UNITED STATES
 SECURITIES AND EXCHANGE
COMMISSION
 Washington,D.C.20549
 
 FORM 10-Q
 
 (Mark One)
 
 x
              QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGEACT
      OF 1934
 For the quarterly period ended:March 31, 2008
 
 or
 
  ̈
              TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGEACT
      OF 1934
 For the transition period from
      ___________ to ____________
 
 
 Auburn Bancorp,
      Inc.(Exact name of registrant as
      specified in its charter)
 
 United
    States
              
              
              
              26-2139168(State or other
      jurisdiction
                of
      incorporation)
              
              (Commission File
      Number)
              
              (IRS Employer
                Identification
      No.)
 
 256 Court Street,P.O. Box 3157,Auburn,Maine04212(Address and zip code of principal
      executive offices)
 
 (207)
    782-0400(Registrant’s telephone number,
      including area code)
 
 None(Former name, former address and
      former fiscal year, if changed since last report)
 
 Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past
90 days. ̈YesxNo*
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company.  See the definitions of “large
accelerated filer”,  “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer ̈                                            
          Accelerated filer ̈
  Non-accelerated filer ̈                                              
         Smaller reporting
companyx
 
 Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes ̈Nox
 
 Indicate the number of shares
outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date: Common Stock, $0.01 par value, no shares outstanding as of
June 27, 2008.*
 ___________
 * The registrant's Registration
Statement on Form S-1 was declared effective on March 13,
2008.
   
 AUBURN BANCORP, INC. AND
SUBSIDIARIES
 QUARTERLY REPORT ON
FORM 10-Q
 March 31, 2008
 
 TABLE OF CONTENTS
 
 PagePARTI.FINANCIAL INFORMATION
      (Unaudited)Item
      1.       Financial
      StatementsAuburn Bancorp, Inc. (the
      “Company”) will be formed to serve as the stock holding company for Auburn
      Savings Bank, FSB (“Auburn Savings Bank”) as part of Auburn Savings Bank’s
      reorganization into a mutual holding company structure. As of the date
      hereof, Auburn Savings Bank has not completed its reorganization, and,
      accordingly, the Company has not yet been organized, has not yet issued
      any stock, has no assets or liabilities, and has not conducted any
      business other than that of an organizational nature. For a further
      discussion of the Company’s formation and operations, see the Company’s
      Registration Statement on Form S-1, as amended, initially filed on March
      14, 2008 and declared effective on May 13, 2008 (File No. 333-149723).
      Based upon the foregoing, the Unaudited Interim Financial Statements filed
      as a part of this Quarterly Report on Form 10-Q are those of Auburn
      Savings Bank only.Balance Sheets as of
      March 31, 2008 (Unaudited) and June
      30, 2007
              
              3Statements of Income for the Three
      and Nine Months Ended March 31, 2008 and March 31, 2007
      (Unaudited)
              
              4Statements of Changes in Capital
      for the Nine Months Ended March 31, 2008 and March 31, 2007
      (Unaudited)
              
              5Statements of Cash Flows for the
      Nine Months Ended March 31, 2008 and March 31, 2007
      (Unaudited)
              
              6Notes to Financial
      Statements
              
              7Item
      2.Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations
              
              9Item
      3.       Quantitative and Qualitative
      Disclosures about Market Risk
              
              16Item
      4.       Controls and
      Procedures
              
              17PART II. OTHER
      INFORMATIONItem
      1.       Legal
      Proceedings
              
              17Item
      2.       Unregistered Sales of Equity
      Securities and Use of Proceeds
              
              17Item
      3.       Defaults Upon Senior
      Securities
              
              17Item
      4.       Submission of Matters to a Vote of
      Security Holders
              
              17Item
      5.       Other
      Information
              
              17Item
      6.       Exhibits
              
              18Signatures
              
              19
  
 2
 PARTI.FINANCIAL INFORMATION
(Unaudited)
 
 ITEM
1.                      FINANCIAL STATEMENTS
 
 AUBURN SAVINGS BANK,
FSB
  Balance Sheets
  March 31, 2008 (Unaudited) and June 30,
2007
   ASSETSMarch 31,
                
                
                June 30,2008
                
                
                2007(Unaudited)Cash and due from
      banks
                
                $
                1,143,342
                
                
                $
                884,546Interest-bearing
      deposits
                
                
                2,145,710
                
                
                
                2,528,784Total cash and cash
      equivalents
                
                
                3,289,052
                
                
                
                3,413,330Certificates of
      deposit
                
                
                2,356,327
                
                
                
                594,000Investment securities available
      for sale
                
                
                1,477,083
                
                
                
                2,364,564Federal Home Loan Bank stock, at
      cost
                
                
                901,100
                
                
                
                901,100Loans
                
                
                54,846,588
                
                
                
                53,116,112Less allowance for loan
      losses
                
                
                (313,624
                )
                
                
                (317,580
                )Net loans
                
                
                54,532,964
                
                
                
                52,798,532Property and equipment,
      net
                
                
                1,945,051
                
                
                
                2,001,115Foreclosed real
      estate
                
                
                129,300
                
                
                
                —Accrued interest
      receivable:Investments
                
                
                35,146
                
                
                
                23,885Mortgage-backed
      securities
                
                
                2,230
                
                
                
                2,566Loans
                
                
                230,533
                
                
                
                251,082Prepaid expenses and other
      assets
                
                
                480,174
                
                
                
                54,270Total
assets
                
                $
                65,378,960
                
                
                $
                62,404,444LIABILITIES AND
      CAPITALLiabilities:Deposits
                
                $
                45,383,360
                
                
                $
                44,878,926Federal Home Loan Bank
      advances
                
                
                15,150,000
                
                
                
                12,900,000Accrued interest and other
      liabilities
                
                
                170,041
                
                
                
                127,207Deferred income
      taxes
                
                
                153,397
                
                
                
                148,510Total
      liabilities
                
                
                60,856,798
                
                
                
                58,054,643Capital:Retained
      earnings
                
                
                4,593,847
                
                
                
                4,362,193Accumulated other comprehensive
      loss
                
                
                (71,685
                )
                
                
                (12,392
                )Total
    capital
                
                
                4,522,162
                
                
                
                4,349,801Total liabilities and
      capital
                
                $
                65,378,960
                
                
                $
                62,404,444
 The accompanying notes are an integral
part of these financial statements.
 3
 AUBURN SAVINGS BANK,
FSB
  Statements of Income
  Three and Nine Months Ended
March 31, 2008 and March 31, 2007 (Unaudited)
  Three Months Ended March
      31,
              
              
              Nine MonthsEnded March
    31,2008
              
              
              2007
              
              
              2008
              
              
              2007(Unaudited)
              
              
              (Unaudited)Interest and dividend
      income:Interest on
      loans
              
              $
              951,511
              
              
              $
              882,534
              
              
              $
              2,812,111
              
              
              $
              2,694,272Interest on investments and other
      interest-bearing deposits
              
              
              64,810
              
              
              
              57,418
              
              
              
              197,639
              
              
              
              165,274Dividends on Federal Home Loan
      Bank stock
              
              
              13,628
              
              
              
              28,534
              
              
              
              42,994
              
              
              
              61,708Total interest and dividend
      income
              
              
              1,029,949
              
              
              
              968,486
              
              
              
              3,052,744
              
              
              
              2,921,254Interest
      expense:Interest on deposits and escrow
      accounts
              
              
              403,121
              
              
              
              405,907
              
              
              
              1,270,479
              
              
              
              1,196,547Interest on Federal Home Loan Bank
      advances
              
              
              193,934
              
              
              
              168,019
              
              
              
              549,183
              
              
              
              538,401Total interest
      expense
              
              
              597,055
              
              
              
              573,926
              
              
              
              1,819,662
              
              
              
              1,734,948Net interest
      income
              
              
              432,894
              
              
              
              394,560
              
              
              
              1,233,082
              
              
              
              1,186,306Provision for (recovery of) loan
      losses
              
              
              4,410
              
              
              
              7,000
              
              
              
              (2,614
              )
              
              
              25,000Net interest income after
      provision for (recovery of) loan losses
              
              
              428,484
              
              
              
              387,560
              
              
              
              1,235,696
              
              
              
              1,161,306Non-interest
      income:Net gain (loss) on sales of
      loans
              
              
              44,514
              
              
              
              (1,465
              )
              
              
              53,839
              
              
              
              10,181Net gain on sales of
      investments
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              4,096Other non-interest
      income
              
              
              62,220
              
              
              
              18,918
              
              
              
              129,863
              
              
              
              55,144Total non-interest
      income
              
              
              106,734
              
              
              
              17,453
              
              
              
              183,702
              
              
              
              69,421Non-interest
      expenses:Salaries and employee
      benefits
              
              
              224,536
              
              
              
              208,063
              
              
              
              654,251
              
              
              
              613,603Occupancy
      expense
              
              
              26,138
              
              
              
              26,953
              
              
              
              78,204
              
              
              
              82,227Depreciation
              
              
              24,397
              
              
              
              28,351
              
              
              
              76,328
              
              
              
              88,738Federal insurance
      premiums
              
              
              1,284
              
              
              
              1,795
              
              
              
              3,843
              
              
              
              4,060Computer
      charges
              
              
              37,728
              
              
              
              33,682
              
              
              
              111,047
              
              
              
              98,488Advertising
      expense
              
              
              10,999
              
              
              
              6,916
              
              
              
              34,224
              
              
              
              23,165Consulting
      expense
              
              
              9,405
              
              
              
              9,787
              
              
              
              28,380
              
              
              
              18,637Other operating
      expenses
              
              
              65,707
              
              
              
              61,368
              
              
              
              178,604
              
              
              
              174,418Total non-interest
      expenses
              
              
              400,194
              
              
              
              376,915
              
              
              
              1,164,881
              
              
              
              1,103,336Income before income
      taxes
              
              
              135,024
              
              
              
              28,098
              
              
              
              254,517
              
              
              
              127,391Income tax
      expense
              
              
              40,600
              
              
              
              8,300
              
              
              
              76,300
              
              
              
              38,100Net income
              
              $
              94,424
              
              
              $
              19,798
              
              
              $
              178,217
              
              
              $
              89,291
  The accompanying notes are an integral
part of these financial statements.
  4
 AUBURN SAVINGS BANK,
FSB
  Statements of Changes in
Capital
  Nine Months Ended March 31, 2008 and
March 31, 2007 (Unaudited)
  Retained
                Earnings
              
              
              Accumulated
                Other
                Comprehensive
                Loss
              
              
              TotalBalance, June 30,
      2006
              
              $
              4,242,211
              
              
              $
              (78,796
              )
              
              $
              4,163,415Comprehensive
      incomeNet income
              
              
              89,291
              
              
              
              —
              
              
              
              89,291Other comprehensive
      incomeUnrealized holding gains on
      securities,
                net of taxes of
      $22,650
              
              
              —
              
              
              
              43,967
              
              
              
              43,967Less reclassification adjustment
      for
                items included in net income, net
      of
                taxes of
    $1,673
              
              
              —
              
              
              
              3,248
              
              
              
              3,248Total comprehensive
      income
              
              
              89,291
              
              
              
              47,215
              
              
              
              136,506Balance, March 31, 2007
      (unaudited)
              
              $
              4,331,502
              
              
              $
              (31,581
              )
              
              $
              4,299,921Retained
                Earnings
              
              
              Accumulated
                Other
                Comprehensive
                Loss
              
              
              TotalBalance, June 30,
      2007
              
              $
              4,362,193
              
              
              $
              (12,392
              )
              
              $
              4,349,801Comprehensive
      incomeNet income
              
              
              178,217
              
              
              
              —
              
              
              
              178,217Other comprehensive
      lossUnrealized holding losses on
      securities, net
                of taxes of
      $(30,545)
              
              
              —
              
              
              
              (59,293
              )
              
              
              (59,293
              )Total comprehensive
      income
              
              
              178,217
              
              
              
              (59,293
              )
              
              
              118,924Effect of adoption of SFAS No.
      156, net of tax effect
                of $17,812
              
              
              53,437
              
              
              
              —
              
              
              
              53,437Balance, March 31, 2008
      (unaudited)
              
              $
              4,593,847
              
              
              $
              (71,685
              )
              
              $
              4,522,162
  The accompanying notes are an integral
part of these financial statements.
 
 5
 AUBURN SAVINGS BANK,
FSB
  Statements of Cash
Flows
  Nine Months Ended March 31, 2008 and
March 31, 2007 (Unaudited)
  Nine Months
      Ended
                March 31,2008
              
              
              2007Cash flows from operating
      activitiesNet income
              
              $
              178,217
              
              
              $
              89,291Adjustments to reconcile net
      income to net cash provided by operating
activities:Depreciation
              
              
              76,328
              
              
              
              88,737Net amortization of premiums
      (accretion of discounts) on investment securities available for
      sale
              
              
              (2,169
              )
              
              
              9,017Provision for (recovery of) loan
      losses
              
              
              (2,614
              )
              
              
              25,000Deferred income tax
      expense
              
              
              17,620
              
              
              
              2,645Gain on sales of
      investments
              
              
              —
              
              
              
              (4,096
              )Gain on sales of
      loans
              
              
              (53,839
              )
              
              
              (10,181
              )Net decrease (increase) in prepaid
      expenses and other assets
              
              
              (165,772
              )
              
              
              13,928Net decrease (increase) in accrued
      interest receivable
              
              
              9,624
              
              
              
              (16,929
              )Net increase (decrease) in accrued
      interest and other liabilities
              
              
              42,834
              
              
              
              (38,431
              )Net cash provided by operating
      activities
              
              
              100,229
              
              
              
              158,981Cash flows from investing
      activities:Purchase of investment securities
      available for sale
              
              
              (576,519
              )
              
              
              —Proceeds from sales of investment
      securities available for sale
              
              
              1,258,630
              
              
              
              771,055Proceeds from maturities and
      principal paydowns on investment securities available for
      sale
              
              
              117,701
              
              
              
              188,292Net proceeds from maturities of
      (investments in) certificates of deposit
              
              
              (1,762,327
              )
              
              
              199,502Net decrease (increase) in loans
      to customers
              
              
              (1,714,438
              )
              
              
              1,222,575Proceeds from redemption of
      Federal Home Loan Bank stock
              
              
              —
              
              
              
              115,600Capital
      expenditures
              
              
              (20,264
              )
              
              
              (15,048
              )Net cash provided (used) by
      investing activities
              
              
              (2,697,217
              )
              
              
              2,481,976Cash flows from financing
      activities:Advances from Federal Home Loan
      Bank
              
              
              3,021,000
              
              
              
              4,000,000Repayment of advances from the
      Federal Home Loan Bank
              
              
              (771,000
              )
              
              
              (5,100,000
              )Net increase (decrease) in
      deposits
              
              
              504,435
              
              
              
              (566,350
              )Increase in reorganization
      costs
              
              
              (281,725
              )
              
              
              —Net cash provided (used) by
      financing activities
              
              
              2,472,710
              
              
              
              (1,666,350
              )Net increase (decrease) in cash
      and cash equivalents
              
              
              (124,278
              )
              
              
              974,607Cash and cash equivalents,
      beginning of period
              
              
              3,413,330
              
              
              
              2,637,965Cash and cash equivalents, end of
      period
              
              $
              3,289,052
              
              
              $
              3,612,572Supplementary cash flow
      information:Cash paid during the year
      for:Interest
              
              $
              1,820,259
              
              
              $
              1,722,928Taxes
              
              $
              19,800
              
              
              $
              33,976
  The accompanying notes are an integral
part of these financial statements.
 6
 AUBURN SAVINGS BANK,
FSB
  Notes to Financial
Statements
  1.        
Basis
of Presentation
 
 The financial information included
herein as of March 31, 2008, and for the interim periods ended March 31, 2008
and 2007, is unaudited; however, in the opinion of management, the information
reflects all adjustments, consisting of normal recurring adjustments, that are
necessary for a fair presentation. The results shown for the nine months ended
March 31, 2008 and 2007 are not necessarily indicative of the results to be
obtained for a full year.
 
 In preparing financial statements in
conformity with accounting principles generally accepted in theUnited States of America, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.  These interim financial statements should be read in
conjunction with the audited financial statements for the year ended June 30,
2007 included in the Company’s Registration Statement on Form S-1, as amended
(File No. 333-149723).
 
 Material estimates that are particularly
susceptible to significant change in the near term relate to the determination
of the allowance for loan losses. In connection with the determination of the
allowance for loan losses, management obtains independent appraisals for
significant properties.
  2.        
Recent
Accounting Pronouncements
  Auburn Savings Bank adopted Statement of
Financial Accounting Standards (SFAS) No. 156,Accounting for
Servicing of Financial Assets – an amendment to FASB Statement No.
140, on July 1, 2007. In
accordance with SFAS No. 156, the Bank capitalizes mortgage servicing rights at
their fair value upon sale of the related loans. Capitalized servicing rights
are reported in other assets and are amortized into non-interest income in
proportion to, and over the period of, the estimated future net servicing income
of the underlying financial assets. Servicing assets are evaluated for
impairment based upon the fair value of the rights as compared to amortized
cost. The effect of capitalizing loan servicing rights for loans sold and
serviced was recorded as a cumulative effect adjustment at July 1,
2007.
  In March 2008, the Financial Accounting
Standards Board (FASB) issued SFAS No. 161,Disclosures about
Derivative Instruments and Hedging Activities—an amendment of FASB Statement
No. 133.SFAS
No. 161 is intended to enhance the current disclosure framework in SFAS
No. 133. This Statement has the same scope as SFAS No. 133. FASB
Statement No. 133 requires that objectives for using derivative instruments
be disclosed in terms of underlying risk and accounting designation. SFAS
No. 161 better conveys the purpose of derivative use in terms of the risk
that the entity is intending to manage, disclosing the fair values of the
derivative instruments and their gains and losses in a tabular format, as well
as disclosing information about credit-risk-related contingent features. This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. Management does not
expect implementation of SFAS No. 161 to have a material impact on the
financial statements of the Company.
   7
 On February 15, 2007, the FASB issued
SFAS No. 159,The Fair Value
Option for Financial Assets and Financial Liabilities, which provides companies with an
option to report selected financial assets and liabilities at fair value. SFAS
No. 159 also establishes presentation and disclosure requirements designed to
facilitate comparisons between companies that choose different measurement
attributes for similar types of assets and liabilities. This Statement is
effective for Auburn Savings Bank’s 2009 fiscal year, with early adoption
permitted for Auburn Savings Bank’s 2008 fiscal year, provided that Auburn
Savings Bank also adopts SFAS No. 157 for fiscal year 2008. Management is
currently evaluating the potential impacts of adopting this Statement on its
financial statements.
  In September 2006, the FASB issued SFAS
No. 157,Fair Value
Measurements. This
Statement defines fair value, establishes a framework for measuring fair value
in accordance with generally accepted accounting principles, and expands
disclosures about fair value measurements. This Statement is effective for
Auburn Savings Bank on July 1, 2008, with earlier adoption permitted for fiscal
year 2008, and is not expected to have a material impact on Auburn Savings
Bank’s financial statements. In February 2008, FASB issued FASB Staff Position
(FSP) No. 157-2 which delays by one year the effective date of SFAS No. 157 for
certain types of nonfinancial assets and nonfinancial
liabilities.
  In July 2006, the FASB issued Financial
Accounting Standards Interpretation No. 48 (FIN 48),Accounting for
Uncertainty in Income Taxes. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprise’s financial statements
in accordance with SFAS No. 109,Accounting for
Income Taxes. FIN 48
prescribes a recognition threshold and measurement attributable for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
derecognizing, classification, interest and penalties, accounting in interim
periods, disclosures and transitions. FIN 48 was effective for Auburn Savings
Bank on July 1, 2007, and did not have a material impact on Auburn Savings
Bank’s financial statements.
  3.      
 Net Income
Per Common Share
 
 Basic and diluted net income per common
share is not calculated since Auburn Savings Bank is in process of reorganizing
into stock form for the period ended March 31, 2008.
 
 4.    
   Plan of
Reorganization
 
 On January 11, 2008, the Board of
Directors of Auburn Savings Bank adopted a Plan of Reorganization From a Mutual
Savings Bank to a Mutual Holding Company and Stock Issuance Plan (the “Plan”)
under which Auburn Savings Bank will reorganize into a mutual holding company
structure. As part of the reorganization, Auburn Savings Bank will convert to a
federal stock savings bank, Auburn Savings Bank will become a wholly-owned
subsidiary of Auburn Bancorp, Inc. (the “Company”), and the Company will become
a majority-owned subsidiary of Auburn Mutual Holding Company (the “MHC”). In
addition, the Company will conduct a stock offering  pursuant to the
laws of theUnited States
of Americaand the rules
and regulations of the Office of Thrift Supervision (“OTS”). Upon completion of
the reorganization and stock offering, the MHC is expected to own 55.0% of the
outstanding common stock of the Company and the minority public shareholders
will own 45.0%.  Shares of the Company’s common stock will be offered
on a first priority basis in a subscription offering to eligible account
holders, tax-qualified employee plans, and other members. Any shares remaining
after the conclusion of the subscription offering may be offered for sale in a
community offering or syndicated offering. So long as the MHC is in existence,
the MHC will be required to own at least a majority of the voting stock of the
Company.
 
 8
 The costs associated with the
reorganization are deferred and will be deducted from the proceeds upon the sale
and issuance of the stock. In the event the reorganization is not consummated,
costs incurred will be charged to expense. As of March 31, 2008, reorganization
costs totaled $281,725.
 
 The Plan is subject to the approval of
the OTS and a majority of the total votes eligible to be cast by voting members
of Auburn Savings Bank.  The OTS granted conditional approval of the
Plan on May 13, 2008.  The voting members of Auburn Savings Bank
approved the Plan on June 26, 2008.
 
 After the reorganization, the Company
will not be able to declare or pay a cash dividend on, or repurchase any of its
common stock, if the effect thereof would cause the regulatory capital of Auburn
Savings Bank to be reduced below the amount required under OTS rules and
regulations.
 
 ITEM 2.
              MANAGEMENT’S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
 
 Overview
  Our principal business is to acquire
deposits from individuals and businesses in the communities surrounding our
offices and to use these deposits to fund loans. We focus on providing our
products and services to two segments of customers: individuals and
businesses.
  Income.Our primary source of income is net
interest income. Net interest income is the difference between interest income,
which is the income that we earn on our loans and investments, and interest
expense, which is the interest that we pay on our deposits and borrowings.
Changes in levels of interest rates affect our net interest
income. Short-term interest rates (which influence the rates we pay on
deposits) have until recently increased, while longer-term interest rates (which
influence the rates we earn on loans) have not. The narrowing of the spread
between the interest we earn on loans and investments and the interest we pay on
deposits has negatively affected our net interest income. A secondary source of
income is non-interest income, which includes revenue that we receive from
providing products and services. The majority of our non-interest income
generally comes from loan service charges and service charges on deposit
accounts.
  Allowance
for Loan Losses.The allowance for loan losses is a
valuation allowance for probable losses inherent in the loan portfolio. We
evaluate the need to establish allowances against losses on loans on a regular
basis. When additional allowances are necessary, a provision for loan losses is
charged to earnings.
  In
originating loans, we recognize that losses will be experienced on loans and
that the risk of loss will vary with many factors, including the type of loan
being made, the creditworthiness of the borrower over the term of the loan,
general economic conditions and, in the case of a secured loan, the quality of
the security for the loan over the term of the loan. We maintain an allowance
for loan losses that is intended to absorb losses inherent in the loan
portfolio, and as such, this allowance represents management’s best estimate of
the probable known and inherent credit losses in the loan portfolio as of the
date of the financial statements. The allowance for loan losses is established
as losses are estimated to have occurred through a provision for loan losses
charged to earnings. Loan losses are charged against the allowance when
management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance.
  9
  The
allowance for loan losses is evaluated on a quarterly basis by management and is
based on management’s periodic review of the collectibility of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, estimated
value of the underlying collateral and prevailing economic conditions. This
evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes
available.
  The
allowance consists of specific and general components.  The specific
component relates to loans that are classified as impaired, whereby an allowance
is established when the discounted cash flows, collateral value or observable
market price of the impaired loan is lower than the carrying value of that
loan.  The general component relates to pools of non-impaired loans and is
based on historical loss experience adjusted for qualitative
factors.
  A loan is
considered impaired when, based on current information and events, it is
probable that we will be unable to collect the scheduled payments of principal
or interest when due according to the contractual terms of the loan agreement.
Management considers factors including payment status, collateral value, and the
probability of collecting scheduled principal and interest payments when due
when determining impairment. Loans that experience insignificant payment delays
and payment shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on a
case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of the delay, the
reasons for the delay, the borrower’s prior payment record, and the amount of
the shortfall in relation to the principal and interest owed. impairment is
measured on a loan by loan basis for commercial loans by either the present
value of expected future cash flows discounted at the loan’s effective interest
rate, the loan’s obtainable market price, or the fair value of the collateral if
the loan is collateral dependent.  Large groups of smaller balance
homogeneous loans are collectively evaluated for impairment. Accordingly, we do
not separately identify individual consumer and residential loans for impairment
disclosures.  At March 31, 2008, we had no impaired loans as defined
by Statement of Financial Accounting Standards No. 114 and, therefore, there is
no established valuation allowance for impaired loans.
  Expenses.
The non-interest expenses we incur in operating our business consist of expenses
for salaries and employee benefits, occupancy and equipment, data processing,
marketing and advertising, professional services and various other miscellaneous
expenses. Our largest non-interest expense is salaries and employee benefits,
which consist primarily of salaries and wages paid to our employees, payroll
taxes, and expenses for health insurance, retirement plans and other employee
benefits. Following the stock offering, we will recognize additional annual
employee compensation expenses stemming from the adoption of new equity benefit
plans. We cannot determine the actual amount of these new stock-related
compensation and benefit expenses at this time because applicable accounting
practices require that they be based on the fair market value of the shares of
common stock at specific points in the future.
  Following completion of the
reorganization and stock offering, we will incur additional non-interest
expenses as a result of operating as a public company. These additional expenses
will consist primarily of legal and accounting fees and expenses of stockholder
communications and meetings.
  10
  Forward-Looking
Statements
  Certain statements herein constitute
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on the beliefs and
expectations of management, as well as the assumptions made using information
currently available to management. Since these statements reflect the views of
management concerning future events, these statements involve risks,
uncertainties and assumptions. As a result, actual results may differ from those
contemplated by these statements. Forward-looking statements can be identified
by the fact that they do not relate strictly to historical or current facts.
They often include words like “believe”, “expect”, “anticipate”, “estimate”, and
“intend” or future or conditional verbs such as “will”, “would”, “should”,
“could”, or “may.” Certain factors that could have a material adverse affect on
the operations of Auburn Savings Bank include, but are not limited to, increased
competitive pressure among financial service companies, national and regional
economic conditions, changes in interest rates, changes in consumer spending,
borrowing and savings habits, legislative and regulatory changes, adverse
changes in the securities markets, inability of key third-party providers to
perform their obligations to Auburn Savings Bank, changes in relevant accounting
principles and guidelines and our ability to successfully implement our branch
expansion strategy. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Quarterly
Report on Form 10-Q. We disclaim any intent or obligation to update any
forward-looking statements, whether in response to new information, future
events or otherwise.
  Critical Accounting
Policies
 
 We consider accounting policies that
require management to exercise significant judgment or discretion, or make
significant assumptions that have or could have a material impact on the
carrying value of certain assets or on income, to be critical accounting
policies. We consider the following to be our critical accounting
policies.
 
 Allowance
for loan losses.The allowance for loan losses is
established as losses are estimated to have occurred through a provision for
loan losses charged to earnings. Loan losses are charged against the allowance
when management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance.  The
allowance for loan losses is evaluated on a regular basis by management and is
based on management’s periodic review of the collectibility of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, estimated
value of the underlying collateral and prevailing economic conditions. This
evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes
available.
 
 The allowance consists of specific and
general components.  The specific component relates to loans that are
classified as impaired, whereby an allowance is established when the discounted
cash flows, collateral value or observable market price of the impaired loan is
lower than the carrying value of that loan.  The general component relates
to pools of non-impaired loans and is based on historical loss experience
adjusted for qualitative factors.
 
 A loan is considered impaired when,
based on current information and events, it is probable that we will be unable
to collect the scheduled payments of principal or interest when due according to
the contractual terms of the loan agreement. Management considers factors
including payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due when determining impairment.
Loans that experience insignificant payment delays and payment shortfalls
generally are not classified as impaired. Management determines the significance
of payment delays and payment shortfalls on a case-by-case basis, taking into
consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrower’s
prior payment record, and the amount of the shortfall in relation to the
principal and interest owed.  Impairment is measured on a loan by loan
basis for commercial loans by either the present value of expected future cash
flows discounted at the loan’s effective interest rate, the loan’s obtainable
market price, or the fair value of the collateral if the loan is collateral
dependent.  Large groups of smaller balance homogeneous loans are
collectively evaluated for impairment. Accordingly, we do not separately
identify individual consumer and residential loans for impairment
disclosures.
  11
  Actual loan losses may be significantly
more than the allowance we have established, which could have a material
negative effect on our financial results.
 
 Securities.We classify our investments
as available for sale. These assets are recorded at fair value, with unrealized
gains and losses excluded from earnings and reported in other comprehensive
income or loss.  Purchase premiums and discounts are recognized in
interest income using the interest method over the terms of the securities.
Declines in the fair value of investment securities available for sale below
their cost that are deemed to be other-than-temporary are reflected in earnings
as realized losses. In estimating other-than-temporary impairment losses,
management considers (1) the length of time and the extent to which the fair
value has been less than cost, (2) the financial condition and near-term
prospects of the issuer, and (3) our intent and ability to retain our investment
in the issuer for a period of time sufficient to allow for any anticipated
recovery in fair value. Gains and losses on the sale of securities are recorded
on the trade date and are determined using the specific identification
method.
 
 Loans.Loans that management has the intent and
ability to hold for the foreseeable future or until maturity or pay-off
generally are reported at their outstanding unpaid principal balances adjusted
for charge-offs, the allowance for loan losses, and any deferred fees or costs
on originated loans. Interest income is accrued on the unpaid principal balance.
Loan origination fees, net of certain direct origination costs, are deferred and
recognized over the contractual life of the loans as an adjustment of the
related loan yield using the interest method.
 
 Loans past due 30 days or more are
considered delinquent. The accrual of interest on mortgage and commercial loans
is discontinued at the time the loan is 90 days delinquent unless the credit is
well secured and in process of collection.  Consumer loans are
typically charged off when they are no more than 180 days past due. In all
cases, loans are placed on nonaccrual or charged-off at an earlier date if
collection of principal or interest is considered doubtful.
 
 All interest accrued but not collected
for loans that are placed on nonaccrual or charged off is reversed against
interest income. Cash payments on these loans are applied to principal balances
until qualifying for return to accrual. Loans are returned to accrual status
when all the principal and interest amounts contractually due are brought
current and future payments are reasonably assured.
 
 Comparison of Financial Condition at
March 31, 2008 and June 30, 2007
 
 Total
Assets.Total assets
increased by $3.0 million, or 4.8%, from $62.4 million at June 30, 2007 to $65.4
million at March 31, 2008. This increase was largely the result of an increase
of $1.7 million in loans and $1.8 million in certificates of deposit, which
increases were partially offset bya reduction in other investment
securities available for sale.
  Cash
and Cash Equivalents.Cash
and correspondent bank balances decreased by $124,000, or 3.6%, from $3.4
million at June 30, 2007 to $3.3 million at March 31, 2008. This decrease was
primarily the result of a temporary decrease in deposit balances in Federated
Liquid Cash and FHLB Ideal account  of $400,000, which was partially
offset byan increase in
the Federal Reserve Bank account.
  12
 Certificates
of Deposit.Certificate of deposit balances at other
banks increased by $1.8 million, or 296.7%, from $594,000 at June 30, 2007 to
$2.4 million at March 31, 2008, because of certificate of deposit rates that
were higher than rates on U.S. treasuries and agency
obligations.
  Securities
Available for Sale.The
investment portfolio available for sale aggregated $1.5 million at March 31,
2008, a decrease of $887,000, or 37.5%, from $2.4 million at June 30, 2007.
Within the securities portfolio, U.S. Government-sponsored enterprise
obligations decreased by $650,000. The decrease in U.S. Government-sponsored
enterprise obligations was primarily related to maturity of agency bonds.
Mortgage-backed securities decreased $96,000, or 16.2%, from $593,000 at June
30, 2007 to $497,000 at March 31, 2008.
  Net
Loans.Including loans held
for sale, net loans increased $1.7 million, or 3.3%, from $52.8 million at June
30, 2007 to $54.5 million at March 31, 2008. Residential mortgage loans
increased $614,000, or 1.9%, commercial real estate loans increased $1.7
million, or 22.6%, home equity loans decreased $849,000, or 7.6%, construction
loans increased $32,000, or 3.4%, commercial loans increased $254,000, or 20.2%,
and consumer installment loans increased $19,000, or 3.7%.
  Deposits
and Borrowed Funds.Deposits increased $504,000, or 1.1%, from $44.9 million at June 30, 2007 to
$45.4 million at March 31, 2008. Demand accounts increased $365,000, or 13.1%,
NOW accounts decreased $257,000, or 11.4%, savings accounts decreased $87,000,
or 3.4%, money market accounts decreased $397,000, or 4.2%, and certificates of
deposit increased $881,000, or 3.2%. Total borrowings from the Federal Home Loan
Bank of Boston increased $2.3 million, or 17.4%, from $12.9 million as of June
30, 2007 to $15.2 million as of March 31, 2008, as increases were used to fund
growth in loans.
  Total
Capital.Retained earnings
increased by $232,000, comprised of net income of $178,000 and the cumulative
effect of capitalizing mortgage servicing rights of $53,000.  This was
offset slightly by the other comprehensive loss of $60,000 related to unrealized
depreciation in investment securities available for sale, which led to an
overall total capital increase of $172,000.
  Comparison of Operating Results for the
Three Months Ended March 31, 2008 and March 31, 2007
  Net
Income.Net income
increased $74,000, or 376.9%, to $94,000 for the three months ended March 31,
2008 compared to $20,000 for the three months ended March 31, 2007. The increase
was primarily the result of an increase in net interest income and sale of
mortgage loans, offset by an increase in non-interest
expense.
  Net
Interest Income.Net
interest income increased $39,000, or 9.7%, from $394,000 in the three months
ended March 31, 2007 to $433,000 in the three months ended March 31,
2008.
  Interest
Income.Interest income
increased from $968,000 for the three months ended March 31, 2007 to $1.0
million for the three months ended March 31, 2008. This increase of $62,000, or
6.3%, was due principally to increased volume of loans. Interest income on loans
increased by $69,000, or 7.8%, and interest income on securities and
interest-bearing deposits increased by $7,000, or 12.9%, while dividends on
Federal Home Loan Bank of Boston stock decreased $15,000 or
52.2%.
  Interest
Expense.Interest expense
increased by $23,000, or 4.0%, to $597,000 for the three months ended March 31,
2008. The increase was due to an increase in advances.  Average
deposit balances increased $1.2 million, or 2.9%, while average rates increased
from 2.92% to 2.98%. Average borrowings balances increased from $13.2 million to
$13.6 million, or 3.0%. The average rate decreased from 4.32% to
3.69%.
  13
 Provision
for Loan Losses.Our
provision for loan losses decreased from $7,000 for the three months ended March
31, 2007 to $4,000 for the three months ended March 31, 2008. There were no net
loan charge-offs for the three months ended March 31, 2007 and 2008. The
allowance for loan losses of $314,000 at March 31, 2008 represented 0.57% of
total loans, as compared to an allowance of $309,000, representing 0.58% of
total loans at March 31, 2007. Our analysis of the adequacy of the allowance
considers economic conditions, historical losses and management’s estimate of
losses inherent in the portfolio. For further discussion of our current
methodology, please refer to, “Overview—Allowance for Loan
Losses.”
  Non-interest
Income.Total non-interest
income increased $89,000, or 511.6%, to $107,000 for the three months ended
March 31, 2008, as compared to $18,000 for the three months ended March 31,
2007. There was a $46,000 increase in gains realized on the sale of fixed rate
residential mortgage loans sold into the secondary market for the three months
ended March 31, 2008 as compared to the three months ended March 31, 2007. This
increase was also impacted by a $32,000 change in the value of our
hedges.
  Non-interest
Expense.Non-interest
expense increased $24,000, or 6.2%, to $401,000 for the three months ended March
31, 2008 as compared to $377,000 for the three months ended March 31, 2007. The
increase was primarily attributable to increases in salary and benefits,
computer expense and advertising expenses of $16,000, $4,000 and $4,000,
respectively. These increases were offset partially by decreases in occupancy
and depreciation expenses of $5,000.
  Income
Taxes.Income tax expense
was $41,000 for the three months ended March 31, 2008, reflecting an effective
tax rate of 30%, compared to $8,000 for the three months ended March 31, 2007,
reflecting an effective tax rate of 29%. The increase in income taxes was due to
higher pre-tax earnings.
 
 Comparison of Operating Results for the
Nine Months Ended March 31, 2008 and March 31, 2007
  Net
Income.Net income
increased $89,000, or 99.6%, to $178,000 for the nine months ended March 31,
2008 compared to $89,000 for the nine months ended March 31, 2007. The increase
was primarily the result of a combination of an increase in net interest income
and non-interest income, offset by an increase in non-interest
expense.
  Net
Interest Income.Net
interest income increased $47,000, or 3.9%, from $1.2 million in the nine months
ended March 31, 2007 to $1.2 million in the nine months ended March 31,
2008.
  The increase in volume of
interest-earning assets increased interest income by $55,000, while the increase
in the volume of interest-bearing liabilities increased interest expense by
$55,000. The changes in volume had an impact of $475 on net interest income.
Changes in rate had the effect of increasing net interest income by $46,000. The
increase in net interest income attributable to higher yields on
interest-earning assets totaled $76,000 compared to a $30,000 decrease in net
interest income attributable to higher rates on interest-bearing liabilities.
Net interest margin was 2.70% for the nine months ended March 31, 2007 and 2.73%
for the nine months ended March 31, 2008. During much of the three months ended
March 31, 2008, short-term interest rates remained comparatively high relative
to long-term rates. Management expects to see short-term interest rates decline
faster than long-term rates as a result of actions taken by the Federal
Reserve.
  Interest
Income.Interest income
increased from $2.9 million for the nine months ended March 31, 2007 to $3.0
million for the nine months ended March 31, 2008. This increase of $131,000, or
4.5%, was due principally to increased volume and rates on loans. Interest
income on loans increased by $118,000, or 4.4%, and dividends on Federal Home
Loan Bank stock and interest income on securities and interest-bearing deposits
increased by $13,000, or 6.0%.
  14
 Interest
Expense.Interest expense
increased by $85,000, or 4.9%, to $1.8 million for the nine months ended March
31, 2008. The increase was due to an increase in deposits and an overall
increase in interest rates on deposits. Average deposit balances increased
$840,000, while average rates increased from 2.89% to 2.98%. Average borrowings
balances increased from $13.2 million to $13.6 million. The average rate on
borrowings has decreased from 4.09% to 4.04%.
  Provision
for Loan Losses.Our
provision for loan losses decreased from $25,000 for the nine months ended March
31, 2007 to a recovery of $3,000 for the nine months ended March 31, 2008. Net
loan charge-offs for each of the nine month periods ended March 31, 2007 and
2008 was $1,000. The allowance for loan losses of $314,000 at March 31, 2008
represented 0.57% of total loans, as compared to an allowance of $309,000,
representing 0.58% of total loans at March 31, 2007. Our analysis of the
adequacy of the allowance considers economic conditions, historical losses and
management’s estimate of losses inherent in the portfolio. For further
discussion of our current methodology, please refer to, “Overview—Allowance
for Loan Losses.”
  Non-interest
Income.Total non-interest
income increased $114,000, or 164.6%, to $183,000 for the nine months ended
March 31, 2008, as compared to $69,000 for the nine months ended March 31, 2007.
There was a $44,000 increase in gains realized on the sale of fixed rate
residential mortgage loans sold into the secondary market for the nine months
ended March 31, 2008 as compared to the nine months ended March 31, 2007. This
increase was also affected by a change in the value of our hedges, deposit fee
income and loan fee income.
  Non-interest
Expense.Non-interest
expense increased $62,000, or 5.6%, to $1.2 million for the nine months ended
March 31, 2008 as compared to $1.1 million for the nine months ended March 31,
2007. The increase was primarily attributable to increases in salary and
benefits, computer expense and advertising expenses of $41,000, $13,000 and
$11,000, respectively. These increases were offset partially by decreases in
occupancy and depreciation expenses of $12,000.
  Income
Taxes.Income tax expense
was $76,000 for the nine months ended March 31, 2008, reflecting an effective
tax rate of 30%, compared to $38,000 for the nine months ended March 31, 2007,
reflecting an effective tax rate of 30%. The increase in income taxes was due to
higher pre-tax earnings.
 
 Liquidity
  Liquidity is the ability to meet current
and future financial obligations of a short-term nature. Our primary sources of
funds consist of deposit inflows, loan repayments, loan sales and maturities of
investment securities. While maturities and scheduled amortization of loans and
securities are predictable sources of funds, deposit flows and mortgage and
mortgage-backed security prepayments are greatly influenced by general interest
rates, economic conditions and competition.
  We regularly adjust our investments in
liquid assets based upon our assessment of (1) expected loan demand,
(2) expected deposit flows, (3) yields available on interest-earning
deposits and securities and (4) the objectives of our asset/liability
management program. Excess liquid assets are invested generally in
interest-earning deposits and federal funds sold. Our most liquid assets are
cash and cash equivalents and interest-bearing deposits. The levels of these
assets are dependent on our operating, financing, lending and investing
activities during any given period. At March 31, 2008, cash and cash
equivalents totaled $3.3 million, including interest-earning deposits of $2.1
million. Securities classified as available-for-sale, which provide additional
sources of liquidity, totaled $1.5 million at March 31, 2008. On March 31, 2008,
we had $15.2 million of outstanding borrowings from the Federal Home Loan Bank
of Boston, and the ability to borrow an additional $7.5 million from the Federal
Home Loan Bank of Boston.
 
 15
 At March 31, 2008, we had $1.8
million in loan commitments outstanding.  In addition to commitments
to originate loans, we also had $3.7 million in unused lines of credit at
March 31, 2008.
 
 Certificates of deposit due within one
year of March 31, 2008 totaled $25.8 million, or 56.8% of total deposits.
If these deposits do not remain with us, we will be required to seek other
sources of funds, including other certificates of deposit and lines of credit.
We believe, however, based on past experience, that a significant portion of our
certificates of deposit will remain with us.
 
 Our primary investing activities are the
origination of loans and the purchase of securities. Our primary financing
activity consists of activity in deposit accounts. However, we may from time to
time utilize borrowings to fund a portion of our operations where the cost of
such borrowings is more favorable than that of deposits of a similar duration.
Deposit flows are affected by the overall level of interest rates, the interest
rates and products offered by us and our local competitors and other factors. We
generally manage the pricing of our deposits to be competitive and to increase
core deposits. Occasionally, we offer promotional rates to attract certain
deposit products.
 
 We are not aware of any known trends,
events or uncertainties that will have or are reasonably likely to have a
material effect on our liquidity, capital or operations, nor are we aware of any
current recommendations by regulatory authorities, which if implemented, would
have a material effect on liquidity, capital or operations.
 
 Capital Resources
 
 We are subject to various regulatory
capital requirements, including a risk-based capital measure. The risk-based
capital guidelines include both a definition of capital and a framework for
calculating risk-weighted assets by assigning balance sheet assets and
off-balance sheet items to broad risk categories. At March 31, 2008, we
exceeded all of our regulatory capital requirements. We are considered
“well-capitalized” under regulatory guidelines.
 
 The capital from the stock offering will
increase our liquidity and capital resources. Over time, the initial level of
liquidity will be reduced as net proceeds from the stock offering are used for
general corporate purposes, including repaying a portion of our borrowings. Our
financial condition and results of operations will be enhanced by the capital
from the reorganization, resulting in increased net interest-earning assets and
net income.  However, due to the increase in equity resulting from the
capital raised in the stock offering, return on equity will be adversely
affected following the reorganization.
 
 ITEM 3.
              QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET
RISK
 
 Management believes there have been no
material changes to the discussion under the section titled, “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Management of Market Risk” of the Company’s Registration
Statement on Form S-1, as amended, initially filed on March 14, 2008 and
declared effective on May 13, 2008 (File Number 333-149723), which is
incorporated herein by reference.
  16
 
 ITEM 4.
              CONTROLS AND
      PROCEDURES
 
 The Company’s chief executive officer
and chief financial officer, after evaluating the effectiveness of the Company’s
“disclosure controls and procedures” (as defined in the Securities Exchange Act
of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
by this quarterly report (the “Evaluation Date”), have concluded that as of the
Evaluation Date the Company’s disclosure controls and procedures were effective
and designed to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and
forms.
  During the period covered by this
quarterly report, there were no changes in the Company’s internal controls that
have materially affected, or are reasonable likely to materially affect, the
Company’s internal controls over financial reporting.
 
 PART II.  OTHER
INFORMATION
 
 ITEM 1.
              LEGAL
      PROCEEDINGS
 
 Auburn Savings Bank is not
involved in any pending legal proceedings other than routine legal proceedings
occurring in the ordinary course of business. Such routine legal proceedings, in
the aggregate, are believed by management to be immaterial to the financial
condition and results of operations of Auburn Savings Bank.
 
 ITEM 2.
              UNREGISTERED SALES OF EQUITY
      SECURITIES AND USE OF
PROCEEDS
 
 None.
 
 ITEM 3.
              DEFAULTS UPON SENIOR
      SECURITIES
 
 None.
 
 ITEM 4.
              SUBMISSION OF MATTERS TO A VOTE OF
      SECURITY HOLDERS
 
 None.
 
 ITEM 5.
              OTHER
      INFORMATION
 
 None.
  17
  ITEM 6.
              EXHIBITS
 
 Exhibit
                Number
              
              Exhibit
      Description2.1
              
              Plan of Reorganization from Mutual
      Savings Bank to Mutual Holding Company and Stock Issuance Plan
      **3.1
              
              Charter of Auburn Bancorp, Inc.
      **3.2
              
              Bylaws of Auburn Bancorp, Inc.
      **4.1
              
              Specimen Stock Certificate of
      Auburn Bancorp, Inc. **21
              
              Subsidiaries of Auburn Bancorp,
      Inc.**31.1
              
              Rule 13a-14(a)/15d-14(a)
      Certificationof
      Chief Executive Officer of the Company31.2
              
              Rule 13a-14(a)/15d-14(a)
      Certificationof
      Chief Financial Officer of the Company32.1
              
              Section 1350 Certification of
      Chief Executive Officer of the Company in accordance with Section 906
      of the Sarbanes-Oxley Act of 200232.2
              
              Section 1350 Certification of
      Chief Financial Officer of the Company in accordance with Section 906
      of the Sarbanes-Oxley Act of 2002
 
 ** Incorporated by reference into
      this document from the Exhibits filed with the Securities and Exchange
      Commission on the Company’s Registration Statement on Form S-1, as
      amended, initially filed on March 14, 2008 and declared effective on May
      13, 2008 (File Number
333-149723).
  18
 SIGNATURES
 
 Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this Report to
be signed on its behalf by the undersigned thereunto duly
authorized.
 
 
 Auburn Bancorp,
      Inc.(Registrant)Date: June 27,
      2008
              
              By:
              /s/  Allen T.
      SterlingAllen T.
      SterlingPresident and Chief Executive
      OfficerDate: June 27,
      2008
              
              By:
              /s/  Rachel A.
      HainesRachel A.
      HainesChief Financial
      Officer
  19