3,391  |   |   |   | 4,108 |   |   |   | 29,661 |   |
| Total real estate loans              |   |                   | 322,030 |   |                         |   | 3,631  |                         |   |   | 6,278                         |   |   |               | 21,194 |   |   |   | 31,103 |   |   |   | 353,133 |   |
|                                 |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Real estate construction loans:      |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| One-to-four family                   |   |                   | 8,672   |   |                         |   | -      |                         |   |   | -                             |   |   |               | -      |   |   |   | - |   |   |   | 8,672 |   |
| Commercial                           |   |                   | 3,274   |   |                         |   | -      |                         |   |   | -                             |   |   |               | 2,584  |   |   |   | 2,584 |   |   |   | 5,858 |   |
| Acquisition and development          |   |                   | 1,352   |   |                         |   | -      |                         |   |   | -                             |   |   |               | -      |   |   |   | - |   |   |   | 1,352 |   |
| Total real estate construction loans |   |                   | 13,298  |   |                         |   | -      |                         |   |   | -                             |   |   |               | 2,584  |   |   |   | 2,584 |   |   |   | 15,882 |   |
|                                 |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Other loans:                         |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Home equity                          |   |                   | 76,920  |   |                         |   | 1,359  |                         |   |   | 582                           |   |   |               | 2,434  |   |   |   | 4,375 |   |   |   | 81,295 |   |
| Consumer                             |   |                   | 71,452  |   |                         |   | 908    |                         |   |   | 223                           |   |   |               | 503    |   |   |   | 1,634 |   |   |   | 73,086 |   |
| Commercial                           |   |                   | 18,155  |   |                         |   | 427    |                         |   |   | -                             |   |   |               | 2,191  |   |   |   | 2,618 |   |   |   | 20,773 |   |
| Total other loans                    |   |                   | 166,527 |   |                         |   | 2,694  |                         |   |   | 805                           |   |   |               | 5,128  |   |   |   | 8,627 |   |   |   | 175,154 |   |
|                                 |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Total loans                          |   | $                      | 501,855 |   |                         | $      | 6,325  |                         |   | $      | 7,083                         |   |   | $                  | 28,906 |   |   | $      | 42,314 |   |   | $ | 544,169 |   |

----

|                                 |   | Current                |    |   | 30-59 DaysPast Due |   |   | 60-89 DaysPast Due |   |   | >90 DaysPast Due |   |   | Total PastDue |   |   | Total  |   |
|--------------------------------------|--------|------------------------|---------|--------|------------------------------|--------|--------|------------------------------|--------|--------|-------------------------------|--------|--------|--------------------|--------|--------|--------|--------|
|                                 |   | (Dollars in Thousands) |    |
| Real estate loans:                   |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |
| One-to-four family                   |   | $                      | 241,251 |   |                         | $      | 4,112  |                         |   | $      | 1,565                         |   |   | $                  | 9,801  |   |   | $      | 15,478 |   |   | $ | 256,729 |   |
| Commercial                           |   |                   | 62,163  |   |                         |   | 5,709  |                         |   |   | 912                           |   |   |               | 3,264  |   |   |   | 9,885 |   |   |   | 72,048 |   |
| Other ( land and multi-family)       |   |                   | 28,068  |   |                         |   | 17     |                         |   |   | 497                           |   |   |               | 1,286  |   |   |   | 1,800 |   |   |   | 29,868 |   |
| Total real estate loans              |   |                   | 331,482 |   |                         |   | 9,838  |                         |   |   | 2,974                         |   |   |               | 14,351 |   |   |   | 27,163 |   |   |   | 358,645 |   |
|                                 |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Real estate construction loans:      |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| One-to-four family                   |   |                   | 7,589   |   |                         |   | -      |                         |   |   | -                             |   |   |               | -      |   |   |   | - |   |   |   | 7,589 |   |
| Commercial                           |   |                   | 3,241   |   |                         |   | 902    |                         |   |   | -                             |   |   |               | 1,682  |   |   |   | 2,584 |   |   |   | 5,825 |   |
| Acquisition and development          |   |                   | 1,652   |   |                         |   | -      |                         |   |   | -                             |   |   |               | -      |   |   |   | - |   |   |   | 1,652 |   |
| Total real estate construction loans |   |                   | 12,482  |   |                         |   | 902    |                         |   |   | -                             |   |   |               | 1,682  |   |   |   | 2,584 |   |   |   | 15,066 |   |
|                                 |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Other loans:                         |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Home equity                          |   |                   | 81,648  |   |                         |   | 972    |                         |   |   | 59                            |   |   |               | 2,403  |   |   |   | 3,434 |   |   |   | 85,082 |   |
| Consumer                             |   |                   | 73,516  |   |                         |   | 1,320  |                         |   |   | 231                           |   |   |               | 678    |   |   |   | 2,229 |   |   |   | 75,745 |   |
| Commercial                           |   |                   | 18,872  |   |                         |   | 2,170  |                         |   |   | -                             |   |   |               | 226    |   |   |   | 2,396 |   |   |   | 21,268 |   |
| Total other loans                    |   |                   | 174,036 |   |                         |   | 4,462  |                         |   |   | 290                           |   |   |               | 3,307  |   |   |   | 8,059 |   |   |   | 182,095 |   |
|                                 |   |                   |    |   |                         |   |   |                         |   |   |                          |   |   |               |   |   |   |   |   |   |   |   |   |   |
| Total loans                          |   | $                      | 518,000 |   |                         | $      | 15,202 |                         |   | $      | 3,264                         |   |   | $                  | 19,339 |   |   | $      | 37,806 |   |   | $ | 555,806 |   |

----

|                                 |   | Performing             |    |   | Non-performing |   |   | Total  |   |
|--------------------------------------|--------|------------------------|---------|--------|----------------|--------|--------|--------|--------|
|                                 |   | (Dollars in Thousands) |    |
| Real estate loans:                   |   |                   |    |   |           |   |   |   |   |
| One-to-four family                   |   | $                      | 240,125 |   |           | $      | 11,891 |   |   | $ | 252,016 |   |
| Commercial                           |   |                   | 64,288  |   |           |   | 7,168  |   |   |   | 71,456 |   |
| Other ( land and multi-family)       |   |                   | 26,020  |   |           |   | 3,641  |   |   |   | 29,661 |   |
| Total real estate loans              |   |                   | 330,433 |   |           |   | 22,700 |   |   |   | 353,133 |   |
|                                 |   |                   |    |   |           |   |   |   |   |   |   |   |
| Real estate construction loans:      |   |                   |    |   |           |   |   |   |   |   |   |   |
| One-to-four family                   |   |                   | 8,672   |   |           |   | -      |   |   |   | 8,672 |   |
| Commercial                           |   |                   | 3,274   |   |           |   | 2,584  |   |   |   | 5,858 |   |
| Acquisition and development          |   |                   | 1,352   |   |           |   | -      |   |   |   | 1,352 |   |
| Total real estate construction loans |   |                   | 13,298  |   |           |   | 2,584  |   |   |   | 15,882 |   |
|                                 |   |                   |    |   |           |   |   |   |   |   |   |   |
| Other loans:                         |   |                   |    |   |           |   |   |   |   |   |   |   |
| Home equity                          |   |                   | 78,699  |   |           |   | 2,596  |   |   |   | 81,295 |   |
| Consumer                             |   |                   | 72,627  |   |           |   | 459    |   |   |   | 73,086 |   |
| Commercial                           |   |                   | 18,582  |   |           |   | 2,191  |   |   |   | 20,773 |   |
| Total other loans                    |   |                   | 169,908 |   |           |   | 5,246  |   |   |   | 175,154 |   |
|                                 |   |                   |    |   |           |   |   |   |   |   |   |   |
| Total loans                          |   | $                      | 513,639 |   |           | $      | 30,530 |   |   | $ | 544,169 |   |

----

|                                 |   | Performing             |    |   | Non-performing |   |   | Total  |   |
|--------------------------------------|--------|------------------------|---------|--------|----------------|--------|--------|--------|--------|
|                                 |   | (Dollars in Thousands) |    |
| Real estate loans:                   |   |                   |    |   |           |   |   |   |   |
| One-to-four family                   |   | $                      | 246,545 |   |           | $      | 10,184 |   |   | $ | 256,729 |   |
| Commercial                           |   |                   | 64,820  |   |           |   | 7,228  |   |   |   | 72,048 |   |
| Other ( land and multi-family)       |   |                   | 26,120  |   |           |   | 3,748  |   |   |   | 29,868 |   |
| Total real estate loans              |   |                   | 337,485 |   |           |   | 21,160 |   |   |   | 358,645 |   |
|                                 |   |                   |    |   |           |   |   |   |   |   |   |   |
| Real estate construction loans:      |   |                   |    |   |           |   |   |   |   |   |   |   |
| One-to-four family                   |   |                   | 7,589   |   |           |   | -      |   |   |   | 7,589 |   |
| Commercial                           |   |                   | 4,143   |   |           |   | 1,682  |   |   |   | 5,825 |   |
| Acquisition and development          |   |                   | 1,652   |   |           |   | -      |   |   |   | 1,652 |   |
| Total real estate construction loans |   |                   | 13,384  |   |           |   | 1,682  |   |   |   | 15,066 |   |
|                                 |   |                   |    |   |           |   |   |   |   |   |   |   |
| Other loans:                         |   |                   |    |   |           |   |   |   |   |   |   |   |
| Home equity                          |   |                   | 82,679  |   |           |   | 2,403  |   |   |   | 85,082 |   |
| Consumer                             |   |                   | 75,066  |   |           |   | 679    |   |   |   | 75,745 |   |
| Commercial                           |   |                   | 19,067  |   |           |   | 2,201  |   |   |   | 21,268 |   |
| Total other loans                    |   |                   | 176,812 |   |           |   | 5,283  |   |   |   | 182,095 |   |
|                                 |   |                   |    |   |           |   |   |   |   |   |   |   |
| Total loans                          |   | $                      | 527,681 |   |           | $      | 28,125 |   |   | $ | 555,806 |   |

----

|                                 |   | Non-accrual            |   |   | Loans pastdue 90 days ormore and stillaccruing |   |
|--------------------------------------|--------|------------------------|--------|--------|------------------------------------------------|--------|
|                                 |   | (Dollars in Thousands) |   |
| Real estate loans:                   |   |                   |   |   |                                           |   |
| One-to-four family                   |   | $                      | 11,891 |   |                                           | $      | - |   |
| Commercial                           |   |                   | 7,168  |   |                                           |   | - |   |
| Other ( land and multi-family)       |   |                   | 3,641  |   |                                           |   | - |   |
| Total real estate loans              |   |                   | 22,700 |   |                                           |   | - |   |
|                                 |   |                   |   |   |                                           |   |   |   |
| Real estate construction loans:      |   |                   |   |   |                                           |   |   |   |
| One-to-four family                   |   |                   | -      |   |                                           |   | - |   |
| Commercial                           |   |                   | 2,584  |   |                                           |   | - |   |
| Acquisition and development          |   |                   | -      |   |                                           |   | - |   |
| Total real estate construction loans |   |                   | 2,584  |   |                                           |   | - |   |
|                                 |   |                   |   |   |                                           |   |   |   |
| Other loans:                         |   |                   |   |   |                                           |   |   |   |
| Home equity                          |   |                   | 2,596  |   |                                           |   | - |   |
| Consumer                             |   |                   | 459    |   |                                           |   | - |   |
| Commercial                           |   |                   | 2,191  |   |                                           |   | - |   |
| Total other loans                    |   |                   | 5,246  |   |                                           |   | - |   |
|                                 |   |                   |   |   |                                           |   |   |   |
| Total loans                          |   | $                      | 30,530 |   |                                           | $      | - |   |

----

|                                 |   | Non-accrual            |   |   | Loans pastdue 90 days ormore andstillaccruing |   |
|--------------------------------------|--------|------------------------|--------|--------|------------------------------------------------------------------------|--------|
|                                 |   | (Dollars in Thousands) |   |
| Real estate loans:                   |   |                   |   |   |                                                                   |   |
| One-to-four family                   |   | $                      | 10,184 |   |                                                                   | $      | - |   |
| Commercial                           |   |                   | 7,228  |   |                                                                   |   | - |   |
| Other ( land and multi-family)       |   |                   | 3,748  |   |                                                                   |   | - |   |
| Total real estate loans              |   |                   | 21,160 |   |                                                                   |   | - |   |
|                                 |   |                   |   |   |                                                                   |   |   |   |
| Real estate construction loans:      |   |                   |   |   |                                                                   |   |   |   |
| One-to-four family                   |   |                   | -      |   |                                                                   |   | - |   |
| Commercial                           |   |                   | 1,682  |   |                                                                   |   | - |   |
| Acquisition and development          |   |                   | -      |   |                                                                   |   | - |   |
| Total real estate construction loans |   |                   | 1,682  |   |                                                                   |   | - |   |
|                                 |   |                   |   |   |                                                                   |   |   |   |
| Other loans:                         |   |                   |   |   |                                                                   |   |   |   |
| Home equity                          |   |                   | 2,403  |   |                                                                   |   | - |   |
| Consumer                             |   |                   | 679    |   |                                                                   |   | - |   |
| Commercial                           |   |                   | 2,201  |   |                                                                   |   | - |   |
| Total other loans                    |   |                   | 5,283  |   |                                                                   |   | - |   |
|                                 |   |                   |   |   |                                                                   |   |   |   |
| Total loans                          |   | $                      | 28,125 |   |                                                                   | $      | - |   |

----

|                                 |   | Pass                   |   |   | SpecialMention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
|--------------------------------------|--------|------------------------|--------|--------|----------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                                 |   | (Dollars in Thousands) |   |
| Real estate loans:                   |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |
| Commercial                           |   | $                      | 50,982 |   |           | $      | 3,501  |        |   | $      | 16,973   |   |   | $      | -      |   |   | $ | 71,456 |   |
| Other ( land and multi-family)       |   |                   | 21,145 |   |           |   | 7,319  |        |   |   | 1,197    |   |   |   | -      |   |   |   | 29,661 |   |
| Total real estate loans              |   |                   | 72,127 |   |           |   | 10,820 |        |   |   | 18,170   |   |   |   | -      |   |   |   | 101,117 |   |
|                                 |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Real estate construction loans:      |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                   | 3,274  |   |           |   | -      |        |   |   | 2,584    |   |   |   | -      |   |   |   | 5,858 |   |
| Acquisition and development          |   |                   | -      |   |           |   | 1,352  |        |   |   | -        |   |   |   | -      |   |   |   | 1,352 |   |
| Total real estate construction loans |   |                   | 3,274  |   |           |   | 1,352  |        |   |   | 2,584    |   |   |   | -      |   |   |   | 7,210 |   |
|                                 |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Other loans:                         |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                   | 18,871 |   |           |   | -      |        |   |   | 1,902    |   |   |   | -      |   |   |   | 20,773 |   |
| Total other loans                    |   |                   | 18,871 |   |           |   | -      |        |   |   | 1,902    |   |   |   | -      |   |   |   | 20,773 |   |
|                                 |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Total loans                          |   | $                      | 94,272 |   |           | $      | 12,172 |        |   | $      | 22,656   |   |   | $      | -      |   |   | $ | 129,100 |   |

----

|                                 |   | Pass                   |   |   | SpecialMention |   |   | Substandard |   |   | Doubtful |   |   | Total  |   |
|--------------------------------------|--------|------------------------|--------|--------|----------------|--------|--------|-------------|--------|--------|----------|--------|--------|--------|--------|
|                                 |   | (Dollars in Thousands) |   |
| Real estate loans:                   |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |
| Commercial                           |   | $                      | 48,814 |   |           | $      | 6,494  |        |   | $      | 16,740   |   |   | $      | -      |   |   | $ | 72,048 |   |
| Other ( land and multi-family)       |   |                   | 19,792 |   |           |   | 7,166  |        |   |   | 2,910    |   |   |   | -      |   |   |   | 29,868 |   |
| Total real estate loans              |   |                   | 68,606 |   |           |   | 13,660 |        |   |   | 19,650   |   |   |   | -      |   |   |   | 101,916 |   |
|                                 |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Real estate construction loans:      |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                   | 3,241  |   |           |   | 902    |        |   |   | 1,682    |   |   |   | -      |   |   |   | 5,825 |   |
| Acquisition and development          |   |                   | -      |   |           |   | 1,652  |        |   |   | -        |   |   |   | -      |   |   |   | 1,652 |   |
| Total real estate construction loans |   |                   | 3,241  |   |           |   | 2,554  |        |   |   | 1,682    |   |   |   | -      |   |   |   | 7,477 |   |
|                                 |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Other loans:                         |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Commercial                           |   |                   | 17,756 |   |           |   | 1,311  |        |   |   | 2,201    |   |   |   | -      |   |   |   | 21,268 |   |
| Total other loans                    |   |                   | 17,756 |   |           |   | 1,311  |        |   |   | 2,201    |   |   |   | -      |   |   |   | 21,268 |   |
|                                 |   |                   |   |   |           |   |   |        |   |   |     |   |   |   |   |   |   |   |   |   |
| Total loans                          |   | $                      | 89,603 |   |           | $      | 17,525 |        |   | $      | 23,533   |   |   | $      | -      |   |   | $ | 130,661 |   |

----

|                                 |   | BeginningBalance       |   |   | Charge Offs |   |   | Recoveries |   |   | Provisions |   |   | EndingBalance |   |
|--------------------------------------|--------|------------------------|--------|--------|------------------|--------|--------|------------|--------|--------|------------|--------|--------|---------------|--------|
|                                 |   | (Dollars in Thousands) |   |
| Real estate loans:                   |   |                   |   |   |             |   |   |       |   |   |       |   |   |          |   |
| One-to-four family                   |   | $                      | 5,860  |   |             | $      | (1,406 | )          |   | $      | 141        |   |   | $             | 1,130  |   |   | $ | 5,725 |   |
| Commercial                           |   |                   | 2,443  |   |             |   | -      |       |   |   | -          |   |   |          | 87     |   |   |   | 2,530 |   |
| Other (land and multi-family)        |   |                   | 1,019  |   |             |   | (49    | )          |   |   | 33         |   |   |          | 211    |   |   |   | 1,214 |   |
| Total real estate loans              |   |                   | 9,322  |   |             |   | (1,455 | )          |   |   | 174        |   |   |          | 1,428  |   |   |   | 9,469 |   |
|                                 |   |                   |   |   |             |   |   |       |   |   |       |   |   |          |   |   |   |   |   |   |
| Real estate construction loans:      |   |                   |   |   |             |   |   |       |   |   |       |   |   |          |   |   |   |   |   |   |
| One-to-four family                   |   |                   | 18     |   |             |   | -      |       |   |   | -          |   |   |          | 84     |   |   |   | 102 |   |
| Commercial                           |   |                   | 37     |   |             |   | -      |       |   |   | -          |   |   |          | 110    |   |   |   | 147 |   |
| Acquisition and development          |   |                   | -      |   |             |   | -      |       |   |   | -          |   |   |          | -      |   |   |   | - |   |
| Total real estate construction loans |   |                   | 55     |   |             |   | -      |       |   |   | -          |   |   |          | 194    |   |   |   | 249 |   |
|                                 |   |                   |   |   |             |   |   |       |   |   |       |   |   |          |   |   |   |   |   |   |
| Other Loans:                         |   |                   |   |   |             |   |   |       |   |   |       |   |   |          |   |   |   |   |   |   |
| Home equity                          |   |                   | 1,663  |   |             |   | (1,106 | )          |   |   | 4          |   |   |          | 1,325  |   |   |   | 1,886 |   |
| Consumer                             |   |                   | 1,922  |   |             |   | (249   | )          |   |   | 54         |   |   |          | (133   | ) |   |   | 1,594 |   |
| Commercial                           |   |                   | 382    |   |             |   | -      |       |   |   | -          |   |   |          | (17    | ) |   |   | 365 |   |
| Total other loans                    |   |                   | 3,967  |   |             |   | (1,355 | )          |   |   | 58         |   |   |          | 1,175  |   |   |   | 3,845 |   |
|                                 |   |                   |   |   |             |   |   |       |   |   |       |   |   |          |   |   |   |   |   |   |
| Total loans                          |   | $                      | 13,344 |   |             | $      | (2,810 | )          |   | $      | 232        |   |   | $             | 2,797  |   |   | $ | 13,563 |   |

|                         |   | (Dollars in Thousands) |   |
|------------------------------|--------|----------------------------------|--------|
| Balance at beginning of year |   | $                                | 13,810 |   |
| Provision for loan losses    |   |                             | 3,722  |   |
| Charge-offs                  |   |                             | (4,354 | ) |
| Recoveries                   |   |                             | 130    |   |
| Balance at end of year       |   | $                                | 13,308 |   |

----

|                                                   |   | Individuallyevaluated forimpairment |   |   | Collectivelyevaluated forimpairment |   |    | Acquired withdeterioratedcredit quality |   |   | Total EndingBalance |   |
|--------------------------------------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|---------|---------------------------------------------------|--------|--------|--------------------------|--------|
|                                                   |   | (Dollars in Thousands)                   |   |
|                                                   |   |                                     |   |
| Allowance for loan losses:                             |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |
|   Ending allowance balance attributable to loans: |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |
| Real estate loans:                                     |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |
| One-to-four family                                     |   | $                                        | 1,279  |   |                                     | $      | 4,446   |                                              |   | $      | -                        |   |   | $ | 5,725 |   |
| Commercial                                             |   |                                     | 2,249  |   |                                     |   | 281     |                                              |   |   | -                        |   |   |   | 2,530 |   |
| Other (land and multi-family)                          |   |                                     | 301    |   |                                     |   | 913     |                                              |   |   | -                        |   |   |   | 1,214 |   |
| Total real estate loans                                |   |                                     | 3,829  |   |                                     |   | 5,640   |                                              |   |   | -                        |   |   |   | 9,469 |   |
| Real estate construction loans:                        |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| One-to-four family                                     |   |                                     | 80     |   |                                     |   | 22      |                                              |   |   | -                        |   |   |   | 102 |   |
| Commercial                                             |   |                                     | 135    |   |                                     |   | 12      |                                              |   |   | -                        |   |   |   | 147 |   |
| Acquisition and development                            |   |                                     | -      |   |                                     |   | -       |                                              |   |   | -                        |   |   |   | - |   |
| Total real estate construction loans                   |   |                                     | 215    |   |                                     |   | 34      |                                              |   |   | -                        |   |   |   | 249 |   |
| Other Loans:                                           |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| Home equity                                            |   |                                     | 10     |   |                                     |   | 1,876   |                                              |   |   | -                        |   |   |   | 1,886 |   |
| Consumer                                               |   |                                     | -      |   |                                     |   | 1,594   |                                              |   |   | -                        |   |   |   | 1,594 |   |
| Commercial                                             |   |                                     | 149    |   |                                     |   | 216     |                                              |   |   | -                        |   |   |   | 365 |   |
| Total other loans                                      |   |                                     | 159    |   |                                     |   | 3,686   |                                              |   |   | -                        |   |   |   | 3,845 |   |
| Total ending allowance balance                         |   | $                                        | 4,203  |   |                                     | $      | 9,360   |                                              |   | $      | -                        |   |   | $ | 13,563 |   |
|                                                   |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| Loans:                                                 |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| Real estate loans:                                     |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| One-to-four family                                     |   | $                                        | 14,415 |   |                                     | $      | 237,601 |                                              |   | $      | -                        |   |   | $ | 252,016 |   |
| Commercial                                             |   |                                     | 21,299 |   |                                     |   | 50,157  |                                              |   |   | -                        |   |   |   | 71,456 |   |
| Other (land and multi-family)                          |   |                                     | 5,071  |   |                                     |   | 24,590  |                                              |   |   | -                        |   |   |   | 29,661 |   |
| Total real estate loans                                |   |                                     | 40,785 |   |                                     |   | 312,348 |                                              |   |   | -                        |   |   |   | 353,133 |   |
| Real estate construction loans:                        |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| One-to-four family                                     |   |                                     | -      |   |                                     |   | 8,672   |                                              |   |   | -                        |   |   |   | 8,672 |   |
| Commercial                                             |   |                                     | 2,585  |   |                                     |   | 3,273   |                                              |   |   | -                        |   |   |   | 5,858 |   |
| Acquisition and development                            |   |                                     | 1,352  |   |                                     |   | -       |                                              |   |   | -                        |   |   |   | 1,352 |   |
| Total real estate construction loans                   |   |                                     | 3,937  |   |                                     |   | 11,945  |                                              |   |   | -                        |   |   |   | 15,882 |   |
| Other Loans:                                           |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| Home equity                                            |   |                                     | 1,479  |   |                                     |   | 79,816  |                                              |   |   | -                        |   |   |   | 81,295 |   |
| Consumer                                               |   |                                     | 260    |   |                                     |   | 72,826  |                                              |   |   | -                        |   |   |   | 73,086 |   |
| Commercial                                             |   |                                     | 2,910  |   |                                     |   | 17,863  |                                              |   |   | -                        |   |   |   | 20,773 |   |
| Total other loans                                      |   |                                     | 4,649  |   |                                     |   | 170,505 |                                              |   |   | -                        |   |   |   | 175,154 |   |
| Total ending loans balance                             |   | $                                        | 49,371 |   |                                     | $      | 494,798 |                                              |   | $      | -                        |   |   | $ | 544,169 |   |

----

|                                            |   | IndividuallyEvaluated ForImpairment |   |   | CollectivelyEvaluated ForImpairment |   |    | Acquired WithDeterioratedCredit Quality |   |   | Total EndingBalance |   |
|-------------------------------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|---------|---------------------------------------------------|--------|--------|--------------------------|--------|
|                                            |   | (Dollars in Thousands)                   |   |
| Allowance for loan losses:                      |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |
| Ending allowance balance attributable to loans: |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |
| Real estate loans:                              |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |
| One-to-four family                              |   | $                                        | 1,263  |   |                                     | $      | 4,597   |                                              |   | $      | -                        |   |   | $ | 5,860 |   |
| Commercial                                      |   |                                     | 2,153  |   |                                     |   | 290     |                                              |   |   | -                        |   |   |   | 2,443 |   |
| Other (land and multi-family)                   |   |                                     | 301    |   |                                     |   | 718     |                                              |   |   | -                        |   |   |   | 1,019 |   |
| Total real estate loans                         |   |                                     | 3,717  |   |                                     |   | 5,605   |                                              |   |   | -                        |   |   |   | 9,322 |   |
| Real estate construction loans:                 |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| One-to-four family                              |   |                                     | -      |   |                                     |   | 18      |                                              |   |   | -                        |   |   |   | 18 |   |
| Commercial                                      |   |                                     | -      |   |                                     |   | 37      |                                              |   |   | -                        |   |   |   | 37 |   |
| Acquisition and development                     |   |                                     | -      |   |                                     |   | -       |                                              |   |   | -                        |   |   |   | - |   |
| Total real estate construction loans            |   |                                     | -      |   |                                     |   | 55      |                                              |   |   | -                        |   |   |   | 55 |   |
| Other Loans:                                    |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| Home equity                                     |   |                                     | 9      |   |                                     |   | 1,654   |                                              |   |   | -                        |   |   |   | 1,663 |   |
| Consumer                                        |   |                                     | -      |   |                                     |   | 1,922   |                                              |   |   | -                        |   |   |   | 1,922 |   |
| Commercial                                      |   |                                     | 149    |   |                                     |   | 233     |                                              |   |   | -                        |   |   |   | 382 |   |
| Total other loans                               |   |                                     | 158    |   |                                     |   | 3,809   |                                              |   |   | -                        |   |   |   | 3,967 |   |
| Total ending allowance balance                  |   | $                                        | 3,875  |   |                                     | $      | 9,469   |                                              |   | $      | -                        |   |   | $ | 13,344 |   |
| Loans:                                          |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| Real estate loans:                              |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| One-to-four family                              |   | $                                        | 15,823 |   |                                     | $      | 240,906 |                                              |   | $      | -                        |   |   | $ | 256,729 |   |
| Commercial                                      |   |                                     | 19,722 |   |                                     |   | 52,326  |                                              |   |   | -                        |   |   |   | 72,048 |   |
| Other (land and multi-family)                   |   |                                     | 5,137  |   |                                     |   | 24,731  |                                              |   |   | -                        |   |   |   | 29,868 |   |
| Total real estate loans                         |   |                                     | 40,682 |   |                                     |   | 317,963 |                                              |   |   | -                        |   |   |   | 358,645 |   |
| Real estate construction loans:                 |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| One-to-four family                              |   |                                     | -      |   |                                     |   | 7,589   |                                              |   |   | -                        |   |   |   | 7,589 |   |
| Commercial                                      |   |                                     | 1,682  |   |                                     |   | 4,143   |                                              |   |   | -                        |   |   |   | 5,825 |   |
| Acquisition and development                     |   |                                     | -      |   |                                     |   | 1,652   |                                              |   |   | -                        |   |   |   | 1,652 |   |
| Total real estate construction loans            |   |                                     | 1,682  |   |                                     |   | 13,384  |                                              |   |   | -                        |   |   |   | 15,066 |   |
| Other Loans:                                    |   |                                     |   |   |                                     |   |    |                                              |   |   |                     |   |   |   |   |   |
| Home equity                                     |   |                                     | 1,709  |   |                                     |   | 84,373  |                                              |   |   | -                        |   |   |   | 85,082 |   |
| Consumer                                        |   |                                     | 312    |   |                                     |   | 75,433  |                                              |   |   | -                        |   |   |   | 75,745 |   |
| Commercial                                      |   |                                     | 2,911  |   |                                     |   | 18,357  |                                              |   |   | -                        |   |   |   | 21,268 |   |
| Total other loans                               |   |                                     | 4,932  |   |                                     |   | 177,163 |                                              |   |   | -                        |   |   |   | 182,095 |   |
| Total ending loans balance                      |   | $                                        | 47,296 |   |                                     | $      | 508,510 |                                              |   | $      | -                        |   |   | $ | 555,806 |   |

----

|                                 |   | RecordedInvestment |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |
|--------------------------------------|--------|--------------------|--------|--------|------------------------|--------|--------|------------------|--------|
|                                 |   |               |   |   | (Dollars in Thousands) |   |   |             |   |
| With no related allowance recorded:  |   |               |   |   |                   |   |   |             |   |
| Real estate loans:                   |   |               |   |   |                   |   |   |             |   |
| One-to-four family                   |   | $                  | -      |   |                   | $      | -      |             |   | $ | - |   |
| Commercial                           |   |               | 7,843  |   |                   |   | 7,843  |             |   |   | - |   |
| Other (land and multi-family)        |   |               | 480    |   |                   |   | 480    |             |   |   | - |   |
| Total real estate loans              |   |               | 8,323  |   |                   |   | 8,323  |             |   |   | - |   |
|                                 |   |               |   |   |                   |   |   |             |   |   |   |   |
| Real estate construction loans:      |   |               |   |   |                   |   |   |             |   |   |   |   |
| One-to-four family                   |   |               | -      |   |                   |   | -      |             |   |   | - |   |
| Commercial                           |   |               | 1,683  |   |                   |   | 4,988  |             |   |   | - |   |
| Acquisition and development          |   |               | 1,352  |   |                   |   | 1,352  |             |   |   | - |   |
| Total real estate construction loans |   |               | 3.035  |   |                   |   | 6,340  |             |   |   | - |   |
|                                 |   |               |   |   |                   |   |   |             |   |   |   |   |
| Other loans:                         |   |               |   |   |                   |   |   |             |   |   |   |   |
| Home equity                          |   |               | -      |   |                   |   | -      |             |   |   | - |   |
| Consumer                             |   |               | 260    |   |                   |   | 260    |             |   |   | - |   |
| Commercial                           |   |               | 958    |   |                   |   | 958    |             |   |   | - |   |
| Total other loans                    |   |               | 1,218  |   |                   |   | 1,218  |             |   |   | - |   |
|                                 |   |               |   |   |                   |   |   |             |   |   |   |   |
| Total                                |   | $                  | 12,576 |   |                   | $      | 15,881 |             |   | $ | - |   |
|                                 |   |               |   |   |                   |   |   |             |   |   |   |   |
| With an allowance recorded:          |   |               |   |   |                   |   |   |             |   |   |   |   |
| Real estate loans:                   |   |               |   |   |                   |   |   |             |   |   |   |   |
| One-to-four family                   |   | $                  | 14,415 |   |                   | $      | 14,543 |             |   | $ | 1,333 |   |
| Commercial                           |   |               | 13,456 |   |                   |   | 13,542 |             |   |   | 2,275 |   |
| Other (land and multi-family)        |   |               | 4,591  |   |                   |   | 5,091  |             |   |   | 301 |   |
| Total real estate loans              |   |               | 32,462 |   |                   |   | 33,176 |             |   |   | 3,909 |   |
|                                 |   |               |   |   |                   |   |   |             |   |   |   |   |
| Real estate construction loans:      |   |               |   |   |                   |   |   |             |   |   |   |   |
| One-to-four family                   |   |               | -      |   |                   |   | -      |             |   |   | - |   |
| Commercial                           |   |               | 902    |   |                   |   | 902    |             |   |   | 136 |   |
| Acquisition and development          |   |               | -      |   |                   |   | -      |             |   |   | - |   |
| Total real estate construction loans |   |               | 902    |   |                   |   | 902    |             |   |   | 136 |   |
|                                 |   |               |   |   |                   |   |   |             |   |   |   |   |
| Other loans:                         |   |               |   |   |                   |   |   |             |   |   |   |   |
| Home equity                          |   |               | 1,479  |   |                   |   | 1,479  |             |   |   | 10 |   |
| Consumer                             |   |               | -      |   |                   |   | -      |             |   |   | - |   |
| Commercial                           |   |               | 1,952  |   |                   |   | 1,952  |             |   |   | 148 |   |
| Total other loans                    |   |               | 3,431  |   |                   |   | 3,431  |             |   |   | 158 |   |
|                                 |   |               |   |   |                   |   |   |             |   |   |   |   |
| Total                                |   | $                  | 36,795 |   |                   | $      | 37,509 |             |   | $ | 4,203 |   |

----

|                                 |   | AverageBalance         |   |   | InterestIncomeRecognized |   |   | Cash BasisInterestIncomeRecognized |   |
|--------------------------------------|--------|------------------------|--------|--------|--------------------------|--------|--------|-----------------------------------------|--------|
|                                 |   | (Dollars in Thousands) |   |
| Real estate loans:                   |   |                   |   |   |                     |   |   |                                    |   |
| One-to-four family                   |   | $                      | 14,414 |   |                     | $      | 160    |                                    |   | $ | 160 |   |
| Commercial                           |   |                   | 19,397 |   |                     |   | 146    |                                    |   |   | 146 |   |
| Other ( land and multi-family)       |   |                   | 6,753  |   |                     |   | 37     |                                    |   |   | 37 |   |
| Total real estate loans              |   |                   | 40,564 |   |                     |   | 343    |                                    |   |   | 343 |   |
|                                 |   |                   |   |   |                     |   |   |                                    |   |   |   |   |
| Real estate construction loans:      |   |                   |   |   |                     |   |   |                                    |   |   |   |   |
| One-to-four family                   |   |                   | -      |   |                     |   | -      |                                    |   |   | - |   |
| Commercial                           |   |                   | 902    |   |                     |   | -      |                                    |   |   | - |   |
| Acquisition and development          |   |                   | 1,353  |   |                     |   | 16     |                                    |   |   | 16 |   |
| Total real estate construction loans |   |                   | 2,255  |   |                     |   | 16     |                                    |   |   | 16 |   |
|                                 |   |                   |   |   |                     |   |   |                                    |   |   |   |   |
| Other loans:                         |   |                   |   |   |                     |   |   |                                    |   |   |   |   |
| Home equity                          |   |                   | 1,480  |   |                     |   | 19     |                                    |   |   | 19 |   |
| Consumer                             |   |                   | 260    |   |                     |   | 3      |                                    |   |   | 3 |   |
| Commercial                           |   |                   | 4,812  |   |                     |   | 45     |                                    |   |   | 45 |   |
| Total other loans                    |   |                   | 6,552  |   |                     |   | 67     |                                    |   |   | 67 |   |
|                                 |   |                   |   |   |                     |   |   |                                    |   |   |   |   |
| Total loans                          |   | $                      | 49,371 |   |                     | $      | 426    |                                    |   | $ | 426 |   |

| Average of impaired loans during the period  |   | $ | 41,545 |   |
|----------------------------------------------|--------|---|--------|--------|
| Interest income recognized during impairment |   | $ | 237    |   |
| Cash-basis interest income recognized        |   | $ | 237    |   |

----

|                                 |   | RecordedInvestment     |   |   | UnpaidPrincipalBalance |   |   | RelatedAllowance |   |
|--------------------------------------|--------|------------------------|--------|--------|------------------------|--------|--------|------------------|--------|
|                                 |   | (Dollars in Thousands) |   |
| With no related allowance recorded:  |   |                   |   |   |                   |   |   |             |   |
| Real estate loans:                   |   |                   |   |   |                   |   |   |             |   |
| One-to-four family                   |   | $                      | -      |   |                   | $      | -      |             |   | $ | - |   |
| Commercial                           |   |                   | 6,296  |   |                   |   | 6,296  |             |   |   | - |   |
| Other ( land and multi-family)       |   |                   | 1,931  |   |                   |   | 1,931  |             |   |   | - |   |
| Total real estate loans              |   |                   | 8,227  |   |                   |   | 8,227  |             |   |   | - |   |
|                                 |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Real estate construction loans:      |   |                   |   |   |                   |   |   |             |   |   |   |   |
| One-to-four family                   |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
| Commercial                           |   |                   | 1,682  |   |                   |   | 4,988  |             |   |   | - |   |
| Acquisition and development          |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
| Total real estate construction loans |   |                   | 1,682  |   |                   |   | 4,988  |             |   |   | - |   |
|                                 |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Other loans:                         |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Home equity                          |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
| Consumer                             |   |                   | 312    |   |                   |   | 312    |             |   |   | - |   |
| Commercial                           |   |                   | 936    |   |                   |   | 936    |             |   |   | - |   |
| Total other loans                    |   |                   | 1,248  |   |                   |   | 1,248  |             |   |   | - |   |
|                                 |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Total                                |   | $                      | 11,157 |   |                   | $      | 14,463 |             |   | $ | - |   |
|                                 |   |                   |   |   |                   |   |   |             |   |   |   |   |
| With an allowance recorded:          |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Real estate loans:                   |   |                   |   |   |                   |   |   |             |   |   |   |   |
| One-to-four family                   |   | $                      | 15,823 |   |                   | $      | 15,880 |             |   | $ | 1,263 |   |
| Commercial                           |   |                   | 13,426 |   |                   |   | 13,426 |             |   |   | 2,153 |   |
| Other ( land and multi-family)       |   |                   | 3,206  |   |                   |   | 3,706  |             |   |   | 301 |   |
| Total real estate loans              |   |                   | 32,455 |   |                   |   | 33,012 |             |   |   | 3,717 |   |
|                                 |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Real estate construction loans:      |   |                   |   |   |                   |   |   |             |   |   |   |   |
| One-to-four family                   |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
| Commercial                           |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
| Acquisition and development          |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
| Total real estate construction loans |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
|                                 |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Other loans:                         |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Home equity                          |   |                   | 1,709  |   |                   |   | 1,709  |             |   |   | 9 |   |
| Consumer                             |   |                   | -      |   |                   |   | -      |             |   |   | - |   |
| Commercial                           |   |                   | 1,975  |   |                   |   | 1,975  |             |   |   | 149 |   |
| Total other loans                    |   |                   | 3,684  |   |                   |   | 3,684  |             |   |   | 158 |   |
|                                 |   |                   |   |   |                   |   |   |             |   |   |   |   |
| Total                                |   | $                      | 36,139 |   |                   | $      | 36,696 |             |   | $ | 3,875 |   |

----

|                                 |   | March 31,         |   |   | December 31, |   |
|--------------------------------------|--------|------------------------|--------|--------|-------------------|--------|
|                                 |   | 2011                   |   |   | 2010              |   |
|                                 |   | (Dollars in Thousands) |   |
| Beginning balance                    |   | $                      | 2,703  |   |              | $      | 4,471 |   |
| New loans                            |   |                   | 23     |   |              |   | 371 |   |
| Effect of changes in related parties |   |                   | (748   | )      |              |   | (1,386 | ) |
| Repayments                           |   |                   | (422   | )      |              |   | (753 | ) |
| Ending balance                       |   | $                      | 1,556  |   |              | $      | 2,703 |   |

|                                                      |   | March 31, 2011         |   |
|-----------------------------------------------------------|--------|----------------------------------|--------|
|                                                      |   | (Dollars in Thousands) |   |
| Notional amounts                                          |   | $                                | 25,000 |   |
| Weighted average pay rates (3 month LIBOR, 2.50% floor)   |   |                             | 2.50   | % |
| Weighted average receive rates (3 month LIBOR, 4.37% cap) |   |                             | 0.30   | % |
| Weighted average maturity (years)                         |   |                             | 0.5    |   |
| Fair value of interest rate swaps                         |   |                             | (138   | ) |

----

|                                                             |   | Liability Interest Rate Swaps          |   |
|------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                             |   | March 31, 2011                         |   | December 31, 2010 |   |
|                                                             |   | (Dollars in thousands)                 |   |
|                                                             |   | Balance Sheet                          |   |   |   | Balance Sheet |   |   |   |
|                                                             |   | Location                               |   | Fair Value |   | Location |   | Fair Value |   |
| Interest rate swaps not designated as hedging instruments:       |   |                                   |   |   |   |   |   |   |   |
| Interest rate contracts                                          |   | Accrued expenses and other liabilities |   | $ | (138 | ) | Accrued expenses and other liabilities |   | $ | (202 | ) |
|                                                             |   |                                   |   |   |   |   |   |   |   |   |   |
| Total interest rate swaps not designated as hedging instruments: |   |                                   |   |   |   |   |   |   |   |   |   |
| Total interest rate swaps                                        |   |                                   |   | $ | (138 | ) |   |   | $ | (202 | ) |

|                                                       |   | Three Months Ended                             |   |
|------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                       |   |                                           |   | March 31, 2011 |   |   | March 31, 2010 |   |
|                                                       |   | Location of Gain or (Loss) |   | (Dollars in Thousands) |   |
|                                                       |   | Recognized in Non-interest           |   | Amount of the Gain or (Loss) |   |
|                                                       |   | Income                                         |   | Recognized in Income |   |
| Interest rate swaps not designated as hedging instruments: |   |                                           |   |   |   |   |   |   |
| Interest rate contracts                                    |   | Other                                          |   | $ | 7 |   |   | $ | 50 |   |
|                                                       |   |                                           |   |   |   |   |   |   |   |   |
| Total                                                      |   |                                           |   | $ | 7 |   |   | $ | 50 |   |

----

|                                                     |   | (Dollars in Thousands, except per share data) |      |
|---------------------------------------------------------------|--------|-----------------------------------------------|-----------|
|                                                          |   | For the three months                          |      |
|                                                          |   | ended March 31,                               |      |
|                                                          |   | 2011                                          |      |   | 2010 |   |
| Basic                                                         |   |                                          |      |   |   |   |
| Net loss                                                      |   | $                                             | (3,423    | ) |   | $ | (2,759 | ) |
| Weighted average common shares outstanding                    |   |                                          | 2,629,181 |   |   |   | 2,624,783 |   |
| Less: Average unallocated ESOP shares                         |   |                                          | (69,954   | ) |   |   | (36,498 | ) |
| Average director's deferred compensation shares               |   |                                          | (44,380   | ) |   |   | - |   |
| Average unvested restricted stock awards                      |   |                                          | (3,138    | ) |   |   | (11,315 | ) |
|                                                          |   |                                          |      |   |   |   |   |   |
| Average Shares                                                |   |                                          | 2,511,709 |   |   |   | 2,576,970 |   |
|                                                          |   |                                          |      |   |   |   |   |   |
| Basic loss per common share                                   |   | $                                             | (1.36     | ) |   | $ | (1.07 | ) |
|                                                          |   |                                          |      |   |   |   |   |   |
| Diluted                                                       |   |                                          |      |   |   |   |   |   |
| Net loss                                                      |   | $                                             | (3,423    | ) |   | $ | (2,759 | ) |
|                                                          |   |                                          |      |   |   |   |   |   |
| Weighted average shares outstanding from above                |   |                                          | 2,511,709 |   |   |   | 2,576,970 |   |
| Add:Dilutive effects of assumed exercise of stock options     |   |                                          | -         |   |   |   | - |   |
|    Dilutive effects of full vesting of stock awards |   |                                          | -         |   |   |   | - |   |
|                                                          |   |                                          |      |   |   |   |   |   |
| Average shares and dilutive potential common shares           |   |                                          | 2,511,709 |   |   |   | 2,576,970 |   |
|                                                          |   |                                          |      |   |   |   |   |   |
| Diluted loss per common share                                 |   | $                                             | (1.36     | ) |   | $ | (1.07 | ) |

----

|                                                                                                                                |   | (Dollars in Thousands)                 |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                                                                |   | Three months ended March 31, |   |
|                                                                                                                                |   | 2011                                             |   |   | 2010 |   |
|                                                                                                                                |   |                                             |   |   |   |   |
| Net loss                                                                                                                            |   | $                                                | (3,423 | ) |   | $ | (2,759 | ) |
| Other comprehensive income (loss):                                                                                                  |   |                                             |   |   |   |   |   |   |
| Change in securities available for sale:                                                                                            |   |                                             |   |   |   |   |   |   |
| Unrealized holding gains (losses) arising during the period                                                                         |   |                                             | (18    | ) |   |   | 1,638 |   |
| Less reclassification adjustments for (gains) losses recognized in income                                                           |   |                                             | (129   | ) |   |   | - |   |
| Net unrealized gains                                                                                                                |   |                                             | (147   | ) |   |   | 1,638 |   |
| Income tax effect                                                                                                                   |   |                                             | -      |   |   |   | 68 |   |
| Net of tax effect                                                                                                                   |   |                                             | (147   | ) |   |   | 1,706 |   |
| Other-than-temporary-impairment on available-for-sale debt securities recorded in other comprehensive income              |   |                                             | 275    |   |   |   | 675 |   |
| Less other-than-temporary-impairment on available-for-sale debt securities associated with credit loss realized in income |   |                                             | (110   | ) |   |   | (75 | ) |
| Income tax effect                                                                                                                   |   |                                             | -      |   |   |   | 25 |   |
| Net of tax effect                                                                                                                   |   |                                             | 165    |   |   |   | 625 |   |
|                                                                                                                                |   |                                             |   |   |   |   |   |   |
| Total other comprehensive income                                                                                                    |   |                                             | 18     |   |   |   | 2,331 |   |
|                                                                                                                                |   |                                             |   |   |   |   |   |   |
| Comprehensive loss                                                                                                                  |   | $                                                | (3,405 | ) |   | $ | (428 | ) |

----

----

|                                                       |   | Fair Value Measurements at March 31, 2011 Using: |   |
|------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|--------|
|                                                       |   | Total                                                                               |   |   | QuotedPrices inActiveMarketsforIdenticalAssets (Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|                                                       |   | (Dollars in Thousands)                                                    |   |
| Assets:                                                    |   |                                                                                |   |
| Available for sale                                         |   |                                                                                |   |   |   |   |   |   |   |   |   |   |
| U.S. government-sponsored entities and  agencies |   | $                                                                                   | -      |   |   |   | - |   |   | $ | - |   |   |   | - |   |
| State and municipal                                        |   |                                                                                | 866    |   |   |   | - |   |   |   | 866 |   |   |   | - |   |
| Mortgage-backed securities – residential             |   |                                                                                | 52,007 |   |   |   | - |   |   |   | 52,007 |   |   |   | - |   |
| Collateralized mortgage obligations – U.S. Govt.     |   |                                                                                | 99,250 |   |   |   | - |   |   |   | 99,250 |   |   |   |   |   |
| Collateralized mortgage obligations - other                |   |                                                                                | 4,872  |   |   |   | - |   |   |   | - |   |   |   | 4,872 |   |
| Liabilities:                                               |   |                                                                                |   |
| Interest rate swap                                         |   | $                                                                                   | (138   | ) |   |   | - |   |   | $ | (138 | ) |   |   |   |   |

|                                                       |   | Fair Value Measurements at December 31, 2010 Using: |   |
|------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|
|                                                       |   | Total                                                                                  |   |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level2) |   |   | SignificantUnobservableInputs(Level 3) |   |
|                                                       |   | (Dollars in Thousands)                                                                 |   |
| Assets:                                                    |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Available for sale securities                              |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |
| U.S. government-sponsored entities and  agencies |   | $                                                                                      | -      |   |   |   | - |   |   | $ | - |   |   |   | - |   |
| State and municipal                                        |   |                                                                                   | 864    |   |   |   | - |   |   |   | 864 |   |   |   | - |   |
| Mortgage-backed securities – residential             |   |                                                                                   | 41,803 |   |   |   | - |   |   |   | 41,803 |   |   |   | - |   |
| Collateralized mortgage obligations – U.S. Govt.     |   |                                                                                   | 99,869 |   |   |   | - |   |   |   | 99,869 |   |   |   | - |   |
| Collateralized mortgage obligations – other          |   |                                                                                   | 6,734  |   |   |   | - |   |   |   | - |   |   |   | 6,734 |   |
| Liabilities:                                               |   |                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest rate swap                                         |   | $                                                                                      | (202   | ) |   | $ | - |   |   | $ | (202 | ) |   | $ | - |   |

----

|                                                   |   | Investment                       |   |
|--------------------------------------------------------|--------|----------------------------------|--------|
|                                                   |   | Securities                       |   |
|                                                   |   | Available-for-sale               |   |
|                                                   |   | (Dollars in thousands) |   |
| Balance of recurring Level 3 assets at January 1, 2011 |   | $                                | 6,734  |   |
| Total realized and unrealized gains (losses):          |   |                             |   |   |
| Included in earnings - realized                        |   |                             |   |   |
| Included in earnings - unrealized                      |   |                             | (110   | ) |
| Included other comprehensive income                    |   |                             | 68     |   |
| Proceeds from maturities and payments, net             |   |                             | (1,820 | ) |
| Transfers in to Level 3                                |   |                             | -      |   |
| Transfers out of Level 3                               |   |                             | -      |   |
| Balance of recurring Level 3 assets at March 31, 2011  |   | $                                | 4,872  |   |

----

|                                        |   | Fair Value Measurements at March 31, 2011 Using: |
|---------------------------------------------|--------|-------------------------------------------------------------------------------------|
|                                        |   | Total                                                                               |   |   | QuotedPrices inActiveMarketsforIdenticalAssets (Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|                                        |   | (Dollars in Thousands)                                                    |
| Assets:                                     |   |                                                                                |   |
| Other real estate owned                     |   | $                                                                                   | 9,213 |   |   | $ | - |   |   | $ | - |   |   | $ | 9,213 |   |
| Impaired loans – collateral dependent |   |                                                                                | 19,478 |   |   | $ | - |   |   | $ | - |   |   |   | 19,478 |   |

|                                        |   | Fair Value Measurements at December 31, 2010 Using: |
|---------------------------------------------|--------|----------------------------------------------------------------------------------------|
|                                        |   | Total                                                                                  |   |   | QuotedPrices inActiveMarketsforIdenticalAssets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs (Level 3) |   |
|                                        |   | (Dollars in Thousands)                                                       |
| Assets:                                     |   |                                                                                   |   |
| Other real estate owned                     |   | $                                                                                      | 9,940 |   |   | $ | - |   |   | $ | - |   |   | $ | 9,940 |   |
| Impaired loans – collateral dependent |   | $                                                                                      | 21,938 |   |   | $ | - |   |   | $ | - |   |   | $ | 21,938 |   |

----

|                                           |   | As of March 31,   |    |   | As of December 31, |   |
|------------------------------------------------|--------|----------------------------------|---------|--------|-----------------------------------|--------|
|                                           |   | 2011                             |    |   | 2010                              |   |
|                                           |   | Carrying                         |    |   | Estimated                         |   |   | Carrying |   |   | Estimated |   |
|                                           |   | Amount                           |    |   | Fair Value                   |   |   | Amount |   |   | Fair Value |   |
|                                      |   | (Dollars in Thousands) |
| FINANCIAL ASSETS                          |   |                             |    |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                      |   | $                                | 11,818  |   |                              | $      | 11,818 |   |   | $ | 8,550 |   |   | $ | 8,550 |   |
| Loans held for sale                            |   |                             | 35,011  |   |                              |   | 35,038 |   |   |   | 49,318 |   |   |   | 49,388 |   |
| Loans, net                                     |   |                             | 537,734 |   |                              |   | 537,561 |   |   |   | 549,752 |   |   |   | 561,189 |   |
| Federal Home Loan Bank stock                   |   |                             | 10,158  |   |                              |   | n/a |   |   |   | 10,158 |   |   |   | n/a |   |
| Accrued interest receivable                    |   |                             | 2,727   |   |                              |   | 2,727 |   |   |   | 2,842 |   |   |   | 2,842 |   |
|                                           |   |                             |    |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| FINANCIAL LIABILITIES                          |   |                             |    |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                       |   |                             | 507,706 |   |                              |   | 509,354 |   |   |   | 528,497 |   |   |   | 530,439 |   |
| Securities sold under agreements to repurchase |   |                             | 92,800  |   |                              |   | 105,847 |   |   |   | 92,800 |   |   |   | 103,780 |   |
| Federal Home Loan Bank advances                |   |                             | 145,000 |   |                              |   | 154,935 |   |   |   | 150,000 |   |   |   | 164,467 |   |
| Other borrowings                               |   |                             | 3,309   |   |                              |   | 3,309 |   |   |   | 5,000 |   |   |   | 5,000 |   |
| Accrued interest payable                       |   |                             | 1,153   |   |                              |   | 1,153 |   |   |   | 1,175 |   |   |   | 1,175 |   |

----

|                                      |   | Year to date   |   |
|-------------------------------------------|--------|--------------------------|--------|
|                                      |   | March 31, 2011 |   |   | March 31, 2010 |   |
|                                      |   |                     |   |   |   |   |
| Pre-tax loss                              |   | $                        | (3,423 | ) |   | $ | (2,759 | ) |
| Effective tax rate                        |   |                     | 40.6   | % |   |   | 38.2 | % |
| Tax benefit                               |   |                     | (1,391 | ) |   |   | (1,053 | ) |
| Increase in valuation allowance - federal |   |                     | 1,267  |   |   |   | 976 |   |
| Increase in valuation allowance - state   |   |                     | 124    |   |   |   | 77 |   |
| Income tax expense (benefit)              |   | $                        | -      |   |   | $ | - |   |

|   | · | As of June 30, 2011, the Bank must have Tier 1(Core) capital to adjusted total assets of 6.25%; and |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | As of September 30, 2011 and thereafter (or until the OTS or its successor removes such requirement), the Bank must have Tier 1(Core) capital to adjusted total assets of 7.0%. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|                                           |   | March 31,         |    |   | December 31, |   |    | Increase (decrease) |   |
|------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|---------|--------------------------|--------|
|                                           |   | 2011                   |    |   | 2010              |   |    | Dollars                  |   |   | Percentage |   |
|                                           |   | (Dollars in Thousands) |    |
| Assets                                         |   |                   |    |   |              |   |    |                     |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                      |   | $                      | 11,818  |   |              | $      | 8,550   |                     |   | $ | 3,268 |   |   |   | 38.2 | % |
| Securitites available for sale                 |   |                   | 156,995 |   |              |   | 149,090 |                     |   |   | 7,905 |   |   |   | 5.3 | % |
| Loans                                          |   |                   | 551,297 |   |              |   | 563,096 |                     |   |   | (11,799 | ) |   |   | -2.1 | % |
| Allowance for loan losses                      |   |                   | (13,563 | )      |              |   | (13,344 | )                        |   |   | (219 | ) |   |   | 1.6 | % |
| Loans, net                                     |   |                   | 537,734 |   |              |   | 549,752 |                     |   |   | (12,018 | ) |   |   | -2.2 | % |
| Loans held for sale                            |   |                   | 35,011  |   |              |   | 49,318  |                     |   |   | (14,307 | ) |   |   | -29.0 | % |
| Other assets                                   |   |                   | 68,543  |   |              |   | 70,732  |                     |   |   | (2,189 | ) |   |   | -3.1 | % |
| Total assets                                   |   | $                      | 810,101 |   |              | $      | 827,442 |                     |   | $ | (17,341 | ) |   |   | -2.1 | % |
|                                           |   |                   |    |   |              |   |    |                     |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' equity           |   |                   |    |   |              |   |    |                     |   |   |   |   |   |   |   |   |
| Deposits                                       |   |                   |    |   |              |   |    |                     |   |   |   |   |   |   |   |   |
| Non-interest bearing demand                    |   | $                      | 37,166  |   |              | $      | 35,941  |                     |   | $ | 1,225 |   |   |   | 3.4 | % |
| Interest bearing demand                        |   |                   | 75,343  |   |              |   | 71,710  |                     |   |   | 3,633 |   |   |   | 5.1 | % |
| Savings and money market                       |   |                   | 183,432 |   |              |   | 181,788 |                     |   |   | 1,644 |   |   |   | 0.9 | % |
| Time                                           |   |                   | 211,765 |   |              |   | 239,058 |                     |   |   | (27,293 | ) |   |   | -11.4 | % |
| Total deposits                                 |   |                   | 507,706 |   |              |   | 528,497 |                     |   |   | (20,791 | ) |   |   | -3.9 | % |
| Federal Home Loan Bank advances                |   |                   | 145,000 |   |              |   | 150,000 |                     |   |   | (5,000 | ) |   |   | -3.3 | % |
| Securities sold under agreements to repurchase |   |                   | 92,800  |   |              |   | 92,800  |                     |   |   | - |   |   |   | 0.0 | % |
| Other borrowings                               |   |                   | 3,309   |   |              |   | 5,000   |                     |   |   | (1,691 | ) |   |   | -33.8 | % |
| Accrued expenses and other liabilities         |   |                   | 6,419   |   |              |   | 6,354   |                     |   |   | 65 |   |   |   | 1.0 | % |
| Total liabilities                              |   |                   | 755,234 |   |              |   | 782,651 |                     |   |   | (27,417 | ) |   |   | -3.5 | % |
| Stockholders' equity                           |   |                   | 54,867  |   |              |   | 44,791  |                     |   |   | 10,076 |   |   |   | 22.5 | % |
| Total liabilities and stockholders' equity     |   | $                      | 810,101 |   |              | $      | 827,442 |                     |   | $ | (17,341 | ) |   |   | -2.1 | % |

|                                                           |   | At March 31, 2011 |   |
|----------------------------------------------------------------|--------|----------------------------------|--------|
|                                                           |   | Amortized                        |   |   | Fair |   |   | Number of |   |   | Cumulative |   |
|                                                           |   | Cost                             |   |   | Value |   |   | Securities |   |   | OTTI |   |
|                                                           |   | (Dollars in Thousands) |   |
|                                                           |   |                             |   |   |   |   |   |   |   |   |   |   |
| Private label collateralized mortgage obligations with OTTI    |   | $                                | 425    |   |   | $ | 527 |   |   |   | 2 |   |   | $ | 1,608 |   |
| Private label collateralized mortgage obligations with no OTTI |   |                             | 4,222  |   |   |   | 4,345 |   |   |   | 5 |   |   |   | - |   |
| Total private label collateralized mortgage obligations        |   | $                                | 4,647  |   |   | $ | 4,872 |   |   |   | 7 |   |   | $ | 1,608 |   |

----

----

|                            |   | March 31, |   |   | March 31, |   |
|---------------------------------|--------|----------------|--------|--------|----------------|--------|
|                            |   | 2011           |   |   | 2010           |   |
|                            |   |           |   |   |           |   |
| Balance at beginning of period  |   | $              | 13,344 |   |           | $      | 13,810 |   |
|                            |   |           |   |   |           |   |   |   |
| Charge-offs:                    |   |           |   |   |           |   |   |   |
| Real Estate Loans               |   |           |   |   |           |   |   |   |
| One-to four-family              |   |           | 1,406  |   |           |   | 1,880 |   |
| Commercial                      |   |           | -      |   |           |   | 115 |   |
| Other (Land & Multi-family) |   |           | 49     |   |           |   | 518 |   |
| Real Estate Construction Loans  |   |           |   |   |           |   |   |   |
| Construction One-to four family |   |           | -      |   |           |   | - |   |
| Construction Commercial         |   |           | -      |   |           |   | - |   |
| Acquistion & Development    |   |           | -      |   |           |   | - |   |
| Other Loans                     |   |           |   |   |           |   |   |   |
| Home equity                     |   |           | 1,106  |   |           |   | 706 |   |
| Consumer                        |   |           | 249    |   |           |   | 437 |   |
| Commercial                      |   |           | -      |   |           |   | 698 |   |
| Total charge-offs               |   |           | 2,810  |   |           |   | 4,354 |   |
|                            |   |           |   |   |           |   |   |   |
| Recoveries:                     |   |           |   |   |           |   |   |   |
| Real Estate Loans               |   |           |   |   |           |   |   |   |
| One-to four-family              |   |           | 141    |   |           |   | 54 |   |
| Commercial                      |   |           | -      |   |           |   | - |   |
| Other (Land & Multi-family) |   |           | 33     |   |           |   | 1 |   |
| Real Estate Construction Loans  |   |           |   |   |           |   |   |   |
| Construction One-to four family |   |           | -      |   |           |   | - |   |
| Construction Commercial         |   |           | -      |   |           |   | - |   |
| Acquistion & Develpoment    |   |           | -      |   |           |   | - |   |
| Other Loans                     |   |           |   |   |           |   |   |   |
| Home equity                     |   |           | 4      |   |           |   | 4 |   |
| Consumer                        |   |           | 54     |   |           |   | 71 |   |
| Commercial                      |   |           | -      |   |           |   | - |   |
| Total recoveries                |   |           | 232    |   |           |   | 130 |   |
|                            |   |           |   |   |           |   |   |   |
| Net charge-offs                 |   |           | 2,578  |   |           |   | 4,224 |   |
| Provision for loan losses       |   |           | 2,797  |   |           |   | 3,722 |   |
| Balance at end of period        |   | $              | 13,563 |   |           | $      | 13,308 |   |

----

| Non-performing assets:                  |   | March 31,                   |   |   | December 31, |   |
|----------------------------------------------|--------|----------------------------------|--------|--------|-------------------|--------|
|                                         |   | 2011                             |   |   | 2010              |   |
|                                         |   | (Dollars in Thousands) |   |
| Real Estate Loans                            |   |                             |   |   |              |   |
| One-to-four-family                           |   | $                                | 11,891 |   |              | $      | 10,184 |   |
| Commercial                                   |   |                             | 7,168  |   |              |   | 7,228 |   |
| Other                                        |   |                             | 5,323  |   |              |   | 3,748 |   |
|                                         |   |                             |   |   |              |   |   |   |
| Construction - One-to-four-family            |   |                             | -      |   |              |   | - |   |
| Construction - Commercial                    |   |                             | 902    |   |              |   | 1,682 |   |
| Construction - Acquisition & Development |   |                             | -      |   |              |   | - |   |
|                                         |   |                             |   |   |              |   |   |   |
| Other Loans - Consumer                       |   |                             |   |   |              |   |   |   |
| Home Equity                                  |   |                             | 2,596  |   |              |   | 2,403 |   |
| Other                                        |   |                             | 459    |   |              |   | 679 |   |
| Commercial                                   |   |                             | 2,191  |   |              |   | 2,201 |   |
|                                         |   |                             |   |   |              |   |   |   |
| Total non-performing loans                   |   |                             | 30,530 |   |              |   | 28,125 |   |
| Other real estate owned                      |   |                             | 9,213  |   |              |   | 9,940 |   |
|                                         |   |                             |   |   |              |   |   |   |
| Total non-performing assets                  |   | $                                | 39,743 |   |              | $      | 38,065 |   |
|                                         |   |                             |   |   |              |   |   |   |
| Total troubled debt restructurings (TDR)     |   | $                                | 24,145 |   |              | $      | 26,687 |   |
|                                         |   |                             |   |   |              |   |   |   |
| Total impaired loans (including TDR)         |   | $                                | 49,371 |   |              | $      | 47,296 |   |
|                                         |   |                             |   |   |              |   |   |   |
| Non-performing loans to total loans          |   |                             | 5.54   | %      |              |   | 4.99 | % |
| Non-performing loans to total assets         |   |                             | 3.77   | %      |              |   | 3.40 | % |
| Non-performing assets to total assets        |   |                             | 4.91   | %      |              |   | 4.60 | % |

----

|                            |   | Non-PerformingLoans              |   |   | Amount ofLoan LossAllowance |   |   | % of Generaland SpecificLoan LossAllowance toNon-PerformingLoans |   |   | % of Generaland SpecificLoan LossAllowance toTotal Loans |   |
|---------------------------------|--------|----------------------------------|--------|--------|---------------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|
|                            |   | (Dollars in Thousands) |   |   |                                  |   |
| Real Estate Loans               |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                   |   |
| One-to four-family              |   | $                                | 11,891 |   |                                  | $      | 5,725  |                                                                                      |   |   | 48.15                                                                                  | %      |   |   | 1.04 | % |
| Commercial                      |   |                             | 7,168  |   |                                  |   | 2,666  |                                                                                      |   |   | 37.19                                                                                  | %      |   |   | 0.48 | % |
| Other (land & multi-family) |   |                             | 5,323  |   |                                  |   | 1,214  |                                                                                      |   |   | 22.81                                                                                  | %      |   |   | 0.22 | % |
|                            |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                   |   |   |   |   |   |
| Real Estate Construction        |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                   |   |   |   |   |   |
| Construction One-to four family |   |                             | -      |   |                                  |   | 102    |                                                                                      |   |   | -                                                                                      |   |   |   | 0.02 | % |
| Construction Commercial         |   |                             | 902    |   |                                  |   | 11     |                                                                                      |   |   | 1.22                                                                                   | %      |   |   | 0.00 | % |
| Acquistion & Development    |   |                             | -      |   |                                  |   | -      |                                                                                      |   |   | -                                                                                      |   |   |   | 0.00 | % |
|                            |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                   |   |   |   |   |   |
| Other Loans                     |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                   |   |   |   |   |   |
| Home Equity                     |   |                             | 2,596  |   |                                  |   | 1,886  |                                                                                      |   |   | 72.65                                                                                  | %      |   |   | 0.34 | % |
| Consumer                        |   |                             | 459    |   |                                  |   | 1,594  |                                                                                      |   |   | 347.28                                                                                 | %      |   |   | 0.29 | % |
| Commercial                      |   |                             | 2,191  |   |                                  |   | 365    |                                                                                      |   |   | 16.66                                                                                  | %      |   |   | 0.07 | % |
| Totals                          |   | $                                | 30,530 |   |                                  | $      | 13,563 |                                                                                      |   |   | 44.43                                                                                  | %      |   |   | 2.46 | % |

----

|                            |   | Non-PerformingLoans              |   |   | Amount ofLoan LossAllowance |   |   | % of Generaland SpecificLoan LossAllowance toNon-PerformingLoans |   |   | % of General andSpecific Loan LossAllowance toTotal Loans |   |
|---------------------------------|--------|----------------------------------|--------|--------|---------------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------|--------|
|                            |   | (Dollars in Thousands) |   |   |                                  |   |
| Real Estate Loans               |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                         |   |
| One-to four-family              |   | $                                | 10,184 |   |                                  | $      | 5,860  |                                                                                      |   |   | 57.54                                                                                        | %      |   |   | 1.04 | % |
| Commercial                      |   |                             | 7,228  |   |                                  |   | 2,443  |                                                                                      |   |   | 33.80                                                                                        | %      |   |   | 0.43 | % |
| Other (land & multi-family) |   |                             | 3,748  |   |                                  |   | 1,019  |                                                                                      |   |   | 27.19                                                                                        | %      |   |   | 0.18 | % |
|                            |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                         |   |   |   |   |   |
| Real Estate Construction        |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                         |   |   |   |   |   |
| Construction One-to four family |   |                             | -      |   |                                  |   | 18     |                                                                                      |   |   | -                                                                                            |   |   |   | 0.00 | % |
| Construction Commercial         |   |                             | 1,682  |   |                                  |   | 37     |                                                                                      |   |   | 2.20                                                                                         | %      |   |   | 0.01 | % |
| Acquistion & Development    |   |                             | -      |   |                                  |   | -      |                                                                                      |   |   | -                                                                                            |   |   |   | 0.00 | % |
|                            |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                         |   |   |   |   |   |
| Other Loans                     |   |                             |   |   |                                  |   |   |                                                                                      |   |   |                                                                                         |   |   |   |   |   |
| Home Equity                     |   |                             | 2,403  |   |                                  |   | 1,663  |                                                                                      |   |   | 69.21                                                                                        | %      |   |   | 0.30 | % |
| Consumer                        |   |                             | 679    |   |                                  |   | 1,922  |                                                                                      |   |   | 283.06                                                                                       | %      |   |   | 0.34 | % |
| Commercial                      |   |                             | 2,201  |   |                                  |   | 382    |                                                                                      |   |   | -                                                                                            |   |   |   | 0.07 | % |
| Totals                          |   | $                                | 28,125 |   |                                  | $      | 13,344 |                                                                                      |   |   | 47.45                                                                                        | %      |   |   | 2.37 | % |

----

|                         |   | March 31, 2011 |   |   | December 31, 2010 |   |
|------------------------------|--------|--------------------------|--------|--------|-----------------------------|--------|
|                         |   | Balance                  |   |   | Specific Reserve       |   |   | Balance |   |   | Specific Reserve |   |
| Accruing                     |   | $                        | 4,996  |   |                        | $      | 478 |   |   | $ | 5,550 |   |   | $ | 338 |   |
| Non-accruing                 |   |                     | 15,559 |   |                        |   | 2,720 |   |   |   | 15,059 |   |   |   | 2,659 |   |
| TDR-Non-accruing residential |   |                     | 38     |   |                        |   | - |   |   |   | 392 |   |   |   | - |   |
| TDR-accruing commercial      |   |                     | 14,605 |   |                        |   | 344 |   |   |   | 8,620 |   |   |   | 210 |   |
| TDR-accruing residential     |   |                     | 14,172 |   |                        |   | 661 |   |   |   | 17,675 |   |   |   | 668 |   |
|                         |   | $                        | 49,371 |   |                        | $      | 4,203 |   |   | $ | 47,296 |   |   | $ | 3,875 |   |

----

|                                         |   | (Dollars in Thousands) |   |
|----------------------------------------------|--------|----------------------------------|--------|
| Average daily balance during the period      |   | $                                | 92,800 |   |
| Average interest rate during the period      |   |                             | 5.06   | % |
| Maximum month-end balance                    |   | $                                | 92,800 |   |
| Weighted average interest rate at period end |   |                             | 5.06   | % |

----

----

|                                                               |   | For the three months ended March 31, |    |
|-------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
|                                                                    |   | 2011                                                               |    |   | 2010 |   |
|                                                                    |   | (Dollars in Thousands)                                   |    |
|                                                                    |   | AverageBalance                                                     |    |   | Interest |   |   | AverageYield /Cost |   |   | AverageBalance |   |   | Interest |   |   | AverageYield /Cost |   |
| INTEREST-EARNING ASSETS                                                 |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans receivable(1)                                                     |   | $                                                                  | 588,985 |   |   | $ | 8,562 |   |   |   | 5.81 | % |   | $ | 628,452 |   |   | $ | 9,190 |   |   |   | 5.85 | % |
| Securites(2)                                                            |   |                                                               | 150,336 |   |   |   | 1,201 |   |   |   | 3.20 | % |   |   | 190,779 |   |   |   | 1,965 |   |   |   | 4.12 | % |
| Other interest-earning assets(3)                                        |   |                                                               | 26,430  |   |   |   | 31 |   |   |   | 0.47 | % |   |   | 33,398 |   |   |   | 47 |   |   |   | 0.56 | % |
| Total interest-earning assets                                           |   |                                                               | 765,751 |   |   |   | 9,794 |   |   |   | 5.12 | % |   |   | 852,629 |   |   |   | 11,202 |   |   |   | 5.26 | % |
| Non-interest earning assets                                             |   |                                                               | 44,350  |   |   |   |   |   |   |   |   |   |   |   | 53,997 |   |   |   |   |   |   |   |   |   |
| Total assets                                                            |   | $                                                                  | 810,101 |   |   |   |   |   |   |   |   |   |   | $ | 906,626 |   |   |   |   |   |   |   |   |   |
|                                                                    |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST-BEARING LIABILITIES                                            |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings deposits                                                        |   | $                                                                  | 65,718  |   |   | $ | 106 |   |   |   | 0.65 | % |   | $ | 38,503 |   |   | $ | 54 |   |   |   | 0.56 | % |
| Interest bearing demand accounts                                        |   |                                                               | 73,297  |   |   |   | 224 |   |   |   | 1.22 | % |   |   | 78,089 |   |   |   | 345 |   |   |   | 1.77 | % |
| Money market accounts                                                   |   |                                                               | 117,699 |   |   |   | 234 |   |   |   | 0.80 | % |   |   | 125,981 |   |   |   | 411 |   |   |   | 1.30 | % |
| Time deposits                                                           |   |                                                               | 222,060 |   |   |   | 1,125 |   |   |   | 2.03 | % |   |   | 296,121 |   |   |   | 2,010 |   |   |   | 2.72 | % |
| Securities sold under agreements to repurchase                          |   |                                                               | 92,800  |   |   |   | 1,173 |   |   |   | 5.06 | % |   |   | 92,800 |   |   |   | 1,148 |   |   |   | 4.95 | % |
| Federal Home Loan Bank advances                                         |   |                                                               | 145,894 |   |   |   | 1,411 |   |   |   | 3.87 | % |   |   | 174,259 |   |   |   | 1,554 |   |   |   | 3.57 | % |
| Other borrowings                                                        |   |                                                               | 2,144   |   |   |   | 216 |   |   |   | 40.30 | % |   |   | 2,533 |   |   |   | 45 |   |   |   | 7.11 | % |
| Total interest-bearing liabilities                                      |   |                                                               | 719,612 |   |   |   | 4,489 |   |   |   | 2.50 | % |   |   | 808,286 |   |   |   | 5,567 |   |   |   | 2.75 | % |
| Non-interest bearing liabilities                                        |   |                                                               | 35,622  |   |   |   |   |   |   |   |   |   |   |   | 40,664 |   |   |   |   |   |   |   |   |   |
| Total liabilities                                                       |   |                                                               | 755,234 |   |   |   |   |   |   |   |   |   |   |   | 848,950 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity                                                    |   |                                                               | 54,867  |   |   |   |   |   |   |   |   |   |   |   | 57,676 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                              |   | $                                                                  | 810,101 |   |   |   |   |   |   |   |   |   |   | $ | 906,626 |   |   |   |   |   |   |   |   |   |
|                                                                    |   |                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income                                                     |   |                                                               |    |   |   | $ | 5,305 |   |   |   |   |   |   |   |   |   |   | $ | 5,635 |   |   |   |   |   |
| Net interest spread                                                     |   |                                                               |    |   |   |   |   |   |   |   | 2.62 | % |   |   |   |   |   |   |   |   |   |   | 2.50 | % |
| Net earning assets                                                      |   | $                                                                  | 46,139  |   |   |   |   |   |   |   |   |   |   | $ | 44,343 |   |   |   |   |   |   |   |   |   |
| Net interest margin(4)                                                  |   |                                                               |    |   |   |   |   |   |   |   | 2.77 | % |   |   |   |   |   |   |   |   |   |   | 2.64 | % |
| Average interest-earning assets to average interest-bearing liabilities |   |                                                               |    |   |   |   | 106.41 | % |   |   |   |   |   |   |   |   |   |   | 105.49 | % |   |   |   |   |

----

|                                           |   | Increase/(Decrease)              |   |   | Total    |   |
|------------------------------------------------|--------|----------------------------------|--------|--------|----------|--------|
|                                           |   | Due to                      |   |   | Increase |   |
|                                           |   | Volume                           |   |   | Rate     |   |   | (Decrease) |   |
|                                           |   | (Dollars in Thousands) |   |
| INTEREST-EARNING ASSETS                   |   |                             |   |   |     |   |   |   |   |
| Loans receivable                               |   | $                                | (574   | )      |     | $      | (54 | ) |   | $ | (628 | ) |
| Securities                                     |   |                             | (371   | )      |     |   | (393 | ) |   |   | (764 | ) |
| Other interest-earning assets                  |   |                             | (9     | )      |     |   | (7 | ) |   |   | (16 | ) |
| Total interest-earning assets                  |   |                             | (954   | )      |     |   | (454 | ) |   |   | (1,408 | ) |
|                                           |   |                             |   |   |     |   |   |   |   |   |   |   |
| INTEREST-BEARING LIABILITIES                   |   |                             |   |   |     |   |   |   |   |   |   |   |
| Savings deposits                               |   |                             | 43     |   |     |   | 10 |   |   |   | 53 |   |
| Interest bearing demand accounts               |   |                             | (20    | )      |     |   | (101 | ) |   |   | (121 | ) |
| Money market accounts                          |   |                             | (26    | )      |     |   | (152 | ) |   |   | (178 | ) |
| Time deposits                                  |   |                             | (439   | )      |     |   | (446 | ) |   |   | (885 | ) |
| Securities sold under agreements to repurchase |   |                             | -      |   |     |   | 25 |   |   |   | 25 |   |
| Federal Home Loan Bank advances                |   |                             | (267   | )      |     |   | 124 |   |   |   | (143 | ) |
| Other borrowings                               |   |                             | (8     | )      |     |   | 179 |   |   |   | 171 |   |
| Total interest-bearing liabilities             |   |                             | (717   | )      |     |   | (361 | ) |   |   | (1,078 | ) |
|                                           |   |                             |   |   |     |   |   |   |   |   |   |   |
| Net interest income                            |   | $                                | (237   | )      |     | $      | (93 | ) |   | $ | (330 | ) |

----

|                                   |   |                   |   |   |   |   |   | Increase(decrease) |   |
|----------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------------------|--------|
|                                   |   | 2011                   |   |   | 2010   |   |   | Dollars            |   |   | Percentage |   |
|                                   |   | (Dollars in Thousands) |   |
| Service charges and fees               |   | $                      | 914    |   |   | $      | 869    |               |   | $ | 45 |   |   |   | 5.2 | % |
| Gain on sale of loans held for sale    |   |                   | 395    |   |   |   | 104    |               |   |   | 291 |   |   |   | 279.8 | % |
| Loss on sale of portfolio loans        |   |                   | -      |   |   |   | (273   | )                  |   |   | 273 |   |   |   | -100.0 | % |
| Gain on available for sale securities  |   |                   | 131    |   |   |   | -      |               |   |   | 131 |   |   |   | n/m |   |
| Other than temporary impairment losses |   |                   | (110   | )      |   |   | (75    | )                  |   |   | (35 | ) |   |   | 46.7 | % |
| Interchange fees                       |   |                   | 249    |   |   |   | 222    |               |   |   | 27 |   |   |   | 12.2 | % |
| Other                                  |   |                   | 310    |   |   |   | 242    |               |   |   | 68 |   |   |   | 28.1 | % |
|                                   |   | $                      | 1,889  |   |   | $      | 1,089  |               |   | $ | 800 |   |   |   | 73.5 | % |

----

|                               |   |                             |   |   | Increase(decrease) |   |
|------------------------------------|--------|----------------------------------|--------|--------|--------------------|--------|
|                               |   | 2011                             |   |   | 2010               |   |   | Dollars |   |   | Percentage |   |
|                               |   | (Dollars in Thousands) |   |
| Compensation and benefits          |   | $                                | 3,972  |   |               | $      | 2,570 |   |   | $ | 1,402 |   |   |   | 54.6 | % |
| Occupancy and equipment            |   |                             | 583    |   |               |   | 554 |   |   |   | 29 |   |   |   | 5.2 | % |
| FDIC insurance premiums            |   |                             | 396    |   |               |   | 449 |   |   |   | (53 | ) |   |   | -11.8 | % |
| Foreclosed assets, net             |   |                             | (42    | )      |               |   | 92 |   |   |   | (134 | ) |   |   | -145.7 | % |
| Data processing                    |   |                             | 393    |   |               |   | 255 |   |   |   | 138 |   |   |   | 54.1 | % |
| Outside professional services      |   |                             | 489    |   |               |   | 359 |   |   |   | 130 |   |   |   | 36.2 | % |
| Collection expense and repossessed |   |                             |   |   |               |   |   |   |   |   |   |   |   |   |   |   |
|  asset losses                 |   |                             | 899    |   |               |   | 393 |   |   |   | 506 |   |   |   | 128.8 | % |
| Other                              |   |                             | 1,130  |   |               |   | 1,089 |   |   |   | 41 |   |   |   | 3.8 | % |
|                               |   | $                                | 7,820  |   |               | $      | 5,761 |   |   | $ | 2,059 |   |   |   | 35.7 | % |

----

----

| At March 31, 2011 |   |
|----------------------------------|--------|
|                             |   |   |   |   |   |   |   |   |   |   | NPV as a Percentage ofPresent Value of Assets (3) |   |   | Net Interest Income |   |
| Change in                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Increase (Decrease) in |   |
| Interest Rates              |   |   |   |   |   |   |   |   |   |   |   |   |   | Increase |   |   | Estimated |   |   | Estimated Net Interest |   |
| (basis points)              |   | Estimated |   |   | Estimated (Decrease) in NPV |   |   |   |   |   | (Decrease) |   |   | Net Interest |   |   | Income |   |
| (1)                              |   | NPV (2) |   |   | Amount |   |   | Percent |   |   | NPV Ratio (4) |   |   | (basis points) |   |   | Income |   |   | Amount |   |   | Percent |   |
|                             |   | (Dollars in Thousands) |   |
|                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| +300                             |   | $ | 44,293 |   |   | $ | (15,961 | ) |   |   | (20.4 | )% |   |   | 6.00 | % |   |   | (115 | ) |   | $ | 23,531 |   |   | $ | (351 | ) |   |   | (1.47 | )% |
| +200                             |   |   | 53,601 |   |   |   | (6,653 | ) |   |   | (11.0 | )% |   |   | 6.59 | % |   |   | (56 | ) |   |   | 23,647 |   |   |   | (235 | ) |   |   | (0.98 | )% |
| +100                             |   |   | 58,790 |   |   |   | (1,464 | ) |   |   | (2.4 | )% |   |   | 7.09 | % |   |   | (6 | ) |   |   | 23,765 |   |   |   | (117 | ) |   |   | (0.49 | )% |
| 0                                |   |   | 60,254 |   |   |   | - |   |   |   | - |   |   |   | 7.15 | % |   |   | - |   |   |   | 23,882 |   |   |   | - |   |   |   | - |   |
| -100                             |   |   | 58,294 |   |   |   | (1,960 | ) |   |   | (3.3 | )% |   |   | 6.84 | % |   |   | (31 | ) |   |   | 23,741 |   |   |   | (141 | ) |   |   | (0.59 | )% |

----

| (1) | Assumes an instantaneous uniform change in interest rates at all maturities. |
|-----|------------------------------------------------------------------------------|

| (2) | NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts. |
|-----|----------------------------------------------------------------------------------------------------------------------|

| (3) | Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets. |
|-----|--------------------------------------------------------------------------------------------------------------------|

| (4)  | NPV Ratio represents NPV divided by the present value of assets. |
|-----------|------------------------------------------------------------------|

----

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

| Item 1A.  | Risk Factors |
|----------------|--------------|

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

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

| Item 4.  | Removed and reserved |
|---------------|----------------------|

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

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

|   | a.  | Exhibits |
|--------|----------|----------|

|   | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|--------|------|----------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|--------|------|----------------------------------------------------------------------------------------------------|

|   | 32. | Certification of Chief Executive Officer and Chief Financial Officer of Atlantic Coast Financial Corporation pursuant to Section 906 |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------|

----

|                          | ATLANTIC COAST FINANCIAL CORPORATION                  |
|-------------------------------|-------------------------------------------------------|
|                          | (Registrant)                                          |
|                          |                                                  |
| Date:  May 16, 2011 | /s/ G. Thomas Frankland                               |
|                          | G. Thomas Frankland, President and Chief              |
|                          | Executive Officer                                     |
|                          | (Principal Executive Officer)                         |
|                          |                                                  |
| Date:  May 16, 2011 | /s/ Thomas B. Wagers, Sr.                             |
|                          | Thomas B. Wagers, Sr. Senior Vice–President and |
|                          | Chief Financial Officer                               |
|                          | (Principal Financial and Accounting Officer)          |

----