Forward Looking Statements:

This report includes certain forward-looking statements that involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include the economic environment, competition, products and pricing in geographic and business areas in which Mayflower Bancorp, Inc. ("the Company") and its wholly owned subsidiary, Mayflower Co-operative Bank (the "Bank") operate, prevailing interest rates, changes in government regulations and policies affecting financial services companies, and credit quality and credit risk management. The Company undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this report.

Critical Accounting Policies:

Accounting policies involving significant judgments and assumptions by management, which have, or could have, a material effect on the carrying value of certain assets and impact income, are considered critical accounting policies. The Company believes the following are critical accounting policies:

Allowance for Loan Losses:

A provision for loan losses represents a charge or credit against current earnings and an addition to or deduction from the allowance for loan losses. In determining the amount to provide for potential loan losses, a key factor is the current adequacy of the allowance for loan losses. Management uses a methodology to systematically measure the amount of estimated loan loss exposure inherent in the loan portfolio for purposes of establishing an adequate allowance for loan losses. The methodology includes three elements: (1) an analysis of individual loans deemed to be impaired or potentially impaired and a subsequent allocation as required, (2) general loss allocations for various categories of loans based on loss experience factors, and (3) an unallocated allowance. General and unallocated allowances are determined as a function of management's assessment of many factors including the risk characteristics of the loan portfolio, concentrations of credit, current and anticipated economic conditions that may effect borrowers' ability to pay, and trends in loan delinquencies and charge-offs.

Material estimates that are susceptible to change in the near-term relate to the allowance for loan losses. Any significant changes in these assumptions and/or conditions could result in higher than estimated losses that could adversely affect the Company's earnings. Management believes that the allowance for loan losses as currently constituted is adequate based on its review of the portfolio and other factors associated with the loans. While management uses available information to recognize loan losses, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition, regulatory agencies, as part of their examination process, periodically review the Company's allowance for loan losses and may require the Company to recognize additional allowances based on judgments different than those of management, which could also adversely affect the Company's earnings.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into account all the circumstances surrounding the loan and borrower, including the length of delay, reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Impairment is measured on a loan by loan basis for commercial, commercial real estate, and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest

The Company also maintains an allowance for possible losses on its outstanding loan commitments. The allowance for loan losses on off-balance sheet credit exposures (shown separately on the balance sheet) is maintained based on expected drawdowns of committed loans and their loss experience factors and management's assessment of various other factors including current and anticipated economic conditions that may effect the borrowers' ability to pay, and trends in loan delinquencies and charge-offs.

Other-Than-Temporarily Impaired Investment Securities:

Management judgment is involved in the evaluation of declines in value of individual investment securities held by the Company. Declines in value that are deemed other-than-temporary are recognized in the income statement through a write-down in the recorded value of the affected security. Management considers many factors in their analysis of which, if any, securities might be classified as other-than-temporarily impaired, including industry analyst reports, sector credit ratings, volatility in market price and other relevant information such as financial condition, earnings capacity and near term prospects of the issuing company and the length of time and extent to which the market value has been less than cost.

Whenever a debt or equity security is deemed to be other-than temporarily impaired as determined by management's analysis, it is written-down to its current fair market value. Any unfavorable change in general market conditions or the condition of a specific issuer could cause an increase in the Company's impairment write-downs on investment securities, which would have an adverse effect on the Company's earnings.

Liquidity and Capital Resources:

The Company's primary sources of liquidity are deposits, loan payments and payoffs, investment income, principal repayments and maturities of investments, and advances from the Federal Home Loan Bank of Boston. The Company's liquidity management program is designed to insure that sufficient funds are available to meet its daily cash requirements and this management program has proven to be successful toward that end. As a member of The Co-operative Central Bank's Reserve Fund, the Company also has the right to borrow from that entity's Reserve Fund for short-term cash needs by pledging certain assets. The Company has not exercised this right for several years.

The Company believes its capital resources, including deposits, scheduled loan repayments, revenue generated from the sales of loans and investment securities, unused borrowing capacity at the Federal Home Loan Bank of Boston, and revenue from other sources are adequate to meet its funding commitments and requirements. At January 31, 2009 and April 30, 2008, the Company's and the Bank's capital ratios were in excess of regulatory requirements and the Company and the Bank are considered to be well-capitalized under regulatory all requirements.

During the quarter, the Company determined that it would not apply for funds available through the U.S. Treasury Department's Capital Purchase Program, as participation in that program was determined to be contrary to the best interests of the Company and its shareholders given the Company's circumstance and the constraints and uncertainties of the program itself.

At January 31, 2009, the Company's total assets were $243.5 million as compared to $243.8 million at April 30, 2008, a decrease of $299,000. During the nine months ended January 31, 2009, total investment securities decreased by $13.3 million while net loans receivable increased by $6.8 million. Additionally, cash and cash equivalent balances increased by $5.1 million.

During the nine months ended January 31, 2009, the Company was able to increase origination of residential mortgage loans, primarily as a result of declining interest rates. Residential mortgages originated during the nine months ended January 31, 2009 totaled $18.3 million compared to $9.6 million originated for the same period one year ago. During the period, the Company sold $10.4 million of fixed-rate residential loans in the secondary mortgage market, generating gains of $281,000. This compares to sales of $8.8 million for the prior year period, with realized gains of $161,000. This activity, combined with other mortgage payoffs and regularly scheduled amortization, resulted in a $3.8 million increase in residential loan balances as compared to April 30, 2008.

Additionally, since April 30, 2008, commercial loan and commercial mortgage balances have increased by $4.9 million or 11.9%. During the same nine-month period, net construction loan balances outstanding decreased by $1.3 million or 24.9% as the Company continued to deemphasize the origination of new construction loans, and as properties securing existing loans have been sold. Finally, home equity loans and lines of credit decreased by $403,000 or 1.6%, and consumer loan balances decreased by $251,000 or 13.4%. In aggregate, net loans outstanding increased by $6.8 million from $125.3 million at April 30, 2008 to $132.1 million at January 31, 2009.

The overall strength of the Company's loan portfolio continues to rely heavily on the health of the New England and local economies. In particular, commercial business, construction and commercial real estate financing are generally considered to involve a higher degree of credit risk than long-term financing of residential properties due to their higher potential for default and the possible difficulty of disposing of underlying collateral, if any.

Non performing assets are comprised of non-accrual loans, non-accrual investments and real estate acquired by foreclosure. Nonperforming loans consist of loans that are more than 90 days past due and loans less than 90 days past due on which the Company has ceased accruing interest. As of January 31, 2009, nonperforming assets totaled $408,000 and consisted of real-estate acquired by foreclosure totaling $378,000 and nonperforming loans totaling $30,000. This compares to nonperforming assets of $1.2 million at April 30, 2008.

At January 31, 2009, the Company's allowance for loan losses was $1,378,000, which represented 1.04% of net loans receivable at that date. This compares to $1,375,000 at April 30, 2008, which represented 1.10% of net loans receivable. During the nine-month period, the Company recovered $5,000 in commercial loans previously charged off and charged off consumer loans totaling $2,000. The Company's loan portfolio continues to rely heavily on the strength of the local real estate market and a significant deterioration in that market or other negative economic conditions could have a negative impact on the Company's results. As management continues to closely monitor the Company's loan portfolio, foreclosed property expense and higher provisions for loan losses may be required should economic conditions worsen or the levels of non-performing assets increase.

The Company also maintains an allowance for loan losses for off-balance sheet credit exposures (reflected separately on the balance sheet). This allowance totaled $110,000 at January 31, 2009 and April 30, 2008. This allowance is intended to protect the Company against losses on undrawn or unfunded loan commitments made to customers.

Total deposits, after interest credited, increased by $2.8 million from $204.2 million at April 30, 2008 to $207.0 million at January 31, 2009. During the nine-month period, the Company experienced an increase of $4.8 million in money market deposits, offset by a decrease of $209,000 in certificate accounts, a decrease of $376,000 in savings account balances and a decrease of $1.4 million in checking account deposits. Additionally, borrowed funds outstanding were reduced by $2.8 million.

During the nine-month period ended January 31, 2009, the company recorded a gross other-than-temporary impairment charge of $1.9 million relating to its investment in preferred stock and auction rate preferred stock issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal National Mortgage Associate ("Fannie Mae"). The net after tax impact to earnings as a result of this charge was $1.2 million.

Results of Operations:

Comparison of the three months ended January 31, 2009 and January 31, 2008.

General:

Net income for the three months ended January 31, 2009 was $387,000 compared with net income of $289,000 for the three months ended January 31, 2008, an increase of $98,000. Net interest income increased by $198,000, total non-interest income increased by $86,000, and total non-interest expense increased by $109,000.

The Company's results largely depend upon its net interest margin, which is the difference between the income earned on loans and investments, and the interest paid on deposits and borrowings as a percentage of average interest-earning assets. During the three months ended January 31, 2009, the Company's net interest margin increased from 2.95% to 3.34%. This increase in net interest margin is primarily the result of higher cost certificates of deposit having repriced into lower rates at maturity.

ANALYSIS OF INTEREST RATE SPREAD:

The following table reflects the weighted average yield, interest earned, and
the average balances of loans and investments, and the weighted average rates,
interest expense, and the average balances of deposits and borrowed funds for
the periods indicated. The yield data for loans does not include loan
origination and other loan fees.



                                                             Three months ended January 31,
                                                     2009                                      2008
                                      Average                                   Average
                                      Balance                     Rate          Balance                     Rate
                                        (1)       Interest    (Annualized)        (1)       Interest    (Annualized)
                                                                 (Dollars in Thousands)
Interest-earning assets:
Loans                                $ 130,265   $    2,050           6.29 %   $ 134,085   $    2,260           6.74 %
Investment securities                   87,205        1,049           4.81 %      87,042        1,056           4.85 %
Short-term investments and
interest bearing deposits in banks       6,597            2           0.12 %       5,802           59           4.07 %

All interest-earning assets          $ 224,067   $    3,101           5.54 %   $ 226,929   $    3,375           5.95 %


Interest-bearing liabilities:
Deposits                               204,509        1,060           2.07 %     203,116        1,489           2.93 %
Borrowed funds                          17,052          170           3.99 %      18,554          213           4.59 %

All interest-bearing liabilities     $ 221,561        1,230           2.22 %   $ 221,670        1,702           3.07 %


Net interest income                              $    1,871                                $    1,673


Weighted average interest rate
spread (2)                                                            3.32 %                                    2.88 %


Net interest margin                                                   3.34 %                                    2.95 %

(1) Average balances calculated using daily balances

(2) Represents the weighted average yield earned on all interest earning assets during the period less the weighted average interest rate paid on all interest bearing liabilities.

                                                                      Three months ended January 31,
                                                                               2008 vs. 2009
                                                                    Changes due to increase (decrease)
                                                                              (in thousands )
                                                                                                          Rate/
                                                              Total             Volume        Rate       Volume
Interest income:
Loans                                                      $      (210 )       $    (64 )    $ (150 )    $     4
Investment securities                                               (7 )              2          (9 )         -
Short-term investments                                             (57 )              8         (57 )         (8 )

Total                                                             (274 )            (54 )      (216 )         (4 )


Interest expense:
Deposits                                                          (429 )             10        (436 )         (3 )
Borrowed funds                                                     (43 )            (17 )       (28 )          2

Total                                                             (472 )             (7 )      (464 )         (1 )


Increase (decrease) in net interest and dividend income    $       198         $    (47 )    $  248      $    (3 )

Interest and Dividend Income:

Total interest and dividend income for the three months ended January 31, 2009 decreased by $274,000, or 8.1%. Interest income from loans decreased by $210,000. This decrease was due to a reduction of $3.8 million in the average balance of loans outstanding, coupled with a decrease in the average rate earned on loans from 6.74% to 6.29% on an annualized basis. Interest and dividend income on investment securities decreased by $7,000 as a result of a decrease in the average yield earned, from 4.85% in the 2008 quarter to 4.81% in the 2009 quarter, offset by an increase of $163,000 in the average balance of investments. Interest on short-term investments decreased by $57,000 due to a decrease in the average yield earned, from 4.07% in the 2008 quarter to 0.12% in the 2009 quarter, offset by an increase of $795,000 in the average balance of short-term investments.

Interest Expense:

Interest expense decreased by $472,000, or 27.7%, to $1.2 million for the three months ended January 31, 2009. Interest expense on deposits decreased by $429,000 as a result of a reduction in the average rate paid, from 2.93% to 2.07%, offset by an increase of $1.4 million in the average balance of deposits. Interest expense on borrowed funds decreased by $43,000, or 20.2%, for the three months ended January 31, 2009. This decrease was due to a decrease of $1.5 million in the average balance of advances outstanding, coupled with a decrease in the average rate paid on borrowed funds, from 4.59% in the January 2008 three-month period to 3.99% in the January 2009 three-month period.

There was no provision made for loan losses for either quarter ended January 31, 2009 or January 31, 2008. The Company provides for loan losses in order to maintain the allowance for loan losses at a level that is adequate to absorb potential losses based on known and inherent risks in the portfolio. In determining the appropriate level of the allowance for loan losses, the Company considers past and anticipated loss experience, evaluations of underlying collateral, prevailing economic conditions, the nature and volume of the loan portfolio, and the levels of non-performing and other classified loans. The loan loss reserve is evaluated on a regular basis and is considered to be adequate during both periods.

Non-interest Income:

Non-interest income increased by $86,000 for the three months ended January 31, 2009 as compared to the three months ended January 31, 2008. This was primarily due to an increase of $121,000 in gains on sales of loans. Because of the recent reductions of residential mortgage interest rates, the Company was able to profitably sell recently originated fixed-rate residential mortgages. Also, because of increased loan demand, loan origination and other loan fees increased by $25,000. These were offset by a decrease of $7,000 in customer service fees, a decrease of $28,000 in gains on sales of investments, and a decrease of $25,000 in other income, due to the elimination of a special dividend from the Bank's excess insurer.

Non-interest Expense:

Non-interest expense increased by $109,000 for the three months ended January 31, 2009 as compared to the three months ended January 31, 2008. This increase was due to an increase of $46,000 in payments to the FDIC for the scheduled resumption of assessments for deposit insurance, and the subsequent, additional 7 basis point increase of FDIC insurance premiums. Also, compensation and fringe benefit expense increased by $24,000 or 2.7% due to higher benefit costs and nominal employee salary increases. Also, data processing expenses increased by $13,000, real estate owned expense increased by $12,000, occupancy expense increased by $2,000 and other expenses increased by $12,000.

Provision for Income Taxes:

The provision for income taxes increased by $77,000 for the three months ended January 31, 2009 when compared to the three months ended January 31, 2008, due to the increase in net income before taxes. Effective income tax rates were 34.3% and 30.2% respectively in the 2009 and 2008 periods. The lower effective tax rate in comparison to statutory rates is reflective of income earned by a non-Bank investment subsidiary, which is taxed, for state tax purposes, at a lower rate; and by dividends received deductions on dividend income generated by the Company's marketable equity portfolio.

Results of Operations:

Comparison of the nine months ended January 31, 2009 and January 31, 2008.

General:

The Company posted a net loss of $270,000 for the nine months ended January 31, 2009 compared with net income of $787,000 for the nine months ended January 31, 2008, a decrease of $1.1 million. Net interest income increased by $397,000, total non-interest income decreased by $1.8 million, and total non-interest expense increased by $295,000.

ANALYSIS OF INTEREST RATE SPREAD:

The following table reflects the weighted average yield, interest earned and the
average balances of loans and investments and the weighted average rates,
interest expense and the average balances of deposits and borrowed funds for the
periods indicated. The yield data for loans does not include loan origination
and other loan fees.



                                                             Nine months ended January 31,
                                                     2009                                      2008
                                      Average                                   Average
                                      Balance                     Rate          Balance                    Rate
                                        (1)       Interest    (Annualized)        (1)      Interest    (Annualized)
                                                                 (Dollars in Thousands)
Interest-earning assets:
Loans                                $ 128,232   $    6,142           6.39 %   $ 137,571   $   7,072           6.85 %
Investment securities                   91,129        3,267           4.78 %      85,522       3,032           4.73 %
Short-term investments and
interest bearing deposits in banks       5,027           33           0.88 %       4,419         152           4.59 %

All interest-earning assets          $ 224,388   $    9,442           5.61 %   $ 227,512   $  10,256           6.01 %


Interest-bearing liabilities:
Deposits                               203,306        3,387           2.22 %     201,102       4,410           2.92 %
Borrowed funds                          17,466          529           4.04 %      20,408         717           4.68 %

All interest-bearing liabilities     $ 220,772        3,916           2.37 %   $ 221,510       5,127           3.09 %


Net interest income                              $    5,526                                $   5,129


Weighted average interest rate
spread (2)                                                            3.24 %                                   2.92 %


Net interest margin                                                   3.28 %                                   3.01 %

(1) Average balances calculated using daily balances

(2) Represents the weighted average yield earned on all interest earning assets during the period less the weighted average interest rate paid on all interest bearing liabilities.

The effect on net interest income due to changes in interest rates and in the amount of interest-earning assets and interest-bearing liabilities is shown in the following table. Information is provided in the table below on changes for the period indicated attributable to (1) changes in volume (change in average balance multiplied by prior period yield), (2) changes in interest rates (changes in yield multiplied by prior period average balance) and (3) the . . .