UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                     ---------------------------------------

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2009


                               ES BANCSHARES, INC.
                               -------------------
        (Exact name of small business issuer as specified in its charter)

            MARYLAND                                    20-4663714
 -------------------------------                        ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or organization)


                  68 North Plank Road, Newburgh, New York 12550
                  ---------------------------------------------
                    (Address of principal executive offices)

                                 (866) 646-0003
                                 --------------
                 Issuer's telephone number, including area code:

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.
YES [X]. NO [ ].

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted  and posted  pursuant to Rule 405 of  Regulation  S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).
YES [ ]. NO [ ].

Indicate by check mark whether the  registrant is a large  accelerated  filer, a
non-accelerated  filer or a smaller  reporting  company.  See the definitions of
"large accelerated  filer,"  "accelerated filer" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act.

    Large accelerated filer [ ]                    Accelerated filer [ ]
    Non-accelerated filer [ ]                      Smaller reporting company [X]
(Do not check if a smaller reporting company)

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

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.

As of August 1, 2009 there were 1,996,070  issued and outstanding  shares of the
Registrant's Common Stock.


<PAGE>


                               ES BANCSHARES, INC.
                                    FORM 10-Q
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009


                         PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>

                                                                                                          Page
<S>               <C>                                                                                        <C>
Item 1.           Financial Statements (Unaudited)
                  Consolidated Balance Sheets at June 30, 2009 and December 31, 2008.........................1
                  Consolidated Statements of Income for the Three and Six Months Ended
                      June 30, 2009, and 2008................................................................2
                  Consolidated Statement of Changes in Stockholders' Equity
                      For the Six Months Ended June 30, 2009 and 2008........................................3
                  Consolidated Statements of Cash Flows for the Six Months Ended
                      June 30, 2009 and 2008.................................................................4
                  Notes to Unaudited Consolidated Financial Statements.......................................5
Item 2.           Management's Discussion and Analysis of Financial Condition and
                      Results of Operations.................................................................18
Item 3.           Quantitative and Qualitative Disclosures About Market Risk................................26
Item 4T.          Controls and Procedures...................................................................26


                           PART II - OTHER INFORMATION


Item 1.           Legal Procedures..........................................................................26
Item 1A           Risk Factors..............................................................................26
Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds...............................27
Item 3            Defaults Upon Senior Securities...........................................................27
Item 4.           Submission of Matters to a Vote of Security Holders.......................................27
Item 5.           Other Information.........................................................................28
Item 6.           Exhibits..................................................................................29
                  Signatures................................................................................30

</TABLE>

<PAGE>

Part 1. Item 1.
                               ES BANCSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                      (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                     June 30,         December 31,
                                                                                       2009               2008
                                                                                       ----               ----
ASSETS
<S>                                                                               <C>               <C>
Cash and cash equivalents:
     Cash and due from banks                                                      $       16,984    $        12,454
     Federal funds sold                                                                        -                  5
                                                                                  --------------    ---------------
         Total cash and cash equivalents                                                  16,984             12,459
Certificates of deposit at other financial institutions                                    3,354              6,628
Securities:
     Available for sale, at fair value                                                     4,259              4,974
     Held to maturity, at amortized cost (fair value of $29,399
       at June 30, 2009, and $24,166 at December 31, 2008)                                28,794             23,529
                                                                                  --------------    ---------------
         Total securities                                                                 33,053             28,503

Real estate mortgage loans held for sale                                                   1,036                  -
Loans receivable                                                                          97,639             94,978
     Deferred costs                                                                          505                512
     Allowance for loan losses                                                            (1,031)              (862)
                                                                                  ---------------   ----------------
         Total loans receivable, net                                                      97,113             94,628
Accrued interest receivable                                                                  606                603
Federal Reserve Bank stock                                                                   287                299
Federal Home Loan Bank stock                                                                 594                528
Goodwill                                                                                     581                581
Office properties and equipment, net                                                         720                757
Other assets                                                                                 435                280
                                                                                  --------------    ---------------
         Total assets                                                             $      154,763    $       145,266
                                                                                  ==============    ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
     Non-interest bearing                                                         $       13,492    $        12,840
     Interest bearing                                                                    120,117            111,922
Borrowed funds                                                                             9,603             10,074
Accrued interest payable                                                                     174                205
Other liabilities                                                                          1,650                994
                                                                                  --------------    ---------------
         Total liabilities                                                               145,036            136,035
Commitments and contingencies

Stockholders' equity
     Preferred Stock (par value $0.01; 5,000,000 shares authorized; 0 shares
       issued at June 30, 2009 and December 31, 2008,
       respectively)                                                                           -                  -
     Capital stock (par value $0.01; 5,000,000 shares authorized;
       1,996,070 shares issued at June 30, 2009,
       1,868,505 at December 31, 2008)                                                        20                 19
     Additional paid-in-capital                                                           18,605             17,911
     Accumulated deficit                                                                  (8,790)            (8,484)
     Accumulated other comprehensive loss                                                   (108)              (215)
                                                                                  ---------------   ----------------
         Total stockholders' equity                                                        9,727              9,231
                                                                                  --------------    ---------------
         Total liabilities and stockholders' equity                               $      154,763    $       145,266
                                                                                  ==============    ===============
</TABLE>

See accompanying notes to financial statements.

                                       1
<PAGE>


                               ES BANCSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                      (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                   For the Three Months                 For the Six Months
                                                      Ended June 30,                      Ended June 30,
                                             ---------------------------------   ---------------------------------
                                                 2009               2008              2009              2008
                                             --------------    ---------------   ---------------    --------------

<S>                                          <C>               <C>               <C>                <C>
Interest and dividend income:
   Loans                                     $       1,397     $        1,207    $        2,762     $       2,432
   Securities                                          406                294               790               379
   Certificates of deposit                              11                 69                40               136
   Fed Funds and other earning assets                   20                 45                36               103
                                             --------------    ---------------   ---------------    --------------
     Total interest and dividend income              1,834              1,615             3,628             3,050
                                             --------------    ---------------   ---------------    --------------

Interest expense:
   Deposits                                            755                678             1,605             1,367
   Borrowed funds                                       84                 69               172                70
                                             --------------    ---------------   ---------------    --------------
     Total interest expense                            839                747             1,777             1,437
                                             --------------    ---------------   ---------------    --------------

       Net interest income                             995                868             1,851             1,613

Provision for loan losses                               97                 90               180                83
                                             --------------    ---------------   ---------------    --------------
       Net interest income after                       898                778             1,671             1,530
         provision for loan losses
                                             --------------    ---------------   ---------------    --------------

Non-interest income:
   Service charges and fees                            124                119               224               207
   Net gain on sales of real estate
   mortgage loans held for sale                         89                 23               154                38
   Net gain on securities available for
     sale                                              --                  --                 -                 7
   Other                                               158                 20               207                42
                                             --------------    ---------------   ---------------    --------------
     Total non-interest income                         371                162               585               294
                                             --------------    ---------------   ---------------    --------------

Non-interest expense:
   Compensation and benefits                           584                577             1,146             1,151
   Occupancy and equipment                             183                211               386               405
   Data processing service fees                         72                 65               142               130
   Other                                               595                322               887               648
                                             --------------    ---------------   ---------------    --------------
     Total non-interest expense                      1,434              1,175             2,561             2,334
                                             --------------    ---------------   ---------------    --------------

       Net (loss) before income taxes                 (165)              (235)             (305)             (510)
Income tax expense                                      --                 --                --                --
                                             --------------    ---------------   ---------------    --------------
       Net (loss)                            $        (165)    $         (235)   $         (305)    $        (510)
                                             --------------    ---------------   ---------------    --------------

Other comprehensive income (loss):
       Net unrealized gain/(loss) on
         available-for-sale securities                 170                (55)              107               (36)
                                             --------------    ---------------   ---------------    --------------
Comprehensive income (loss)                  $           5     $         (290)   $         (198)     $       (546)
                                             ==============    ===============   ===============    ==============

Weighted average:
       Common shares                             1,869,907          1,721,437         1,869,214         1,721,437
(Loss) per common share:
       Basic & diluted                       $       (0.09)    $        (0.14)   $        (0.16)    $       (0.30)
                                             ==============    ===============   ===============    ==============
</TABLE>
See accompanying notes to finanacial statements.

                                       2
<PAGE>


                               ES BANCSHARES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
                                   (Unaudited)
                      (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                         Accumulated
                                                             Additional                     Other
                                      Capital Stock           Paid-In     Accumulated   Comprehensive
                                  Shares        Amount        Capital       Deficit         Gain           Total
                                  ------        ------        -------       -------         ----           -----

<S>                               <C>         <C>           <C>           <C>             <C>            <C>
Balance at January 1, 2008        1,721,437   $     17      $   16,911    $   (6,553)     $     7        $   10,382

Stock based compensation                  -          -               5             -            -                5

Comprehensive loss:
   Net loss for the period                -          -               -          (510)           -             (510)
   Net unrealized gain on
     available-for-sale securities        -          -               -             -          (36)             (36)
                                                                                                       ------------
     Total comprehensive loss                                                                                  (546)
                               ------------  -------------  ------------  ------------   -----------   ------------
Balance at June 30, 2008          1,721,437   $     17      $   16,916    $   (7,063)     $   (29)       $    9,841
                               ============  =============  ============  ============   ============  ============

Balance at January 1, 2009        1,868,505   $     19      $   17,911    $   (8,484)     $  (215)       $    9,231

Stock based compensation                  -          -               9             -            -                9

Comprehensive loss:
   Net loss for the period                -          -               -          (305)           -             (305)
   Net unrealized gain on
     available-for-sale securities        -          -               -             -          107              107
                                                                                                       ------------
Total comprehensive loss                                                                                      (198)
                                                                                                       ------------

Net proceeds from issuance
    of  common stock                127,565          1             685             -            -              686


Balance at June 30, 2009          1,996,070   $     20      $   18,605    $   (8,790)     $  (108)       $   9,727
                               ============  =============  ============  =============  ============  ============

</TABLE>
                                       3

<PAGE>


                               ES BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                      (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                            For the Six Months
                                                                                              Ended June 30,
                                                                                            2009               2008
                                                                                            ----               ----
<S>                                                                               <C>               <C>
Cash flows from operating activities:
     Net loss for period                                                          $         (305)   $          (510)
     Adjustments to reconcile net losses to net cash provided by
       operating activities
         Provision for loan losses                                                           180                 83
         Depreciation expense                                                                132                179
         Amortization of deferred fees, discounts and premiums, net                          (25)                 3
         Net proceeds (originations) on loans held for sale                               (1,036)               387
         Net gain on sale of real estate mortgage loans held for sale                       (154)               (38)
         Net gain on sale of securities available for sale                                     -                 (7)
         Gain on sale of fixed assets                                                          -                 (9)
         Stock compensation expense                                                            8                  5
         Changes in assets and liabilities
              Increase in other assets                                                      (157)              (147)
              Increase in accrued expenses and other liabilities                             626                 49
                                                                                  --------------    ---------------
                  Net cash used in operating activities                                     (732)                (5)

Cash flows from investing activities:
     Maturity of certificates of deposit at other financial institutions                   6,279              4,249
     Purchase of certificates of deposit at other financial institutions                  (3,005)            (7,102)
     Purchase of available-for-sale securities                                                 -             (2,929)
     Purchase of held-to-maturity securities                                             (11,356)           (20,265)
     Proceeds on sale of securities available for sale                                         -                506
     Proceeds from principal payments and maturities of securities                         6,895              3,601
     Proceeds on sale of fixed assets                                                          -                  9
     Net disbursements for loan originations                                              (2,468)           (10,137)
     Purchase of Federal Home Loan Bank stock                                                (67)              (463)
     Redemption of Federal Home Loan Bank stock                                                -                  3
     Redemption of Federal Reserve Bank stock                                                 12                 18
     Leasehold improvements and acquisitions of capital assets                               (94)               (49)
                                                                                  ---------------   ---------------
         Net cash used in investing activities                                            (3,805)           (32,559)

Cash flows from financing activities:
     Net increase in deposits                                                              8,847             25,835
     Proceeds of advance from FHLB                                                             -              9,948
     Repayment of borrowings                                                                (471)                 -
        Net proceeds from common stock issuance                                              686                  -
                                                                                  --------------    ---------------
         Net cash provided by financing activities                                         9,062             35,783
                                                                                  --------------    ---------------

Net increase in cash and cash equivalents                                                  4,525              3,219
Cash and cash equivalents at beginning of period                                          12,459              6,752
                                                                                  --------------    ---------------

Cash and cash equivalents at end of period                                        $       16,984    $         9,971
                                                                                  ==============    ===============

Supplemental cash flow information
     Interest paid                                                                $        1,808    $         1,390
     Income taxes paid                                                                         -                  -
</TABLE>

See accompanying notes to financial statements

                                       4
<PAGE>

                               ES BANCSHARES, INC.
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS


Note 1.  Nature of Operations

         Empire State Bank (the "Bank") was organized  under federal law in 2004
as a national bank  regulated by the Office of the  Comptroller  of the Currency
("OCC").  The Bank's  deposits  are insured up to legal  limits by the FDIC.  In
March 2009, the Bank converted its charter to a New York State  commercial  bank
charter,  with  the New York  Banking  Department  becoming  its  primary  state
regulator.

         On April 28, 2004, the Bank sold  1,650,000  shares of its common stock
at a price of $10.00 per share,  for an aggregate  consideration  of $16,500,000
(the  "Offering").  In  addition,  for every  five (5)  shares  of common  stock
purchased by a subscriber in the offering, such subscriber received a warrant to
purchase,  within a  three-year  period,  one (1)  share of  common  stock at an
exercise price of $12.50 per share.  As discussed in Note 4, these warrants were
subsequently modified.

         The Board of  Directors  entered  into an  Agreement  and Plan of Share
Exchange  (the "Plan") on March 21, 2006,  as amended and restated as of May 16,
2006, under which the Bank reorganized into a one-bank holding company structure
(the "Reorganization").  In connection with the Reorganization,  the Bank formed
ES Bancshares,  Inc. (the "Company"),  a Maryland  corporation,  to serve as its
holding company.  The  Reorganization  was effected by an exchange of all of the
outstanding  shares of Bank Common Stock for shares of Company Common Stock (the
"Share Exchange").  Following the Share Exchange, the Bank became a wholly owned
subsidiary of the Company and former  shares of Bank Common Stock  represent the
same number of shares of Company Common Stock.

         The  Company  filed a  Registration  Statement  on Form  S-4  that  the
Securities and Exchange  Commission  (the "SEC")  declared  effective on May 25,
2006. The Bank's shareholders  approved the Reorganization at our Annual Meeting
of Shareholders on July 6, 2006. The  Reorganization was completed on August 15,
2006.

         The  consolidated  financial  statements  include  the  accounts of the
Company and the Bank,  its wholly  owned  subsidiary.  The  Company's  financial
condition  and operating  results  principally  reflect  those of the Bank.  All
intercompany balances and amounts have been eliminated.

         The Bank is a full  service  commercial  bank that  offers a variety of
financial services to meet the needs of communities in its market area. The Bank
attracts  deposits  from the general  public and uses such deposits to originate
commercial loans,  revolving lines of credit,  commercial real estate,  mortgage
loans secured by one-to  four-family  residences,  home equity  lines,  and to a
lesser extent construction,  land, and consumer installment loans. The Bank also
invests in mortgage-backed and other securities permissible for a New York State
chartered  commercial bank. The Bank also operated two loan production  offices,
one in Staten Island, New York, and another in Lynbrook,  New York.  However, in
November  of 2007,  the  Staten  Island  loan  production  office  was closed in
conjunction  with the  opening  of the Bank's  new full  service  branch in that
borough.  During the first quarter of 2008, the Bank closed its loan  production
office in  Lynbrook,  Nassau  County,  New York.  The  Bank's  primary  area for
deposits includes the Town of Newburgh and the Village of New Paltz, in addition
to the communities  surrounding those offices, and the borough of Staten Island.
The Bank's  primary  market  area for its  lending  activities  consists  of the
communities  within Orange County,  Ulster County, the five boroughs of New York
City, and portions of Dutchess,  Rockland,  Putnam and Westchester Counties, New
York.

                                       5
<PAGE>

Note 2.  Basis of Presentation

         The  consolidated  financial  statements  included  herein  include the
accounts of the  Company  and the Bank,  subsequent  to the  elimination  of all
significant  intercompany  balances and transactions,  and have been prepared by
the Company without audit. In the opinion of management, the unaudited financial
statements  include all adjustments,  consisting of normal  recurring  accruals,
necessary  for a fair  presentation  of the  financial  position  and results of
operations  for  the  periods  presented.   Certain   information  and  footnote
disclosures  normally included in accordance with generally accepted  accounting
principles of the United States have been  condensed or omitted  pursuant to the
rules  and  regulations  of the SEC,  however,  the  Company  believes  that the
disclosures are adequate to make the information  presented not misleading.  The
operating  results for the periods  presented are not necessarily  indicative of
results to be  expected  for any other  interim  period or for the  entire  year
ending December 31, 2009. The unaudited interim financial  statements  presented
herein should be read in conjunction with the annual financial statements of the
Company as of and for the year ended  December 31,  2008,  included in Form 10-K
filed with the SEC on March 31, 2009.

         The  financial   statements  have  been  prepared  in  conformity  with
generally accepted accounting  principles of the United States. In preparing the
financial  statements,  management is required to make estimates and assumptions
that affect the  reported  amounts of assets,  liabilities,  income and expense.
Actual  results  could  differ  significantly  from  these  estimates.  Material
estimates that are particularly  susceptible to significant change relate to the
determination of the allowance for losses on loans, and the valuation  allowance
on deferred tax assets.

Stock Options

         The Company has a stock-based compensation plan as more fully described
in Note 4. For accounting purposes, the Company recognizes expense for shares of
common  stock  awarded  under the  Company's  Stock Option Plan over the vesting
period at the fair  market  value of the  shares  on the date they are  awarded.
Total  expense  incurred  during  the six months  ended June 30,  2009 and 2008,
relating to the options was $9 thousand and $5 thousand, respectively.

Earnings (Loss) Per Share

         Basic  earnings  (loss) per share is computed  by  dividing  net income
(loss) by the  weighted  average  number of common  shares  outstanding  for the
period.  Diluted earnings (loss) per share reflects the potential  dilution that
could occur if  securities  or other  contracts  to issue  common stock (such as
stock  warrants and options)  were  exercised or converted  into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity.  Diluted  earnings  (loss) per share is computed by dividing  net income
(loss) by the weighted-average  number of shares outstanding for the period plus
common-equivalent  shares computed using the treasury stock method.  None of the
warrants or stock options were considered in computing  diluted  earnings (loss)
per share because to do so would have been anti-dilutive.

Income Taxes

         Deferred tax assets and liabilities are the expected future tax amounts
for the temporary  differences  between carrying amounts and tax bases of assets
and liabilities, computed using tax rates. Temporary differences are differences
between the tax basis of assets and  liabilities  and their reported  amounts in
the financial  statements  that will result in taxable or deductible  amounts in
future  years.  The  effect  on  deferred  taxes  of a  change  in tax  rates is
recognized  in income in the period that includes the  enactment  date.  The tax

                                       6
<PAGE>

benefit  on  net  operating  losses,   included  in  deferred  tax  assets,  was
approximately  $2.6 million at June 30, 2009. The net operating losses are being
carried  forward  and  will  be  available  to  reduce  future  taxable  income.
Realization  of deferred tax assets is dependent  upon the  generation of future
taxable  income.  A valuation  allowance is provided when it is more likely than
not that some portion of the  deferred  tax asset will not be realized.  Because
the Bank has  limited  operating  experience,  management  recorded a  valuation
allowance against the total amount of deferred tax assets.

Securities

         The Company is required  to report  readily-marketable  equity and debt
securities  in  one  of  the  following   categories:   (i)   "held-to-maturity"
(management has the positive intent and ability to hold to maturity),  which are
reported at amortized cost; (ii) "trading" (held for current resale),  which are
to be  reported  at fair  value,  with  unrealized  gain and losses  included in
earnings;  and (iii) "available for sale" (all other debt and marketable  equity
securities),  which are to be reported at fair value,  with unrealized gains and
losses  reported net of taxes,  as accumulated  other  comprehensive  income,  a
separate component of stockholders' equity.

         Premiums and discounts on investments in debt and equity securities are
amortized  to expense  or  accreted  to income  over the  estimated  life of the
respective securities using methods approximating the effective interest method.
Gains and losses on the sales of  securities  are  recognized  upon  realization
based on the specific identification method.

Loans Held for Sale

         Loans  originated  and  intended for sale in the  secondary  market are
carried at the lower of cost or estimated fair value in the aggregate. All sales
are made with servicing  released and without recourse.  Gains and losses on the
disposition of loans held for sale are determined on the specific identification
basis.  Net unrealized  losses on loans held for sale are  recognized  through a
valuation allowance by charges to income.  There were no valuation allowances as
of June 30, 2009.

Loans

         Loans receivable that management has the intent and ability to hold for
the foreseeable  future or until maturity or payoff are reported at their unpaid
principal  adjusted for any charge-offs,  the allowance for loan losses, and any
deferred  fees and costs on  originated  loans and any  unamortized  premiums or
discounts on purchased  loans.  Loan origination and commitment fees and certain
direct loan  origination  costs will be deferred and the net amount amortized as
an adjustment of the related  loan's yield using  methods that  approximate  the
interest method over the  contractual  life of the loan. Loan interest income is
accrued daily on outstanding balances.

Allowance for Loan Losses

         The  allowance  for loan losses is  increased  by  provisions  for loan
losses  charged to income.  Losses are  charged to the  allowance  when all or a
portion of a loan is deemed to be uncollectible.  Subsequent recoveries of loans
previously  charged  off are  credited  to the  allowance  for loan  losses when
realized.  The allowance for loan losses is a  significant  estimate  based upon
management's  periodic  evaluation of the loan portfolio under current  economic
conditions,  considering  factors such as the  Company's  past loss  experience,
known and inherent risks in the portfolio,  adverse  situations  that may affect
the  borrower's  ability to repay,  and the  estimated  value of the  underlying
collateral.  Establishing  the  allowance for loan losses  involves  significant
management  judgment,  utilizing the best  available  information at the time of
review.  Those  judgments  are  subject  to further  review by various  sources,
including  the Bank's  regulators,  who may  require  the  Company to  recognize
additions to the allowance based on their judgment about  information  available
to them at the time of their examination. While management estimates loan losses
using the best available information, future adjustments to the allowance may be

                                       7
<PAGE>

necessary  based on changes  in  economic  and real  estate  market  conditions,
further  information  obtained regarding known problem loans, the identification
of additional problem loans, and other factors. Allocations of the allowance may
be made for specific loans,  but the entire  allowance is available for any loan
that in management's judgment should be charged off.

Subsequent Events

         Events occurring  subsequent to June 30, 2009 have been evaluated as to
their potential  impact to the financial  statements  through the date of filing
this Form 10-Q, August 13, 2009.

Cash Flows

         Cash and cash equivalents  include cash,  deposits with other financial
institutions,  and federal funds sold.  Net cash flows are reported for customer
loan and deposit  transactions,  interest-bearing  deposits  in other  financial
institutions, and federal funds purchased.

Adoption of New Accounting Standards

         In September  2006, the Financial  Accounting  Standards Board ("FASB")
issued Statement No. 157, Fair Value  Measurements.  This Statement defines fair
value,  establishes a framework for measuring fair value and expands disclosures
about fair value measurements. This Statement establishes a fair value hierarchy
about the assumptions used to measure fair value and clarifies assumptions about
risk  and the  effect  of a  restriction  on the  sale or use of an  asset.  The
standard is effective  for fiscal years  beginning  after  November 15, 2007. In
February 2008, the FASB issued Staff Position  ("FSP") 157-2,  Effective Date of
FASB  Statement No. 157.  This FSP delays the effective  date of FAS 157 for all
nonfinancial  assets  and  nonfinancial  liabilities,   except  those  that  are
recognized or disclosed at fair value on a recurring  basis (at least  annually)
to fiscal years  beginning  after November 15, 2008, and interim  periods within
those fiscal years. The impact of adoption was not material.

         In February  2007,  the FASB issued  Statement  No. 159, The Fair Value
Option for Financial  Assets and Financial  Liabilities.  The standard  provides
companies with an option to report selected  financial assets and liabilities at
fair value and establishes  presentation and disclosure requirements designed to
facilitate  comparisons  between  companies  that choose  different  measurement
attributes  for similar  types of assets and  liabilities.  The new  standard is
effective for the Company on January 1, 2008. The Company did not elect the fair
value option for any financial assets or financial  liabilities as of January 1,
2008.

         In April 2009, the FASB issued FSP No. 115-2 and No.124-2,  Recognition
and  Presentation  of  Other-Than-Temporary  Impairments,  which amends existing
guidance for determining  whether  impairment is  other-than-temporary  for debt
securities.  The FSP requires an entity to assess whether it intends to sell, or
it is more likely  than not that it will be  required to sell,  a security in an
unrealized  loss position before recovery of its amortized cost basis. If either
of these criteria is met, the entire difference  between amortized cost and fair
value  is  recognized  in  earnings.   For  securities  that  do  not  meet  the
aforementioned  criteria,  the amount of  impairment  recognized  in earnings is
limited to the amount  related to credit  losses,  while  impairment  related to
other factors is recognized in other comprehensive income. Additionally, the FSP
expands   and   increases   the   frequency   of  existing   disclosures   about
other-than-temporary  impairments  for debt and equity  securities.  This FSP is
effective for interim and annual  reporting  periods ending after June 15, 2009.
The impact of adoption was not material.

         In April 2009,  the FASB issued FSP No. 157-4,  Determining  Fair Value
When  the  Volume  and  Level of  Activity  for the  Asset  and  Liability  Have
Significantly Decreased and Identifying  Transactions That Are Not Orderly. This

                                       8
<PAGE>

FSP emphasizes that even if there has been a significant  decrease in the volume
and level of activity,  the  objective of a fair value  measurement  remains the
same. Fair value is the price that would be received to sell an asset or paid to
transfer  a  liability  in  an  orderly  transaction  (that  is,  not  a  forced
liquidation or distressed sale) between market participants.  The FSP provides a
number  of  factors  to  consider  when  evaluating  whether  there  has  been a
significant  decrease  in the  volume  and  level  of  activity  for an asset or
liability in relation to normal market activity. In addition,  when transactions
or quoted prices are not considered  orderly,  adjustments to those prices based
on  the  weight  of  available  information  may  be  needed  to  determine  the
appropriate fair value. The FSP also requires increased disclosures. This FSP is
effective for interim and annual  reporting  periods ending after June 15, 2009,
and shall be applied  prospectively.  Early  adoption is  permitted  for periods
ending after March 15, 2009. The Company adopted this FSP in the second quarter,
however, the adoption did not have a material effect on the results of operation
or financial position.

         In April  2009,  the FASB  issued FSP No.  107-1 and APB 28-1,  Interim
Disclosures  about Fair Value of  Financial  Instruments.  This FSP 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  that were  previously  only
required  in annual  financial  statements.  This FSP is  effective  for interim
reporting periods ending after June 15, 2009, with early adoption  permitted for
periods ending after March 15, 2009. The Company  adopted this FSP in the second
quarter of 2009. The impact of the adoption was not material.

         In  May  2009,  the  FASB  issued  Statement  of  Financial  Accounting
Standards (SFAS) No. 165,  Subsequent Events,  which establishes  principles and
requirements for subsequent  events.  In particular,  this Statement defines (i)
the period after the balance  sheet date during which  management of a reporting
entity  shall  evaluate  events or  transactions  that may  occur for  potential
recognition or disclosure in the financial  statements,  (ii) the  circumstances
under which an entity shall recognize events or transactions occurring after the
balance sheet date in its financial  statements,  and (iii) the disclosures that
an entity  shall make  about  events or  transactions  that  occurred  after the
balance sheet date.  SFAS No. 165 is effective  for interim or annual  financial
periods  ending after June 15,  2009,  and shall be applied  prospectively.  The
adoption  of SFAS  No.  165 did not  have a  material  effect  on the  Company's
financial condition, results of operations or cash flows.

         On June 12, 2009, the FASB issued  Statements  No. 166,  Accounting for
Transfers of Financial Assets,  and No. 167,  Amendments to FASB  Interpretation
No. 46(R). Statement No. 166 is a revision to FASB Statement No. 140, Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities,  and will require  more  information  about  transfers of financial
assets,   including  securitization   transactions,   and  where  entities  have
continuing  exposure to the risks related to transferred  financial  assets.  It
eliminates  the concept of a "qualifying  special-purpose  entity,"  changes the
requirements  for  derecognizing   financial  assets,  and  requires  additional
disclosures.   Statement   No.   167   amends   FIN   46(R)   to   replace   the
quantitative-based   risks  and  rewards   calculation  for  determining   which
enterprise,  if any, has a controlling financial interest in a variable interest
entity with a qualitative  approach focused on identifying  which enterprise has
the power to direct the activities of a variable interest entity (VIE) that most
significantly impact the entity's economic performance and (1) the obligation to
absorb  losses  of the  entity  or (2) the right to  receive  benefits  from the
entity.  Unlike FIN 46 (R), this Statement  requires ongoing  reconsideration of
whether (1) an entity is a VIE and (2) an enterprise is the primary  beneficiary
of a VIE. Statement Nos. 166 and 167 will be effective at the start of the first
fiscal year beginning  after November 15, 2009. The adoption of these  standards
are not expected to impact the Company's consolidated financial statements.

         On June 29,  2009,  the FASB issued FASB  Statement  No. 168,  The FASB
Accounting  Standards  Codification  and the  Hierarchy  of  Generally  Accepted
Accounting  Principles  - A  Replacement  of FASB  Statement  No. 162.  With the
issuance  of  this  statement,  the  FASB  Accounting  Standards  CodificationTM
(Codification)  became  the  source of  authoritative  U.S.  generally  accepted

                                       9
<PAGE>

accounting   principles   (GAAP)  recognized  by  the  FASB  to  be  applied  by
nongovernmental  entities. Rules and interpretive releases of the Securities and
Exchange  Commission  (SEC) under authority of federal  securities laws are also
sources of authoritative GAAP for SEC registrants. On the effective date of this
Statement,  the Codification superseded all then-existing non-SEC accounting and
reporting standards. All other non-grandfathered,  non-SEC accounting literature
not included in the Codification became  non-authoritative.  The issuance of the
Codification  is not intended to change GAAP.  This  Statement is effective  for
financial  statements  issued  for  interim  and  annual  periods  ending  after
September 15, 2009.  The adoption of this standard is not expected to impact the
Company's consolidated financial statements.

The SEC's Office of the Chief  Accountant  published Staff  Accounting  Bulletin
(SAB) No. 112. SAB 112 which was effective  June 10, 2009 and amends or rescinds
portions of the interpretive  guidance included in the Staff Accounting Bulletin
Series  to make the  relevant  interpretive  guidance  consistent  with  current
authoritative  accounting and auditing  guidance and SEC rules and  regulations.
Specifically,  SAB 112 aims to bring  existing  guidance  into  conformity  with
recent  pronouncements  by the FASB,  including  FASB Statement No. 141 (Revised
December   2007),   Business   Combinations,   and  FASB   Statement   No.  160,
Noncontrolling  Interests in Consolidated Financial Statements.  The adoption of
this  bulletin is not expected to impact the  Company's  consolidated  financial
statements.

NOTE 3 - INVESTMENT SECURITIES

         The  following is a summary of the  amortized  cost,  gross  unrealized
gains and losses,  and  estimated  fair market  value of  investment  securities
available-for-sale   at  June  30,  2009  and  December   31,   2008.

<TABLE>
<CAPTION>

                                                     June 30, 2009
                                  ----------------------------------------------------
                                                     (in thousands)

                                    Amortized       Gross Unrealized         Fair
                                                 ------------------------
                                      Cost          Gains      Losses        Value
                                  -------------- -----------  ----------- ------------

<S>                                <C>           <C>          <C>           <C>
Residential MBS                    $   1,567     $     14     $      (2)    $ 1,579
U.S. Government Agencies               1,499            7            --       1,506
Trust Preferred Securities             1,300           --          (126)      1,174
                                  -------------- -----------  ----------- ------------
   Total                           $   4,366     $     21     $    (128)    $ 4,259
                                  ============== ===========  =========== ============

</TABLE>
<TABLE>
<CAPTION>

                                                   December 31, 2008
                                  ----------------------------------------------------
                                                     (in thousands)

                                    Amortized       Gross Unrealized         Fair
                                                 ------------------------
                                      Cost          Gains      Losses        Value
                                  -------------- -----------  ----------- ------------

<S>                                <C>          <C>           <C>           <C>
Residential MBS                    $   1,807    $      --     $     (47)    $ 1,760
U.S. Government Agencies               2,080           15            --       2,095
Trust Preferred Securities             1,302                       (183)      1,119
                                  -------------- -----------  ----------- ------------
   Total                           $   5,189     $     15     $    (230)    $ 4,974
                                  ============== ===========  =========== ============
</TABLE>

                                       10
<PAGE>

         The  following is a summary of the  amortized  cost,  gross  unrealized
gains and losses,  and  estimated  fair market  value of  investment  securities
held-to-maturity at June 30, 2009 and December 31, 2008.

<TABLE>
<CAPTION>

                                                     June 30, 2009
                                  ----------------------------------------------------
                                                     (in thousands)


                                    Amortized       Gross Unrealized         Fair
                                                 ------------------------
                                      Cost          Gains      Losses        Value
                                  -------------- ------------------------ ------------

<S>                                <C>            <C>        <C>           <C>
Mortgaged-backed securities        $   28,194     $     645  $      (63)   $ 28,776
U.S. Government Agencies                  600            23          --         623
                                  -------------- ------------------------ ------------
   Total                           $   28,794     $     668  $      (63)   $ 29,399
                                  ============== ======================== ============

</TABLE>
<TABLE>
<CAPTION>

                                  ----------------------------------------------------
                                                   December 31, 2008
                                  ----------------------------------------------------
                                                     (in thousands)


                                    Amortized       Gross Unrealized         Fair
                                                 ------------------------
                                      Cost          Gains      Losses        Value
                                  -------------- ------------------------ ------------


<S>                                <C>            <C>        <C>           <C>
Mortgaged-backed securities        $   19,459     $     596  $       --    $ 20,055
U.S. Government Agencies                4,070            41          --       4,111
                                  -------------- ------------------------ ------------

   Total                           $   23,529     $     637  $       --    $ 24,166
                                  ============== ======================== ============
</TABLE>

                                       11

<PAGE>



         The  following is a summary of the amortized  cost and  estimated  fair
market value of investment securities available-for-sale and held-to-maturity at
June 30, 2009,  with amounts shown by remaining  term to  contractual  maturity.
Securities  not  due  at a  single  maturity  date,  primarily  mortgaged-backed
securities, are shown separately.

                                           --------------------------
                                                 June 30, 2009
                                           --------------------------
                                                (in thousands)

                                            Amortized      Fair
                                               Cost        Value
                                           --------------------------
Available-for-Sale:
Mortgaged-backed securities                 $   1,567   $   1,579
U.S. Government Agencies
      Due less than one year                       --          --
      One year to less than three years            --          --
      Three years to less than five years          --          --
      Five years to ten years                      --          --
      More than ten years                       1,499       1,506
Trust Preferred Securities                      1,300       1,174
                                           --------------------------
                Total                       $   4,366   $   4,259
                                           ==========================



                                                June 30, 2009
                                           ------------------------
                                               (in thousands)
                                           ------------------------

                                            Amortized     Fair
                                               Cost       Value
                                           ------------------------
Held-to-Maturity:
Mortgaged-backed securities                 $ 28,194    $ 28,776
U.S. Government Agencies
      Due less than one year                      --          --
      One year to less than three years          600         623
      Three years to less than five years         --          --
      Five years to ten years                     --          --
      More than ten years                         --          --
Trust Preferred Securities                        --          --
                                           ------------------------
                 Total                      $ 28,794    $ 29,399
                                           ========================


                                       12
<PAGE>

         The following  tables  summarize,  for all  securities in an unrealized
loss position at June 30, 2009 and December 31, 2008,  the aggregate fair values
and gross unrealized losses by the length of time those securities had been in a
continuous loss position.
<TABLE>
<CAPTION>

                                                         June 30,
                                                          2009
                                           ------------------------------------

                                 Less Than 12 Months      12 Months or More            Total
                               ------------------------------------------------------------------------
                                  Fair      Unrealized    Fair     Unrealized    Fair      Unrealized
                                  Value        Loss       Value       Loss       Value        Loss
                               ------------------------------------------------------------------------
                                                           (In thousands)

<S>                               <C>        <C>          <C>        <C>         <C>         <C>
Mortgaged-backed securities       $  5,259   $    54      $  1,098   $    11     $   6,357   $    65
U.S. Government Agencies                 -         -             -         -             -         -
Trust Preferred Securities               -         -         1,174       126         1,174       126
                               ------------------------------------------------------------------------
  Total temporarily impaired      $  5,259   $    54      $  2,272   $   137     $   7,531   $   191
                            ========================================================================
</TABLE>
<TABLE>
<CAPTION>

                                                       December 31,
                                                          2008
                                           ------------------------------------

                                 Less Than 12 Months      12 Months or More            Total
                               ------------------------------------------------------------------------
                                  Fair      Unrealized    Fair     Unrealized    Fair      Unrealized
                                  Value        Loss       Value       Loss       Value        Loss
                               ------------------------------------------------------------------------
                                                           (In thousands)

<S>                               <C>        <C>          <C>        <C>         <C>         <C>
Mortgaged-backed securities       $      -   $     -      $  1,178   $    47     $   1,178   $    47
U.S. Government Agencies                 -         -             -         -             -         -
Trust Preferred Securities           1,119       183                       -         1,119       183
                               ------------------------------------------------------------------------
  Total temporarily impaired      $  1,119   $   183      $  1,178   $    47     $   2,297   $   230
                            ========================================================================
</TABLE>


         The Bank evaluates  securities for  other-than-temporary  impairment at
least on a quarterly basis, and more frequently when economic or market concerns
warrant such  evaluation.  Consideration  is given to the length of time and the
extent to which the fair value has been less than cost, the financial  condition
and near term prospects of the issuer, and the intent and ability of the Bank to
retain its investment in the issuer for a period of time sufficient to allow for
any  anticipated  recovery in fair value.  In  analyzing  an issuer's  financial
condition,  the Bank may  consider  whether  the  securities  are  issued by the
federal  government or its agencies,  whether downgrades by bond rating agencies
have occurred, and the results of reviews of the issuer's financial condition.

         At June 30,  2009,  five  debt  securities  have  unrealized  losses of
approximately  $54  thousand,   and  seven  others  have  unrealized  losses  of
approximately $137 thousand,  that have existed for less than twelve months, and
less than thirty  months,  respectively,  from the Bank's  cost  basis,  and are
largely due to changes in interest rates.  The fair value is expected to recover
as the securities approach their maturity date or reset date.

                                       13
<PAGE>
Note 4.  Stock-Based Compensation Plans

Warrants

         At January 1, 2008, the Bank had 327,690 total common stock shareholder
warrants issued and  outstanding.  These warrants were  convertible  into common
shares  at an  exercise  price of  $10.00  exercisable  through  June 27,  2008.
Additionally,  there  were  190,000  organizer  warrants  granted  to the Bank's
nineteen  organizers in  connection  with the opening of the Bank as of December
31, 2004.  The  organizer  warrants  were  convertible  into common shares at an
exercise  price of $10.00  exercisable  through  June 27,  2009.  The  organizer
warrants,  valued  at  $323,000,  were  expensed  at the  time  of  issuance  in
accordance with SFAS No. 123.

         Effective June 30, 2008,  the Company  modified the terms of the common
stock  shareholder  warrants to purchase common stock of the Company attached to
the 2004  Offering  by  reducing  the  exercise  price of $10.00  to $6.75,  and
extended the expiration date from June 28, 2008 to October 31, 2008. Previously,
on April 15, 2007,  the Company  modified the  original  expiration  term of the
warrants from June 28, 2007 to June 28, 2008, and reduced the original  exercise
price from $12.50 to $10.00.

         Also effective June 30, 2008, the Company reduced the exercise price of
its 190,000 issued and outstanding organizer warrants from $10.00 to $6.75 for a
period ending on October 31, 2008,  after which the exercise price reverted back
to $10.00 per share.  There was no additional  expense recognized as a result of
any of the modifications.

         During 2008,  there were  147,068  warrants  exercised at $6.75.  As of
November 1, 2008,  all common stock  warrants  expired.  As of December 31, 2008
there were 92,952 organizer  warrants still  outstanding.  At June 30, 2009, all
organizer  warrants were expired.  There were no warrants  exercised  during the
first six months of 2009 or 2008.

Stock Options

         On October 19, 2004,  the Board of  Directors  approved the adoption of
the  Company's  Stock Option Plan which allows for a total of 180,000  shares of
authorized  but  unissued  common stock  reserved  for issuance  under the Stock
Option Plan,  although option exercises may also be funded using treasury shares
or shares acquired in open market  purchases.  These options have a 10-year term
and may be either non-qualified stock options or incentive stock options.  These
options were not deemed granted until  shareholder  approval  occurred on May 3,
2005.  The options  vest at a rate of 20% on each of five annual  vesting  dates
except for 65,000 options granted to Directors,  which vested immediately.  Each
option  entitles the holder to purchase one share of common stock at an exercise
price equal to the fair market value of the stock on the grant date.

         The Company  accounts  for stock  options  under SFAS No. 123  (revised
2004),  Share-based  Payment  ("SFAS  123(R)"),  using the modified  prospective
transition method. For accounting  purposes,  the Company recognizes expense for
shares of common stock awarded  under the  Company's  Stock Option Plan over the
vesting  period  at the fair  market  value of the  shares  on the date they are
awarded.

                                       14
<PAGE>

         A summary of options  outstanding under the Company's Stock Option Plan
as of June 30, 2009, and changes during the year then ended is presented below.
<TABLE>
<CAPTION>

                                                                                            Weighted
                                                                             Weighted        Average
                                                                              Average       Remaining
                                                                             Exercise      Contractual     Intrinsic
                                                              Shares           Price      Term (years)       Value
                                                              ------           -----      -----------        -----

         <S>                                                  <C>        <C>            <C>             <C>
         Outstanding at January 1, 2009                       157,750    $     10.42
         Granted                                                    -              -
         Exercised                                                  -              -
         Forfeited or expired                                    (500)         10.00
                                                          ------------   -----------    -----------     -----------
         Outstanding at June 30, 2009                         157,250    $     10.42            6.0               -
                                                          ===========    ===========    ===========     ===========
         Options exercisable at June 30, 2009                 126,850    $     10.47            5.8               -
                                                          ===========    ===========    ===========     ===========
         Vested and expected to vest                          157,250    $     10.42            6.0
                                                          ===========    ===========    ===========
</TABLE>

         As of June 30,  2009,  there  was $10  thousand  of total  unrecognized
compensation  cost related to non-vested  stock options  granted under the Stock
Option  Plan.  The  cost  is  expected  to  be  recognized   over  a  period  of
approximately 12 months.

         At June 30, 2009,  there were 22,750 shares  available for future grant
under the Stock Option Plan.

Note 5.  Fair Value

         Statement 157  establishes  a fair value  hierarchy  which  requires an
entity  to  maximize  the  use of  observable  inputs  and  minimize  the use of
unobservable  inputs when measuring  fair value.  The standard  describes  three
levels of inputs that may be used to measure fair value:

         Level 1: Quoted prices (unadjusted) for identical assets or liabilities
         in active markets that the entity has the ability to access as of the
         measurement date.

         Level 2: Significant other observable inputs other than Level 1 prices
         such as quoted prices for similar assets or liabilities, quoted prices
         in markets that are not active, or other inputs that are observable or
         can be corroborated by observable market data.

         Level 3: Significant unobservable inputs that reflect a reporting
         entity's own assumptions about the assumptions that market participants
         would use in pricing an asset or liability.

         The fair values of  securities  available  for sale are  determined  by
obtaining quoted prices on nationally  recognized  securities exchanges (Level 1
inputs) or matrix pricing,  which is a mathematical technique widely used in the
industry to value debt securities  without relying  exclusively on quoted prices
for  the  specific   securities  but  rather  by  relying  on  the   securities'
relationship to other benchmark quoted securities (Level 2 inputs).

                                       15
<PAGE>

         Assets and liabilities  measured at fair value on a recurring basis are
summarized below:
<TABLE>
<CAPTION>

                                                                              Fair Value Measurements
                                                                                In Thousands Using
                                                               ----------------------------------------------------
                                                                Quoted Prices       Significant
                                                                  In Active            Other           Significant
                                                                 Markets for        Observable        Unobservable
                                                               Markets Assets         Inputs             Inputs
                                                                  (Level 1)          (Level 2)          (Level 3)
                                                                  --------           --------           --------
         <S>                                                  <C>                 <C>                  <C>
         Assets:
              June 30, 2009 Available for
              sale securities                                  $      -           $    4,259           $       -

              December 31, 2008 Available for
                sale securities                                $      -           $    4,974           $       -
</TABLE>

         The fair value of  impaired  loans  with  specific  allocations  of the
allowance for loan losses is generally  based on recent real estate  appraisals.
These  appraisals  may utilize a single  valuation  approach or a combination of
approaches including  comparable sales and the income approach.  Adjustments are
routinely  made  in the  appraisal  process  by the  appraisers  to  adjust  for
differences  between  the  comparable  sales and  income  data  available.  Such
adjustments are typically  significant and result in a Level 3 classification of
the inputs for determining fair value.

         Total non-accrual loans were $2.7 million and $749 thousand at June 30,
2009 and December 31, 2008, respectively.

         Carrying amounts and estimated fair values of financial  instruments at
June 30, 2009 and December 31, 2008 were as follows:
<TABLE>
<CAPTION>

                                                   June 30,               December 31,
                                                     2009                     2008
                                                     ----                     ----
                                             Carrying    Fair          Carrying    Fair
                                              Amount     Value          Amount     Value
                                             --------  ----------      --------   --------
<S>                                          <C>         <C>          <C>         <C>
Financial assets
     Cash and due from banks                 $ 16,984    $ 16,984     $ 12,454    $ 12,454
     Federal Funds Sold                             -                        5           5
     Securities available for sale              4,259       4,259        4,974       4,974
     Securities held to maturity               28,794      29,399       23,529      24,166
     Loans, net                                97,113      97,696       94,628      96,610
     Federal Home Loan Bank stock                 594         594          528         528
     Federal Reserve Bank stock                   287         287          299         299
     Accrued interest receivable                  606         606          603         603

Financial Liabilities
     Deposits                                 133,609     133,970      124,762     125,747
     Federal Home Loan Bank advances            8,988       9,129        9,459       9,682
     Other borrowings                             615         625          615         547
     Accrued interest payable                     174         174          205         205
</TABLE>

                                       16
<PAGE>

         The methods and  assumptions  used to estimate fair value are described
as follows:

         Carrying  amount  is  the  estimated  fair  value  for  cash  and  cash
equivalents, interest bearing deposits, accrued interest receivable and payable,
demand  deposits,  short-term  debt,  and variable  rate loans or deposits  that
reprice  frequently and fully. For fixed rate loans or deposits and for variable
rate loans or deposits with infrequent repricing or repricing limits, fair value
is based on  discounted  cash flows using  current  market rates  applied to the
estimated life and credit risk. Fair value of debt is based on current rates for
similar financing. It was not practicable to determine the fair value of FHLB or
FRB stock due to restrictions placed on its  transferability.  The fair value of
off-balance-sheet items is not considered material.

Note 6.  Commitments and Contingencies

Legal Proceedings

         The Company has not been a party to any legal proceedings that may have
a  material  effect  on  the  Company's  results  of  operations  and  financial
condition. However, in the normal course of its business, the Company may become
involved as  plaintiff or defendant  in  proceedings  such as judicial  mortgage
foreclosures  and  proceedings  to  collect on loan  obligations  and to enforce
contractual obligations.

Operating Lease Commitments

         The Company is obligated under non-cancelable  operating leases for its
main office  location in Newburgh,  New York and its branch office  locations in
New Paltz,  New York,  and Staten  Island,  New York. The leases are for initial
terms of 10 years, 15 years, and 10 years, respectively and have various renewal
options.  Rent  expense  under  operating  leases was $80 thousand for the three
months ended June 30, 2009. At June 30, 2009, the future minimum rental payments
under  operating  lease  agreements for the fiscal years ending  December 31 are
$134  thousand in 2009,  $273  thousand  in 2010,  $276  thousand in 2011,  $262
thousand  in  2012;  $183  thousand  in  2013;  and a  total  of  $826  thousand
thereafter.

Off-Balance Sheet Financial Instruments

         The Company's off-balance sheet financial instruments at June 30, 2009,
were  limited  to loan  origination  commitments  of  $5.30  million  (including
one-to-four  family  loans held for sale of $3.67  million)  and unused lines of
credit  (principally  commercial and home equity lines) extended to customers of
$10.82 million.  Substantially all of these commitments and lines of credit have
been  provided  to  customers  within  the Bank's  primary  lending  area.  Loan
origination  commitments at June 30, 2009 consisted of adjustable and fixed rate
commitments of $1.36 million and $3.94 million respectively, with interest rates
ranging from 3.2500% to 6.5000%.

                                       17
<PAGE>

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Forward-Looking Statements

         This  Report  on Form  10-Q of the  Company  includes  "forward-looking
statements"  within the meaning of the Securities  Act of 1933, as amended,  and
the Securities  Exchange Act of 1934, as amended,  that are based on the current
beliefs of, as well as assumptions made by and information  currently  available
to, the  management  of the Company.  All  statements  other than  statements of
historical  facts  included  in  this  Report,  including,  without  limitation,
statements  contained under the caption  "Management's  Discussion and Analysis"
regarding  the  Company's  business  strategy  and plans and  objectives  of the
management of the Company for future operations, are forward-looking statements.
When  used  in this  Report,  the  words  "anticipate,"  "believe,"  "estimate,"
"project,"  "predict," "expect," "intend" or words or phrases of similar import,
as they  relate to the  Company or the  Company's  management,  are  intended to
identify  forward-looking  statements.  Although the Company  believes  that the
expectations reflected in such forward-looking  statements are reasonable,  such
expectations  may not prove to be correct.  All  forward-looking  statements are
subject to risks and  uncertainties  that could cause  actual  results to differ
materially from those anticipated,  believed, estimated,  projected,  predicted,
expected or intended  including  risks and  uncertainties  including  changes in
economic  conditions  in our market area,  changes in local real estate  values,
changes in regulatory  policies,  fluctuations in interest rates, local loan and
deposit demand levels, competition, our ability to control expenses, our ability
to increase our lower cost deposits,  the level of deposit  insurance  premiums,
our ability to execute our plan to attain  profitability,  our ability to expand
operations in our new Staten Island office and other  factors.  The Company does
not intend to update these  forward-looking  statements.  All subsequent written
and oral  forward-looking  statements  attributable  to the  Company  or persons
acting on its behalf are  expressly  qualified in their  entirety by  applicable
cautionary statements.

Comparison of Financial Condition at June 30, 2009 and December 31, 2008

         Total assets at June 30, 2009, amounted to $154.8 million, representing
an increase of $9.5 million,  or 6.5%, from $145.3 million at December 31, 2008.
The increase in assets was primarily  attributable to a $4.6 million increase in
total securities,  a $1.0 million increase in real estate loans for sale, a $2.5
million increase in total loans receivable,  net, and a $4.5 million increase in
total cash and cash equivalents.  These increases,  which reflect our efforts to
maintain high liquidity and a well capitalized  position,  were partially offset
by a $4.7  million  decrease  in  certificates  of  deposit  at other  financial
institutions.

         Overall, net loans receivable increased $2.5 million, or 2.6%, to $97.1
million at June 30, 2009,  from $94.6  million at December 31, 2008.  Commercial
and residential  real estate mortgage loans,  excluding  mortgage loans held for
sale,  increased  $2.2 million,  or 3.3%,  from $65.9 million to $68.1  million.
Commercial loans and commercial lines of credit increased $1.1 million, or 6.7%,
from  $16.4  million  to $17.5  million,  and home  equity  and  consumer  loans
decreased  $627 thousand or 6.8%,  from $9.2 million to $8.6  million,  over the
same six-month period. Management continues to emphasize the origination of high
quality loans to the loan  portfolio.  Non-performing  loans,  which  constitute
non-accrual  loans,  at June 30,  2009  totaled  $2.7  million  compared to $753
thousand at December 31, 2008.

         Total  cash  and cash  equivalents  at June 30,  2009,  increased  $4.5
million,  or 36.0%,  to $17.0  million from $12.5  million at December 31, 2008,
while  certificates  of deposit at other financial  institutions  decreased $3.2
million,  or 48.5%,  to $3.4 million  from $6.6 million  during the same period.
Total  securities at June 30, 2009,  increased $4.6 million,  or 16.1%, to $33.1
million from $28.5  million at December  31, 2008 in an effort to deploy  excess
cash flows in a prudent manner.

                                       18
<PAGE>

         Interest bearing  deposits  increased by $8.2 million to $120.1 million
at June 30, 2009,  from $111.9 million at December 31, 2008. The net growth over
the period  consisted  of a $6.7  million  increase in savings and money  market
accounts and a $1.7 million increase in NOW accounts  partially offset by a $194
thousand  decrease in  certificates of deposit.  Over the same six-month  period
non-interest  bearing  accounts  increased  $652  thousand,  or 5.1% from  $12.8
million to $13.5 million

         Stockholders' equity increased by $496 thousand to $9.7 million at June
30, 2009,  from $9.2 million at December  31, 2008.  The increase was  primarily
attributable  to an increase in additional  paid in capital  resulting from $700
thousand in additional  capital raised through a private  placement  offering of
the Company's common stock partially offset by a net loss for the period of $305
thousand.  Also contributing to the increase was a $107 thousand decrease in net
unrealized loss in market value of securities available-for-sale. Book value per
share  decreased to $4.89 at June 30, 2009, from $4.96 at December 31, 2008. See
"Liquidity  and  Capital   Resources"  for  information   regarding  the  Bank's
regulatory capital amounts and ratios.

Analysis of Net Interest Income

         The following tables summarize the Company's average balance sheets for
interest  earning assets and interest  bearing  liabilities,  average yields and
costs (on an annualized  basis), and certain other information for the three and
six-month  periods ended June 30, 2009, as compared to the comparable  three and
six-month  periods  ended June 30,  2008.  The yields and costs were  derived by
dividing  interest  income or  expense  by the  average  balance  of assets  and
liabilities  for the period  shown.  Substantially  all  average  balances  were
computed  based  on  daily  balances.  The  yields  include  deferred  fees  and
discounts, which are considered yield adjustments.

                                       19
<PAGE>

<TABLE>
<CAPTION>

                                                            For the Three Months Ended June 30,
                                         --------------------------------------------------------------------------

                                                        2009                                  2008
                                         ------------------------------------  ------------------------------------
                                                                   Average                               Average
                                          Average                  Yield /      Average                  Yield /
                                          Balance     Interest      Cost        Balance      Interest     Cost
                                         ----------   ----------  -----------  -----------  ----------- -----------

                                                                  (Dollars in thousands)
<S>                                      <C>          <C>              <C>     <C>         <C>               <C>
Assets
Interest-earning assets:
    Loans                                $  97,510    $   1,397        5.73%   $   77,035   $    1,208       6.31%
    Fed Funds Sold                          15,047            8        0.22%        7,032           37       2.12%
    Certificates of deposit                  1,696           11        2.55%        6,916           69       4.01%
    FRB & FHLB Stock                           891           12        5.26%        1,091            8       2.95%
    Investment securities                   32,940          407        4.91%       23,595          293       5.01%
                                         ----------   ----------  -----------  -----------  ----------- -----------
       Total interest-earning assets       148,084    $   1,834        4.95%      115,669   $    1,615       5.62%
                                                      ==========  ===========               =========== ===========

Allowance for loan losses                     (959)                                  (620)
Cash & Due from banks                        1,848                                  2,466
Other Non-interest earning assets            2,171                                  2,117
                                         ----------                            -----------
       Total assets                      $ 151,144                             $  119,632
                                         ==========                            ===========

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
    NOW accounts                         $   3,808    $       4        0.45%   $    2,258   $        6       1.07%
    Money Market accounts                   36,052          152        1.68%       30,848          164       2.14%
    Regular savings accounts                11,557           39        1.34%       14,296           87       2.45%
    Certificates of Deposit                 66,152          560        3.37%       42,082          421       4.02%
                                         ----------   ----------  -----------  -----------  ----------- -----------
       Total interest-bearing deposits     117,569          755        2.56%       89,484          678       3.05%

    Borrowings                               9,067           84        3.63%        8,537           69       3.20%
                                         ----------   ----------  -----------  -----------  ----------- -----------
       Total interest-bearing            $ 126,636    $     839        2.64%   $   98,021   $      747       3.06%
liabilities
                                         ==========   ==========  ===========  ===========  =========== ===========

Non-interest-bearing liabilities            14,839                                 11,549
                                         ----------                            -----------
       Total liabilities                   141,475                                109,570

Stockholders' equity                         9,669                                 10,062
                                         ----------                            -----------
       Total liabilities and             $ 151,144                             $  119,632
stockholders' equity
                                         ==========   ----------               ===========  -----------
Net interest income                                   $     995                             $      868
                                                      ==========                            ===========

Average interest rate spread (1)                                       2.31%                                 2.56%
Net interest margin (2)                                                2.69%                                 3.01%
                                         ----------                            -----------
Net interest-earning assets (3)          $  21,448                             $   17,648
                                         ==========                            ===========

Ratio of average interest-earning
     assets to average interest-bearing
     liabilities                                                     116.94%                               118.00%

</TABLE>
                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                             For the Six Months Ended June 30,
                                         --------------------------------------------------------------------------

                                                        2009                                  2008
                                         ------------------------------------  ------------------------------------
                                                                   Average                               Average
                                          Average                  Yield /      Average                  Yield /
                                          Balance     Interest      Cost        Balance      Interest     Cost
                                         ----------   ----------  -----------  -----------  ----------- -----------

                                                                  (Dollars in thousands)
<S>                                      <C>          <C>              <C>     <C>          <C>              <C>
Assets
Interest-earning assets:
    Loans                                $  97,042    $   2,762        5.69%   $   75,241   $    2,432       6.50%
    Fed Funds Sold                          12,622           15        0.24%        6,781           87       2.58%

    Certificates of deposit                  2,665           40        2.99%        5,959          136       4.59%
    FRB & FHLB Stock                           855           21        4.91%          787           16       4.09%
    Investment securities                   31,678          790        4.99%       15,037          379       5.07%
                                         ----------   ----------  -----------  -----------  ----------- -----------
       Total interest-earning assets       144,863    $   3,628        5.01%      103,805   $    3,050       5.91%
                                                      ==========  ===========               =========== ===========

Allowance for loan losses                     (921)                                  (622)
Cash & Due from banks                        1,857                                  2,295
Other Non-interest earning assets            2,283                                  2,137
                                         ----------                            -----------
       Total assets                      $ 148,081                             $  107,615
                                         ==========                            ===========

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
    NOW accounts                         $   3,120    $       7        0.45%   $    2,120   $       14       1.33%
    Money Market accounts                   32,856          319        1.94%       33,801          457       2.72%
    Regular savings accounts                11,925           95        1.60%       12,758          171       2.70%
    Certificates of Deposit                 67,055        1,184        3.53%       34,058          725       4.28%
                                         ----------   ----------  -----------  -----------  ----------- -----------
       Total interest-bearing deposits     114,956        1,605        2.79%       82,737        1,367       3.33%

    Borrowings                               9,186          172        3.68%        4,313           70       3.26%
                                         ----------   ----------  -----------  -----------  ----------- -----------
       Total interest-bearing            $ 124,142    $   1,777        2.86%   $   87,050   $    1,437       3.32%
liabilities
                                         ==========   ==========  ===========  ===========  =========== ===========

Non-interest-bearing liabilities            14,286                                 10,362
                                         ----------                            -----------
       Total liabilities                   138,429                                 97,412

Stockholders' equity                         9,652                                 10,203
                                         ----------                            -----------
       Total liabilities and             $ 148,082                             $  107,615
stockholders' equity
                                         ==========   ----------               ===========  -----------
Net interest income                                   $   1,851                             $    1,613
                                                      ==========                            ===========

Average interest rate spread (1)                                       2.15%                                 2.59%
Net interest margin (2)                                                2.56%                                 3.11%
                                         ----------                            -----------
Net interest-earning assets (3)          $  20,721                             $   16,755
                                         ==========                            ===========

Ratio of average interest-earning
     assets to average interest-bearing
     liabilities                                                     116.69%                               119.24%

-----------------------------
(1)      Average 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 margin represents net interest income divided by average
         total interest-earning assets.
(3)      Net interest-earning assets represents total interest-earning assets
         less total interest-bearing liabilities.
</TABLE>

                                       21

<PAGE>


Results of Operations for the Quarters Ended June 30, 2009 and June 30, 2008

         General.  For the quarter ended June 30, 2009, the Company recognized a
net loss of $165 thousand, or ($0.09) per basic share, as compared to a net loss
of $235  thousand,  or ($0.14) per basic share,  for the quarter  ended June 30,
2008.

         Interest and Dividend Income.  Interest and dividend income amounted to
$1.8 million for the quarter  ended June 30,  2009,  as compared to $1.6 million
for the quarter ended June 30, 2008. The increase of $219 thousand was primarily
attributable to the $31.9 million  increase in average  interest-earning  assets
from $115.7  million for the quarter  ended June 30, 2008 to $147.6  million for
the quarter  ended June 30, 2009,  offset by a decrease in the average  yield of
interest earning assets of 67 basis points from 5.62% for the quarter ended June
30, 2008, to 4.95% for the same respective period in 2009.

         Average loan balances  increased by $20.5  million,  from $77.0 million
for the quarter ended June 30, 2008, to $97.5 million for the quarter ended June
30, 2009,  while the average yield  decreased  from 6.31% to 5.73% over the same
respective  periods.  The average  balances of the Bank's Fed Funds increased by
$8.0  million,  over the quarter  ended June 30, 2009 as compared to the quarter
ended June 30, 2008 while the yield  decreased to 0.22% from 2.12% over the same
comparable  periods.  The  average  balance  and yield of the Bank's  investment
securities  for the  quarter  ended June 30,  2009 was $32.9  million and 4.91%,
respectively,  as compared to an average balance of $23.6 million and a yield of
5.01% for the comparable quarter ended one-year earlier.  The average balance on
certificates  of deposit at other  financial  institutions  decreased  from $6.9
million for the quarter ended June 30, 2008,  to $1.7 million in the  respective
period in 2009.  The average yield  declined to 2.55% for the quarter ended June
30, 2009,  as compared to 4.01% at the quarter ended June 30, 2008, or 218 basis
points.

         Interest Expense. Total interest expense for the quarter ended June 30,
2009  increased by $92  thousand,  from $747 thousand for the quarter ended June
30, 2008 to $839  thousand  for the  quarter  ended June 30,  2009.  The average
balances of total interest-bearing liabilities increased $28.1 million to $126.6
million for the quarter  ended June 30, 2009 from $98.0  million for the quarter
ended June 30, 2008,  but the average costs for those  liabilities  decreased to
2.64% from 3.06% for the year earlier period.

         The average  balances of the Bank's  certificates of deposit  portfolio
increased  to $66.2  million at an average  cost of 3.37% for the quarter  ended
June 30,  2009,  from $42.1  million at an average cost of 4.02% for the quarter
ended June 30, 2008. The $24.1 million  increase was primarily  attributable  to
the increase in the number of customers  that followed the opening of the Bank's
third full  service  branch in Staten  Island,  New York in November  2007.  The
average balance of regular savings accounts decreased by $2.7 million from $14.3
million at an average cost of 2.45% for the quarter ended June 30, 2008 to $11.6
million at an average cost of 1.34% for the quarter ended June 30, 2009.

         Average money market account balances increased $5.3 million, or 17.21%
to $36.1  million at an  average  cost of 1.68% for the  quarter  ended June 30,
2009,  from $30.8 million at an average cost of 2.14% for the quarter ended June
30, 2008. The increased balances were primarily  attributable to the downturn in
other investment alternatives such as the US stock market and local real estate,
causing an increased demand for more secure investment  vehicles such as insured
bank deposits.

         For the  quarter  ended  June 30,  2009,  the  average  balance  of the
Company's  borrowed  funds was $9.1 million and its average  cost was 3.63%,  as
compared to $8.5 million and an average cost of 3.20% for the quarter ended June
30, 2008.  These  borrowed  funds were used by the Company to fund its formation
costs and subsequent expenses.

         Net  Interest  Income.  Net  interest  income  was  approximately  $995
thousand  for the quarter  ended June 30, 2009 as compared to $868  thousand for
the same quarter in the prior year. The Company's  average  interest rate spread

                                       22
<PAGE>

decreased  to 2.32% for the  quarter  ended  June 30,  2009  from  2.56% for the
quarter ended June 30, 2008,  while the net interest  margin  decreased to 2.69%
from 3.01%, over the same respective  periods.  This decrease is attributable to
the decrease in yield on the  commercial  loan  portfolio as well as other short
term  investments  whose yield depends on the overall  short-term  interest rate
environment.

         Provision  for Loan  Losses.  For the three  months ended June 30, 2009
management provided an additional $97 thousand to the provision.  The Company is
still too new to have developed enough internal historical loan loss experience.
As a result,  management  decided it was prudent to increase  several  loan loss
reserve  components to more adequately  reflect the national economic  downturn.
Comparatively,  the  provision  was $90 thousand for the quarter  ended June 30,
2008.

         Non-interest Income. Non-interest income for the quarter ended June 30,
2009 increased $209 thousand to approximately  $371 thousand as compared to $162
thousand for the quarter ended June 30, 2008. Service charges and fees increased
by $5 thousand,  from $119  thousand for the quarter ended June 30, 2008 to $124
thousand for the quarter ended June 30, 2009, primarily as a result of servicing
a greater  number of deposit  and loan  customers.  The net gain on the sales of
real estate  mortgage  loans  increased  $66  thousand to $89  thousand  for the
quarter  ended June 30, 2009,  as compared to $23 thousand for the quarter ended
June 30,  2008,  primarily  because of the increase in  refinancing  activities.
Other non-interest  income categories  increased to $73 thousand for the quarter
ended June 30, 2009 from $20 thousand for the same quarter in 2008,  an increase
of $53 thousand.

         Non-interest  Expense.  Non-interest expense for the quarter ended June
30, 2009  increased  $259  thousand  when  compared to the same quarter in 2008.
Compensation  and benefits  increased $7 thousand.  Other  non-interest  expense
increased  to $595  thousand  for the  quarter  ended June 30,  2009,  from $322
thousand for the quarter  ended June 30, 2008.  The $273  thousand  increase was
primarily due to increases in  professional  and consulting  fees,  advertising,
FDIC  assessments and other operating  expenses  related to the expansion of the
Bank's business activities.  An FDIC special assessment based on the Bank's Tier
1 capital at June 30, 2009  payable on  September  30, 2009 in the amount of $68
thousand is fully accrued at June 30, 2009.

         Income Tax Expense.  We receive no tax benefit  from our net  operating
losses as they are being carried  forward and will be available to reduce future
taxable income.

Results of Operations for the Six Months Ended June 30, 2009 and June 30, 2008

         General. For the six months ended June 30, 2009, the Company recognized
a net loss of $305  thousand,  or ($0.16) per basic share,  as compared to a net
loss of $510 thousand, or ($0.30) per basic share, for the six months ended June
30, 2008.  The $205  thousand  decrease in net loss was  primarily the result of
increased net interest income and  non-interest  income  partially  offset by an
increase in non-interest expense.

         Interest  Income.  Compared  to the first six months of 2008,  interest
income for the six-month  period ended June 30, 2009 increased by $578 thousand,
or 19.0%,  to $3.6 million from $3.1 million for the comparable six month period
one year earlier.  The increase in interest  income resulted from an increase in
average interest-earning assets to $144.9 million for the six-month period ended
June 30, 2009 from $103.8 million for the comparable  six-month period ended one
year earlier,  partially  offset by a lower overall yield  associated with those
assets. Over the comparable periods,  average loan balances increased from $75.2
million to $97.0  million,  while their  average yield  decreased  from 6.50% to
5.69%. The average balances of the investment  securities portfolio increased by
$16.6 million,  from $15.0 million to $31.7 million,  while the average balances
of fed funds sold also  increased by nearly $5.8  million,  from $6.8 million to
$12.6 million,  over the six-month period ended June 30, 2009 as compared to the
same  six-month  period in the previous  year.  The average  yield on investment
securities  decreased to 4.99% for the six months ended June 30, 2009 from 5.07%
for the  six-month  period  ended June 30, 2008  primarily  from the addition of
mortgage-backed securities to the portfolio during the end of 2008 and the first

                                       23
<PAGE>

half of 2009 at generally lower yields. The yield on fed funds sold decreased to
0.24% from 2.58% over the same respective periods as a result of the decrease in
short-term interest rates.

         During the six-month  period ended June 30, 2009 the Company  decreased
by  approximately  $2.7  million  the average  balance  invested in a variety of
certificates of deposit at other financial  institutions with maturities ranging
from three to twelve  months.  Due to the decrease in short-term  interest rates
available in the marketplace,  the average yield of this asset segment decreased
from  4.59%  for the  six-month  period  ended  June 30,  2008 to 2.99%  for the
comparable six-month period in 2009.

         Interest  Expense.  Total interest expense increased $340 thousand from
$1.4  million for the six months ended June 30, 2008 to $1.8 million for the six
months  ended June 30,  2009.  The  increase  resulted  from an  increase in the
average  balances  of  the  Bank's  interest-bearing   deposits  and  borrowings
partially offset by a decrease in the cost of short-term  deposits.  The average
balances of the Bank's  certificates  of deposit  portfolio  increased  to $67.1
million at an average  cost of 3.53% over the  six-month  period  ended June 30,
2009,  from $34.1  million at an average  cost of 4.28% over the same  six-month
period ended one-year earlier.  Average money market account balances  decreased
$0.9 million, from $33.8 million for the six-month period ended June 30, 2008 to
$32.9  million  for the  six-month  period  ended  June  30,  2009.  Over  those
respective  periods  the average  costs for those  balances  decreased  78 basis
points, from 2.72% to 1.94%.  Average regular savings account balances decreased
$900  thousand to $11.9  million for the  six-month  period ended June 30, 2009,
from $12.8  million for the  six-month  period  ended June 30,  2008,  while the
average costs  decreased 110 basis  points,  to 1.60% from 2.70%,  over the same
respective  periods.  For the six-month  period ended June 30, 2009, the average
balance of the Company's  borrowed  funds was $9.2 million at an average cost of
3.68% as compared to an average  balance of $4.3  million at an average  cost of
3.26% one  year-earlier.  The increase in borrowed  funds was primarily  used to
help fund the increase in the loan and investment portfolios.

         Provision  for Loan  Losses.  Provisions  for  loan  losses  were  $180
thousand  and $83  thousand  for the six months  ended  June 30,  2009 and 2008,
respectively. The increase was primarily due to the portfolio's net loan growth.
As discussed previously,  following management's analysis of the adequacy of the
allowance for loan losses,  the Company  determined that an increased  provision
was  warranted  because of an  increase  in the loan  portfolio's  overall  risk
profile under  current  market  conditions  at June 30, 2009,  and from economic
weakness in its market areas.

         Net Interest Income. Net interest income was approximately $1.9 million
for the six-month period ended June 30, 2009 as compared to $1.6 million for the
six-month period ended June 30, 2008. The average interest rate spread decreased
to  2.15%  from  2.59%  due to the  decrease  in yield  on the  commercial  loan
portfolio  as well as other short term  investments  whose yield  depends on the
overall short-term interest rate environment.  The net interest margin decreased
to 2.56% from 3.11% over the same comparable periods.

         Non-Interest Income. Non-interest income for the six-month period ended
June 30, 2009  totaled  $585  thousand,  which  represented  an increase of $291
thousand  from $294  thousand  earned over the  six-month  period ended June 30,
2008.  The increase was  primarily  attributable  to a $17 thousand  increase in
service  charges and fees earned  from an  increased  number of deposit and loan
customer relationships, and a $116 thousand increase in the net gain on the sale
of real estate  mortgage  loans held for sale resulting from an increase in real
estate mortgage loan refinance activity. There was also an $80 thousand increase
in other  categories  of  non-interest  income,  attributable,  primarily,  to a
recovery of $90 thousand in prior amounts written off.

         Non-Interest  Expense.  Non-interest  expense for the six-month  period
ended June 30, 2009  increased  $227  thousand to $2.6 million from $2.3 million
for the  six-month  period  ended  June  30,  2008.  Compensation  and  benefits

                                       24
<PAGE>

decreased by $5 thousand,  or 1.4%,  despite the increase in personnel needed to
staff the previously  mentioned new  full-service  branch in Staten Island,  New
York that  opened  in  November  2007.  Occupancy  and  equipment  expense  also
decreased by $19 thousand, or 4.7%, due to the consolidation of loan origination
offices into the new Staten Island location.  Data processing  expense increased
by $12  thousand,  or 9.2%,  due to the  increased  number of  deposit  and loan
relationships.  Other  non-interest  expense  increased to $887 thousand for the
six-month  period  ended June 30,  2009 from $648  thousand  for the  comparable
six-month  period ended June 30, 2008. The $239 thousand  increase was primarily
due  to  increases  in  professional  and  consulting  fees,  advertising,  FDIC
assessments, and other operating expenses related to the expansion of the Bank's
business  activities.  An FDIC  special  assessment  based on the Bank's  Tier 1
capital at June 30,  2009  payable on  September  30,  2009 in the amount of $68
thousand is fully accrued at June 30, 2009.

Liquidity and Capital Resources

         The primary sources of funds are deposits,  capital,  proceeds from the
sale of loans,  and  principal  and interest  payments on loans and  securities.
While  maturities  and  scheduled  payments on loans and  securities  provide an
indication of the timing of the receipt of funds, other sources of funds such as
loan  prepayments and deposit inflows are less predictable due to the effects of
changes in interest rates, economic conditions and competition.

         The primary investing  activities of the Company are the origination of
loans and the purchase of investment  securities.  For the six months ended June
30, 2009, the Company originated loans of approximately  $25.9 million including
real estate  mortgage  loans held for sale.  At June 30,  2009,  the Company had
outstanding   loan   origination   commitments   of  $5.30  million   (including
one-to-four-family  real estate  mortgage  loans held for sale of $3.67 million)
and  undisbursed  lines of credit  and  construction  loans in process of $10.82
million. The Company anticipates that it will have sufficient funds available to
meet its current loan originations and other commitments.

         At June 30, 2009, total deposits were  approximately  $133.6 million of
which approximately  $69.0 million was in certificates of deposit.  Certificates
of deposit  scheduled  to mature in one year or less from June 30, 2009  totaled
$33.1 million.  Based on past experience the Company  anticipates that most such
certificates of deposit can be renewed upon their expiration.

         The  Company  has a line of  credit  with a  correspondent  bank for an
amount of up to $3.2  million.  This  credit  facility is secured by 100% of the
outstanding  shares of the Bank for a period of two years with an additional one
year renewal,  at the Company's  option.  As of June 30, 2009,  the  outstanding
balance is $615 thousand. The Company utilized this credit facility primarily to
provide  funds to the Company to downstream to the Bank to enable it to maintain
strong capital ratios and leverage the balance sheet by increasing  assets.  The
line of credit also repaid the amounts due to the same correspondent bank on its
previously drawn line of credit, to fund operating expenses and to provide funds
for an interest  reserve to be applied toward monthly interest  payments.  Under
the debt  covenants on this line of credit,  the Bank is required to remain well
capitalized under the regulatory definition.

         The Bank  does  borrow  based  upon its need for  funds and the cost of
deposits as an  alternative  source of funds.  In general  the Bank  manages its
liquidity by  maintaining  sufficient  levels of short-term  investments so that
funds are available for  investment in loans when needed.  The Bank monitors its
liquidity on a regular basis.  Excess liquidity is invested in overnight federal
funds sold and other short-term investments.  The Bank has a line of credit with
the same  correspondent  bank for an amount of up to $5.0  million.  This credit
facility  is on a secured  basis for $2.5  million  for a period of one  hundred
eighty (180)  calendar days and an unsecured  basis of $2.5 million for a period
of fourteen (14) calendar days. The Bank did not utilize this credit facility at
any time during the quarter ending June 30, 2009.

         The Bank is subject to the risk based capital  guidelines  administered
by bank  regulatory  agencies.  The  guidelines  require  the Bank to maintain a

                                       25
<PAGE>

minimum  leverage  ratio of core  (Tier 1) capital  to total  adjusted  tangible
assets  of 3.0%,  and a  minimum  ratio  of  total  capital  (core  capital  and
supplementary  capital) to  risk-weighted  assets of 8.0%, of which 4.0% must be
core (Tier 1) capital.  As of June 30, 2009, the Bank's risk weighted capital to
risk weighted assets was 11.09%;  its Tier 1 capital to risk weighted assets was
10.03% and its Tier 1 capital to average assets  capital ratio was 6.78%.  As of
December 31, 2008,  the Bank's risk weighted  capital to risk  weighted  assets,
Tier 1 capital to risk  weighted  assets,  and Tier 1 capital to average  assets
capital ratios were 11.0%, 10.1% and 6.8%, respectively.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         This item is not applicable to a Smaller Reporting Company.

Item 4T. Controls and Procedures

         The Company has adopted  interim  disclosure  controls  and  procedures
designed to facilitate the Company's financial reporting. The interim disclosure
controls  currently  consist  of  communications  among the  Co-Chief  Executive
Officers,  the Chief Financial  Officer and each department head to identify any
transactions,  events,  trends,  risks or contingencies which may be material to
the Company's operations.  In addition,  the Co-Chief Executive Officers,  Chief
Financial  Officer and the Audit Committee meet on a quarterly basis and discuss
the Company's  material  accounting  policies.  The Company's Co-Chief Executive
Officers and Chief Financial  Officer have evaluated the  effectiveness of these
interim disclosure controls as of June 30, 2009, and found them to be adequate.

         The Company maintains internal control over financial reporting.  There
have not been any  significant  changes in such internal  control over financial
reporting  that have  materially  been  affected,  or are  reasonably  likely to
materially affect, the Company's internal control over financial reporting.

PART II

Item 1.  Legal Proceedings

         The Company is not involved in any pending legal proceedings other than
routine legal proceedings  occurring in the ordinary course of business. At June
30, 2009,  we were not involved in any legal  proceedings,  the outcome of which
would be material to our financial condition or results of operations.

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 factors previously  disclosed in the Company's Annual Report on Form
10-K for the 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 $68,000  during the quarter ended

                                       26
<PAGE>

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.

Item 2.  Unregistered Sales of Securities and Use of Proceeds

         (a)      The information required by this Item was previously disclosed
                  by the Company in its Current Report on Form 8-K filed with
                  the Securities and Exchange Commission on July 1, 2009.

         (b)      Not applicable

         (c)      Not applicable

Item 3.  Defaults Upon Senior Securities

         None

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

         (a) On May, 2009 the Company held its Annual Meeting of Stockholders.

         (b) At the meeting, Harold L. Kahn, David N. Mesches, M.D., Michael P.
         Ostrow, Albert J. Pagano and Peter J. Savago, were elected, each to
         serve a three-year term.

                           The following directors continue in office:

                                    William W. Davenport
                                    Peter B. Ferrante
                                    Andrew G. Finklestein
                                    Gale L. Foster
                                    Thomas D. Weddell
                                    Anthony P. Costa
                                    Philip Guarnieri
                                    David Freer, Jr.

                                       27

<PAGE>


         (c) Stockholders voted on the following matters:

                  (i) The election of the following directors of the Company:

        DIRECTOR                         FOR                         WITHHELD
         --------                        ---                         --------

         Harold L. Kahn                1,116,275                      68,046

         David N. Mesches, M.D         1,092,275                      92,046

         Michael P. Ostrow             1,114,525                      69,796

         Albert J. Pagano              1,092,275                      92,046

         Peter J. Savago               1,077,778                     106,543


                  (ii) The ratification of the appointment of Crowe Horwath LLP
         as the independent registered public auditing firm for the Company for
         the year ending December 31, 2009:


         VOTES FOR                      AGAINST      ABSTENTIONS
         ----- ---                      -------      -----------

          1,183,071                       250            1000


Item 5.  Other Information

         None

                                       28
<PAGE>


Item 6.  Exhibits
<TABLE>
<CAPTION>

<S>                  <C>                                                        <C>
                                                                                Reference to Previous Filing
Exhibit Number       Document                                                                  If Applicable
--------------       --------                                                                  -------------

3.1                  Articles of Incorporation                                                       *

3.2                  Amended Bylaws                                                                  *

4                    Form of Stock Certificate                                                       **

10.1                 Employment Agreement dated September 23, 2004                                   **
                     Between the Bank and Anthony P. Costa.

10.2                 Employment Agreement dated September 23, 2004                                   **
                     Between the Bank and Philip Guarnieri

10.4                 Empire State Bank, N.A. 2004 Stock Option 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

32.1                 Certification of Chief Executive Officer Pursuant to
                     Section 906 of the Sarbanes-Oxley Act of 2002

32.2                 Certification of Chief Financial Officer Pursuant to
                     Section 906 of the Sarbanes-Oxley Act of 2002

* Previously filed with the SEC as an exhibit to the Company's Quarterly Report
on Form 10-QSB for the period ended September 30, 2006.

** Previously filed with the SEC as an exhibit to the Company's Registration
Statement on Form S-4 filed on April 14, 2006 and subsequently amended on April
18, 2006, May 1, 2006 and May 23, 2006 and a post-effective amendment filed on
June 9, 2006. All of such previously filed documents are hereby incorporated
herein by reference in accordance with Item 601 of Regulation S-B.
</TABLE>

                                       29

<PAGE>


                                   SIGNATURES

         In accordance with the  requirements of the Securities  Exchange Act of
1934 (the "Exchange Act"), the registrant caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized, as of August 13, 2009.

                                     ES Bancshares, Inc.

                                     By: /s/ Anthony P Costa
                                         --------------------------------------
Date:  August 13, 2009                   Anthony P. Costa
                                         Chairman and Co-Chief Executive Officer



                                     By: /s/ Thomas P. Sperzel
                                         --------------------------------------
Date:  August 13, 2009                   Thomas P. Sperzel
                                         Chief Financial Officer


                                       30
<PAGE>


                                  Exhibit 31.1
                  Certification of Principal Executive Officer

I, Anthony P. Costa, certify that:

I have reviewed this quarterly report on Form 10-Q of ES Bancshares, Inc.;

Based on my knowledge,  this report does not contain any untrue  statements of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this quarterly report;

Based on my knowledge,  the financial statements and other financial information
included in this report,  fairly present in all material  respects the financial
condition,  results of  operations  and cash flows of the  registrant as of, and
for, the periods presented in this report;

The  registrant's   other   certifying   officers  and  I  are  responsible  for
establishing and maintaining  disclosure controls and procedures  (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial
reporting  (as defined in  Exchange  Act Rules  13a-15(f)  and  15d-15)  for the
registrant and we have:

         a)       Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

         b)       Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting, to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

         c)       Evaluated the effectiveness of the small business issuer's
                  disclosure controls and procedures and presented in this
                  report our conclusions about the effectiveness of the
                  disclosure controls and procedures as of the end of the period
                  covered by this report based on such evaluation; and

         d)       Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonable likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

The registrant's  other certifying  officers and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors (or persons performing the equivalent function):

         a)       All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  small business issuer's ability to record, process, summarize
                  and report financial information; and

         b)       Any fraud, whether material or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal controls over financial reporting.


/s/ Anthony P Costa                                    Date: August 13, 2009
-----------------------------------------                   -------------------
Anthony P. Costa
Chairman and Co-Chief Executive Officer


<PAGE>


                                  Exhibit 31.2
                  Certification of Principal Financial Officer

I, Thomas P. Sperzel, certify that:

I have reviewed this quarterly report on Form 10-Q of ES Bancshares, Inc.;

Based on my knowledge,  this report does not contain any untrue  statements of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this quarterly report;

Based on my knowledge,  the financial statements and other financial information
included in this report,  fairly present in all material  respects the financial
condition,  results of  operations  and cash flows of the  registrant as of, and
for, the periods presented in this report;

The  registrant's   other   certifying   officers  and  I  are  responsible  for
establishing and maintaining  disclosure controls and procedures  (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial
reporting  (as defined in  Exchange  Act Rules  13a-15(f)  and  15d-15)  for the
registrant and we have:

         a)       Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

         b)       Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting, to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

         c)       Evaluated the effectiveness of the small business issuer's
                  disclosure controls and procedures and presented in this
                  report our conclusions about the effectiveness of the
                  disclosure controls and procedures as of the end of the period
                  covered by this report based on such evaluation; and

         d)       Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonable likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

The registrant's  other certifying  officers and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors (or persons performing the equivalent function):

         a)       All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  small business issuer's ability to record, process, summarize
                  and report financial information; and

         b)       Any fraud, whether material or not material, that involves
                  management or other employees who have a significant role in
                  the registrant's internal controls over financial reporting.


/s/ Thomas P. Sperzel                                  Date: August 13, 2009
---------------------                                        ------------------
Thomas P. Sperzel
Chief Financial Officer

<PAGE>


                                  Exhibit 32.1
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection  with the quarterly  report of ES  Bancshares,  Inc. (the
"Company") on Form 10-Q for the period ending June 30, 2009 (the  "Report"),  I,
Anthony P.  Costa,  Chairman  and  Co-Chief  Executive  Officer of the  Company,
certify,  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

         (1)    The report fully complies with the requirements of Section 13(a)
                or 15(d) of the Securities Exchange Act of 1934; and

         (2)    The information contained in the Report fairly presents, in
                all material respects, the financial condition and results of
                operations of the Company.



Date: August 13, 2009                    /s/ Anthony P Costa
      --------------------------         --------------------------------------
                                         Anthony P. Costa
                                         Chairman and Co-Chief Executive Officer

<PAGE>


                                  Exhibit 32.2
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



         In connection  with the quarterly  report of ES  Bancshares,  Inc. (the
"Company") on Form 10-Q for the period ending June 30, 2009 (the  "Report"),  I,
Thomas P. Sperzel, Chief Financial Officer of the Company,  certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

         (1)    The report fully complies with the requirements of Section 13(a)
                or 15(d) of the Securities Exchange Act of 1934; and

         (2)    The information contained in the Report fairly presents, in
                all material respects, the financial condition and results of
                operations of the Company.

Date: August 13, 2009                    /s/ Thomas P. Sperzel
      --------------------------         --------------------------------------
                                         Thomas P. Sperzel
                                         Chief Financial Officer