SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]      Quarterly Report Pursuant To Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the quarterly period ended June 30, 2007
                                       OR
[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the transition period from _______________ to  ___________________

                          Commission File No. 001-52751

                         FSB Community Bankshares, Inc.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

                 United States                           74-3164710
        -------------------------------             ---------------------
        (State or other jurisdiction of              (I.R.S. Employer
         incorporation or organization)            Identification Number)

   45 South Main Street, Fairport, New York                14450
   -----------------------------------------               -----
   (Address of Principal Executive Offices)               Zip Code

                                 (585) 223-9080
                                 --------------
                         (Registrant's telephone number)



                                       N/A
             ------------------------------------------------------
          (Former name or former address, if changed since last report)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such requirements for the past 90 days. YES     NO  X
                                                               ---     ---.

     Indicate  by check mark  whether  the  registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act). YES     NO X
                                               ---    ---

     As of August  13,  2007  there were  1,785,000  shares of the  Registrant's
common stock,  par value $0.10 per share,  outstanding,  945,050,  or 53.0%,  of
which  were held by FSB  Community  Bankshares,  MHC,  the  Registrant's  mutual
holding company.


<PAGE>

                         FSB Community Bankshares, Inc.
                                   FORM 10-QSB

                                      Index
                                      -----
<TABLE>
<CAPTION>

                                                                                                     Page
                                                                                                     ____
                          Part I. Financial Information


<S>               <C>                                                                                <C>
Item 1.           Consolidated Financial Statements (unaudited)
                  Consolidated Balance Sheets as of June 30, 2007
                  and December 31, 2006                                                              1

                  Consolidated Statements of Operations for the Three Months Ended
                  June 30, 2007 and 2006                                                             2

                  Consolidated Statements of Operations for the Six Months Ended
                  June 30, 2007 and 2006                                                             3

                  Consolidated Statements of Stockholder's Equity for the Six Months Ended
                  June 30, 2007 and 2006                                                             4

                  Consolidated Statements of Cash Flows for the Six Months Ended
                  June 30, 2007 and 2006                                                             5

                  Notes to Consolidated Financial Statements                                         7

Item 2.           Management's Discussion and Analysis or Plan of Operation                         10

Item 3.           Controls and Procedures                                                           22

                           Part II. Other Information

Item 1.           Legal Proceedings                                                                 22

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds                       22

Item 3.           Defaults upon Senior Securities                                                   22

Item 4.           Submission of Matters to a Vote of Security Holders                               23

Item 5.           Other Information                                                                 23

Item 6.           Exhibits                                                                          23

                  Signature Page                                                                    24

</TABLE>

<PAGE>



                          Part I. Financial Information

Item 1.  Consolidated Financial Statements

                         FSB COMMUNITY BANKSHARES, INC.

                           Consolidated Balance Sheets
                 June 30, 2007 and December 31, 2006 (unaudited)
                  (Dollars in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                         June 30,               December 31,
                                            Assets                         2007                     2006
                                                                       -------------          ----------------
<S>                                                                      <C>                     <C>
Cash and due from banks                                                  $   1,251               $   1,202
Interest-earning demand deposits                                             8,495                     980
                                                                       -------------          ----------------
     Cash and Cash Equivalents                                               9,746                   2,182
Securities available for sale                                                  537                     604
Securities held to maturity (fair value 2007- $24,904,
   2006- $25,502)                                                           25,213                  24,191
Investment in FHLB stock                                                     1,151                   1,490
Loans receivable, net of allowance for loan losses of $322                 120,475                 121,137
Accrued interest receivable                                                    808                     873
Premises and equipment, net                                                  2,641                   2,146
Other assets                                                                   748                     200
                                                                       -------------          ----------------
                        Total Assets                                     $ 161,319               $ 152,823
                                                                       =============          ================
                             Liabilities
Deposits:
     Non-interest bearing                                                $   3,291               $   3,402
     Interest bearing                                                      121,873                 105,178
                                                                       -------------          ----------------
                Total Deposits                                             125,164                 108,580

Short term borrowings                                                          -                     4,200
Long term borrowings                                                        19,957                  23,824
Advances from borrowers for taxes and insurance                              2,314                   1,828
Other liabilities                                                              305                     521
                                                                       -------------          ----------------
                        Total Liabilities                                  147,740                 138,953
                                                                       -------------          ----------------
                             Stockholder's Equity

Preferred Stock- no par- 1,000,000 shares authorized;                          -                      -
  No shares issued and outstanding
Common Stock- $0.10 par value- 10,000,000 shares authorized;                   -                      -
  100 shares issued and outstanding
Additional paid in capital                                                      10                      10
Retained earnings                                                           13,258                  13,505
Accumulated other comprehensive income                                         311                     355
                                                                       -------------          ----------------
                        Total Stockholder's Equity                          13,579                  13,870
                                                                       -------------          ----------------
                        Total Liabilities and Stockholder's Equity       $ 161,319               $ 152,823
                                                                       =============          ================

See accompanying notes to consolidated financial statements
</TABLE>
                                       1


<PAGE>



                         FSB COMMUNITY BANKSHARES, INC.

                      Consolidated Statements of Operations
              Three Months Ended June 30, 2007 and 2006 (unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                        2007                     2006
                                                                -------------------       -------------------
<S>                                                             <C>                       <C>
Interest and Dividend Income
    Loans                                                       $          1,782          $        1,656
    Securities-taxable                                                       242                     234
    Mortgage-backed securities                                                64                      75
    Other                                                                     41                      18
                                                                -------------------       -------------------
                 Total Interest and Dividend Income                        2,129                   1,983
                                                                -------------------       -------------------

Interest Expense
    Deposits                                                               1,064                     845
    Borrowings:
        Short term                                                             -                       2
        Long term                                                            255                     214
                                                                -------------------       -------------------
                 Total Interest Expense                                    1,319                   1,061
                                                                -------------------       -------------------


              Net Interest Income                                            810                     922
                                                                -------------------       -------------------

Other Income
    Service fees                                                              25                      22
    Fee income                                                                20                      53
    Other                                                                     33                      30
                                                                -------------------       -------------------
                 Total Other Income                                           78                     105
                                                                -------------------       -------------------

Other Expense
     Salaries and employee benefits                                          549                     482
     Occupancy expense                                                       109                      67
     Data processing costs                                                    29                      18
     Advertising                                                              60                      47
     Equipment expense                                                        84                      72
     Electronic banking                                                       14                      19
     Directors fees                                                           24                      22
     Mortgage fees and taxes                                                  47                      57
     Other expense                                                           147                      92
                                                                -------------------       -------------------
                 Total Other Expense                                       1,063                     876
                                                                -------------------       -------------------

              Income (Loss) Before Income Taxes                             (175)                    151

              Provision (Benefit) for Income Taxes                           (63)                     54
                                                                -------------------       -------------------

              Net Income (Loss)                                 $           (112)         $           97
                                                                ===================       ===================


See accompanying notes to consolidated financial statements
</TABLE>
                                       2

<PAGE>


                         FSB COMMUNITY BANKSHARES, INC.

                      Consolidated Statements of Operations
               Six Months Ended June 30, 2007 and 2006 (unaudited)
                             (Dollars in thousands)
<TABLE>
<CAPTION>


                                                                        2007                     2006

<S>                                                             <C>                       <C>
Interest and Dividend Income                                    -------------------       -------------------

     Loans                                                      $          3,575          $        3,251
     Securities-taxable                                                      477                     452
     Mortgage-backed securities                                              123                     156
     Other                                                                    47                      46
                                                                -------------------       -------------------
                 Total Interest and Dividend Income                        4,222                   3,905
                                                                -------------------       -------------------

Interest Expense
     Deposits                                                              2,027                   1,587
     Borrowings:
        Short term                                                            29                      10
        Long term                                                            516                     427
                                                                -------------------       -------------------
                 Total Interest Expense                                    2,572                   2,024
                                                                -------------------       -------------------


              Net Interest Income                                          1,650                   1,881
                                                                -------------------       -------------------

Other Income
     Service fees                                                             49                      37
     Fee income                                                               42                      77
     Other                                                                    68                      59
                                                                -------------------       -------------------
                 Total Other Income                                          159                     173
                                                                -------------------       -------------------

Other Expense
     Salaries and employee benefits                                        1,173                   1,015
     Occupancy expense                                                       216                     134
     Data processing costs                                                    53                      37
     Advertising                                                             162                      81
     Equipment expense                                                       178                     149
     Electronic banking                                                       21                      40
     Directors fees                                                           53                      48
     Mortgage fees and taxes                                                  71                      88
     Other expense                                                           267                     206
                                                                -------------------       -------------------
                 Total Other Expense                                       2,194                   1,798
                                                                -------------------       -------------------

              Income (Loss) Before Income Taxes                             (385)                    256

              Provision (Benefit) for Income Taxes                          (138)                     92
                                                                -------------------       -------------------
           Net Income (Loss)                                    $           (247)         $          164
                                                                ===================       ===================

See accompanying notes to consolidated financial statements
</TABLE>
                                       3

<PAGE>

                         FSB COMMUNITY BANKSHARES, INC.

                 Consolidated Statements of Stockholder's Equity
               Six Months Ended June 30, 2007 and 2006 (unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                                  Accumulated
                                                                   Additional                       Other
                                         Preferred     Common        Paid in       Retained      Comprehensive
                                           Stock        Stock        Capital       Earnings         Income           Total
                                        -----------  -----------  -------------  --------------  ---------------   ----------
<S>                                     <C>          <C>          <C>            <C>             <C>               <C>
Balance - January 1, 2006               $         -  $        -   $          10  $       13,272  $           336   $   13,618

Comprehensive income
   Net income                                                                               164                           164
   Change in net unrealized gain
      on securities available for
      sale, net of taxes                          -           -               -               -              (47)         (47)
                                        -----------  -----------  -------------  --------------  ---------------   ----------
Total Comprehensive Income                                                                                                117
                                                                                                                   ----------

Balance - June 30, 2006                 $         -  $         -  $          10  $       13,436  $            289  $   13,735
                                        ===========  ===========  =============  ==============  ================  ==========

Balance - January 1, 2007               $         -  $         -  $          10  $       13,505  $            355  $   13,870

Comprehensive loss
    Net loss                                                                               (247)                         (247)
    Change in net unrealized gain
       on securities available for
       sale, net of taxes                         -            -              -               -               (44)        (44)
                                        -----------  -----------  -------------  --------------  ----------------  ----------
Total Comprehensive Loss                                                                                                 (291)
                                                                                                                   ----------

Balance - June 30, 2007                $          -  $         -  $          10  $       13,258  $           311   $   13,579
                                       ============  ===========  =============  ==============  ===============   ==========


See accompanying notes to consolidated financial statements

</TABLE>
                                       4




<PAGE>
                         FSB COMMUNITY BANKSHARES, INC.

                      Consolidated Statements of Cash Flows
               Six Months Ended June 30, 2007 and 2006 (unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                       2007               2006
                                                                                ----------------     --------------
<S>                                                                             <C>                  <C>
Cash Flows From Operating Activities
   Net income (loss)                                                            $           (247)    $          164
   Adjustments to reconcile net income (loss) to net cash provided from
    operating activities:
         Amortization of premium on investments                                               17                 24
         Accretion of discount on investments                                                 (2)                (1)
         Amortization of net deferred loan origination costs                                 (13)              (111)
         Loans originated for sale                                                          (411)                 -
         Proceeds from sales of loans                                                        411                  -
         Depreciation and amortization                                                       151                111
         Deferred income tax benefit                                                         (23)               (42)
         (Increase) decrease in accrued interest receivable                                   65                (61)
         Increase in other assets                                                           (543)               (48)
         Increase (decrease) in other liabilities                                           (175)               (32)
                                                                                ----------------     --------------
                        Net Cash Used By Operating Activities                               (770)                 4
                                                                                ----------------     --------------

Cash Flows From Investing Activities
   Purchase of securities held to maturity                                                (5,000)            (1,500)
   Proceeds from maturities and calls of securities
      held to maturity                                                                     3,963                956
   Net (increase) decrease in loans                                                          675             (7,945)
   Net (increase) decrease of Federal Home Loan Bank stock                                   339                (32)
   Purchase of premises and equipment                                                       (646)              (140)
   Proceeds from sale of foreclosed real estate                                                -                225
                                                                                ----------------     --------------
                        Net Cash Used By Investing Activities                               (669)            (8,436)
                                                                                ----------------     --------------

Cash Flows From Financing Activities
   Net increase in deposits                                                               16,584              6,204
   Net decrease in short term borrowings                                                  (4,200)                 -
   Proceeds from long-term borrowings                                                          -              2,000
   Repayments on long-term borrowings                                                     (3,867)            (1,558)
   Net increase in advances from borrowers
     for taxes and insurance                                                                 486                628
                                                                                ----------------     --------------
                        Net Cash Provided By Financing Activities                          9,003              7,274
                                                                                ----------------     --------------
                        Net Increase (Decrease) in Cash                                    7,564             (1,158)
                                and Cash Equivalents

Cash and Cash Equivalents- Beginning                                                       2,182              4,669
                                                                                ----------------     --------------
Cash and Cash Equivalents- End                                                  $          9,746     $        3,511
                                                                                ================     ==============

</TABLE>
                                       5
<PAGE>

<TABLE>
<CAPTION>


                         FSB COMMUNITY BANKSHARES, INC.

                  Consolidated Statements of Cash Flows, Cont'd


                                                                   2007               2006
                                                            ------------------   -----------------

<S>                                                         <C>                  <C>
Supplementary Cash Flows Information

        Interest paid                                       $            2,576   $           2,019
                                                            ==================   =================

        Income taxes paid                                   $                1  $               46
                                                              ================     ===============

See accompanying notes to consolidated financial statements

</TABLE>

                                       6
<PAGE>


Notes to Financial Statements

Note 1-Basis of Presentation

The accompanying  unaudited  consolidated  financial statements of FSB Community
Bankshares,  Inc., and its wholly owned  subsidiary  (the  "Company")  have been
prepared in accordance  with  generally  accepted  accounting  principles in the
United States of America for interim financial  information and the instructions
of Form  10-QSB.  Accordingly,  they do not include all of the  information  and
footnotes  necessary  for a  complete  presentation  of  consolidated  financial
position,  results of  operations,  and cash flows in conformity  with generally
accepted accounting principles.  In the opinion of management,  all adjustments,
consisting  of  normal  recurring  accruals,  considered  necessary  for a  fair
presentation have been included.

The unaudited consolidated financial statements and "Management's Discussion and
Analysis or Plan of Operation"  should be read in conjunction with the Company's
audited  financial  statements  for the years ended  December 31, 2006 and 2005,
included in the  Prospectus  filed under Rule  424(b)(3) with the Securities and
Exchange Commission ("SEC") on May 23, 2007, as subsequently amended.

Operating  results  for the three and six  months  ended  June 30,  2007 are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 2007.

The consolidated financial statements at June 30, 2007 and December 31, 2006 and
for the three and six months  ended June 30, 2007 and 2006  include the accounts
of the Company,  Fairport Savings Bank (the "Bank") and the Bank's  wholly-owned
subsidiary, Oakleaf Services Corporation ("Oakleaf"). All inter-company balances
and  transactions  have been eliminated in  consolidation.  Certain amounts from
prior  periods have been  reclassified,  when  necessary,  to conform to current
period presentation.

Note 2-Stock Issuance Plan

On August  10,  2007 the  Company  completed  its stock  offering  of 47% of the
aggregate  total voting stock of the Company  pursuant to the laws of the United
States  of  America  and the  rules  and  regulations  of the  Office  of Thrift
Supervision  ("OTS") issuing  1,785,000 shares of common stock, of which 838,950
shares were sold at $10 per share  raising gross  proceeds of $8.4 million.  The
stock was  offered  to  eligible  account  holders,  the Bank's  employee  stock
ownership  plan  (ESOP),  and to the  public.  After  the  offering,  53% of the
Company's outstanding common stock, or 946,050 shares, is owned by FSB Community
Bankshares, MHC.

Costs of  approximately  $855,000  associated  with the Stock Offering have been
deducted from the proceeds from the sale of stock  resulting in approximate  net
proceeds of $7,534,500, and were included in other assets at June 30, 2007.

Note 3-Recent Accounting Pronouncements

In July 2006,  the FASB  issued  FASB  Interpretation  No. 48,  "Accounting  for
Uncertainty  in Income  Taxes"  ("FIN 48").  The  interpretation  clarifies  the
accounting for uncertainty in income taxes  recognized in a company's  financial
statements in accordance  with Statement of Financial  Accounting  Standards No.
109, "Accounting for Income Taxes." Specifically, the pronouncement prescribes a
recognition  threshold and a measurement  attribute for the financial  statement
recognition and measurement of a tax position taken or expected to be taken in a
tax  return.   The   interpretation   also  provides  guidance  on  the  related
derecognition,  classification,  interest and penalties,  accounting for interim

                                       7
<PAGE>


periods,  disclosure and transition of uncertain tax positions.  The adoption of
FIN 48 did not have any effect on our consolidated financial statements.  In May
2007,  the FASB  issued FASB Staff  Position  ("FSP")  FIN 48-1  "Definition  of
Settlement in FASB  Interpretation No. 48" (FSP FIN 48-1). FSP FIN 48-1 provides
guidance on how to determine  whether a tax position is effectively  settled for
the purpose of recognizing previously unrecognized tax benefits. FSP FIN 48-1 is
effective  retroactively to January 1, 2007. The implementation of this standard
did not have any impact on our  consolidated  financial  position  or results of
operations.

     In September 2006, the FASB issued SFAS 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.  The new guidance is  effective  for  financial  statements
issued for fiscal years  beginning  after  November  15,  2007,  and for interim
periods within those fiscal years. We are evaluating the impact,  if any, of the
adoption of SFAS 157 on our consolidated financial statements.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial  Assets  and  Financial  Liabilities-Including  an  amendment  of FASB
Statement No. 115" ("SFAS 159").  SFAS 159 permits entities to choose to measure
many  financial  instruments  and certain other items at fair value.  Unrealized
gains and losses on items for which the fair value  option has been elected will
be  recognized  in  earnings  at each  subsequent  reporting  date.  SFAS 159 is
effective as of January 1, 2008. We are  evaluating  the impact,  if any, of the
adoption of SFAS 159 on our consolidated financial statements.

Note 4-Comprehensive Income (Loss)

     Accounting principles generally require that recognized revenue,  expenses,
     gains,  and losses be included in net income.  Although  certain changes in
     assets and  liabilities,  such as unrealized  gains and losses on available
     for  sale  securities,   are  reported  as  a  separate  component  of  the
     stockholder's  equity  section of the  consolidated  balance  sheets,  such
     items,  along with net  income,  are  components  of  comprehensive  income
     (loss).

     The components of other comprehensive income (loss) and related tax effects
     for the three and six months ended June 30, 2007 and 2006 are as follows:

<TABLE>
<CAPTION>

                                                                 For the Three Months           For the Six Months
                                                                    Ended June 30,                Ended June 30,
                                                                  2007         2006              2007         2006
                                                                  ----         ----              ----         ----
                                                                    (In Thousands)                (In Thousands)
<S>                                                              <C>         <C>               <C>          <C>
Unrealized holding gain (loss) on available for                  $   9       $  (48)           $  (67)      $  (72)
   sale securities
Less reclassification adjustment for realized gains
   Included in net income                                            -            -                 -            -
                                                                 -----       ------            ------       ------

       Net unrealized loss                                           9          (48)              (67)         (72)
       Tax effect                                                    3          (17)              (23)         (25)

       Net of tax amount                                         $   6       $   31            $  (44)      $  (47)
                                                                 =====       ======            ======      =======

</TABLE>
                                       8
<PAGE>
Note 5-Earnings (Loss) Per Share

Since the Offering described in Note 2 was still in process as of June 30, 2007,
the  Company  has not  presented  earnings  (loss)  per share  data  since  such
information would not be meaningful.

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

General

Throughout  the  Management's  Discussion  and  Analysis  or Plan  of  Operation
("MD&A")  the term,  "the  Company",  refers to the  consolidated  entity of FSB
Community  Bankshares,   Inc.,  Fairport  Savings  Bank,  and  Oakleaf  Services
Corporation,  a wholly owned  subsidiary  of Fairport  Savings Bank. At June 30,
2007, FSB Community Bankshares, MHC the Company's mutual holding company parent,
held 100% of the Company's  outstanding common stock,  engaged in no significant
activities and was not included in the MD&A.

Forward Looking Statements

     This  Quarterly  Report  contains  forward-looking  statements,  within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties,  including,  among other things,
changes in economic  conditions  including  real estate  values in the Company's
market  area,  changes in  policies  by  regulatory  agencies,  fluctuations  in
interest rates,  demand for loans in the Company's market areas and competition,
that could cause actual results to differ  materially from  historical  earnings
and those  presently  anticipated  or projected.  The Company  wishes to caution
readers not to place  undue  reliance  on any such  forward-looking  statements,
which speak only as of the date made.  The Company wishes to advise readers that
the factors listed above could affect the Company's  financial  performance  and
could cause the Company's actual results for future periods to differ materially
from any opinions or statements  expressed with respect to future periods in any
current statements.

     The Company does not undertake,  and specifically  declines any obligation,
to  publicly  release  the  results  of any  revisions  that  may be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

Critical Accounting Policies

     The most  significant  accounting  policies  followed  by the  Company  are
presented in Note 1 to the consolidated  financial statements ("the Consolidated
Financial  Statements")  included in the Company's  Prospectus filed pursuant to
Rule 424(b) on May 23, 2007, as subsequently amended. These policies, along with
the  disclosures  presented in the other  financial  statement notes and in this
discussion,  provide  information on how significant  assets and liabilities are
valued  in the  consolidated  financial  statements  and how  those  values  are
determined.  We have  identified the accounting of our allowance for loan losses
as our critical accounting policy.

     Allowance  for Loan  Losses.  The  allowance  for loan losses is the amount
estimated by management  as necessary to absorb  credit  losses  incurred in the
loan portfolio  that are both probable and  reasonably  estimable at the balance
sheet date. The amount of the allowance is based on significant  estimates,  and
the ultimate  losses may vary from such  estimates as more  information  becomes
available or conditions  change.  The  methodology for determining the allowance
for loan losses is considered a critical  accounting policy by management due to
the high degree of judgment  involved,  the subjectivity of the assumptions used

                                       9
<PAGE>

and the potential for changes in the economic  environment  that could result in
changes to the amount of the recorded allowance for loan losses.

     As a substantial percentage of our loan portfolio is collateralized by real
estate,  appraisals  of the  underlying  value of  property  securing  loans are
critical in determining the amount of the allowance required for specific loans.
Assumptions  are  instrumental  in determining  the value of properties.  Overly
optimistic  assumptions or negative changes to assumptions  could  significantly
affect the  valuation  of a property  securing a loan and the related  allowance
determined.   Management  carefully  reviews  the  assumptions  supporting  such
appraisals to determine that the resulting  values  reasonably  reflect  amounts
realizable on the related loans.

     Management performs a quarterly evaluation of the adequacy of the allowance
for loan losses.  We consider a variety of factors in establishing this estimate
including,  but  not  limited  to,  current  economic  conditions,   delinquency
statistics,   geographic   concentrations,   the  adequacy  of  the   underlying
collateral,  the financial  strength of the  borrower,  results of internal loan
reviews and other relevant factors.  This evaluation is inherently subjective as
it  requires  material  estimates  by  management  that  may be  susceptible  to
significant  change  based  on  changes  in  economic  and  real  estate  market
conditions.

     The evaluation has a specific and general component. The specific component
relates to loans that are  delinquent or otherwise  identified as a problem loan
through the  application of our loan review process and our loan grading system.
All such loans are evaluated individually, with principal consideration given to
the  value  of  the  collateral  securing  the  loan.  Specific  allowances  are
established as required by this analysis. The general component is determined by
segregating  the remaining loans by type of loan, risk weighting (if applicable)
and payment history.  We also analyze  historical loss  experience,  delinquency
trends, general economic conditions and geographic concentrations. This analysis
establishes  factors that are applied to the loan groups to determine the amount
of the general component of the allowance for loan losses.

     Actual loan losses may be  significantly  more than the  allowance  we have
established  which  could  have a  material  negative  effect  on our  financial
results.

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

     Total Assets.  Total assets  increased by $8.5 million,  or 5.6%, to $161.3
million at June 30, 2007 from $152.8  million at December 31, 2006.  The primary
increase in total asset growth reflected  increases in cash and cash equivalents
of $7.6  million,  with $5.6 million in  subscription  funds from the  Company's
stock offering and additional  funds from deposit growth in the  Irondequoit and
Penfield branches. Securities increased by $955,000 while premises and equipment
increased by $495,000 mainly due to building and equipment costs associated with
the new Irondequoit branch.  Other assets increased by $548,000 primarily due to
deferred  stock  offering  costs of  $502,000.  These  increases  were offset by
decreases in loans receivable of $662,000, and FHLB stock of $339,000.

     Loans receivable  decreased by $662,000,  or .5%, to $120.5 million at June
30,  2007 from  $121.1  million at  December  31,  2006.  The  decrease in loans
receivable was the result of loan  repayments  exceeding loan  originations  and

                                       10
<PAGE>

sales of three 30-year fixed-rate mortgage loans totaling $411,000.  The Bank is
not involved in, and has no exposure to, subprime lending activities.

     Investment  securities increased by $955,000,  or 3.9%, to $25.8 million at
June 30,  2007 from  $24.8  million at  December  31,  2006.  The  increase  was
primarily  attributable to $3.5 million in purchases of United States Government
agency securities,  $1.5 million in purchases of adjustable rate mortgage-backed
securities,  partially  offset by the maturity of $3.2 million of United  States
Government  agency  securities,  $763,000 of principal  payments  received  from
mortgage-backed  securities,  and a  $67,000  decrease  in  the  fair  value  of
securities classified as available for sale.

     Deposits and Borrowings.  Deposits increased by $16.6 million, or 15.3%, to
$125.2  million at June 30,  2007 from  $108.6  million at  December  31,  2006.
Certificates  of  deposit,  including  IRAs,  increased  by  $8.1  million,  and
transaction  accounts,  including  checking,  money market and savings accounts,
increased by $8.5 million. The net deposit growth was primarily  attributable to
$5.6 million in  subscription  funds  deposited into a savings account until the
offering  closed,  and $9.8 million in deposit growth in the Irondequoit  branch
since opening on January 4, 2007.

     Borrowings  decreased by $8.1 million,  or 28.8%,  to $20.0 million at June
30, 2007 from $28.0 million on December 31, 2006.  We decreased  our  short-term
Federal Home Loan Bank borrowings by $4.2 million and our long-term Federal Home
Loan Bank  borrowings  by $3.9 million.  These funding  sources were replaced by
deposits obtained following the opening of our Irondequoit branch.

     Stockholder's  Equity. Total stockholder's equity decreased by $291,000, or
2.1%, to $13.6 million at June 30, 2007 from $13.9 million at December 31, 2006.
The decrease  resulted from a net loss of $247,000 for the six months ended June
30, 2007, and a $44,000 decrease in accumulated other comprehensive income.

     Non-Performing   Assets.  The  table  below  sets  forth  the  amounts  and
categories of our non-performing assets at the dates indicated.

<TABLE>
<CAPTION>

                                                              June         December
                                                            30, 2007        31, 2006
                                                            --------       ----------
                                                              (Dollars in thousands)

<S>                                                         <C>           <C>
Non-accrual loans:
  Real estate loans:

   One- to four-family residential...........               $     85       $      143
   Home equity lines of credit...............                    150               28
   Multi-family residential..................                      -                -
   Construction..............................                      -                -
   Commercial................................                      -                -
   Other loans...............................                      3                -
                                                            ---------      -----------
    Total....................................                    238              171
                                                            ---------      -----------

Accruing loans 90 days or more past due:                           -                -
                                                            ---------      -----------

     Total non-performing loans..............                    238              171
                                                            ---------      -----------

Foreclosed real estate.......................                      -                -
Other non-performing assets..................                      -                -
                                                            ---------      -----------
Total non-performing assets..................               $    238       $      171
                                                            ---------      -----------

Ratios:
   Total non-performing loans to total loans                    0.20%            0.14%
   Total non-performing loans to total assets                   0.15%            0.11%
   Total non-performing assets to total assets                  0.15%            0.11%

</TABLE>

                                       11
<PAGE>
At June 30,  2007,  there  were no other  loans  or  other  assets  that are not
disclosed in the table or  disclosed as  classified  or special  mention,  where
known  information about possible credit problems of borrowers caused us to have
serious  doubts as to the  ability of the  borrowers  to comply with the present
loan  repayment  terms and which may result in  disclosure  of such loans in the
future.

     Average balances and yields. The following table sets forth average balance
sheets,  average yields and costs, and certain other  information at and for the
periods indicated. All average balances are daily average balances.  Non-accrual
loans  were  included  in the  computation  of average  balances,  but have been
reflected  in the  table  as  loans  carrying  a zero  yield.  The  Bank  has no
tax-exempt securities or loans. The yields set forth below include the effect of
deferred fees, discounts and premiums that are amortized or accreted to interest
income.

<TABLE>
<CAPTION>


                                                     For the Three Months Ended June 30,
                                    -------------------------------------------------------------------
                                                  2007                                2006
                                    ---------------------------------  --------------------------------
                                                Interest                           Interest
                                                 Income/                            Income/
                                    Average     ---------    Yield/    Average     ----------    Yield/
                                     Balance     Expense      Cost      Balance     Expense       Cost
                                    ----------  ---------  --------   -----------  ----------   -------

<S>                                 <C>         <C>           <C>     <C>               <C>       <C>
Interest-earning assets:
Loans.........................      $  120,083  $    1,782    5.94%   $   113,565       1,656     5.83%
Securities-taxable............          18,791         242    5.15         20,530         234     4.56
Mortgage-backed securities....           6,025          64    4.25          7,139          75     4.20
Other.........................           3,293          41    4.98          1,623          18     4.44
                                    ----------  ----------    ----     ----------  ----------     ----
   Total interest-earning assets       148,192       2,129    5.75%       142,857       1,983     5.55%
                                                ----------                         ----------
Noninterest-earning assets....           4,980                              3,193
                                    ----------                         ----------
   Total assets...............      $  153,172                         $  146,050
                                    ==========                         ==========

Interest-bearing liabilities:
NOW accounts..................      $    5,390           8    0.59     $    3,563           4     0.45
Passbook savings..............          13,536          35    1.03         12,244          23     0.75
Money market savings.........           10,604          75    2.83         10,739          67     2.50
Individual retirement accounts          15,714         173    4.40         14,632         137     3.75
Certificates of deposit.......          68,265         773    4.53         64,821         614     3.79
Federal Home Loan Bank advances         20,536         255    4.97         19,997         216     4.32
                                    ----------  ----------             ----------  ----------
   Total interest-bearing
     liabilities..............         134,045       1,319     3.94%      125,996       1,061    3.37%
                                    ----------  ----------    -----    ----------  ----------    ----
Noninterest-bearing liabilities:
Demand deposits.........                 3,124                              3,990
Other.........................           2,351                              2,346
                                    ----------                         ----------
     Total liabilities........         139,520                            132,332
Stockholder's equity..........          13,652                             13,718
                                    ----------                         ----------
   Total liabilities and
     stockholder's equity.....      $  153,172                         $  146,050
                                    ==========                         ===========

Net interest income...........                  $      810                         $      922
                                                ==========                         ==========
Interest rate spread (1)......                                 1.81%                               2.18%
                                                           ========                           =========
Net interest-earning assets (2)     $   14,147                         $   16,861
                                    ==========                         ==========
Net interest margin (3).......                          2.18%                           2.58%
                                                =============                      ==========
Average interest-earning assets
   to average interest-bearing
   liabilities................             111%                               113%
                                    ==========                         ==========
---------------------

(1)  Interest rate spread represents the difference between the yield on average
     interest-earning assets and the cost of average interest-bearing
     liabilities.
(2)  Net interest-earning assets represent total interest-earning assets less
     total interest-bearing liabilities.
(3)  Net interest margin represents net interest income divided by total
     interest-earning assets.
</TABLE>
                                       12

<PAGE>
<TABLE>
<CAPTION>


                                                      For the Six Months Ended June 30,
                                    -------------------------------------------------------------------
                                                  2007                                2006
                                    --------------------------------  ---------------------------------
                                                Interest                           Interest
                                                 Income/                            Income/
                                    Average     ---------    Yield/    Average     ----------    Yield/
                                     Balance     Expense      Cost      Balance     Expense       Cost
                                    ----------  ----------  -------   ----------   ----------   --------

<S>                                 <C>         <C>           <C>     <C>              <C>        <C>
Interest-earning assets:
Loans.........................      $  120,277  $    3,575    5.94%   $   111,622       3,251     5.94%
Securities-taxable............          19,101         477    4.99         20,044         452     4.51
Mortgage-backed securities....           5,899         123    4.17          7,389         156     4.22
Other.........................           1,882          47    4.99          2,174          46     4.23
                                    ----------  ----------    ----     ----------  ----------     ----
   Total interest-earning assets       147,159       4,222    5.74%       141,229       3,905     5.53%
                                                ----------                         ----------
Noninterest-earning assets....           4,839                              3,154
                                    ----------                         ----------
   Total assets...............      $  151,998                         $  144,383
                                    ==========                         ==========

Interest-bearing liabilities:
NOW accounts..................      $    5,139          16    0.62     $    3,412           8     0.47
Passbook savings..............          12,866          77    1.20         12,245          38     0.62
Money market savings.........           10,407         146    2.81         10,602         117     2.21
Individual retirement accounts          15,358         330    4.30         14,739         272     3.69
Certificates of deposit.......          66,871       1,458    4.36         63,310       1,152     3.64
Federal Home Loan Bank advances         22,355         545    4.88         20,245         437     4.32
                                    ----------  ----------             ----------  ----------
   Total interest-bearing
     liabilities..............         132,996       2,572     3.87%      124,553       2,024    3.25%
                                    ----------  ----------     ----    ----------  ----------    ----
Noninterest-bearing liabilities:
Demand deposits.........                 3,185                              4,063
Other.........................           2,132                              2,065
                                    ----------                         ----------
     Total liabilities........         138,313                            130,681
Stockholder's equity..........          13,685                             13,702
                                    ----------                         ----------
   Total liabilities and
     stockholder's equity.....      $  151,998                         $  144,383
                                    ==========                         ===========

Net interest income...........                  $    1,650                         $    1,881
                                                ==========                         ==========
Interest rate spread (1)......                                1.87%                                2.28%
                                                              ====                                 ====
Net interest-earning assets (2)     $   14,163                         $   16,676
                                    ==========                         ==========
Net interest margin (3).......                       2.24%                              2.66%
                                                ==========                         ==========
Average interest-earning assets
   to average interest-bearing
   liabilities................             111%                                113%
                                    ==========                         ===========
---------------------

(1)  Interest rate spread represents the difference between the yield on average
     interest-earning assets and the cost of average interest-bearing
     liabilities.
(2)  Net interest-earning assets represent total interest-earning assets less
     total interest-bearing liabilities.
(3)  Net interest margin represents net interest income divided by total
     interest-earning assets.
</TABLE>
                                       13

<PAGE>


Comparison of Operating Results for the Three Months Ended June 30, 2007 and
June 30, 2006

     General.  We had a net loss of $112,000 for the three months ended June 30,
2007 compared to net income of $97,000 the three months ended June 30, 2006. The
decrease was primarily  attributable  to a decrease in net interest  income as a
result  of the  decrease  in our  net  interest  margin  in a flat  yield  curve
environment  (short-term  interest rates on United States  Treasury  obligations
equal or are slightly higher or lower than long-term  rates). In addition we had
a decrease in other income mainly due to decreasing  revenue  generated from our
Oakleaf  subsidiary,  and an increase in other expense resulting  primarily from
additional salaries and benefits,  occupancy,  advertising,  and other operating
expenses  incurred in connection  with the operation of our  Irondequoit  branch
that opened in early 2007.

     Interest and Dividend  Income.  Interest and dividend  income  increased by
$146,000,  or 7.4% to $2.1 million for the three months ended June 30, 2007 from
$2.0 million for the three months ended June 30, 2006.  The increase in interest
and dividend income  resulted  primarily from a $126,000,  or 7.6%,  increase in
interest income from loans and a $20,000,  or 6.1%,  increase in interest income
from investments.  Average interest-earning assets increased by $5.3 million, or
3.7%,  to $148.2  million for the three  months  ended June 30, 2007 from $142.9
million for the three months ended June 30, 2006. The yield on interest  earning
assets increased by 20 basis points to 5.75% for the three months ended June 30,
2007  compared to 5.55% for the three  months  ended June 30,  2006,  reflecting
modest increases in long-term rates.

     Interest Expense.  Interest expense increased  $258,000,  or 23.4%, to $1.3
million for the three months ended June 30, 2007 from $1.1 million for the three
months ended June 30, 2006.  The increase in interest  expense  resulted from an
increase  in both the  average  balance  and  average  cost of  interest-bearing
liabilities.  The average balance of interest-bearing liabilities increased $8.0
million,  or 6.4%,  to $134.0  million for the three  months ended June 30, 2007
compared to $126.0 million for the three months ended June 30, 2006. The average
cost of interest-bearing  liabilities  increased by 57 basis points to 3.94% for
the three  months ended June 30, 2007 from 3.37% for the three months ended June
30, 2006. The average cost of deposit  accounts  increased by 56 basis points to
3.75% for the three months  ended June 30, 2007  compared to 3.19% for the three
months ended June 30, 2006.  In addition,  the average cost of Federal Home Loan
Bank  advances  increased by 65 basis points to 4.97% for the three months ended
June 30, 2007  compared to 4.32% for the three months  ended June 30, 2006.  The
increase  in  interest  expense  reflects  higher  cost  for  new  and  renewing
certificates of deposits and borrowings over the last twelve months.

     Based upon current  market  rates,  we expect our cost of funds to increase
slightly in the third quarter of 2007 which will create  additional  pressure on
our interest rate spread and our ability to be profitable. We have $16.7 million
of  certificates  of deposit that will mature  during the third  quarter of 2007
with a weighted  average cost of 4.44%.  Based on current market rates, if these
funds remain with Fairport  Savings Bank with similar  maturities,  the rates we
pay on these deposits would  increase  moderately.  We hope to alleviate some of
this increase in interest  expense with checking and savings account  promotions
that would result in lower average interest costs.

     Net Interest Income. Net interest income decreased  $112,000,  or 12.1%, to
$810,000 for the three  months  ended June 30, 2007 from  $922,000 for the three
months  ended  June 30,  2006.  The  decrease  in net  interest  income  was due
primarily   to  a  57  basis  point   increase  in  the  average   cost  of  our
interest-bearing  liabilities,  while the average yield on our  interest-earning
assets  increased by only 20 basis points,  as the flat yield curve continued to
decrease our net interest rate spread and net interest margin.  Our net interest
margin  decreased  40 basis  points to 2.18% for the three months ended June 30,
2007 from 2.58% for the three months ended June 30, 2006.

                                       14
<PAGE>
     Provision for Loan Losses. Based on management's  evaluation of the factors
that  determine  the level of the  allowance  for loan  losses,  we  recorded no
provision  for loan losses for the three month  periods  ended June 30, 2007 and
June 30, 2006. We continue to maintain  exceptional  credit  quality  within our
loan portfolio with no charge-offs  recorded  within the reporting  period.  The
allowance  for loan losses as of June 30, 2007 was  $322,000,  or 0.27% of total
loans, compared to $331,000, or 0.28% of total loans as of June 30, 2006. We had
non-accrual  loans totaling  $238,000,  or 0.20% of total loans receivable as of
June 30, 2007 compared to $207,000,  or 0.18% of loans in non-accrual  status as
of June 30, 2006.

     Other Income.  Other income decreased $27,000, or 25.7%, to $78,000 for the
three months ended June 30, 2007 compared to $105,000 for the three months ended
June 30,  2006.  The  decrease  in other  income was  primarily  the result of a
$33,000 decrease in our Oakleaf subsidiary revenue.

     Other Expense.  Other expense increased $187,000, or 21.3%, to $1.1 million
for the three  months  ended June 30, 2007  compared  to $876,000  for the three
months ended June 30, 2006. The increase was the result of an additional $67,000
in salaries and benefits  expense  primarily due to annual cost of living raises
effective  January 1 of each year and staffing of the  Irondequoit  branch which
opened on  January 4,  2007,  an  increase  of  $42,000  in  occupancy  expenses
(primarily lease,  maintenance and depreciation of the Irondequoit  branch),  an
increase  in data  processing  costs of  $11,000,  an  increase  of  $13,000  in
advertising,  and an  increase  of  $54,000  in  miscellaneous  other  expenses,
primarily  related  to  the  Irondequoit  branch  as  well  as  increased  costs
associated with being a newly registered public company.

     Income Tax Expense/Benefit. We had a pre-tax loss of $175,000 for the three
months  ended June 30,  2007 versus a pre-tax  profit of $151,000  for the three
months  ended June 30,  2006,  which  resulted  in a $63,000 tax benefit for the
three  months  ended June 30,  2007,  versus a $54,000 tax expense for the three
months ended June 30, 2006, a change of  $117,000.  The  effective  tax rate was
(36.0%) for the three months ended June 30, 2007 compared to 35.8% for the three
months ended June 30, 2006.

Comparison of Operating Results for the Six Months Ended June 30, 2007 and June
30, 2006

     General.  We had a net loss of $247,000  for the six months  ended June 30,
2007 compared to net income of $164,000 the six months ended June 30, 2006.  The
decrease was  attributable to a decrease in net interest  income of $231,000,  a
decrease in other income of $14,000,  an increase in other  expense of $396,000,
offset by a decrease in income taxes of  $230,000.  The decrease in net interest
income resulted from a decrease in our net interest margin in a flat yield curve
environment  and an increase in our other expense  resulted  primarily  from the
additional  cost of  salaries  and  benefits,  occupancy,  and  other  operating
expenses  incurred in  connection  with the recent  opening and operation of our
Irondequoit branch.

     Interest and Dividend  Income.  Interest and dividend  income  increased by
$317,000,  or 8.1% to $4.2  million for the six months  ended June 30, 2007 from
$3.9 million for the six months  ended June 30,  2006.  The increase in interest
and dividend income resulted  primarily from a $324,000,  or 10.0%,  increase in
interest income from loans, partially offset with a $7,000, or 1.1%, decrease in
interest income from investments.  Average  interest-earning assets increased by
$5.9 million,  or 4.2%, to $147.2 million for the six months ended June 30, 2007
from  $141.2  million  for the six  months  ended  June 30,  2006.  The yield on
interest earning assets increased by 21 basis points to 5.74% for the six months
ended June 30, 2007  compared to 5.53% for the six months  ended June 30,  2006,
reflecting modest increases in long-term rates and an asset structure containing
a large percentage of fixed rate mortgages.

                                       15
<PAGE>
     Interest Expense.  Interest expense increased  $548,000,  or 27.1%, to $2.6
million  for the six months  ended June 30,  2007 from $2.0  million for the six
months ended June 30, 2006.  The increase in interest  expense  resulted from an
increase  in both the  average  balance  and  average  cost of  interest-bearing
liabilities.  The average balance of interest-bearing liabilities increased $8.4
million,  or 6.8%,  to $133.0  million  for the six months  ended June 30,  2007
compared to $124.6  million for the six months ended June 30, 2006.  The average
cost of interest-bearing  liabilities  increased by 62 basis points to 3.87% for
the six months  ended June 30, 2007 from 3.25% for the six months ended June 30,
2006. The average cost of deposit accounts increased by 62 basis points to 3.66%
for the six months  ended  June 30,  2007  compared  to 3.04% for the six months
ended June 30,  2006.  In  addition,  the average cost of Federal Home Loan Bank
advances increased by 56 basis points to 4.88% for the six months ended June 30,
2007  compared to 4.32% for the six months  ended June 30,  2006.  The  interest
expense increase was primarily  attributable to the deposit customer  preference
for high  yielding  certificates  of deposits in the higher short term  interest
rate environment that we have been experiencing.

     Net Interest Income. Net interest income decreased  $231,000,  or 12.3%, to
$1.7  million for the six months  ended June 30, 2007 from $1.9  million for the
six months  ended June 30, 2006.  The  decrease in net  interest  income was due
primarily   to  a  62  basis  point   increase  in  the  average   cost  of  our
interest-bearing  liabilities,  while the average yield on our  interest-earning
assets  increased by only 21 basis points,  as the flat yield curve continued to
decrease our net interest rate spread and net interest margin.  Our net interest
margin decreased 42 basis points to 2.24% for the six months ended June 30, 2007
from 2.66% for the six months ended June 30, 2006.

     Provision for Loan Losses. Based on management's  evaluation of the factors
that  determine  the level of the  allowance  for loan  losses,  we  recorded no
provision for loan losses for the six month periods ended June 30, 2007 and June
30, 2006. We continue to maintain  exceptional  credit  quality  within our loan
portfolio  with  no  charge-offs  recorded  within  the  reporting  period.  The
allowance  for loan losses as of June 30, 2007 was  $322,000,  or 0.27% of total
loans, compared to $331,000, or 0.28% of total loans as of June 30, 2006. We had
non-accrual  loans totaling  $238,000,  or 0.20% of total loans receivable as of
June 30, 2007 compared to $207,000,  or 0.18% of loans in non-accrual  status as
of June 30, 2006.

     Other Income.  Other income decreased $14,000, or 8.1%, to $159,000 for the
six months  ended June 30, 2007  compared to $173,000  for the six months  ended
June 30, 2006. The decrease in non-interest income was primarily the result of a
$35,000  decrease  in our  Oakleaf  subsidiary  revenue,  partially  offset by a
$12,000 increase in service fees and a $9,000 increase in other income.

     Other Expense.  Other expense increased $396,000, or 22.0%, to $2.2 million
for the six months  ended June 30,  2007  compared  to $1.8  million for the six
months  ended  June 30,  2006.  The  increase  was the  result of an  additional
$158,000 in salaries and benefits expense primarily due to annual cost of living
raises effective  January 1 of each year and staffing of the Irondequoit  branch
which  opened on January  4,  2007,  an  increase  of  $82,000 in new  occupancy
expenses  (primarily  lease,  maintenance  and  depreciation  of the Irondequoit
branch), an increase in data processing costs of $16,000, an increase of $81,000
in  advertising  expense,  and an  increase  of $59,000 in  miscellaneous  other
expenses related to the Irondequoit branch as well as increased costs associated
with being a newly registered public company.

     Income Tax  Expense/Benefit.  We had a pre-tax loss of $385,000 for the six
months  ended June 30,  2007  versus a pre-tax  profit of  $256,000  for the six
months ended June 30, 2006, which resulted in a $138,000 tax benefit for the six
months  ended June 30,  2007,  versus a $92,000  tax  expense for the six months
ended June 30, 2006, a change of $230,000.  The  effective  tax rate was (35.8%)
for the six months  ended  June 30,  2007  compared  to 35.9% for the six months
ended June 30, 2006.

                                       16
<PAGE>
Liquidity and Capital Resources

     Liquidity is the ability to meet current and future  financial  obligations
of a short-term nature. Our primary sources of funds consist of deposit inflows,
loan  repayments,  advances  from  the  Federal  Home  Loan  Bank  of New  York,
maturities and principal repayments of securities, and recently, but to a lesser
extent,  loan sales.  While  maturities and scheduled  amortization of loans and
securities  are  predictable  sources  of  funds,  deposit  flows  and  mortgage
prepayments  are  greatly   influenced  by  general  interest  rates,   economic
conditions  and  competition.   Our  asset/liability   management  committee  is
responsible for establishing and monitoring our liquidity targets and strategies
in order to ensure that  sufficient  liquidity  exists for meeting the borrowing
needs  and  deposit  withdrawals  of our  customers  as  well  as  unanticipated
contingencies. We seek to maintain a liquidity ratio of 4.0% or greater. For the
six ended June 30, 2007,  our liquidity  ratio averaged 5.6%. We believe that we
have enough  sources of liquidity to satisfy our short- and long-term  liquidity
needs as of June 30,  2007.  We  anticipate  that we will  continue  to maintain
current liquidity levels following the completion of the stock offering.

     We  regularly  adjust  our  investments  in liquid  assets  based  upon our
assessment of:

         (i) expected loan demand;

         (ii) expected deposit flows;

         (iii) yields available on interest-earning deposits and securities; and

         (iv) the objectives of our asset/liability management program.

     Excess liquid assets are invested generally in  interest-earning  deposits,
short- and intermediate-term securities and federal funds sold.

     Our most liquid assets are cash and cash  equivalents.  The levels of these
assets  are  dependent  on  our  operating,  financing,  lending  and  investing
activities  during any given period. At June 30, 2007, cash and cash equivalents
totaled $9.7 million.

     Our cash flows are derived from operating activities,  investing activities
and  financing  activities  as reported in our  Consolidated  Statements of Cash
Flows included in our Consolidated Financial Statements.

     At June 30, 2007, we had $4.4 million in loan commitments  outstanding.  In
addition to commitments to originate  loans, we had $7.7 million in unused lines
of credit to borrowers. Certificates of deposit, including individual retirement
accounts  comprised  solely of certificates of deposits,  due within one year of
June 30, 2007,  totaled $55.7 million,  or 64.7% of our  certificates of deposit
and 44.5% of total deposits. If these deposits do not remain with us, we will be
required to seek other  sources of funds,  including  loan sales,  other deposit
products,  including  certificates  of  deposit,  and  Federal  Home  Loan  Bank
advances. Depending on market conditions, we may be required to pay higher rates
on such deposits or other  borrowings than we currently pay on the  certificates
of deposit at June 30, 2007. We believe,  however, based on past experience that
a significant  portion of such deposits will remain with us. We have the ability
to attract and retain deposits by adjusting the interest rates offered.

     Our primary investing activity is originating loans.  During the six months
ended June 30, 2007,  we  originated  $7.3 million of loans,  and during the six
months ended June 30, 2006, we originated  $15.7 million of loans.  We purchased
$5.0 million of securities held-to-maturity during the six months ended June 30,

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<PAGE>
2007 year as compared to $1.5 million of securities-held-to-maturity  during the
six months ended June 30, 2006.

     Financing  activities consist primarily of activity in deposit accounts and
Federal Home Loan Bank advances. We experienced a net increase in total deposits
of $16.6  million  for the six months  ended  June 30,  2007  compared  to a net
increase of $6.2 million for the six months  ended June 30,  2006.  Of the $16.6
million  increase,  $5.6 million was attributable to funds received in our stock
offering. Deposit flows are affected by the overall level of interest rates, the
interest  rates and  products  offered by us and our local  competitors,  and by
other factors.

     Liquidity  management  is both a daily and  long-term  function of business
management.  If we require funds beyond our ability to generate them internally,
borrowing  agreements  exist with the Federal Home Loan Bank of New York,  which
provides  an  additional  source of  funds.  Federal  Home  Loan  Bank  advances
decreased  by $8.0  million to $20.0  million for the six months  ended June 30,
2007,  compared to a net  decrease of $1.5  million  during the six months ended
June 30, 2006.  Federal Home Loan Bank advances have primarily been used to fund
loan demand. At June 30, 2007, we had the ability to borrow  approximately $89.4
million from the Federal Home Loan Bank of New York,  of which $20.0 million had
been advanced.

     Fairport   Savings   Bank  is  subject  to   various   regulatory   capital
requirements,  including a risk-based  capital measure.  The risk-based  capital
guidelines  include both a definition of capital and a framework for calculating
risk-weighted  assets by assigning  balance sheet assets and  off-balance  sheet
items to broad risk categories. At June 30, 2007, Fairport Savings Bank exceeded
all regulatory  capital  requirements.  The Bank's  leverage (Tier 1) capital at
June 30, 2007 was $13.3 million,  or 8.25% of adjusted assets.  In ordered to be
classified  as  "well  capitalized"  under  regulatory  guidelines,  the Bank is
required to have Tier 1 capital of $8.0 million, or 5.00% of adjusted assets. To
be classified as a well capitalized bank under regulatory  guidelines,  the Bank
must have a total risk-based capital ratio of 10.0%. The Bank's total risk-based
capital ratio at June 30, 2007 was $18.45%.

     The net proceeds  from the stock  offering  will increase our liquidity and
capital resources.  Over time, the initial level of liquidity will be reduced as
net proceeds from the stock  offering are used for general  corporate  purposes,
including  the  funding  of  loans.  Our  financial  condition  and  results  of
operations  will be  enhanced  by the net  proceeds  from  the  stock  offering,
resulting  in increased  net  interest-earning  assets and net interest  income.
However, due to the increase in equity resulting from the net proceeds raised in
the stock offering,  our return on equity will be adversely  affected  following
the stock offering.

Off-Balance Sheet Arrangements

     In the  ordinary  course of business,  Fairport  Savings Bank is a party to
credit-related  financial  instruments with  off-balance  sheet risk to meet the
financing  needs  of  our  customers.   These  financial   instruments   include
commitments  to extend  credit.  We follow the same  credit  policies  in making
commitments as we do for on-balance sheet instruments.

     Commitments  to extend credit are  agreements to lend to a customer as long
as  there  is no  violation  of  any  condition  established  in  the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require payment of a fee. The commitments for equity lines of credit may
expire without being drawn upon. Therefore,  the total commitment amounts do not
necessarily  represent  future  cash  requirements.  The  amount  of  collateral
obtained,  if it is deemed necessary by us, is based on our credit evaluation of
the customer.

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<PAGE>
     At  June  30,  2007  and  2006,  we had  $4.4  million  and  $6.5  million,
respectively,  of commitments to grant loans, and $7.7 million and $7.3 million,
respectively, of unfunded commitments under lines of credit.

Item 3.  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 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  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 Securities  Exchange Act
of 1934 is recorded, processed,  summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms.

     There were no significant  changes made in the Company's  internal  control
over financial reporting or in other factors that could significantly affect the
Company's internal control over financial reporting during the period covered by
this report that has materially affected,  or is reasonably likely to materially
affect, the Company's internal control over financial reporting.

                           Part II - Other Information

Item 1. Legal Proceedings

     The  Company and its  subsidiaries  are  subject to various  legal  actions
arising in the normal  course of  business.  In the opinion of  management,  the
resolution  of these legal  actions is not  expected to have a material  adverse
effect on the Company's financial condition or results of operations.

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

        (a)    There were no sales of unregistered  securities during the period
               covered by this Report.

        (b)    On August 10, 2007 the Company completed its intital public stock
               offering.   In  connection   with  this  offering,   the  Company
               registered  1,305,308 shares of its common stock, par value $0.10
               per share,  on a  Registration  Statement on Form SB-2,  declared
               effective on May 14, 2007  (Commission File No.  333-141380).  In
               the offering, the Company sold 838,950 shares of its common stock
               to its  eligible  account  holders,  the  Bank's  employee  stock
               ownership  plan and the public  for gross  offering  proceeds  of
               $8,389,500.  Costs of approximately  $855,000 associated with the
               Offering  were  deducted  from the  gross  procees  resulting  in
               approximate net proceeds of $7,534,500.

               Sandler  O'Neill &  Parnters,  L.P.  was engaged to assist in the
               marketing  of the  Company's  common stock in the  offering.  For
               these services,  Sandler O'Neill & Partners,  L.P. received a fee
               of $150,000. Sandler O'Neill & Partners, L.P. was also reimbursed
               for reasonable out-of-pock expenses.

               The Company lent  approximately  $700,000 to the ESOP of the Bank
               in connection with the stock  offering.  In addition to the funds
               used for the  ESOP  loan,  approximately  $3  million  of the net
               proceeds  of the  offering  was  retained  by the Company and the
               remainder of the net proceeds was contributed to the Bank. All of
               such proceeds have been invested in short-term investments.

                                       19
<PAGE>
        (c)    There were no issuer  repurchases of securities during the period
               covered by this Report.

Item 3. Defaults Upon Senior Securities

     Not applicable.

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

     During the period  covered by this  report,  the Company did not submit any
matters to the vote of security holders.

Item 5. Other Information

     Not applicable

Item 6. Exhibits

     The  following  exhibits  are  either  filed as part of this  report or are
incorporated herein by reference:

3.1      Charter of FSB Community Bankshares, Inc.*

3.2      Bylaws of FSB Community Bankshares, Inc.*

4        Form of Common Stock Certificate of FSB Community Bankshares, Inc.*

10.1     Employment Agreement between FSB Community Bankshares, Inc. and Dana C.
         Gavenda*

10.2     Supplemental Executive Retirement Plan*

10.3     Form of Employee Stock Ownership Plan*
31.1     Certification of Chief Executive Officer pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002

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

32       Certification of Chief Executive Officer and Chief Financial Officer
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
-----------------------
     *   Filed as exhibits to the Company's Registration Statement on Form SB-2,
         and any amendments thereto, with the Securities and Exchange Commission
         (Registration No. 333-141380).

                                       20

<PAGE>


                                   SIGNATURES
                                   ----------

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                       FSB COMMUNITY BANKSHARES, INC.


Date:    August 14, 2007               /s/ Dana C. Gavenda
                                       ---------------------------------------
                                       Dana C. Gavenda
                                       President and Chief Executive Officer


Date:    August 14, 2007               /s/ Kevin D. Maroney
                                       ---------------------------------------
                                       Kevin D. Maroney
                                       Senior Vice President and Chief Financial
                                       Officer


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