FORWARD-LOOKING STATEMENTS

This Form 10-Q may include, and from time to time the Company may disclose, certain forward-looking statements based on current management expectations. The Company's actual results could differ materially from those management expectations. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices. Additional factors are discussed in the Company's Annual Report on Form 10-K for the year ended March 31, 2009 under "Item 1A. Risk Factors". These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made and the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date of the forward-looking statements or to reflect the occurrence of unanticipated events. Accordingly, past results and trends should not be used by investors to anticipate future results or trends.

OVERVIEW OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company's results of operations depend primarily on its net interest income, which is a direct result of the interest rate environment. Net interest income is the difference between the interest income earned on interest-earning assets and the interest paid on interest-bearing liabilities. It is a function of the average balances of loans and securities versus deposits and borrowed funds outstanding in any one period and the yields earned on those loans and securities and the cost of those deposits and borrowed funds.

Interest-earning assets consist primarily of investment and mortgage-backed securities and loans which comprised 40.5% and 46.8%, respectively, of total assets at June 30, 2009, as compared to 41.1% and 48.8%, respectively, at March 31, 2009. Cash and cash equivalents increased to 8.1% of total assets at June 30, 2009, as compared to 5.3% at March 31, 2009. The Company's investment and mortgage-backed securities portfolios consist of only U.S. government-sponsored or guaranteed enterprises.

Interest-bearing liabilities consist of deposits and borrowings from the Federal Home Loan Bank of New York ("FHLB"). Deposits increased $43.0 million, or 6.8%, between March 31, 2009 and June 30, 2009, and borrowed funds decreased by $2.1 million, or 1.4%, during this period. The balance in borrowed funds was $142.2 million at June 30, 2009 as compared to $144.3 million at March 31, 2009. During the three months ended June 30, 2009, $2.1 million of long-term borrowings were repaid in accordance with their original terms.

Net interest income increased $389,000, or 9.3%, during the three months ended June 30, 2009, when compared with the same 2008 period. Such increase was due to a $152,000 increase in total interest income and a decrease in total interest expense of $237,000. Average interest-earning assets increased $34.4 million, or 4.0%, while average interest-bearing liabilities increased $69.7 million, or 9.7%. The $35.3 million decrease in average net interest-earning assets was mainly attributable to an increase of $72.5 million in interest-bearing deposits and a decrease of $19.4 million in other interest-earning assets, partially offset by increases of $40.3 million in interest-earning loans and $13.5 million in securities

OVERVIEW OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D)

coupled with a decrease of $2.8 million in borrowings. The interest rate spread increased 32 basis points to 1.69% from 1.37%. This was due to a 45 basis point decrease in the cost of interest-bearing liabilities which was partially offset by a decrease of 13 basis points in the yield earned on interest-earning assets. Results of operations also depend, to a lesser extent, on non-interest income generated, any provision for loan losses recorded, and non-interest expenses incurred. During the three months ended June 30, 2009 and 2008, non-interest income remained at the same level of $290,000. The provision for loan losses was $100,000 and $-0-, respectively, for the three months ended June 30, 2009 and 2008, respectively, and non-interest expenses increased $770,000, or 27.0% between periods.

CHANGES IN FINANCIAL CONDITION

The Company's assets at June 30, 2009 totaled $1,001.5 million, which represents an increase of $41.7 million or 4.3% as compared with $959.8 million at March 31, 2009.

Cash and cash equivalents increased $29.7 million, or 58.1% to $80.8 million at June 30, 2009 as compared to $51.1 million at March 31, 2009, as funds from the increase in deposits during the quarter had not yet been redeployed into higher yielding assets.

Securities available for sale at June 30, 2009 decreased $2.7 million, or 3.1% to $85.5 million when compared with $88.2 million at March 31, 2009. The decrease during the three months ended June 30, 2009 resulted primarily from maturities and repayments totaling $7.3 million, and a decrease in the unrealized gain of $393,000 on the portfolio, partially offset by a purchase of $5.0 million.

Securities held to maturity at June 30, 2009 increased $13.7 million or 4.5% to $319.9 million when compared with $306.2 million at March 31, 2009. The increase during the three months ended June 30, 2009, resulted primarily from purchases of securities totaling $49.9 million partially offset by maturities, calls and repayments totaling $36.3 million.

Net loans at June 30, 2009 increased $300,000, or 0.1% to $468.8 million when compared with $468.5 million at March 31, 2009. The increase during the three months ended June 30, 2009, resulted primarily from internal origination volume, primarily in residential real estate loans, which slightly offset repayment levels. The largest increase in the loan portfolio was in non-residential real estate loans which increased $2.0 million, or 9.0%.

Total liabilities increased $41.3 million, or 5.3% to $827.9 million at June 30, 2009 from $786.6 million at March 31, 2009. Deposits at June 30, 2009 increased $43.0 million, or 6.8% to $676.6 million when compared with $633.6 million at March 31, 2009, as the Bank continued to offer very competitive rates on their deposit products. Borrowings decreased $2.1 million, or 1.4% to $142.2 million at June 30, 2009, as compared with $144.3 million at March 31, 2009. During the period ended June 30, 2009, $2.1 million of long-term borrowings were repaid in accordance with their original terms. At June 30, 2009, the remaining borrowings of $142.2 million had an average interest rate of 3.85%.

Stockholders' equity totaled $173.6 million and $173.2 million at June 30, 2009 and March 31, 2009, respectively. The increase of $400,000, or 0.2%, for the three months ended June 30, 2009, resulted primarily from net income of $844,000, ESOP shares committed to be released of $195,000, and $306,000 for stock options and restricted stock awards earned under the Company's 2005 Equity Incentive Plan and related tax benefits, partially offset by the repurchase of approximately 25,000 shares

CHANGES IN FINANCIAL CONDITION (CONT'D)

of Company common stock for $250,000, cash dividends paid of $461,000, and a net decrease in unrealized gains of $236,000 on the available for sale securities portfolios.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2009 AND
2008

Net income decreased $288,000, or 25.4% to $844,000 for the three months ended June 30, 2009 compared with $1.13 million for the same 2008 period. The decrease in net income during the 2009 period resulted primarily from an increase in non-interest expenses of $770,000, or 27.0%, to $3.62 million for the three months ended June 30, 2009 as compared to $2.85 million for the three months ended June 30, 2008, partially offset by an increase of $389,000, or 9.3% in net interest income for the three months ended June 30, 2009, as compared to the same 2008 period.

Interest income on loans increased by $500,000, or 8.9% to $6.1 million during the three months ended June 30, 2009, when compared with $5.6 million for the same 2008 period. The increase during the 2009 period mainly resulted from an increase in average loan balance of $40.3 million, or 9.4% when compared to the same period in 2008, coupled with a decrease in the yield earned on the loan portfolio of 4 basis points to 5.20% from 5.24%. Interest on mortgage-backed securities increased $400,000, or 11.1% to $4.0 million during the three months ended June 30, 2009, when compared with $3.6 million for the same 2008 period. The increase during the 2009 period resulted from an increase of 7 basis points in the yield earned on mortgage-backed securities to 5.20% from 5.13%, coupled with an increase of $25.9 million, or 9.2% in the average balance of mortgage-backed securities outstanding. Interest earned on investment securities decreased by $527,000, or 42.8% to $703,000 during the three months ended June 30, 2009, when compared to $1.23 million during the same 2008 period, due to a decrease in the average balance of $12.4 million, or 12.4%, coupled with a 171 basis point decrease in yield to 3.21% from 4.92%. Interest earned on other interest-earning assets decreased by $194,000, or 63.4% to $112,000 during the three months ended June 30, 2009, when compared to $306,000 during the same 2008 period primarily due to a decrease of 98 basis points in yield to 1.67% from 2.65%, coupled with a decrease of $19.4 million, or 41.8%, in the average balance. Investment securities decreased primarily due to the redeployment of funds resulting from maturities and calls of investment securities into higher yielding loans and mortgage-backed securities. Other interest-earning assets decreased due to cash and cash equivalents being redeployed into higher yielding assets.

Interest expense on deposits decreased $190,000, or 3.7% to $4.95 million during the three months ended June 30, 2009, when compared to $5.14 million during the same 2008 period. Such decrease was primarily attributable to a decrease of 52 basis points in the cost of interest-bearing deposits to 3.07% from 3.59%, partially offset by an increase of $72.5 million, or 12.7% in the average balance of interest-bearing deposits. Interest expense on borrowed money decreased approximately $50,000, or 3.5% to $1.38 million during the three months ended June 30, 2009 when compared with $1.43 million during the same 2008 period. Such decrease was primarily attributable to a decrease of $2.8 million, or 2.0% in the average balance of borrowings, coupled with a decrease of 5 basis points in the cost of borrowings to 3.86% from 3.91%.

Net interest income increased $389,000, or 9.3% during the three months ended June 30, 2009, to $4.59 million when compared to $4.20 million for the same 2008 period. Such increase was due to a $152,000 increase in total interest income coupled with a decrease in total interest expense of $237,000. Average interest-earning assets increased $34.4 million, or 4.0% while average interest-bearing liabilities increased $69.7 million, or 9.7%. The $34.4 million increase in average interest-earning assets was mainly attributable to increases of $40.3 million in loans and $25.9 million in mortgage-backed securities,

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2009 AND
2008 (CONT'D.)

partially offset by decreases of $12.4 million in investment securities and $19.4 million in other interest-earning assets. Loans and mortgage-backed securities increased primarily due to the redeployment of maturities and calls of investment securities and growth in deposits into higher yielding assets.

Other interest-earning assets decreased due to cash and cash equivalents being redeployed into higher yielding assets. The $69.7 million increase in average interest-bearing liabilities was primarily due to an increase of $72.5 million in interest-bearing deposits partially offset by a decrease of $2.8 million in borrowings. The net interest rate spread increased 32 basis points due to a 45 basis points decrease in the cost of interest-bearing liabilities which was partially offset by a decrease of 13 basis points in the yield earned on interest-earning assets.

During the three months ended June 30, 2009 and 2008, the Bank recorded $100,000 and $-0-, respectively, for the provision for loan losses. The provision for the 2009 period was the result of both increases in non-performing loans and the loan portfolio balances. Non-performing loans increased from $270,000 at June 30, 2008 to $1.4 million, or 418.5% at June 30, 2009, while gross loans increased from $440.5 million at June 30, 2008 to $470.1 million, or 6.7% at June 30, 2009. The allowance for loan losses is based on management's evaluation of the risk inherent in the Bank's loan portfolio and gives due consideration to the changes in general market conditions and in the nature and volume of the Bank's loan activity. The Bank intends to continue to evaluate the need for a provision for loan losses based on its periodic review of the loan portfolio and general market conditions. At June 30, 2009 and June 30, 2008, the Bank's non-performing loans, which were delinquent ninety days or more, and all of which were in a non-accrual status, totaled $1.4 million and $270,000 respectively, and represented 0.30%, and 0.06%, respectively, of total gross loans, and 0.14% and 0.03%, respectively, of total assets. During the three months ended June 30, 2009 and 2008, the Bank did not charge off any loans. The allowance for loan losses amounted to $1.8 million at June 30, 2009 and $1.7 million at March 31, 2009, representing 0.38% of total gross loans at June 30, 2009 and 0.36% of total gross loans at March 31, 2009.

Non-interest income was $290,000 for both the three months ended June 30, 2009 and 2008.

Non-interest expense increased by $770,000, or 27.0% to $3.62 million during the three months ended June 30, 2009, when compared with $2.85 million during the same 2008 period. The components of non-interest expense which experienced the most significant change were federal deposit insurance premiums and miscellaneous expenses, which increased by $616,000, or 3,798.7% and $131,000, or 44.9%, respectively. The increase in federal deposit insurance premiums in 2009 was mostly due to an increase in the quarterly assessment rates for all financial institutions, along with a special emergency assessment imposed by the FDIC in order to cover the losses of the Deposit Insurance Fund that were incurred from failed financial institutions in 2008, as well as anticipated future losses. The increase in miscellaneous expenses was mostly due to a $49,000 recovery of previously expensed consulting fees relating to litigation reimbursement in the 2008 period, and increases of $12,000 in stationary, printing and supplies, $17,000 in correspondent bank service fees, and $17,000 in loan expenses.

Income taxes totaled $307,000 and $500,000 during the three months ended June 30, 2009 and 2008, respectively. The decrease of $193,000, or 38.6% during the 2009 period resulted from lower pre-tax income, coupled with a decrease in the overall effective income tax rate which was 26.7% in the 2009 period, compared with 30.6% for 2008. The Company's effective tax rate decreases when overall income decreases, as tax exempt income recognized from the increase in cash surrender value of bank owned life insurance accounts for a larger percentage of overall income.

LIQUIDITY AND CAPITAL RESOURCES

The Company maintains levels of liquid assets sufficient to ensure the Bank's safe and sound operation. The Company adjusts its liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The Company also adjusts its liquidity level as appropriate to meet its asset/liability objectives. Liquid assets, which include cash and cash equivalents and securities available for sale, totaled $166.2 million, or 16.6% of total assets at June 30, 2009 as compared to $139.3 million, or 14.5% of total assets at March 31, 2009.

The Company's liquidity, represented by cash and cash equivalents and securities available for sale, is a product of its operating, investing and financing activities.

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its shareholders. The Company also has repurchased shares of its common stock. The Company's primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OTS but with prior notice to the OTS, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. At June 30, 2009, the Company had liquid assets of $166.2 million.

Cash was generated by operating and financing activities during the three months ended June 30, 2009. The primary source of cash was net income and a net increase in deposits. The Company declared and paid a cash dividend during the three months ended June 30, 2009, totaling $461,000.

The Company's primary investing activities are lending and the purchases of securities. Net loans amounted to $468.8 million and $468.5 million at June 30, 2009 and March 31, 2009, respectively. Securities, including available for sale and held to maturity issues, totaled $405.4 million and $394.4 million at June 30, 2009 and March 31, 2009, respectively. In addition to funding new loan production through operating and financing activities, such activities were funded by principal repayments and maturities on existing loans and securities.

Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as interest-bearing deposits. If the Bank requires funds beyond its ability to generate them internally, the Bank can borrow funds from the FHLB up to approximately $88.9 million under an overnight line of credit, and $88.9 million under a one-month overnight repricing line of credit agreement. The Bank's membership in FHLB also provides access to additional sources of borrowed funds based on the Bank's ability to collateralize such borrowings. At June 30, 2009, advances from the FHLB amounted to $142.2 million at a weighted average rate of 3.85%. Additionally, the Company has the ability to borrow funds at the Bank of America and PNC Capital Markets under unsecured overnight lines of credit.

The Bank anticipates that it will have sufficient fund available to meet its current commitments. At June 30, 2009, the Bank had outstanding commitments to originate loans totaling approximately $16.9 million, which included $11.4 million for fixed-rate mortgage loans with interest rates ranging from 4.25% to 5.625%, $5.3 million for adjustable rate mortgage loans with initial rate ranging from 4.625% to 6.50%, and $150,000 for an adjustable rate home equity line of credit with an initial interest rate of 4.50%.

LIQUIDITY AND CAPITAL RESOURCES (CONT'D)

At June 30, 2009, the Bank had outstanding commitments to purchase a $750,000 participation in a $5.8 million construction loan, a $750,000 participation in a $7.3 million construction loan, and a $500,000 participation in a $3.0 million construction loan, with adjustable interest rates of 3.00%, 2.50%, and 2.75%, respectively, over the one month London Interbank Offering Rate. In addition, the Bank has a commitment to purchase a $500,000 participation in a $1.7 million construction loan with an adjustable interest rate at the Prime Rate.

At June 30, 2009, the Bank also had commitments outstanding to purchase $20.0 million in Federal National Mortgage Association mortgage-backed securities at fixed interest rates of 4.50%.

At June 30, 2009, undisbursed funds from customer approved unused lines of credit under a homeowners' equity lending program amounted to approximately $2.9 million. Unless they are specifically cancelled by notice from the Bank, these funds represent firm commitments available to the respective borrowers on demand.

Certificates of deposit scheduled to mature in one year or less at June 30, 2009, totaled $421.0 million, or 79.7% of our certificates of deposit. Management believes that, based upon its experience and the Bank's deposit flow history, a significant portion of such deposits will remain with the Bank. FHLB advances scheduled to mature in one year or less at June 30, 2009, totaled $20.3 million.

Under OTS regulations, three separate measurements of capital adequacy (the "Capital Rule") are required. The Capital Rule requires each savings institution to maintain tangible capital equal of at least 1.5% and core capital equal of at least 4.0% of its adjusted total assets. The Capital Rule further requires each savings institution to maintain total capital equal of at least 8.0% of its risk-weighted assets.

The following table sets forth the Bank's capital position at June 30, 2009, as compared to the minimum regulatory capital requirements:

                                                                                     OTS Requirements
                                                                 ------------------------------------------------------
                                                                      Minimum Capital           For Classification as
                                           Actual                        Adequacy                 Well-Capitalized
                                   --------------------------    --------------------------   -------------------------
                                       Amount        Ratio          Amount         Ratio         Amount        Ratio
                                   ---------------  ---------    -------------   ----------   -------------  ----------
                                                                  (Dollars In Thousands)
Total capital
   (to risk-weighted assets)           $150,822      41.03%         $29,408         8.00%        $36,761       10.00%
Tier 1 capital
   (to risk-weighted assets)            149,022      40.54           14,704         4.00          22,056        6.00
Core (tier 1) capital
   (to adjusted total assets)           149,022      15.06           39,589         4.00          49,486        5.00
Tangible capital
   (to adjusted tangible assets)        149,022      15.06           14,846         1.50               -           -