----

----

|   |                                                                                          |
|--------|-----------------------------------------------------------------------------------------------|
| x      | QUARTERLY      REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF      1934  |
|   |                                                                                          |
|   | For      the quarterly period ended June 30,      2009                                        |
|   |                                                                                          |
| o      | TRANSITION      REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|   |                                                                                          |
|   | For      the transition period from ________________________ to      ________________________ |
|   |                                                                                          |
|   | Commission      file number 0-51385                                                           |

| COLONIAL      BANKSHARES, INC.                             |
|------------------------------------------------------------|
| (Exact      name of registrant as specified in itscharter) |

| United      States of America                                       | 90-0183739                               |
|---------------------------------------------------------------------|------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer IdentificationNo.) |

| 2745      S. Delsea Drive                     |            |
|-----------------------------------------------|-----------------|
| Vineland,      New Jersey                     | 08360           |
| (Address      of principal executive offices) | (Zip      code) |

| Large      accelerated filer | o | Accelerated      filer         | o |
|------------------------------|---|--------------------------------|---|
| Non-accelerated      filer   | o | Smaller      reporting company | x |

----

|          |                                                                                                  |   |   |   |
|---------------|-------------------------------------------------------------------------------------------------------|--------|--------|--------|
|          |                                                                                                  |   | PAGE   |
| PART      I   | FINANCIAL      INFORMATION                                                                            |   |   |
|          |                                                                                                  |   |   |   |
| Item      1   | Unaudited      Consolidated Statements of Financial Condition                                         |   | 2      |   |
|          | Unaudited      Consolidated Statements of Income                                                      |   | 3      |   |
|          | Unaudited      Consolidated Statements of Stockholders’ Equity                                  |   | 4      |   |
|          | Unaudited      Consolidated Statements of Cash Flows                                                  |   | 5      |   |
|          | Notes      to Unaudited Consolidated Financial Statements                                             |   | 6      |   |
|          |                                                                                                  |   |   |   |
| Item      2   | Management’s      Discussion and Analysis of Financial Condition And Results of      Operations |   | 23     |   |
|          |                                                                                                  |   |   |   |
| Item      3   | Quantitative      and Qualitative Disclosures About Market Risk                                       |   | 33     |   |
|          |                                                                                                  |   |   |   |
| Item      4T. | Controls      and Procedures                                                                          |   | 33     |   |
|          |                                                                                                  |   |   |   |
| PART      II  | OTHER      INFORMATION                                                                                |   |   |   |
|          |                                                                                                  |   |   |   |
| Item      1   | Legal      Proceedings                                                                                |   | 34     |   |
|          |                                                                                                  |   |   |   |
| Item      1A. | Risk      Factors                                                                                     |   | 34     |   |
|          |                                                                                                  |   |   |   |
| Item      2   | Unregistered      Sales of Equity Securities and Use of Proceeds                                      |   | 36     |   |
|          |                                                                                                  |   |   |   |
| Item      3   | Defaults      Upon Senior Securities                                                                  |   | 36     |   |
|          |                                                                                                  |   |   |   |
| Item      4   | Submission      of Matters to Vote of Security Holders                                                |   | 37     |   |
|          |                                                                                                  |   |   |   |
| Item      5   | Other      Information                                                                                |   | 37     |   |
|          |                                                                                                  |   |   |   |
| Item      6   | Exhibits                                                                                              |   | 37     |   |
|          |                                                                                                  |   |   |   |
|          | Signatures                                                                                            |   | 38     |   |

----

| PART      I          FINANCIAL      INFORMATION |   |
|---------------------------------------------------------------------------------------------------|--------|
| Item      1.          Financial      Statements |   |

| Colonial      Bankshares,      Inc.                             |
|-----------------------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION (Unaudited) |
| At      June 30, 2009 and December 31,2008                      |

|                                                                                                                                                                                            |   | June      30,2009                             |    |   | December      31,2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|--------|-----------------------|--------|
|                                                                                                                                                                                            |   |                                          |    |
|                                                                                                                                                                                            |   | (Dollars      in thousands, except sharedata) |    |
| Assets                                                                                                                                                                                          |   |                                          |    |   |                  |   |
| Cash      and amounts due from banks                                                                                                                                                            |   | $                                             | 32,133  |   |                  | $      | 23,407 |   |
| Investment      securities available for sale                                                                                                                                                   |   |                                          | 166,442 |   |                  |   | 165,462 |   |
| Investment      securities held to maturity (fair value at June 30, 2009 - $30,353; at      December 31, 2008 - $16,332)                                                                        |   |                                          | 30,578  |   |                  |   | 16,897 |   |
| Loans      receivable, net of allowance for loan losses of $2,247 at June 30, 2009      and $2,105 at December 31, 2008                                                                         |   |                                          | 307,321 |   |                  |   | 303,151 |   |
| Loans      available for sale                                                                                                                                                                   |   |                                          | 673     |   |                  |   | — |   |
| Real      estate owned                                                                                                                                                                          |   |                                          | 113     |   |                  |   | 113 |   |
| Federal      Home Loan Bank stock, at cost                                                                                                                                                      |   |                                          | 1,763   |   |                  |   | 1,991 |   |
| Office      properties and equipment, net                                                                                                                                                       |   |                                          | 11,649  |   |                  |   | 11,563 |   |
| Bank-owned      life insurance                                                                                                                                                                  |   |                                          | 2,726   |   |                  |   | 2,674 |   |
| Accrued      interest receivable                                                                                                                                                                |   |                                          | 2,126   |   |                  |   | 2,298 |   |
| Other      assets                                                                                                                                                                               |   |                                          | 3,091   |   |                  |   | 3,020 |   |
|                                                                                                                                                                                            |   |                                          |    |   |                  |   |   |   |
| Total      Assets                                                                                                                                                                               |   | $                                             | 558,615 |   |                  | $      | 530,576 |   |
|                                                                                                                                                                                            |   |                                          |    |   |                  |   |   |   |
| Liabilities      and Stockholders’      Equity                                                                                                                                            |   |                                          |    |   |                  |   |   |   |
| Liabilities                                                                                                                                                                                     |   |                                          |    |   |                  |   |   |   |
| Deposits:                                                                                                                                                                                       |   |                                          |    |   |                  |   |   |   |
| Noninterest-bearing                                                                                                                                                                             |   | $                                             | 17,145  |   |                  | $      | 18,146 |   |
| Interest-bearing                                                                                                                                                                                |   |                                          | 473,848 |   |                  |   | 439,085 |   |
| Total      deposits                                                                                                                                                                             |   |                                          | 490,993 |   |                  |   | 457,231 |   |
| Federal      Home Loan Bank short-term borrowings                                                                                                                                               |   |                                          | — |   |                  |   | 3,000 |   |
| Federal      Home Loan Bank long-term borrowings                                                                                                                                                |   |                                          | 22,000  |   |                  |   | 28,227 |   |
| Advances      from borrowers for taxes and insurance                                                                                                                                            |   |                                          | 762     |   |                  |   | 620 |   |
| Accrued      interest payable and other liabilities                                                                                                                                             |   |                                          | 2,121   |   |                  |   | 868 |   |
|                                                                                                                                                                                            |   |                                          |    |   |                  |   |   |   |
| Total      Liabilities                                                                                                                                                                          |   |                                          | 515,876 |   |                  |   | 489,946 |   |
|                                                                                                                                                                                            |   |                                          |    |   |                  |   |   |   |
| Stockholders’      Equity                                                                                                                                                                 |   |                                          |    |   |                  |   |   |   |
| Preferred      stock, 1,000,000 shares authorized and unissued                                                                                                                                  |   |                                          | — |   |                  |   | — |   |
| Common      stock, par value $0.10 per share; authorized 10,000,000 shares; issued      4,521,696 shares; outstanding 4,422,521 shares at June 30, 2009 and      4,428,021 at December 31, 2008 |   |                                          | 452     |   |                  |   | 452 |   |
| Additional      paid-in capital                                                                                                                                                                 |   |                                          | 20,475  |   |                  |   | 20,290 |   |
| Unearned      shares held by Employee Stock Ownership Plan (“ESOP”)                                                                                                                 |   |                                          | (1,200  | )      |                  |   | (1,200 | ) |
| Treasury      stock, at cost, 134,625 shares at June 30, 2009 and 129,125 shares at      December 31, 2008                                                                                      |   |                                          | (1,596  | )      |                  |   | (1,559 | ) |
| Retained      earnings                                                                                                                                                                          |   |                                          | 23,087  |   |                  |   | 22,439 |   |
| Accumulated      other comprehensive income                                                                                                                                                     |   |                                          | 1,521   |   |                  |   | 208 |   |
| Total      Stockholders’ Equity                                                                                                                                                           |   |                                          | 42,739  |   |                  |   | 40,630 |   |
|                                                                                                                                                                                            |   |                                          |    |   |                  |   |   |   |
| Total      Liabilities and Stockholders’ Equity                                                                                                                                           |   | $                                             | 558,615 |   |                  | $      | 530,576 |   |

----

----

|                                                                                                    |
|---------------------------------------------------------------------------------------------------------|
| Colonial      Bankshares,      Inc.                                                                     |
| CONSOLIDATED      STATEMENTS OF INCOME (Unaudited)Three      and Six Months Ended June 30, 2009 and2008 |

|                                                             |   | Three      Months EndedJune      30,              |      |   | Six      Months EndedJune      30, |   |
|------------------------------------------------------------------|--------|---------------------------------------------------|-----------|--------|------------------------------------|--------|
|                                                             |   | 2009                                              |      |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|                                                             |   | (Dollars      in thousands except per share data) |      |
| Interest      Income                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |
| Loans,      including fees                                       |   | $                                                 | 4,588     |   |                               | $      | 4,122 |   |   | $ | 9,179 |   |   | $ | 8,047 |   |
| Mortgage-backed      securities                                  |   |                                              | 1,456     |   |                               |   | 1,309 |   |   |   | 2,987 |   |   |   | 2,398 |   |
| Securities:                                                      |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                          |   |                                              | 583       |   |                               |   | 1,012 |   |   |   | 1,163 |   |   |   | 2,309 |   |
| Tax-exempt                                                       |   |                                              | 164       |   |                               |   | 144 |   |   |   | 291 |   |   |   | 303 |   |
| Total      Interest Income                                       |   |                                              | 6,791     |   |                               |   | 6,587 |   |   |   | 13,620 |   |   |   | 13,057 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Expense                                            |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                         |   |                                              | 3,192     |   |                               |   | 3,514 |   |   |   | 6,457 |   |   |   | 7,088 |   |
| Borrowings                                                       |   |                                              | 331       |   |                               |   | 364 |   |   |   | 673 |   |   |   | 728 |   |
| Total      Interest Expense                                      |   |                                              | 3,523     |   |                               |   | 3,878 |   |   |   | 7,130 |   |   |   | 7,816 |   |
| Net      Interest Income                                         |   |                                              | 3,268     |   |                               |   | 2,709 |   |   |   | 6,490 |   |   |   | 5,241 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for Loan      Losses                              |   |                                              | —   |   |                               |   | — |   |   |   | 195 |   |   |   | — |   |
| Net      Interest Income after Provision for Loan Losses         |   |                                              | 3,268     |   |                               |   | 2,709 |   |   |   | 6,295 |   |   |   | 5,241 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Non-Interest      Income                                         |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Fees      and service charges                                    |   |                                              | 304       |   |                               |   | 284 |   |   |   | 581 |   |   |   | 542 |   |
| Gain      on sale of loans                                       |   |                                              | 41        |   |                               |   | — |   |   |   | 49 |   |   |   | 7 |   |
| Impairment      charge on investment securities                  |   |                                              | (249      | )      |                               |   | (368 | ) |   |   | (346 | ) |   |   | (518 | ) |
| Net      gain on sales and calls of investment securities        |   |                                              | 128       |   |                               |   | 238 |   |   |   | 285 |   |   |   | 216 |   |
| Earnings      on life insurance                                  |   |                                              | 27        |   |                               |   | 24 |   |   |   | 52 |   |   |   | 47 |   |
| Other                                                            |   |                                              | 5         |   |                               |   | 5 |   |   |   | 11 |   |   |   | 11 |   |
| Total      Non-Interest Income                                   |   |                                              | 256       |   |                               |   | 183 |   |   |   | 632 |   |   |   | 305 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Non-Interest      Expenses                                       |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Compensation      and benefits                                   |   |                                              | 1,493     |   |                               |   | 1,343 |   |   |   | 2,834 |   |   |   | 2,683 |   |
| Occupancy      and equipment                                     |   |                                              | 397       |   |                               |   | 327 |   |   |   | 770 |   |   |   | 642 |   |
| FDIC      insurance premium                                      |   |                                              | 206       |   |                               |   | 81 |   |   |   | 597 |   |   |   | 122 |   |
| Data      processing                                             |   |                                              | 181       |   |                               |   | 194 |   |   |   | 383 |   |   |   | 376 |   |
| Office      supplies                                             |   |                                              | 51        |   |                               |   | 41 |   |   |   | 97 |   |   |   | 76 |   |
| Professional      fees                                           |   |                                              | 134       |   |                               |   | 108 |   |   |   | 261 |   |   |   | 201 |   |
| Other                                                            |   |                                              | 827       |   |                               |   | 299 |   |   |   | 1,143 |   |   |   | 574 |   |
| Total      Non-Interest Expenses                                 |   |                                              | 3,289     |   |                               |   | 2,393 |   |   |   | 6,085 |   |   |   | 4,674 |   |
| Income      before Income Tax Expense                            |   |                                              | 235       |   |                               |   | 499 |   |   |   | 842 |   |   |   | 872 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Income      Tax      Expense                                     |   |                                              | 30        |   |                               |   | 112 |   |   |   | 194 |   |   |   | 181 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Net      Income                                                  |   | $                                                 | 205       |   |                               | $      | 387 |   |   | $ | 648 |   |   | $ | 691 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Per      Share Data (See Note 3):                                |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share – basic                            |   | $                                                 | 0.05      |   |                               | $      | 0.09 |   |   | $ | 0.15 |   |   | $ | 0.16 |   |
| Earnings      per share – diluted                          |   | $                                                 | 0.05      |   |                               | $      | 0.09 |   |   | $ | 0.15 |   |   | $ | 0.16 |   |
|                                                             |   |                                              |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding – basic |   |                                              | 4,268,761 |   |                               |   | 4,296,855 |   |   |   | 4,270,232 |   |   |   | 4,299,169 |   |
| Weighted      average number of shares outstanding - diluted     |   |                                              | 4,268,761 |   |                               |   | 4,385,480 |   |   |   | 4,270,232 |   |   |   | 4,387,794 |   |

----

----

| Colonial      Bankshares,      Inc.                                                                               |
|-------------------------------------------------------------------------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)Six      Months Ended June 30, 2009 and2008 |

|                                                                                                 |   | CommonStock                 |    |   | AdditionalPaid-inCapital |   |    | UnearnedSharesHeld      byESOP |   |   | RetainedEarnings |   |   | TreasuryStock |    |   | Accumu-latedOtherCompre-hensiveIncome(Loss) |   |    | TotalStock-holders’Equity |   |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|--------------------------|--------|---------|--------------------------------|--------|--------|------------------|--------|--------|---------------|---------|--------|---------------------------------------------|--------|---------|---------------------------------|--------|
|                                                                                                 |   | (Dollars      in thousands) |    |
| Balance,      January 1, 2009                                                                        |   | $                           | 452     |   |                     | $      | 20,290  |                           |   | $      | (1,200           | )      |   | $             | 22,439  |   |                                        | $      | (1,559  | )                               |   | $ | 208 |   |   | $ | 40,630 |   |
| Comprehensive      income:                                                                           |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Net      income                                                                                      |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | 648     |   |                                        |   | — |                            |   |   | — |   |   |   | 648 |   |
| Net      change in unrealized gain on securities available for sale, net of tax      expense of $736 |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | 1,313 |   |   |   | 1,313 |   |
| Total      Comprehensive Income                                                                      |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | — |   |   |   | 1,961 |   |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Treasury      stock purchased (5,500 shares)                                                         |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | — |   |                                        |   | (37     | )                               |   |   | — |   |   |   | (37 | ) |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Stock-based      compensation expense (restricted stock awards)                                      |   |                        | — |   |                     |   | 111     |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | — |   |   |   | 111 |   |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Stock-based      compensation expense (stock options)                                                |   |                        | — |   |                     |   | 74      |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | — |   |   |   | 74 |   |
|                                                         |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Balance,      June 30, 2009                                                                          |   | $                           | 452     |   |                     | $      | 20,475  |                           |   | $      | (1,200           | )      |   | $             | 23,087  |   |                                        | $      | (1,596  | )                               |   | $ | 1,521 |   |   | $ | 42,739 |   |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Balance,      January 1, 2008                                                                        |   | $                           | 452     |   |                     | $      | 19,922  |                           |   | $      | (1,316           | )      |   | $             | 21,094  |   |                                        | $      | (1,189  | )                               |   | $ | 65 |   |   | $ | 39,028 |   |
| Comprehensive      loss:                                                                             |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Net      income                                                                                      |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | 691     |   |                                        |   | — |                            |   |   | — |   |   |   | 691 |   |
| Net      change in unrealized loss on securities available for sale, net of tax      benefit of $557 |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | (934 | ) |   |   | (934 | ) |
| Total      Comprehensive Loss                                                                        |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | — |   |   |   | (243 | ) |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Treasury      stock purchased (15,500 shares)                                                        |   |                        | — |   |                     |   | — |                           |   |   | —          |   |   |          | — |   |                                        |   | (163    | )                               |   |   | — |   |   |   | (163 | ) |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Stock-based      compensation expense (restricted stock awards)                                      |   |                        | — |   |                     |   | 111     |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | — |   |   |   | 111 |   |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Stock-based      compensation expense (stock options)                                                |   |                        | — |   |                     |   | 74      |                           |   |   | —          |   |   |          | — |   |                                        |   | — |                            |   |   | — |   |   |   | 74 |   |
|                                                                                                 |   |                        |    |   |                     |   |    |                           |   |   |             |   |   |          |    |   |                                        |   |    |                            |   |   |   |   |   |   |   |   |
| Balance,      June 30, 2008                                                                          |   | $                           | 452     |   |                     | $      | 20,107  |                           |   | $      | (1,316           | )      |   | $             | 21,785  |   |                                        | $      | (1,352  | )                               |   | $ | (869 | ) |   | $ | 38,807 |   |

----

----

| Colonial      Bankshares,      Inc.                                                               |
|---------------------------------------------------------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF CASH FLOWS (Unaudited)Six      Months Ended June 30, 2009 and2008 |

|                                                                                        |   | Six      Months EndedJune      30, |    |
|---------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                        |   | 2009                               |    |   | 2008 |   |
|                                                                                        |   | (Dollars      in thousands)        |    |
| Cash      Flows from Operating Activities:                                                  |   |                               |    |   |   |   |
| Net      income                                                                             |   | $                                  | 648     |   |   | $ | 691 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |   |                               |    |   |   |   |   |   |
| Provision      for loan losses                                                              |   |                               | 195     |   |   |   | — |   |
| Depreciation      expense                                                                   |   |                               | 323     |   |   |   | 285 |   |
| Stock-based      compensation expense                                                       |   |                               | 185     |   |   |   | 185 |   |
| Impairment      charge on investment securities                                             |   |                               | 346     |   |   |   | 518 |   |
| Net      earnings on bank-owned life insurance                                              |   |                               | (52     | ) |   |   | (47 | ) |
| Loans      originated for sale                                                              |   |                               | (4,801  | ) |   |   | (331 | ) |
| Proceeds      from sale of loans                                                            |   |                               | 4,177   |   |   |   | 338 |   |
| Gain      on sale of loans                                                                  |   |                               | (49     | ) |   |   | (7 | ) |
| Net      amortization of loan costs                                                         |   |                               | 20      |   |   |   | (8 | ) |
| Net      (gain) on sales and calls of investment securities                                 |   |                               | (285    | ) |   |   | (216 | ) |
| Accretion      of premium and discount on investment securities, net                        |   |                               | (268    | ) |   |   | (241 | ) |
| Decrease      in accrued interest receivable                                                |   |                               | 172     |   |   |   | 79 |   |
| Increase      in other assets                                                               |   |                               | (808    | ) |   |   | (162 | ) |
| Increase      (decrease) in accrued interest payable and other    liabilities               |   |                               | 1,253   |   |   |   | (55 | ) |
|                                                                                        |   |                               |    |   |   |   |   |   |
| Net      cash provided by operating activities                                              |   |                               | 1,056   |   |   |   | 1,029 |   |
| Cash      Flows from Investing Activities:                                                  |   |                               |    |   |   |   |   |   |
| Proceeds      from sales of investment securities available-for-sale                        |   |                               | 602     |   |   |   | 19,149 |   |
| Proceeds      from sales of mortgage-backed securitiesavailable-for-sale                    |   |                               | 1,674   |   |   |   | 2,911 |   |
| Proceeds      from calls and maturities of investment securities      available-for-sale    |   |                               | 27,004  |   |   |   | 25,912 |   |
| Proceeds      from calls and maturities of investment securities      held-to-maturity      |   |                               | 4,447   |   |   |   | 2,000 |   |
| Purchase      of investment securities available-for-sale                                   |   |                               | (31,997 | ) |   |   | (18,947 | ) |
| Purchase      of investment securities held-to-maturity                                     |   |                               | (18,533 | ) |   |   | (3,712 | ) |
| Purchase      of mortgage-backed securities available-for-sale                              |   |                               | (10,877 | ) |   |   | (41,425 | ) |
| Purchase      of office properties and equipment                                            |   |                               | (409    | ) |   |   | (1,257 | ) |
| Principal      repayments from investment securities                                        |   |                               | 823     |   |   |   | 583 |   |
| Principal      repayments from mortgage-backed securities                                   |   |                               | 14,453  |   |   |   | 8,232 |   |
| Net      decrease (increase) of Federal Home Loan Bank stock                                |   |                               | 228     |   |   |   | (249 | ) |
| Maturity      of interest-bearing time deposits in banks                                    |   |                               | — |   |   |   | 208 |   |
| Net      increase in loans receivable                                                       |   |                               | (4,385  | ) |   |   | (34,695 | ) |
|                                                                                        |   |                               |    |   |   |   |   |   |
| Net      cash used for investing activities                                                 |   |                               | (16,970 | ) |   |   | (41,290 | ) |
| Cash      Flows from Financing Activities:                                                  |   |                               |    |   |   |   |   |   |
| Net      increase in deposits                                                               |   |                               | 33,762  |   |   |   | 41,499 |   |
| Decrease      in Federal Home Loan Bank short-term borrowings, net                          |   |                               | (3,000  | ) |   |   | (2,705 | ) |
| Proceeds      from Federal Home Loan Bank long-term borrowings                              |   |                               | — |   |   |   | 6,000 |   |
| Repayment      of Federal Home Loan Bank long-term borrowings                               |   |                               | (6,227  | ) |   |   | (163 | ) |
| Increase      in advances from borrowers for taxes and insurance                            |   |                               | 142     |   |   |   | 173 |   |
| Acquisition      of treasury stock                                                          |   |                               | (37     | ) |   |   | (163 | ) |
|                                                                                        |   |                               |    |   |   |   |   |   |
| Net      cash provided by financing activities                                              |   |                               | 24,640  |   |   |   | 44,641 |   |
|                                                                                        |   |                               |    |   |   |   |   |   |
| Increase      in cash and cash equivalents                                                  |   |                               | 8,726   |   |   |   | 4,380 |   |
|                                                                                        |   |                               |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       |   |                               | 23,407  |   |   |   | 15,978 |   |
|                                                                                        |   |                               |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                             |   | $                                  | 32,133  |   |   | $ | 20,358 |   |
|                                                                                        |   |                               |    |   |   |   |   |   |
| Supplemental      Cash Flow Disclosures:                                                    |   |                               |    |   |   |   |   |   |
| Cash      paid:                                                                             |   |                               |    |   |   |   |   |   |
| Interest                                                                                    |   | $                                  | 7,313   |   |   | $ | 8,073 |   |
| Income      taxes                                                                           |   | $                                  | 800     |   |   | $ | 331 |   |
| Supplemental      Schedule of Noncash Investing and Financing Activities:                   |   |                               |    |   |   |   |   |   |
| Other      real estate acquired in settlement of loans                                      |   |                               | — |   |   | $ | 155 |   |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| 1.     | Organization      and Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Colonial      Bankshares, Inc. (the “Company”) was organized in January 2003 to serve as      the mid-tier stock holding company of Colonial Bank, FSB (the “Bank”). The      Company is a federally chartered corporation and owns 100% of the      outstanding common stock of the Bank. The Bank is a federally chartered      capital stock savings bank. Colonial Bankshares, MHC, a federally      chartered mutual holding company, is the parent of the Company and owns      approximately 55% of the Company’s outstanding common stock. The Bank is a      wholly owned subsidiary of the Company. The Bank has established a      Delaware corporation, CB Delaware Investments, Inc. (the “Operating      Subsidiary”) whose purpose is to invest in and manage      securities.                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      consolidated financial statements include the accounts of the Company, the      Bank and the Operating Subsidiary. All material intercompany transactions      and balances have been eliminated. The Company prepares its financial      statements on the accrual basis and in conformity with accounting      principles generally accepted in the United States of America (“US GAAP”).      The unaudited information furnished herein reflects all adjustments      (consisting of normal recurring accruals) that are, in the opinion of      management, necessary to a fair statement of the results for the interim      periods presented. They do not include all of the information and      footnotes required by US GAAP for complete financial statements. Operating      results for the three and six months ended June 30, 2009 (unaudited) are      not necessarily indicative of the results that may be expected for the      year ending December 31, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      balance sheet at December 31, 2008 has been derived from the audited      consolidated financial statements at that date but does not include all of      the information and footnotes required by US GAAP for complete financial      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      preparation of financial statements in conformity with US GAAP requires      management to make estimates and assumptions that affect the reported      amounts of assets and liabilities and disclosure of contingent assets and      liabilities at the date of the financial statements and the reported      amounts of income and expenses during the reporting period. Actual results      could differ from those estimates. Material estimates that are      particularly susceptible to significant change in the near term relate to      the determination of the allowance for loan losses, evaluation of      other-than-temporary impairment of investment securities, the potential      impairment of Federal Home Loan Bank (“FHLB”) stock and our ability to      realize deferred tax assets.                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      Bank maintains its executive office and main branch in Vineland, New      Jersey with branches in Bridgeton, Mantua, Millville, Upper Deerfield,      Vineland, Sewell and Cedarville New Jersey. The Bank’s principal business      consists of attracting customer deposits and investing these deposits      primarily in single-family residential, commercial and consumer loans and      investments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      Company has evaluated subsequent events for potential recognition and/or      disclosure in this Quarterly Report on Form 10-Q through August 10,      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

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| 2.     | Recent      Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In      April 2009, the Financial Accounting Standards Board (FASB) issued      FASB Staff Position (FSP) No. FAS 157-4, Determining Fair Value When      the Volume and Level of Activity for the Asset or Liability Have      Significantly Decreased and Identifying Transactions That Are Not Orderly      (FSP FAS 157-4) which amends SFAS No. 157 to provide additional      guidance for determining fair value of a financial asset or financial      liability when the volume and level of activity for such asset or      liability have decreased significantly. FAS 157-4 also provides guidance      for determining whether a transaction is an orderly one. FAS 157-4 is      effective prospectively for interim periods and annual years ending after      June 15, 2009, with early adoption permitted for periods ending after      March 15, 2009. An entity early adopting FSP FAS 157-4 must also      early adopt FSP FAS 115-2 and FAS 124-2, Recognition and Presentation      of Other-Than-Temporary Impairments. The application of the      provisions of FSP 157-4 did not have a material impact on the Company’s      consolidated financial statements as of June 30, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In      April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2,      Recognition and      Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2 and      FAS 124-2). FSP FAS 115-2 and FAS 124-2 clarify the interaction of the      factors that should be considered when determining whether a debt security      is other-than-temporarily impaired. For debt securities, management must      assess whether (a) it has the intent to sell the security and      (b) it is more likely than not that it will be required to sell the      security prior to its anticipated recovery. These steps are done before      assessing whether the entity will recover the cost basis of the      investment. Previously, this assessment required management to assert it      has both the intent and the ability to hold a security for a period of      time sufficient to allow for an anticipated recovery in fair value to      avoid recognizing an other-than-temporary impairment. This change does not      affect the need to forecast recovery of the value of the security through      either cash flows or market price. In instances when a determination is      made that an other-than-temporary impairment exists but the investor does      not intend to sell the debt security and it is not more likely than not      that it will be required to sell the debt security prior to its      anticipated recovery, FSP FAS 115-2 and FAS 124-2 changes the presentation      and amount of the other-than-temporary impairment recognized in the income      statement. The other-than-temporary impairment is separated into      (a) the amount of the total other-than-temporary impairment related      to a decrease in cash flows expected to be collected from the debt      security (the credit loss) and (b) the amount of the total      other-than-temporary impairment related to all other factors. The amount      of the total other-than-temporary impairment related to the credit loss is      recognized in earnings. The amount of the total other-than-temporary      impairment related to all other factors is recognized in other      comprehensive income. This FSP is effective for interim and annual      reporting periods ending after June 15, 2009, with early adoption      permitted for periods ending after March 15, 2009. An entity early      adopting FSP FAS 115-2 and FAS 124-2 must also early adopt FSP FAS      157-4, Determining Fair      Value When the Volume and Level of Activity for the Asset or Liability      Have Significantly Decreased and Identifying Transactions That Are Not      Orderly. The application of the provisions of FAS 115-2 and FAS      124-2 did not have a material impact on the Company’s consolidated      financial statements as of June 30,2009. |

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|   | In      April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair      Value of Financial Instruments (FSP FAS 107-1 and APB 28-1). FSP      FAS 107-1 and APB 28-1 amends FASB Statement No. 107, Disclosures about Fair Value      of Financial Instruments, to require disclosures about fair value      of financial instruments for interim reporting periods of publicly traded      companies as well as in annual financial statements. This FSP also amends      APB Opinion No. 28, Interim Financial      Reporting, to require those disclosures in summarized financial      information at interim reporting periods. This FSP is effective for      interim and annual reporting periods ending after June 15, 2009, with      early adoption permitted for periods ending after March 15, 2009. An      entity early adopting FSP FAS 107-1 and APB 28-1 must also early adopt FSP      FAS 157-4, Determining      Fair Value When the Volume and Level of Activity for the Asset or      Liability Have Significantly Decreased and Identifying Transactions That      Are Not Orderly and FSP FAS 115-2 and FAS 124-2, Recognition and Presentation      of Other-Than-Temporary Impairments. The application of the      provisions of FAS 107-1 and APB 28-1 did not have a material impact on the      Company’s consolidated financial statements. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | In      June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of      Financial Assets, an amendment of FASB Statement No. 140. This      statement prescribes the information that a reporting entity must provide      in its financial reports about a transfer of financial assets; the effects      of a transfer on its financial position, financial performance and cash      flows; and a transferor’s continuing involvement in transferred financial      assets. Specifically, among other aspects, SFAS 166 amends Statement      of Financial Standard No. 140, Accounting for Transfers and      Servicing of Financial Assets and Extinguishments of Liabilities,      or SFAS 140, by removing the concept of a qualifying special-purpose      entity from SFAS 140 and removes the exception from applying      FIN 46(R) to variable interest entities that are qualifying      special-purpose entities. It also modifies the financial-components      approach used in SFAS 140. SFAS 166 is effective for fiscal      years beginning after November 15, 2009. The Company does not anticipate      the adoption of FAS 166 to have a material impact on its consolidated      financial statements.                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | In      June 2009, the FASB issued SFAS No. 167, Amendments to FASB      Interpretation No. 46(R). This statement amends FASB      Interpretation No. 46, Consolidation of Variable      Interest Entities (revised December 2003) — an interpretation of ARB      No. 51, or FIN 46(R), to require an enterprise to      determine whether it’s variable interest or interests give it a      controlling financial interest in a variable interest entity. The primary      beneficiary of a variable interest entity is the enterprise that has both      (1) the power to direct the activities of a variable interest entity      that most significantly impact the entity’s economic performance and      (2) the obligation to absorb losses of the entity that could      potentially be significant to the variable interest entity or the right to      receive benefits from the entity that could potentially be significant to      the variable interest entity. SFAS 167 also amends FIN 46(R) to      require ongoing reassessments of whether an enterprise is the primary      beneficiary of a variable interest entity. SFAS 167 is effective for      fiscal years beginning after November 15, 2009. The Company does not      anticipate the adoption of FAS 167 to have a material impact on its      consolidated financialstatements.      |

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|   | In      June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards      Codification and the Hierarchy of Generally Accepted Accounting      Principles, a replacement of FASB Statement No. 162.      SFAS 168 replaces SFAS No. 162, The Hierarchy of Generally      Accepted Accounting Principles, to establish the FASB Accounting Standards      Codification as the source of authoritative accounting principles      recognized by the FASB to be applied by nongovernmental entities in      preparation of financial statements in conformity with generally accepted      accounting principles in the United States. SFAS 168 is effective for      interim and annual periods ending after September 15, 2009. The      Company does not expect the adoption of this standard to have an impact on      its consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.     | Earnings      Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | There      are no convertible securities which would affect the net income      (numerator) in calculating basic and diluted earnings per share;      therefore, for these calculations, the net income for the six months ended      June 30, 2009 is $648 thousand and the net income for the six months ended      June 30, 2008 is $691 thousand. Net income for the three months ended June      30, 2009 is $205 thousand and the net income for the three months ended      June 30, 2008 is $387 thousand. Basic and diluted earnings per share data      are based on the weighted-average number of common shares outstanding      during each period. Diluted earnings per share are further adjusted for      potential common shares that were dilutive and outstanding during the      period. Potential common shares consist of stock options outstanding and      non-vested stock grants under the stock-based incentive plans. The      dilutive effect of potential common shares is computed using the treasury      stock method. The following table sets forth the composition of the      weighted average common shares (denominator) used in the basic and diluted      earnings per share computation. At June 30, 2009 and 2008, respectively      there were 249,643 and 196,468 anti-dilutive non-vested awards and options      excluded from the computation of diluted earnings per share because the      option price was greater than the average market price,      respectively. |

|                                                                   |   | For      the Three Months EndedJune      30, |      |   | For      the Six Months EndedJune      30, |   |
|------------------------------------------------------------------------|--------|----------------------------------------------|-----------|--------|--------------------------------------------|--------|
|                                                                   |   | 2009                                         |      |   | 2008                                       |   |   | 2009 |   |   | 2008 |   |
| Net      Income                                                        |   | $                                            | 205,000   |   |                                       | $      | 387,000 |   |   | $ | 648,000 |   |   | $ | 691,000 |   |
|                                                                   |   |                                         |      |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average common shares issues                             |   |                                         | 4,521,696 |   |                                       |   | 4,521,696 |   |   |   | 4,521,696 |   |   |   | 4,521,696 |   |
| Average      unearned ESOP shares                                      |   |                                         | (119,986  | )      |                                       |   | (131,589 | ) |   |   | (119,986 | ) |   |   | (131,589 | ) |
| Average      treasury stock shares                                     |   |                                         | (132,949  | )      |                                       |   | (93,252 | ) |   |   | (131,478 | ) |   |   | (90,938 | ) |
| Weighted      average common shares outstanding-basic                  |   |                                         | 4,268,761 |   |                                       |   | 4,296,855 |   |   |   | 4,270,232 |   |   |   | 4,299,169 |   |
| Effect      of dilutive non-vested shares and stock optionsoutstanding |   |                                         | —   |   |                                       |   | 88,625 |   |   |   | — |   |   |   | 88,625 |   |
| Weighted      average common shares outstanding-diluted                |   |                                         | 4,268,761 |   |                                       |   | 4,385,480 |   |   |   | 4,270,232 |   |   |   | 4,387,794 |   |
| Basic      earnings per share                                          |   | $                                            | 0.05      |   |                                       | $      | 0.09 |   |   | $ | 0.15 |   |   | $ | 0.16 |   |
| Diluted      earnings per share                                        |   | $                                            | 0.05      |   |                                       | $      | 0.09 |   |   | $ | 0.15 |   |   | $ | 0.16 |   |

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| 4.     | Stock      Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The      Company’s Board of Directors and stockholders have adopted the 2006      Colonial Bankshares, Inc. Stock-Based Incentive Plan (the “2006 Plan”).      The 2006 Plan provides for the grant of shares of common stock and the      grant of stock options to officers, employees and directors of the      Company. Under the 2006 Plan, the Company may grant options to purchase      221,563 shares of Company stock and may grant up to 88,625 shares of      common stock as restricted stock awards.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The      2006 Plan enables the Board of Directors to grant stock options to      executives, other key employees and nonemployee directors. The options      granted under the 2006 Plan may be either non-qualified stock options      (NQOs) or incentive stock options (ISOs). Only NQOs may be granted to      nonemployee directors under the 2006 Plan and ISOs may be granted to      employees. The Company has reserved 221,563 shares of common stock for      issuance upon the exercise of options granted under the 2006 Plan. The      2006 Plan will terminate ten years from the date of adoption. Options may      not be granted with an exercise price that is less than 100% of the fair      market value of the Company’s common stock on the date of grant. Options      may not be granted with a term longer than 10 years. Stock options granted      under the 2006 Plan are subject to limitations under Section 422 of      the Internal Revenue Code. The number of shares available under the 2006      Plan, the number of shares subject to outstanding options and the exercise      price of outstanding options will be adjusted to reflect any stock      dividend, stock split, merger, reorganization or other event generally      affecting the number of the Company’s outstanding shares. At June 30,      2009, there were 25,095 options available for grant under the 2006      Plan. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | On      October 19, 2006, 88,625 shares of restricted stock were awarded. The      restricted shares awarded had a grant date fair value of $12.47 per share.      The restricted stock awarded vests 20% annually beginning October 19,      2007. For the three months and six months ended June 30, 2009, $56      thousand and $111 thousand, respectively, in compensation expense was      recognized in regard to these restricted stock awards with a related tax      benefit of $19 thousand and $37 thousand, respectively. As of June 30,      2009, there was $507 thousand of unrecognized compensation expense related      to the restricted stock awards which is expected to be recognized over a      period of 2.25 years. At June 30, 2008, there was $728 thousand of      unrecognized compensation expense related to the restricted stock awards      which is expected to be recognized over a period of 3.25      years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Activity      in issued but unvested award shares during the six months ended June 30,      2009 was asfollows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

| Award      Shares                    |   | Number      ofShares |    |   | WeightedAverageGrant      DateFair      Value |   |
|--------------------------------------|--------|----------------------|---------|--------|-----------------------------------------------|--------|
| Restricted,      beginning of period |   |                 | 53,175  |   |                                          | $      | 12.47 |   |
| Granted                              |   |                 | — |   |                                          |   | — |   |
| Forfeitures                          |   |                 | — |   |                                          |   | — |   |
| Vested                               |   |                 | — |   |                                          |   | — |   |
| Restricted      stock, end of period |   |                 | 53,175  |   |                                          | $      | 12.47 |   |

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|   | On      October 19, 2006, options to purchase 196,468 shares of common stock at      $12.47 per share were awarded. The options awarded vest 20% annually      beginning October 19, 2007. The following is a summary of the Company’s      stock option activity for the six months ended June 30,    2009: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Shares |    |   | WeightedAverageExercisePrice |   |
|-----------------------------------------------|--------|--------|---------|--------|------------------------------|--------|
|                                          |   |   |    |   |                         |   |
| Options      outstanding, beginning of period |   |   | 196,468 |   |                         | $      | 12.47 |   |
| Granted                                       |   |   | — |   |                         |   | — |   |
| Exercised                                     |   |   | — |   |                         |   | — |   |
| Forfeitures                                   |   |   | — |   |                         |   | — |   |
| Options      outstanding, end of period       |   |   | 196,468 |   |                         | $      | 12.47 |   |
| Exercisable      at end of period             |   |   | 78,588  |   |                         | $      | 12.47 |   |

|   | The      fair value of each option grant is estimated on the date of grant using      the Black-Scholes option-pricing model with the following weighted average      assumptions for options granted in 2006: dividend yield of 0%, risk-free      interest rate of 4.79%, expected life of 6.5 years, and expected      volatility of 15.00%. The calculated fair value of options granted in 2006      was $3.79 per option. The weighted average contractual term of options      outstanding and exercisable were 7.25 years at June 30, 2009 and 8.25      years at June 30, 2008.                                                                                                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Stock-based      compensation expense related to stock options for the three and six months      ended June 30, 2009, were $37 thousand and $74 thousand, respectively,      with a related tax benefit of $13 thousand and $26 thousand, respectively.      As of June 30, 2009, there was approximately $341 thousand of unrecognized      compensation cost related to unvested stock options granted in 2006. The      cost will be recognized in a straight line method over a period of 2.25      years. At June 30, 2008, there was approximately $490 thousand of      unrecognized compensation cost related to unvested stock options granted      in 2006.                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The      Company has an Employee Stock Ownership Plan (“ESOP”) for the benefit of      employees who meet the eligibility requirements as defined in the plan.      The ESOP trust purchased 166,398 shares of common stock in the initial      public offering using proceeds of a loan from the Company. The Bank will      make cash contributions to the ESOP on an annual basis sufficient to      enable the ESOP to make the required loan payments to the Company. The      loan bears an interest rate of 6.00% with principal and interest payable      annually in equal installments over 15 years. The loan is secured by the      shares of the stock purchased.                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | As      the debt is repaid, shares are released from the collateral and allocated      to qualified employees. Accordingly, the shares pledged as collateral are      reported as unearned ESOP shares in the Consolidated Statements of      Financial Condition. As shares are released from collateral, the Company      reports compensation expense equal to the current market price of the      shares, and the shares become outstanding for earnings per share      computations. The compensation expense is recorded on a monthly basis. The      Company’s contribution expense for the ESOP was $20 thousand and $41      thousand for the three and six months ended June 30, 2009,      respectively. |

----

----

|   | The      following table presents the components of the ESOP  shares: |
|--------|-----------------------------------------------------------------------|

|                                |   | June      30, 2009 |    |   | June      30, 2008 |   |
|-------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
| Shares      released for allocation |   |               | 46,412  |   |               |   | 34,809 |   |
| Unreleased      shares              |   |               | 119,986 |   |               |   | 131,589 |   |
| Total      ESOP shares              |   |               | 166,398 |   |               |   | 166,398 |   |

| 5.     | Comprehensive      Income                                                                                                                                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                   |
|   | Comprehensive      income for the Company consists of net income and unrealized gains and      losses on available for sale securities. Other comprehensive income for      the three and six months ended June 30, 2009 and 2008 was as      follows: |

|                                                                           |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
|                                                                           |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
|                                                                           |   | (Dollars      in thousands)          |   |
| Other      comprehensive income (loss):                                        |   |                                 |   |   |                               |   |   |   |   |   |   |   |
| Unrealized      holding gains (loss) on available for sale securities          |   | $                                    | 763    |   |                               | $      | (2,385 | ) |   | $ | 2,334 |   |   | $ | (1,275 | ) |
| Reclassification      adjustment for net (gains) losses realized in net income |   |                                 | (128   | )      |                               |   | (238 | ) |   |   | (285 | ) |   |   | (216 | ) |
| Net      unrealized gains (losses)                                             |   |                                 | 635    |   |                               |   | (2,623 | ) |   |   | 2,049 |   |   |   | (1,491 | ) |
| Income      tax expense (benefit)                                              |   |                                 | 251    |   |                               |   | (941 | ) |   |   | 736 |   |   |   | (557 | ) |
|                                                                           |   |                                 |   |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Net      of tax amount                                                         |   | $                                    | 384    |   |                               | $      | (1,682 | ) |   | $ | 1,313 |   |   | $ | (934 | ) |

| 6.     | Contingent      Liabilities and Guarantees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | In      the normal course of business, there are various outstanding commitments      and contingent liabilities, such as commitments to extend credit and      standby letters of credit that are not reflected in the accompanying      financial statements. No material losses are anticipated as a result of      those transactions on either a completed or uncompleted    basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      Company does not issue any guarantees that would require liability      recognition or disclosure, other than its standby letters of credit.      Standby letters of credit are conditional commitments issued by the      Company to guarantee the performance of a customer to a third party.      Generally, all letters of credit, when issued, have expiration dates      within one year. The credit risk involved in issuing letters of credit is      essentially the same as those that are involved in extending loan      facilities to customers. The Company generally holds collateral and/or      personal guarantees supporting those commitments. The Company had $4.3      million of standby letters of credit outstanding as of June 30, 2009.      Management believes that the proceeds obtained through a liquidation of      collateral and the enforcement of guarantees would be sufficient to cover      the potential amount of future payment required under the corresponding      guarantees. The current amount of the liability as of June 30, 2009 for      guarantees under standby letters of credit is not  material. |

----

----

| 7.     | Investment      Securities                           |
|--------|------------------------------------------------------|
|   |                                                 |
|   | Investment      securities are summarized asfollows: |

|                              |   | Amortized      Cost |    |   | GrossUnrealizedGains |    |    | GrossUnrealizedLosses |   |    | Fair      Value |   |
|-----------------------------------|--------|---------------------|---------|--------|----------------------|---------|---------|-----------------------|--------|---------|-----------------|--------|
|                              |   | (In      thousands) |    |
|                              |   |                |    |   |                 |    |    |                  |   |    |            |   |
| Available      for Sale:          |   |                |    |   |                 |    |    |                  |   |    |            |   |
| June      30, 2009                |   |                |    |   |                 |    |    |                  |   |    |            |   |
| U.      S. Government obligations |   | $                   | 29,468  |   |                 | $       | 162     |                  |   | $       | (58             | )      |   | $ | 29,572 |   |
| Corporate                         |   |                | 13,130  |   |                 |    | 120     |                  |   |    | (1,163          | )      |   |   | 12,087 |   |
| Mutual      funds                 |   |                | 2,056   |   |                 |    | — |                  |   |    | —         |   |   |   | 2,056 |   |
| Municipal      securities         |   |                | 3,331   |   |                 |    | 34      |                  |   |    | (63             | )      |   |   | 3,302 |   |
| SBA      pools                    |   |                | 5,805   |   |                 |    | 34      |                  |   |    | (53             | )      |   |   | 5,786 |   |
| Mortgage-backed      securities   |   |                | 110,367 |   |                 |    | 3,423   |                  |   |    | (151            | )      |   |   | 113,639 |   |
|                              |   | $                   | 164,157 |   |                 | $       | 3,773   |                  |   | $       | (1,488          | )      |   | $ | 166,442 |   |
|                              |   |                |    |   |                 |    |    |                  |   |    |            |   |   |   |   |   |
| December      31, 2008            |   |                |    |   |                 |    |    |                  |   |    |            |   |   |   |   |   |
| U.      S. Government obligations |   | $                   | 21,963  |   |                 | $       | 331     |                  |   | $       | (49             | )      |   | $ | 22,245 |   |
| Corporate                         |   |                | 15,249  |   |                 |    | 67      |                  |   |    | (1,833          | )      |   |   | 13,483 |   |
| Mutual      funds                 |   |                | 2,643   |   |                 |    | — |                  |   |    | —         |   |   |   | 2,643 |   |
| Municipal      securities         |   |                | 3,659   |   |                 |    | 49      |                  |   |    | (76             | )      |   |   | 3,632 |   |
| SBA      pools                    |   |                | 6,453   |   |                 |    | 58      |                  |   |    | (62             | )      |   |   | 6,449 |   |
| Mortgage-backed      securities   |   |                | 115,245 |   |                 |    | 2,172   |                  |   |    | (407            | )      |   |   | 117,010 |   |
|                              |   | $                   | 165,212 |   |                 | $       | 2,677   |                  |   | $       | (2,427          | )      |   | $ | 165,462 |   |
|                              |   |                |    |   |                 |    |    |                  |   |    |            |   |   |   |   |   |
| Held      to Maturity:            |   |                |    |   |                 |    |    |                  |   |    |            |   |   |   |   |   |
| June      30, 2009                |   |                |    |   |                 |    |    |                  |   |    |            |   |   |   |   |   |
| Corporate                         |   | $              | 4,772   |   |                 | $  | 8       |                  |   | $  | (497            | )      |   | $  | 4,283 |   |
| Municipal      securities         |   |                | 22,936  |   |                 |    | 198     |                  |   |    | (65             | )      |   |   | 23,069 |   |
| Mortgage-backed      securities   |   |                | 2,870   |   |                 |    | 131     |                  |   |    | —         |   |   |   | 3,001 |   |
|                              |   | $                   | 30,578  |   |                 | $       | 337     |                  |   | $       | (562            | )      |   | $ | 30,353 |   |
|                              |   |                |    |   |                 |    |    |                  |   |    |            |   |   |   |   |   |
| December      31, 2008            |   |                |    |   |                 |    |    |                  |   |    |            |   |   |   |   |   |
| U.      S. Government obligations |   | $                   | 932     |   |                 | $       | 38      |                  |   | $       | —         |   |   | $ | 970 |   |
| Corporate                         |   |                | 3,969   |   |                 |    | 19      |                  |   |    | (729            | )      |   |   | 3,259 |   |
| Municipal      securities         |   |                | 8,853   |   |                 |    | 217     |                  |   |    | (223            | )      |   |   | 8,847 |   |
| Mortgage-backed      securities   |   |                | 3,143   |   |                 |    | 113     |                  |   |    | —         |   |   |   | 3,256 |   |
|                              |   | $                   | 16,897  |   |                 | $       | 387     |                  |   | $       | (952            | )      |   | $ | 16,332 |   |

|   | All      of the Company’s mortgage-backed securities at June 30, 2009 and December      31, 2008 have been issued by government agencies or government sponsored      enterprises. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | The      amortized cost and estimated fair value of investment securities at June      30, 2009, by contractual maturity, are shown below. Expected maturities      will differ from contractual maturities because borrowers may have the      right to call or prepay obligations with or without call or prepayment      penalties. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       |   | Held      to Maturity |   |   | Available      for Sale |   |
|--------------------------------------------|--------|-----------------------|--------|--------|-------------------------|--------|
|                                       |   | AmortizedCost         |   |   | Fair      Value         |   |   | AmortizedCost |   |   | Fair      Value |   |
|                                       |   | (In      thousands)   |   |
|                                       |   |                  |   |
| Due      in one year or less               |   | $                     | 17,688 |   |                    | $      | 17,694 |   |   | $ | 5,058 |   |   | $ | 5,075 |   |
| Due      after one year through five years |   |                  | 3,136  |   |                    |   | 3,205 |   |   |   | 36,503 |   |   |   | 36,514 |   |
| Due      after five year through ten years |   |                  | 3,477  |   |                    |   | 3,012 |   |   |   | 16,847 |   |   |   | 15,977 |   |
| Due      thereafter                        |   |                  | 6,277  |   |                    |   | 6,442 |   |   |   | 105,749 |   |   |   | 108,876 |   |
|                                       |   | $                     | 30,578 |   |                    | $      | 30,353 |   |   | $ | 164,157 |   |   | $ | 166,442 |   |

|   | At      June 30, 2009 and December 31, 2008, $64.4 million and $74.2 million,      respectively, of securities were pledged as collateral to secure certain      deposits and FHLB advances.                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                     |
|   | Gross      gains and losses of $289 thousand and $4 thousand, respectively, for the      six months ended June 30, 2009, and $357 thousand and $141 thousand,      respectively, for the six months ended June 30, 2008, were realized on      sales and calls of investment securities. |
|   |                                                                                                                                                                                                                                                                                     |
|   | The      following table shows the Company’s available for sale investments’ gross      unrealized losses and fair value, and length of time that individual      securities have been in a continuous unrealized loss    position:                                          |

| At      June 30, 2009             |   | Less      than 12 months |   |   | 12      months or more |   |    | Total     |   |
|-----------------------------------|--------|--------------------------|--------|--------|------------------------|--------|---------|-----------|--------|
|                         |   | Fair      Value          |   |   | UnrealizedLosses       |   |    | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                              |   | (In      thousands)      |   |
| U.      S. Government obligations |   | $                        | 11,918 |   |                   | $      | 58      |      |   | $ | — |   |   | $ | — |   |   | $ | 11,918 |   |   | $ | 58 |   |
| Corporate                         |   |                     | 2,159  |   |                   |   | 59      |      |   |   | 5,344 |   |   |   | 1,104 |   |   |   | 7,503 |   |   |   | 1,163 |   |
| Municipal      securities         |   |                     | 1,225  |   |                   |   | 63      |      |   |   | — |   |   |   | — |   |   |   | 1,225 |   |   |   | 63 |   |
| SBA      pools                    |   |                     | 0      |   |                   |   | — |      |   |   | 2,547 |   |   |   | 53 |   |   |   | 2,547 |   |   |   | 53 |   |
| Mortgage-backed      securities   |   |                     | 8,107  |   |                   |   | 142     |      |   |   | 844 |   |   |   | 9 |   |   |   | 8,951 |   |   |   | 151 |   |
| Total                             |   | $                        | 23,409 |   |                   | $      | 322     |      |   | $ | 8,735 |   |   | $ | 1,166 |   |   | $ | 32,144 |   |   | $ | 1,488 |   |

| At      December 31, 2008         |   | Less      than 12 months |   |   | 12      months or more |   |   | Total     |   |
|-----------------------------------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------|--------|
|                         |   | Fair      Value          |   |   | UnrealizedLosses       |   |   | FairValue |   |   | UnrealizedLosses |   |   | Fair      Value |   |   | UnrealizedLosses |   |
|                              |   | (In      thousands)      |   |
| U.      S. Government obligations |   | $                        | 451    |   |                   | $      | 13     |      |   | $ | 1,931 |   |   | $ | 36 |   |   | $ | 2,382 |   |   | $ | 49 |   |
| Corporate                         |   |                     | 8,889  |   |                   |   | 1,157  |      |   |   | 2,748 |   |   |   | 676 |   |   |   | 11,637 |   |   |   | 1,833 |   |
| Municipal      securities         |   |                     | 1,373  |   |                   |   | 76     |      |   |   | — |   |   |   | — |   |   |   | 1,373 |   |   |   | 76 |   |
| SBA      pools                    |   |                     | 1,609  |   |                   |   | 38     |      |   |   | 1,316 |   |   |   | 24 |   |   |   | 2,925 |   |   |   | 62 |   |
| Mortgage-backed      securities   |   |                     | 31,136 |   |                   |   | 357    |      |   |   | 2,046 |   |   |   | 50 |   |   |   | 33,182 |   |   |   | 407 |   |
| Total                             |   | $                        | 43,458 |   |                   | $      | 1,641  |      |   | $ | 8,041 |   |   | $ | 786 |   |   | $ | 51,499 |   |   | $ | 2,427 |   |

----

----

|   | The      following table shows the Company’s held to maturity investments’ gross      unrealized losses and fair value, and length of time that individual      securities have been in a continuous unrealized loss    position: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| At      June 30, 2009     |   | Less      than 12 months |   |   | 12      months or more |   |   | Total     |   |
|---------------------------|--------|--------------------------|--------|--------|------------------------|--------|--------|-----------|--------|
|                      |   | Fair      Value          |   |   | UnrealizedLosses       |   |   | FairValue |   |   | UnrealizedLosses |   |   | Fair      Value |   |   | UnrealizedLosses |   |
|                      |   | (In      thousands)      |   |
| Corporate                 |   | $                        | 2,880  |   |                   | $      | 122    |      |   | $ | 457 |   |   | $ | 375 |   |   | $ | 3,337 |   |   | $ | 497 |   |
| Municipal      securities |   |                     | 1,539  |   |                   |   | 65     |      |   |   | — |   |   |   | — |   |   |   | 1,539 |   |   |   | 65 |   |
| Total                     |   | $                        | 4,419  |   |                   | $      | 187    |      |   | $ | 457 |   |   | $ | 375 |   |   | $ | 4,876 |   |   | $ | 562 |   |

|                      |   |                     |   |   |                   |    |   |      |   |    |             |   |   |            |    |   |             |    |
|---------------------------|--------|--------------------------|--------|--------|------------------------|---------|--------|-----------|--------|---------|------------------|--------|--------|-----------------|---------|--------|------------------|---------|
| At      December 31, 2008 |   | Less      than 12 months |   |   | 12      months or more |    |   | Total     |   |
|                      |   | Fair      Value          |   |   | UnrealizedLosses       |    |   | FairValue |   |    | UnrealizedLosses |   |   | Fair      Value |    |   | UnrealizedLosses |    |
|                      |   | (In      thousands)      |   |
| Corporate                 |   | $                   | 1,474  |   |                   | $  | 351    |      |   | $  | 605              |   |   | $          | 378     |   |             | $  | 2,079 |   |   | $  | 729 |   |
| Municipal      securities |   |                     | 2,367  |   |                   |    | 223    |      |   |    | —          |   |   |            | — |   |             |    | 2,367 |   |   |   | 223 |   |
| Total                     |   | $                        | 3,841  |   |                   | $       | 574    |      |   | $       | 605              |   |   | $               | 378     |   |             | $       | 4,446 |   |   | $ | 952 |   |

|   | The      Company’s investment in mortgage-backed securities consists of government      sponsored enterprise (GSE) securities. The change in market value is      attributable to changes in interest rates and widening credit spreads, and      not due to underlying credit deterioration. The contractual cash flows for      the investments are performing as expected. As the change in market value      is attributable to changes in interest rates and credit spread and not      underlying credit deterioration, and because the Company has the intent to      hold the securities and will not be required to sell the securities before      recovery occurs, the Company does not consider the investments to be      other-than-temporarily impaired at June 30, 2009.      |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      Company’s investment in U. S. Government agency securities and SBA loan      pools consist of debt obligations of government sponsored enterprises and      pools of loans from the Small Business Administration. All principal and      interest payments are current in regards to the investments. The      contractual cash flows of these investments are guaranteed by an agency of      the United States government. The change in market value is attributable      to current interest rate levels relative to the Company’s cost and not      credit quality. As noted above as to the ability and intent of the Company      to hold the investments, the Company does not consider the investments to      be other-than-temporarily impaired at June 30,  2009. |

----

----

|   | The      Company’s investment in corporate bonds consists of debt obligations of      corporations mostly in the financial and insurance sectors of the economy.      All interest payments are current in regards to the investments and all of      the bonds except an AMBAC Financial Group, Inc. (“AMBAC”) corporate bond      are still rated as investment grade by at least one of the rating      agencies. In the second quarter of 2009, the AMBAC bond was downgraded and      was not considered investment grade as a result of the downgrade. With the      downgrade, the Company determined that the AMBAC bond was      other-than-temporarily impaired and wrote-down the bond by $246 thousand      to its estimated fair market value. In regards to the other corporate      investments as the Company has the intent to hold the investments and will      not be required to sell the securities before recovery occurs, the Company      does not consider the other corporate investments to be      other-than-temporarily impaired at June 30, 2009. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      Company’s investment in municipal bonds consist of general obligations and      revenue obligations of municipalities in the United States and bond      anticipation notes of entities located in New Jersey. The change in market      value is attributable to the changes in interest rates relative to the      Company’s cost and because the Company has the intent to hold the      investments and will not be required to sell the securities before      recovery occurs, the Company does not consider the investments to be      other-than-temporarily impaired at June 30, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      Company recognized an other-than-temporarily impairment charge for the      AMBAC corporate bond and an AMF mutual fund. For the three and six months      ended June 30, 2009, the Company took total impairment charges of $249      thousand (pre-tax) and $346 thousand (pre-tax), respectively, or an      after-tax charge of $149 thousand and $208 thousand,      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | During      the second quarter of 2009, the Company redeemed $250 thousand of the      mutual fund at a pre-tax gain of approximately $3 thousand, or an      after-tax gain of $2 thousand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| 8.     | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The      components of loans at June 30, 2009 and December 31, 2008 are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

|                                       |   | At      June 30, 2009       |    |   | At      December 31, 2008 |   |
|--------------------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
|                                       |   | Amount                      |    |   | Percent                   |   |   | Amount |   |   | Percent |   |
|                                       |   | (Dollars      in thousands) |    |
| Real      estate loans:                    |   |                        |    |   |                      |   |   |   |   |   |   |   |
| One-      to four-family residential       |   | $                           | 145,999 |   |                      |   | 47.1 | % |   | $ | 145,329 |   |   |   | 47.6 | % |
| Home      equity loans and lines of credit |   |                        | 38,589  |   |                      |   | 12.4 |   |   |   | 41,293 |   |   |   | 13.5 |   |
| Multi-family                               |   |                        | 4,910   |   |                      |   | 1.6 |   |   |   | 4,942 |   |   |   | 1.6 |   |
| Commercial                                 |   |                        | 89,080  |   |                      |   | 28.7 |   |   |   | 81,983 |   |   |   | 26.8 |   |
| Construction                               |   |                        | 9,815   |   |                      |   | 3.2 |   |   |   | 12,223 |   |   |   | 4.0 |   |
| Commercial                                 |   |                        | 18,860  |   |                      |   | 6.1 |   |   |   | 17,177 |   |   |   | 5.6 |   |
| Consumer      and other                    |   |                        | 2,641   |   |                      |   | 0.9 |   |   |   | 2,616 |   |   |   | 0.9 |   |
| Total      loans receivable                |   | $                           | 309,894 |   |                      |   | 100.0 | % |   | $ | 305,563 |   |   |   | 100.0 | % |
| Deferred      loan fees                    |   |                        | (326    | )      |                      |   |   |   |   |   | (307 | ) |   |   |   |   |
| Allowance      for loan losses             |   |                        | (2,247  | )      |                      |   |   |   |   |   | (2,105 | ) |   |   |   |   |
| Total      loans receivable, net           |   | $                           | 307,321 |   |                      |   |   |   |   | $ | 303,151 |   |   |   |   |   |

----

----

|   | Our      loans are originated and administered through our loan policies. We      originate one-to four-family residential real estate loans, home equity      loans and lines of credit, commercial real estate loans, commercial      business loans, construction loans, consumer loans and multi-family loans.      We offer fixed-rate, adjustable-rate and balloon loans that fully amortize      with monthly loan payments.                                                                                                                                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | We      have not originated or purchased any sub-prime or Alt-A loans. We have not      originated or purchased payment-option ARMs or negative amortizing      loans.                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Nonaccrual      loans amounted to approximately $2.8 million and $1.9 million at June 30,      2009 and December 31, 2008, respectively. At June 30, 2009, the nonaccrual      loans were comprised of $2.1 million of one- to-four family residential      loans, $278 thousand of home equity loans and $452 thousand of commercial      loans. At June 30, 2009, the valuation allowances set up for the      nonaccrual loans totaled $122 thousand for one- to-four family residential      loans, $34 thousand for the home equity loans and $172 thousand for the      commercial loans, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Loans      are reviewed on a regular basis, and generally are placed on nonaccrual      status when either principal or interest is 90 days or more past due or if      we believe that there is sufficient reason to question the borrower’s      ability to continue to meet contractual principal or interest payment      obligations.                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 9.     | Deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Deposit      accounts, by type, at June 30, 2009 and December 31, 2008 are summarized      as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|                             |   | At      June 30, 2009       |    |   | At      December 31, 2008 |   |
|----------------------------------|--------|-----------------------------|---------|--------|---------------------------|--------|
|                             |   | Balance                     |    |   | Percent                   |   |   | Wtd.Avg.Rate |   |   | Balance |   |   | Percent |   |   | Wtd.Avg.Rate |   |
|                             |   | (Dollars      in thousands) |    |
|                             |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposit      type:               |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest      bearing demand |   | $                           | 17,145  |   |                      |   | 3.49 | % |   |   | — | % |   | $ | 18,146 |   |   |   | 3.97 | % |   |   | — | % |
| Savings                          |   |                        | 85,521  |   |                      |   | 17.42 |   |   |   | 2.59 |   |   |   | 81,050 |   |   |   | 17.73 |   |   |   | 2.76 |   |
| NOW      accounts                |   |                        | 87,642  |   |                      |   | 17.85 |   |   |   | 1.01 |   |   |   | 55,439 |   |   |   | 12.12 |   |   |   | 0.72 |   |
| Super      NOW accounts          |   |                        | 17,771  |   |                      |   | 3.62 |   |   |   | 1.45 |   |   |   | 15,532 |   |   |   | 3.40 |   |   |   | 1.75 |   |
| Money      market deposit        |   |                        | 53,418  |   |                      |   | 10.88 |   |   |   | 1.93 |   |   |   | 45,404 |   |   |   | 9.93 |   |   |   | 3.26 |   |
| Total      transaction accounts  |   |                        | 261,497 |   |                      |   | 53.26 |   |   |   | 1.68 |   |   |   | 215,571 |   |   |   | 47.15 |   |   |   | 2.06 |   |
|                             |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates      of deposit     |   |                        | 229,496 |   |                      |   | 46.74 |   |   |   | 3.71 |   |   |   | 241,660 |   |   |   | 52.85 |   |   |   | 3.97 |   |
|                             |   |                        |    |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      deposits              |   | $                           | 490,993 |   |                      |   | 100.00 | % |   |   | 2.63 | % |   | $ | 457,231 |   |   |   | 100.00 | % |   |   | 3.06 | % |

----

----

| 10.    | Federal      Home Loan Bank Borrowings                                                                                                                                                  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                    |
|   | The      following table sets forth information concerning advances from the      Federal Home Loan Bank (“FHLB”) of New York, at June 30, 2009 and December      31, 2008: |

|                   |   |         |   |   |                        |   |    |                  |   |
|------------------------|--------|--------------|--------|--------|-----------------------------|--------|---------|-----------------------|--------|
| Maturity               |   | InterestRate |   |   | June      30,2009           |   |    | December      31,2008 |   |
|                   |   |         |   |   | (Dollars      in thousands) |   |
|                   |   |         |   |   |                        |   |    |                  |   |
| June      23, 2009     |   |         | 3.35   | %      |                        | $      | — |                  |   | $ | 3,000 |   |
| October      19, 2009  |   |         | 4.65   |   |                        |   | 4,000   |                  |   |   | 4,000 |   |
| November      20, 2009 |   |         | 4.23   |   |                        |   | 4,000   |                  |   |   | 4,000 |   |
| December      3, 2009  |   |         | 3.89   |   |                        |   | 4,000   |                  |   |   | 4,000 |   |
| June      23, 2010     |   |         | 3.88   |   |                        |   | 3,000   |                  |   |   | 3,000 |   |
| October      18, 2010  |   |         | 4.70   |   |                        |   | 4,000   |                  |   |   | 4,000 |   |
| June      23, 2011     |   |         | 4.31   |   |                        |   | 3,000   |                  |   |   | 3,000 |   |
| June      30, 2021     |   |         | 5.57   |   |                        |   | — |                  |   |   | 6,227 |   |
|                   |   |         |   |   |                        | $      | 22,000  |                  |   | $ | 31,227 |   |

|   | At      June 30, 2009, the Bank had a borrowing capacity of $118.3 million      available from the FHLB of New York, which is based on the amount of FHLB      stock held or levels of other assets, including investment securities,      which are available for collateral. At June 30, 2009, the Bank had $22.0      million in outstanding borrowings from the FHLB of New    York.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 11.    | Fair      Value Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Management      uses its best judgment in estimating the fair value of the Company’s      financial instruments; however, there are inherent weaknesses in any      estimation technique. Therefore, for substantially all financial      instruments, the fair value estimates herein are not necessarily      indicative of the amounts the Company could have realized in a sale      transaction on the dates indicated. The estimated fair value amounts have      been measured as of their respective dates and have not been re-evaluated      or updated for purposes of these financial statements subsequent to those      respective dates. As such, the estimated fair values of these financial      instruments subsequent to the respective reporting dates may be different      than the amounts reported at each period. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   | In      September 2006, the FASB issued Statement No. 157, Fair Value Measurements      (“SFAS 157”), which defines fair value, establishes a framework for      measuring fair value under GAAP, and expands disclosures about fair value      measurements. SFAS 157 applies to other accounting pronouncements that      require or permit fair value measurements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | SFAS      157 establishes a fair value hierarchy that prioritizes the inputs to      valuation methods used to measure fair value. The hierarchy gives the      highest priority to unadjusted quoted prices in active markets for      identical assets or liabilities (Level 1 measurements) and the lowest      priority to unobservable inputs (Level 3 measurements).                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|   | The      three levels of the fair value hierarchy under SFAS 157 are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Level 1: Unadjusted      quoted prices in active markets that are accessible at the measurement      date for identical, unrestricted assets or  liabilities. |

----

----

|   |                                                                                                                                                                                                   | Level 2: Quoted prices      for similar assets or liabilities, quoted prices in markets that are not      active, or inputs that are observable either directly or indirectly, for      substantially the full term of the asset or liability. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                   |                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                   | Level 3: Prices or      valuation techniques that require inputs that are both significant to the      fair value measurement and unobservable (i.e., supported with little or no      market activity).                                       |
|   |                                                                                                                                                                                                   |                                                                                                                                                                                                                                           |
|   | An      asset’s or liability’s level within the fair value hierarchy is based on      the lowest level of input that is significant to the fair value      measurement.                    |
|   |                                                                                                                                                                                                   |                                                                                                                                                                                                                                           |
|   | For      assets measured at fair value on a recurring basis, the fair value      measurements by level within the fair value hierarchy used at June 30,      2009 and December 31, 2008 are asfollows: |

|                               |   | June      30,2009     |    |   | (Level      1)QuotedPrices      inActiveMarkets      forIdenticalAssets |   |    | (Level      2)SignificantObservableOther      Inputs |   |   | (Level      3)SignificantUnobservableInputs |   |
|------------------------------------|--------|-----------------------|---------|--------|-------------------------------------------------------------------------|--------|---------|------------------------------------------------------|--------|--------|---------------------------------------------|--------|
|                               |   |                  |    |   |                                                                    |   |    |                                                 |   |   |                                        |   |
| Securities      available-for-sale |   | $                     | 166,442 |   |                                                                    | $      | — |                                                 |   | $      | 166,442                                     |   |   | $ | — |   |
|                               |   |                  |    |   |                                                                    |   |    |                                                 |   |   |                                        |   |   |   |   |   |
|                               |   | December31,      2008 |    |   | (Level      1)QuotedPrices      inActiveMarkets      forIdenticalAssets |   |    | (Level      2)SignificantObservableOther      Inputs |   |   | (Level      3)SignificantUnobservableInputs |   |
|                               |   |                  |    |   |                                                                    |   |    |                                                 |   |   |                                        |   |   |   |   |   |
| Securities      available-for-sale |   | $                     | 165,462 |   |                                                                    | $      | — |                                                 |   | $      | 165,462                                     |   |   | $ | — |   |

|   | The      fair value of investment securities available-for-sale is based on quoted      market prices for similar or identical assets or other observable inputs      that are provided by recognized broker dealers or an independent third      party. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | For      assets measured at fair value on a nonrecurrent basis, the fair value      measurements by level within the fair value hierarchy used at June 30,      2009 and December 31, 2008 are as follow: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                      |

|                   |   | June      30,2009     |   |   | (Level      1)QuotedPrices      inActiveMarkets      forIdenticalAssets |   |    | (Level      2)significantObservableOther      Inputs |   |   | (Level      3)SignificantUnobservableInputs |   |
|------------------------|--------|-----------------------|--------|--------|-------------------------------------------------------------------------|--------|---------|------------------------------------------------------|--------|--------|---------------------------------------------|--------|
|                   |   |                  |   |   |                                                                    |   |    |                                                 |   |   |                                        |   |
| Impaired      loans    |   | $                     | 280    |   |                                                                    | $      | — |                                                 |   | $      | —                                     |   |   | $ | 280 |   |
|                   |   |                  |   |   |                                                                    |   |    |                                                 |   |   |                                        |   |   |   |   |   |
| Real      estate owned |   | $                     | 113    |   |                                                                    | $      | — |                                                 |   | $      | —                                     |   |   | $ | 113 |   |
|                   |   |                  |   |   |                                                                    |   |    |                                                 |   |   |                                        |   |   |   |   |   |
|                   |   | December31,      2008 |   |   | (Level      1)QuotedPrices      inActiveMarkets      forIdenticalAssets |   |    | (Level      2)significantObservableOther      Inputs |   |   | (Level      3)SignificantUnobservableInputs |   |
|                   |   |                  |   |   |                                                                    |   |    |                                                 |   |   |                                        |   |   |   |   |   |
| Impaired      loans    |   | $                     | 257    |   |                                                                    | $      | — |                                                 |   | $      | —                                     |   |   | $ | 257 |   |
|                   |   |                  |   |   |                                                                    |   |    |                                                 |   |   |                                        |   |   |   |   |   |
| Real      estate owned |   | $                     | 113    |   |                                                                    | $      | — |                                                 |   | $      | —                                     |   |   | $ | 113 |   |

|   | The      fair value of impaired loans is based on the fair value of the collateral      less specific valuation allowances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | At      June 30, 2009 and December 31, 2008, impaired loans totaled $452 thousand      and $370 thousand, respectively. The amounts of related valuation      allowances were $172 thousand and $113 thousand, respectively, at those      dates.                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Real      estate owned is based on the fair value of the collateral less estimated      costs to sell the property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The      following information should not be interpreted as an estimate of the fair      value of the entire Company since a fair value calculation is only      provided for a limited portion of the Company’s assets and liabilities.      Due to a wide range of valuation techniques and subjectivity used in      making the estimates, comparisons between the Company’s disclosures and      those of other companies may not be meaningful. The following methods and      assumptions were used to estimate the fair values of the Company’s      financial instruments at June 30, 2009 and December 31,    2008: |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Cash      and Amounts Due From Banks (Carried at Cost)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The      carrying amounts reported in the balance sheet for cash and amounts due      from banks approximate those assets’ fair  values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

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----

|   | Investment      Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      fair value of securities available for sale (carried at fair value) and      held to maturity (carried at amortized cost) are determined by obtaining      quoted market prices on nationally recognized securities exchanges (Level      1), or matrix pricing (Level 2), which is a mathematical technique used      widely in the industry to value debt securities without relying      exclusively on quoted market prices for the specific securities but rather      by relying on the securities’ relationship to other benchmark quoted      prices.                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Loans      Receivable (Carried at Cost)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      fair values of loans are estimated using discounted cash flow analyses,      using market rates at the balance sheet date that reflect the credit and      interest rate-risk inherent in the loans. Projected future cash flows are      calculated based upon contractual maturity or call dates, projected      repayments and prepayments of principal. Generally, for variable rate      loans that reprice frequently and with no significant change in credit      risk, fair values are based on carrying values.                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Impaired      Loans (Generally Carried at Fair Value)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Impaired      loans are those that are accounted for under FASB Statement No. 114, Accounting by Creditors for      Impairment of a Loan (“SFAS 114”), in which the Company has      measured impairment generally based on the fair value of the loan’s      collateral. Fair value is generally determined based upon independent      third-party appraisals of the properties, or discounted cash flows based      upon the expected proceeds. These assets are included as Level 3 fair      values, based upon the lowest level of input that is significant to the      fair value measurements. At June 30, 2009 the fair value consists of the      loan balances of $452 thousand, net of a valuation allowance of $172      thousand. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Federal      Home Loan Bank Stock (Carried at Cost)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      carrying amount of restricted investment in Company stock approximates      fair value, and considers the limited marketability of such      securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Accrued      Interest Receivable and Payable (Carried at Cost)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      carrying amount of accrued interest receivable and accrued interest      payable approximates its fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Deposit      Liabilities (Carried at Cost)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      fair values disclosed for demand deposits (e.g., interest and noninterest      checking, passbook savings and money market accounts) are, by definition,      equal to the amount payable on demand at the reporting date (i.e., their      carrying amounts). Fair values for fixed-rate certificates of deposit are      estimated using a discounted cash flow calculation that applies interest      rates currently being offered in the market on certificates to a schedule      of aggregated expected monthly maturities on time  deposits.                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Short-Term      Borrowings (Carried at Cost)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      carrying amounts of short-term borrowings approximate their fair      values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

----

----

|   | Long-Term      Borrowings (Carried at Cost)                                                                                                                                                                                                                                                                                                                                                              |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Fair      values of FHLB advances are estimated using discounted cash flow analysis,      based on quoted prices for new FHLB advances with similar credit risk      characteristics, terms and remaining maturity. These prices obtained from      this active market represent a market value that is deemed to represent      the transfer price if the liability were assumed by a third      party. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Off-Balance      Sheet Financial Instruments (Disclosed at Cost)                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Fair      values for the Company’s off-balance sheet financial instruments (lending      commitments and letters of credit) are based on fees currently charged in      the market to enter into similar agreements, taking into account, the      remaining terms of the agreements and the counterparties’ credit      standing.                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The      estimated fair value of the Company’s financial instruments at June 30,      2009 and December 31, 2008 are asfollows:                                                                                                                                                                                                                                                                    |

|                                                    |   | 2009                |    |   | 2008            |   |
|---------------------------------------------------------|--------|---------------------|---------|--------|-----------------|--------|
|                                                    |   | CarryingAmount      |    |   | Fair      Value |   |   | CarryingAmount |   |   | Fair      Value |   |
|                                                    |   | (In      thousands) |    |
|                                                    |   |                |    |   |            |   |   |   |   |   |   |   |
| Assets:                                                 |   |                |    |   |            |   |   |   |   |   |   |   |
| Cash      and amounts due from banks                    |   | $                   | 32,133  |   |            | $      | 32,133 |   |   | $ | 23,407 |   |   | $ | 23,407 |   |
| Investment      securities available-for-sale           |   |                | 166,442 |   |            |   | 166,442 |   |   |   | 165,462 |   |   |   | 165,462 |   |
| Investment      securities held-to-maturity             |   |                | 30,578  |   |            |   | 30,353 |   |   |   | 16,897 |   |   |   | 16,332 |   |
| Federal      Home Loan Bank stock                       |   |                | 1,763   |   |            |   | 1,763 |   |   |   | 1,991 |   |   |   | 1,991 |   |
| Loans      receivable, net                              |   |                | 307,321 |   |            |   | 320,168 |   |   |   | 303,151 |   |   |   | 311,796 |   |
| Accrued      interest receivable                        |   |                | 2,126   |   |            |   | 2,126 |   |   |   | 2,298 |   |   |   | 2,298 |   |
|                                                    |   |                |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                            |   |                |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                |   |                | 490,993 |   |            |   | 498,432 |   |   |   | 457,231 |   |   |   | 467,070 |   |
| Federal      Home Loan Bank short-term borrowings       |   |                | — |   |            |   | — |   |   |   | 3,000 |   |   |   | 3,000 |   |
| Federal      Home Loan Bank long-term borrowings        |   |                | 22,000  |   |            |   | 22,484 |   |   |   | 28,227 |   |   |   | 30,896 |   |
| Accrued      interest payable                           |   |                | 250     |   |            |   | 250 |   |   |   | 433 |   |   |   | 433 |   |
|                                                    |   |                |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Off-balance      sheet financial instruments:           |   |                |    |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Commitments      to extend credit and letters of credit |   |                | — |   |            |   | — |   |   |   | — |   |   |   | — |   |

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| Item      2. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations |
|--------------|-------------------------------------------------------------------------------------------------------|

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| Item      3.  | Quantitative      and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          | Not      applicable, as the Company is a Smaller Reporting  Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Item      4.  | Controls      and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          | Not      applicable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Item      4T. | Controls      and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (a)           | Evaluation      of disclosure controls and procedures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          | Under      the supervision and with the participation of our management, including      our Chief Executive Officer and Chief Financial Officer, we evaluated the      effectiveness of the design and operation of our disclosure controls and      procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange      Act) as of the end of the period covered by this quarterly report. Based      upon that evaluation, the Chief Executive Officer and Chief Financial      Officer concluded that, as of the end of the period covered by this      quarterly report, our disclosure controls and procedures were effective to      ensure that information required to be disclosed in the reports that the      Company files or submits under the Exchange Act is recorded, processed,      summarized and reported within the time periods specified in the      Securities and Exchange Commission’s rules and forms. |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (b)           | Changes      in internal control over financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|          | There      were no changes made in our internal control over financial reporting      during the period covered by this report that have materially affected, or      are reasonably likely to materially affect, our internal control over      financialreporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Item      1.  | Legal      Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|          | The      Company or the Bank is periodically involved in various claims and      lawsuits in the ordinary course of business. Management of the Company      believes that such proceedings will not have a material adverse effect on      the Company’s financial condition, results of operations or cash      flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Item      1A. | Risk      Factors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|          | In      addition to the other information contained this Quarterly Report on Form      10-Q, the following risk factors represent material updates and additions      to the risk factor previously disclosed in the Company’s Annual Report on      Form 10-K for the Fiscal Year Ended December 31, 2008, as filed with the      Securities and Exchange Commission. Additional risks not presently known      to us, or that we currently deem immaterial, may also adversely affect our      business, financial condition or results of operations. Further, to the      extent that any of the information contained in this Quarterly Report on      Form 10-Q constitutes forward-looking statements, the risk factors set      forth below also are cautionary statements identifying important      factors that could cause our actual results to differ materially from      those expressed in any forward-looking statements made by or on behalf of      us.                                                                                                                                                                                                                                                                                                                                                                                                 |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|          | Any      Future FDIC Insurance Premiums Will Adversely Impact Our      Earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|          | On      May 22, 2009, the FDIC adopted a final rule levying a five basis point      special assessment on each insured depository institution’s assets minus      Tier 1 capital as of June 30, 2009. The special assessment is payable on      September 30, 2009. We recorded an expense of $259 thousand during the      quarter ended June 30, 2009, to reflect the special assessment. The final      rule permits the FDIC’s Board of Directors to levy up to two additional      special assessments of up to five basis points each during 2009 if the      FDIC estimates that the Deposit Insurance Fund reserve ratio will fall to      a level that the FDIC’s Board of Directors believes would adversely affect      public confidence or to a level that will be close to or below zero. The      FDIC has publicly announced that it is probable that it will levy an      additional special assessment of up to five basis points later in 2009,      the amount and timing of which are currently uncertain. Any further      special assessments that the FDIC levies will be recorded as an expense      during the appropriate period. In addition, the FDIC materially increased      the general assessment rate and, therefore, our FDIC general insurance      premium expense will increase substantially compared to prior      periods. |

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|   | A      Legislative Proposal Has Been Introduced That Would Eliminate our Primary      Federal Regulator, Require the Bank to Convert to a National Bank or State      Bank, and Require Colonial Bankshares, MHC and the Company to Become Bank      Holding Companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The      U.S. Treasury Department recently released a legislative proposal that      would implement sweeping changes to the current bank regulatory structure.      The proposal would create a new federal banking regulator, the National      Bank Supervisor, and merge our current primary federal regulator, the      Office of Thrift Supervision, as well as the Office of the Comptroller of      the Currency (the primary federal regulator for national banks) into this      new federal bank regulator. The proposal would also eliminate federal      savings banks and require all federal savings banks, such as the Bank, to      elect, within six months of the effective date of the legislation, to      convert to either a national bank, state bank or state savings bank. A      federal savings bank that does not make the election would, by operation      of law, be converted into a national bank within one year of the effect      date of the legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | If      the Bank is required to convert to a national bank, Colonial Bankshares,      MHC and the Company would become bank holding companies subject to      supervision by the Board of Governors of the Federal Reserve System (the      “Federal Reserve”) as opposed to the Office of Thrift Supervision. The      Federal Reserve has historically looked to Office of Thrift Supervision      regulations in its regulation of mutual holding companies and processing      of mutual holding company applications; however, it is not obligated to      follow such regulations. One important Office of Thrift Supervision      regulation that the Federal Reserve does not follow relates to the ability      of mutual holding companies to waive the receipt of dividends declared on      the common stock of their stock holding company or savings bank      subsidiaries. While Office of Thrift Supervision regulations permit mutual      holding companies to waive the receipt of dividends, subject to filing a      notice with the Office of Thrift Supervision and receiving its      non-objection, the Federal Reserve’s current policy is to prohibit mutual      holding companies from waiving the receipt of dividends so long as the      subsidiary savings bank is well capitalized. Moreover, Office of Thrift      Supervision regulations provide that it will not take into account the      amount of waived dividends in determining an appropriate exchange ratio      for minority shares in the event of the conversion of a mutual holding      company to stock form. If the Office of Thrift Supervision is eliminated,      the Federal Reserve becomes the exclusive regulator of mutual holding      companies, and the Federal Reserve retains its current policy regarding      dividend waivers by mutual holding companies, Colonial Bankshares, MHC      would not be permitted to waive the receipt of dividends declared by the      Company. This would have an adverse impact on our ability to pay dividends      and, consequently, the value of our common  stock. |

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| Item      2. | Unregistered      Sales of Equity Securities and Use of Proceeds |
|--------------|------------------------------------------------------------------|
|         |                                                             |
|         | (a)                                                              | Not      applicable |
|         | (b)                                                              | Not      applicable |
|         | (c)                                                              | Purchases      of Equity Securities |
|         |                                                             |   |
|         |                                                             | The      Company’s repurchases of its common stock made during the quarter are set      forth in the followingtable: |

| Period                        |   | TotalNumber      ofSharesPurchased |    |   | AveragePricePaid      perShare |   |    | TotalNumber      ofSharesPurchasedas      Part ofPubliclyAnnouncedPlans      orPrograms |   |   | MaximumNumberof      Sharesthat      Mayyet      bePurchasedUnder      thePlan      orPrograms(1) |   |
|-------------------------------|--------|------------------------------------|---------|--------|--------------------------------|--------|---------|-----------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------|--------|
| April      1 – April 30 |   |                               | — |   |                           | $      | — |                                                                                    |   |   | —                                                                                           |   |   |   | 56,954 |   |
|                          |   |                               |    |   |                           |   |    |                                                                                    |   |   |                                                                                              |   |   |   |   |   |
| May      1 – May 31     |   |                               | — |   |                           |   | — |                                                                                    |   |   | —                                                                                           |   |   |   | 56,954 |   |
|                          |   |                               |    |   |                           |   |    |                                                                                    |   |   |                                                                                              |   |   |   |   |   |
| June      1 – June 30   |   |                               | 2,500   |   |                           | $      | 7.00    |                                                                                    |   |   | 2,500                                                                                             |   |   |   | 54,454 |   |
|                          |   |                               |    |   |                           |   |    |                                                                                    |   |   |                                                                                              |   |   |   |   |   |
| Total                         |   |                               | 2,500   |   |                           | $      | 7.00    |                                                                                    |   |   | 2,500                                                                                             |   |   |   | 54,454 |   |

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|   |   |                                                                                                                                                                                                                                                         |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (1)    | On      March 24, 2008, the Company announced its second stock repurchase program      to repurchase 100,454 shares or approximately 5.0% of the Company’s      outstanding common stock held by stockholders other than Colonial      Bankshares,MHC. |

| Item      3. | Defaults      Upon Senior Securities |
|--------------|--------------------------------------|
|         |                                 |
|         | None                                 |

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| Item      4. | Submission      of Matters to Vote of Security Holders                                                                                                                                                                                                                                                                                                          |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                            |
|         | On      May 21, 2009 the Company held its Annual Meeting of Stockholders to obtain      approval for two proposals submitted on behalf of the Company’s Board of      Directors. Stockholders of record as of March 27, 2009, were eligible to      vote on these proposals. The following is a summary of each proposal and      the result of the vote. |
|         |                                                                                                                                                                                                                                                                                                                                                            |
|         | 1.                                                                                                                                                                                                                                                                                                                                                              | The      following directors were elected by the requisite plurality of the votes      cast to serve on the Company’s Board of Directors for a three-year      term: |

|                          |   | For       |   | Withheld |
|-------------------------------|--------|-----------|--------|----------|
|                          |   |      |   |     |
| Frank      M. Hankins, Jr.    |   | 3,969,056 |   | 33,137   |
| Gregory      J. Facemyer, CPA |   | 3,971,357 |   | 30,836   |

|   | 2. | To      ratify the appointment of Beard Miller Company LLP as the independent      registered public accounting firm for the year ending December 31,      2009: |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For       |   | Against |   | Abstain |   | Broker      non-votes |   |
|-----------|--------|---------|--------|---------|--------|-----------------------|--------|
|      |   |    |   |    |   |                  |   |
| 4,001,587 |   | 506     |   | 100     |   | —               |   |

| Item      5. | Other      Information                    |
|--------------|-------------------------------------------|
|         |                                      |
|         | None                                      |
|         |                                      |
| Item      6. | Exhibits                                  |   |
|         |                                      |   |
|         | Exhibit      31.1     | Certification      of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act      of 2002 |
|         |                                      |   |
|         | Exhibit      31.2                         | Certification      of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act      of 2002 |
|         |                                      |   |
|         | Exhibit      32                           | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to Section      906 of Sarbanes-Oxley Act of2002 |

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|                       |                                                                                                      |
|----------------------------|-----------------------------------------------------------------------------------------------------------|
|                       | COLONIAL      BANKSHARES, INC.                                                                            |
|                       | Registrant                                                                                                |
|                       |                                                                                                      |
| Date:      August 13, 2009 | By:      /s/ Edward J. Geletka                                                                            |   |
|                       | Edward      J. Geletka                                                                                    |
|                       | President      and Chief Executive Officer(Principal Executive    Officer)                                |
|                       |                                                                                                      |
| Date:      August 13, 2009 | By:      /s/ L. Joseph Stella, III, CPA                                                                   |   |
|                       | L.      Joseph Stella, III, CPA                                                                           |
|                       | Executive      Vice President and Chief FinancialOfficer      (Principal Accounting and FinancialOfficer) |

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