UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 2007

OR

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from              to             

Commission file number: 0-51014

BV FINANCIAL, INC.

(Exact name of small business issuer as specified in its charter)

Federal	14-1920944
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7114 North Point Road, Baltimore, Maryland 21219

(Address of principal executive offices)

(410) 477-5000

(Issuer’s telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of May 15, 2007, there were 2,563,959 shares of the registrant’s common stock outstanding.

BV FINANCIAL, INC.

Form 10-QSB

Table of Contents

			Page No.
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Statements of Financial Condition at March 31, 2007 and June 30, 2006 (unaudited)	1
		Consolidated Statements of Income for the three and nine months ended March 31, 2007 and 2006 (unaudited)	2
		Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2007 and 2006 (unaudited)	3
		Consolidated Statements of Cash Flows for the nine months ended March 31, 2007 and 2006 (unaudited)	4
		Notes to Unaudited Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis or Plan of Operation	8
	Item 3.	Controls and Procedures	18
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	19
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
	Item 3.	Defaults upon Senior Securities	19
	Item 4.	Submission of Matters to a Vote of Security Holders	19
	Item 5.	Other Information	19
	Item 6.	Exhibits	20
SIGNATURES

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

(unaudited)

	March 31, 2007			June 30, 2006
	(Dollars in thousands, except per share data)
ASSETS
Cash	$	3,368		$	1,359
Interest bearing deposits in other banks		1,743			6,363
Federal funds sold		2,047			1,357
Cash and Cash Equivalents		7,158			9,079
Securities available for sale		3,303			4,228
Securities held to maturity		3,167			3,233
Loans receivable, net of allowance for loan losses March 31, 2007 -$402; June 30, 2006 - $410		113,861			113,026
Premises and equipment, net		2,434			2,485
Federal Home Loan Bank of Atlanta stock, at cost		848			939
Investment in life insurance		1,955			1,889
Accrued interest receivable		505			494
Other assets		701			610
Total Assets	$	133,932		$	135,983
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Non-interest bearing deposits	$	3,768		$	3,887
Interest bearing deposits		96,359			93,208
Total deposits		100,127			97,095
Federal Home Loan Bank advances		13,500			14,500
Official checks		223			3,922
Advance payments by borrowers for taxes and insurance		844			1,145
Other liabilities		880			741
Total Liabilities	$	115,574		$	117,403
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.01 par value; 9,000,000 shares authorized; 2,645,000 shares issued; 2,563,959 and 2,593,158 shares outstanding as of March 31, 2007 and June 30, 2006, respectively		26			26
Paid-in capital		11,067			10,994
Unearned employee stock ownership plan shares		(842	)		(894	)
Treasury stock, at cost; 81,041 shares and 51,842 shares as of March 31, 2007 and June 30, 2006, respectively		(709	)		(418	)
Retained earnings		8,856			8,938
Accumulated other comprehensive loss		(40	)		(66	)
Total Stockholders’ Equity		18,358			18,580
Total Liabilities and Stockholders’ Equity	$	133,932		$	135,983

See notes to Unaudited Consolidated Financial Statements.

1

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

	Three Months Ended March 31,				Nine Months Ended March 31,
	2007		2006		2007		2006
	(Dollars in thousands, except per share data)
INTEREST INCOME
Loans, including fees	$	1,766	$	1,671	$	5,287	$	4,963
Investment securities		89		87		276		258
Other		56		47		154		124
Total Interest Income		1,911		1,805		5,717		5,345
INTEREST EXPENSE
Deposits		924		731		2,737		2,026
Borrowed funds		151		162		492		448
Total Interest Expense		1,075		893		3,229		2,474
Net Interest Income		836		912		2,488		2,871
PROVISION FOR LOAN LOSSES		—		20		5		90
Net Interest Income after Provision for Loan Losses		836		892		2,483		2,781
NON-INTEREST INCOME
Service fees on deposits		31		29		88		86
Service fees on loans		7		25		21		39
Income from investment in life insurance		17		19		66		57
Other income		13		10		36		55
Total Non-Interest Income		68		83		211		237
NON-INTEREST EXPENSES
Compensation and related expenses		507		488		1,535		1,320
Occupancy		43		43		130		122
Data processing		69		79		217		217
Repossessed assets expense		7		—		23		—
Telephone and postage		15		15		47		48
Advertising		26		39		76		89
Professional fees		49		44		181		132
Equipment		36		32		105		96
Other		111		99		314		311
Total Non-Interest Expenses		863		839		2,628		2,335
Income before Income Taxes		41		136		66		683
PROVISION FOR INCOME TAXES		19		54		29		264
Net Income	$	22	$	82	$	37	$	419
BASIC AND DILUTED EARNINGS PER SHARE	$	0.01	$	0.03	$	0.01	$	0.17
DIVIDENDS DECLARED PER SHARE	$	0.05		—	$	0.10		—

See Notes to Unaudited Consolidated Financial Statements.

2

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(Unaudited)

	For Three Months Ended March 31,					For Nine Months Ended March 31,
	2007		2006			2007		2006
	(In thousands)
Net income	$	22	$	82		$	37	$	419
Unrealized net holding gains/(losses) on available-for- sale securities, net of taxes (benefit) of $2, $(1), $19 and $(13)		3		(2	)		26		(20	)
Comprehensive income	$	25	$	80		$	63	$	399

See Notes to Unaudited Consolidated Financial Statements.

3

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended March 31,
	2007			2006
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	37		$	419
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of discounts and premiums		5			7
Provision for loan losses		5			90
Amortization of deferred loan fees		55			96
Provision for depreciation		112			95
Increase in cash surrender value of life insurance		(66	)		(57	)
Stock-based compensation expense		186			91
Increase in other assets		(125	)		(27	)
Increase (decrease) in other liabilities		139			(168	)
Net Cash Provided by Operating Activities		348			546
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale		(103	)		(76	)
Proceeds from maturity of securities available for sale		1,000			—
Principal collected on mortgage backed securities		131			232
Net increase in loans		(504	)		(12,914	)
Purchase of loans		(384	)		(1,219	)
Purchase of premises and equipment		(61	)		(39	)
Net Sale (purchase) of Federal Home Loan Bank stock		91			(442	)
Net Cash Provided by (Used In) Investing Activities		170			(14,458	)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in official checks		(3,699	)		(451	)
Net increase in deposits		3,032			3,021
Decrease in advance payments by borrowers for taxes and insurance		(301	)		(222	)
Federal Home Loan Bank advances		2,000			14,000
Repayment of advances from Federal Home Loan Bank		(3,000	)		(4,500	)
Purchase of shares of restricted stock		—			(437	)
Cash dividends paid		(119	)		—
Treasury stock purchased		(352	)		—
Net Cash (Used In) Provided by Financing Activities		(2,439	)		11,411
Net Decrease in Cash and Cash Equivalents		(1,921	)		(2,501	)
CASH AND CASH EQUIVALENTS – BEGINNING		9,079			8,336
CASH AND CASH EQUIVALENTS – ENDING	$	7,158		$	5,835
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid	$	3,226		$	2,474
Income taxes paid	$	130		$	421
Net loans transferred to foreclosed real estate/repossessed assets	$	7		$	25

See Notes to Unaudited Consolidated Financial Statements.

4

BV FINANCIAL, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2007

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions for Form 10-QSB and, therefore, do not include all disclosures necessary for a complete presentation of the financial statements in conformity with accounting principles generally accepted in the United States of America. However, all adjustments that are, in the opinion of management, necessary for the fair presentation of the interim financial statements have been included. Such adjustments were of a normal recurring nature. The results of operations for the period ended March 31, 2007 are not necessarily indicative of the results that may be expected for the entire year. These unaudited consolidated financial statements should be read in conjunction with BV Financial Inc.’s (the “Company” or “BV Financial”) Annual Report on Form 10-KSB for the year ended June 30, 2006.

Principles of Consolidation

The consolidated financial statements at March 31, 2007 and June 30, 2006 and for the three and nine months ended March 31, 2007 include the accounts of the Company, Bay-Vanguard Federal Savings Bank (the “Bank”) and its wholly-owned subsidiary, Housing Recovery Corporation. All intercompany balances and transactions have been eliminated in consolidation.

(2) Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the appropriate period. Unearned shares under the Bay-Vanguard Federal Savings Bank Employee Stock Ownership Plan (“ESOP”) are not included in outstanding shares. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding as adjusted for the dilutive effect of stock options and unvested stock awards based on the “treasury stock” method. Information related to the calculation of earnings per share is summarized for the three and nine months ended March 31, 2007 and 2006 as follows:

	Three Months Ended March 31,								Nine Months Ended March 31,
	2007				2006				2007				2006
	Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted
	In Thousands								In Thousands
Net income	$	22	$	22	$	82	$	82	$	37	$	37	$	419	$	419
Weighted average common shares outstanding		2,487		2,487		2,535		2,535		2,499		2,499		2,505		2,505
Diluted securities:
Restricted stock		—		—		—		—		—		1		—		—
Stock options		—		—		—		—		—		—		—		—
Adjusted weighted average shares		2,487		2,487		2,535		2,535		2,499		2,500		2,505		2,505

5

(3) Equity Incentive Plan

On November 8, 2005, stockholders approved the Plan that enabled the Company to grant stock options and restricted stock awards to employees and directors. The Company had elected to implement early the requirements of SFAS No. 123R, Share-Based Payment. On November 14, 2005, the Company granted stock options covering 111,456 shares of common stock to certain employees and directors of the Company. The options were granted at the then fair market value of the stock of $8.94, vest over five years and expire ten years from the date of grant. The Company estimated the grant date fair value of each option awarded in fiscal 2006 using the Black-Scholes Option-Pricing model with the following assumptions: dividend yield 0%, risk-free interest rate of 4.30%, and expected lives of 6.5 years. The assumption for the expected volatility was 15.977%. The estimated fair value of each option granted was computed to be $2.64.

The Compensation cost charged against income for the BV Financial, Inc. 2005 Equity Compensation Plan (the “Plan”) was $39,000 and $140,000 for the three and nine months ended March 31, 2007, respectively, and $55,000 and $77,000 for the three and nine months ended March 31, 2006, respectively. The total income tax benefit recognized was $10,000 and $33,000 for the three and nine months ended March 31, 2007, respectively, and $14,000 and $19,000 for the three and nine months ended March 31, 2006, respectively.

At March 31, 2007, there was $357,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Plan. The cost is expected to be recognized over a weighted average period of 3.5 years.

During the three and nine months ended March 31, 2007, there were no grants of stock options or restricted stock under the Plan. No stock options were exercised during the three and nine months ended March 31, 2007. At March 31, 2007, there were 22,286 stock options and 8,914 restricted stock shares that had vested under the Company’s Plan. At March 31, 2007, the Company’s outstanding options have no intrinsic value.

(4) Subsequent Events

On April 12, 2007, BV Financial announced that Bay-Vanguard Federal entered into a definitive agreement with Greater Atlantic Bank, Reston, Virginia, to purchase Greater Atlantic Bank’s branch office located in Pasadena, Maryland. Assets and liabilities of significance to be acquired in the transaction are limited to customer deposits. At March 31, 2007, the deposits at the Pasadena branch office, which will be assumed at an 8.5% premium, totaled approximately $50.9 million. The purchase is expected to be completed during the third quarter of 2007, subject to regulatory approval.

(5) Recent Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments (“SFAS No. 155”). SFAS No. 155 amends FASB Statement No. 133 and FASB Statement No. 140, and improves the financial reporting of certain hybrid financial instruments by requiring more consistent accounting that eliminates exemptions and provides a means to simplify the accounting for these instruments. Specifically, SFAS No. 155 allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The Company is required to adopt the provisions of SFAS No. 155, as applicable, beginning in fiscal year 2008. The Company has evaluated SFAS No. 155 and determined that it will have no impact on the Company’s financial position or results of operations.

6

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets—An Amendment of FASB Statement No. 140 (“SFAS 156”). SFAS 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. The statement permits, but does not require, the subsequent measurement of servicing assets and servicing liabilities at fair value. SFAS 156 is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006, which for the Company will be as of the beginning of fiscal year 2008. The Company does not believe that the adoption of SFAS 156 will have a significant effect on its financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that companies recognize in their financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Company has analyzed FIN 48 and determined that upon adoption, it will have no impact on our financial statements.

In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. FASB Statement No. 157 applies to other accounting pronouncements that require or permit fair value measurements. The new guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years. The company is in the process of evaluating FASB Statement No. 157.

In September 2006, the FASB’s Emerging Issues Task Force (EITF) issued EITF Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split Dollar Life Insurance Arrangements” (“EITF 06-4”). EITF 06-4 requires the recognition of a liability related to the postretirement benefits covered by an endorsement split-dollar life insurance arrangement. The consensus highlights that the employer (who is also the policyholder) has a liability for the benefit it is providing to its employee. As such, if the policyholder has agreed to maintain the insurance policy in force for the employee’s benefit during his or her retirement, then the liability recognized during the employee’s active service period should be based on the future cost of insurance to be incurred during the employee’s retirement. Alternatively, if the policy holder has agreed to provide the employee with a death benefit, then the liability for the future death benefit should be recognized by following the guidance in SFAS No. 106 or Accounting Principals Board (APB) Opinion No. 12, as appropriate. For transition, an entity can choose to apply the guidance using either of the following approaches: (a) a change in accounting principle through retrospective application to all periods presented or (b) a change in accounting principle through a cumulative-effect adjustment to the balance in retained earnings at the beginning of the year of adoption. The disclosures are required in fiscal years beginning after December 15, 2007, with early adoption permitted. The Company is evaluating the impact that the adoption of EITF 06-4 will have on our consolidated financial statements.

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

7

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

Management’s discussion and analysis of the financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of BV Financial. The information contained in this section should be read in conjunction with the Unaudited Consolidated Financial Statements and footnotes appearing in Part I, Item 1 of this document.

Forward-Looking Statements

This quarterly report contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of Bay-Vanguard, M.H.C., BV Financial and Bay-Vanguard Federal. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions.

Bay-Vanguard, M.H.C., BV Financial and Bay-Vanguard Federal’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of BV Financial and its subsidiary include, but are not limited to, changes in interest rates, national and regional economic conditions, legislative and regulatory changes, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in BV Financial and Bay-Vanguard’s market area, changes in real estate market values in BV Financial and Bay-Vanguard’s market area, and changes in relevant accounting principles and guidelines.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, BV Financial does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

General

BV Financial was organized as a federally chartered corporation at the direction of Bay-Vanguard Federal Savings Bank (the “Bank” or “Bay-Vanguard Federal”) in January 2005 to become the mid-tier stock holding company for Bay-Vanguard Federal upon the completion of its reorganization into the mutual holding company form of organization. Pursuant to the Plan of Reorganization, the Bank converted to stock form with all of its stock owned by BV Financial and organized Bay-Vanguard, M.H.C. as a federally chartered mutual holding company that owns 55% of the common stock of BV Financial. As part of the reorganization, the Company sold 1,190,250 shares of its common stock at a price of $10.00 per share to members of the Bank in a subscription offering raising approximately $11.0 million in net proceeds.

Bay-Vanguard Federal is headquartered in Baltimore, Maryland and is a community-oriented financial institution offering traditional financial services to its local communities. The Bank is engaged primarily in the business of attracting deposits from the general public using such funds to originate one-to four-family real estate, mobile home, construction, multi-family and commercial real estate and consumer loans.

8

The Bank’s savings accounts are insured up to the applicable legal limits by the Federal Deposit Insurance Corporation. Bay-Vanguard Federal is a member of the Federal Home Loan Bank System.

Recent Developments

On April 12, 2007, BV Financial announced that Bay-Vanguard Federal entered into a definitive agreement with Greater Atlantic Bank, Reston, Virginia, to purchase Greater Atlantic Bank’s branch office located in Pasadena, Maryland. Under the agreement, Bay-Vanguard Federal will pay an 8.5% premium on the balance of deposits assumed at closing. At March 31, 2007, the deposits at the Pasadena branch office on which the deposit premium would apply totaled approximately $50.9 million. Bay-Vanguard will also purchase the branch office’s fixed assets but will not acquire any loans as part of the transaction. The purchase is expected to be completed during the third quarter of 2007, subject to regulatory approval.

Critical Accounting Policies

The Company considers accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets and liabilities or income and expense to be critical accounting policies. The Company considers the allowance for loan losses to be a critical accounting policy.

Allowance for Loan Losses. The allowance for loan losses is the amount estimated by management as necessary to cover losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses, which is charged to income. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Among the material estimates required to establish the allowance are: loss exposure at default; the amount and timing of future cash flows on impaired loans; the value of collateral; and the determination of loss factors to be applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. However, historically, the Company’s estimates and assumptions have provided results that did not differ materially from actual results.

Management reviews the level of the allowance on a quarterly basis, at a minimum, and establishes the provision for loan losses based on an evaluation of the portfolio, past loss experience, economic conditions and business conditions affecting its primary market area, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, the duration of the current business cycle, bank regulatory examination results and other factors related to the collectibility of the loan portfolio. Although the Company believes that it uses the best information available to establish the allowance for loan losses, future additions to the allowance may be necessary if certain future events occur that cause actual results to differ from the assumptions used in making the evaluation. For example, a downturn in the local economy could cause increases in nonperforming loans. Additionally, a decline in real estate values could cause some of the Company’s loans to become inadequately collateralized. In either case, this may require the Company to increase its provisions for loan losses, which would negatively impact earnings. Further, the Office of Thrift Supervision, as an integral part of its examination process, periodically reviews the Company’s allowance for loan losses. Such agency may require the Company to recognize adjustments to the allowance based on its judgments about information available to it at the time of its examination. An increase to the allowance required to be made by the Office of Thrift Supervision would negatively impact the Company’s earnings. Additionally, a large loss could deplete the allowance and require increased provisions to replenish the allowance, which would negatively affect earnings.

9

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

Total assets decreased $2.1 million, or 1.5%, to $133.9 million at March 31, 2007 from $136.0 million at June 30, 2006 primarily due to a decrease in interest-bearing deposits, which were used to pay back Federal Home Loan Bank borrowings.

Loans receivable increased $835,000, or 0.7%, to $113.9 million at March 31, 2007, primarily due to $5.4 million in originations of residential real estate loans, $760,000 of residential construction loans, $1.6 million in non-residential and commercial loans, and $2.1 million of other loans, offset by repayments. The increased originations were due to a strong local real estate market and competitive pricing.

Securities decreased $991,000, or 13.3%, from $7.5 million at June 30, 2006 to $6.5 million at March 31, 2007, due to the maturation of a $1.0 million Federal Home Loan Bank note, the proceeds of which were used to fund loan growth.

Cash and cash equivalents decreased $1.9 million, or 21.2%, from $9.1 million at June 30, 2006 to $7.2 million at March 31, 2007, as those funds were used to pay down Federal Home Loan Bank borrowings and fund loan growth.

Deposits increased $3.0 million, or 3.1%, to $100.1 million at March 31, 2007, primarily due to an increase in certificates of deposit of $6.8 million, offset by a decrease of $1.6 million in checking accounts and a decrease of $2.0 million in savings accounts. The increase in deposits was primarily due to aggressive marketing of higher rate certificates of deposit. Federal Home Loan Bank advances decreased $1.0 million, or 6.9%, to $13.5 million at March 31, 2007. The repayment of Federal Home Loan Bank advances was also funded by deposit growth.

Total equity decreased $222,000, or 1.2%, to $18.4 million at March 31, 2007 primarily due to the payment of a dividend to stockholders and the purchase of treasury shares, offset by an increase to paid in capital and a reduction of the offsets to capital for the allocation of ESOP shares and the vesting of shares of restricted stock.

Results of Operations for the Three Months Ended March 31, 2007 and 2006

General. Net income decreased $60,000, or 73.2%, to $22,000 for the three months ended March 31, 2007 compared to the same period in the prior year due primarily to a $76,000 decrease in net interest income and a $24,000 increase in non-interest expenses, offset by a $20,000 decrease in the provision for loan losses and a $35,000 decrease in the provision for income taxes.

10

Net Interest Income. The following table summarizes interest income and expense for the three months ended March 31, 2007 and 2006.

	Three Months Ended March 31,
	2007		2006		% change
	(Dollars in thousands)
Interest Income:
Loans, including fees	$	1,766	$	1,671	5.7	%
Investment securities		89		87	2.3
Other		56		47	19.1
Total interest income		1,911		1,805	5.9
Interest Expense:
Deposits		924		731	26.4
Federal Home Loan Bank advances		151		162	(6.8	)
Total interest expense		1,075		893	20.4
Net interest income	$	836	$	912	(8.3	)

The following table summarizes average balances and average yield and costs for the three months ended March 31, 2007 and 2006.

	Three Months Ended March 31,
	2007				2006
	Average Balance		Yield/ Cost		Average Balance		Yield/ Cost
	(Dollars in thousands)
Loans	$	113,444	6.23	%	$	110,597	6.04	%
Investment securities		6,997	5.09			7,534	4.62
Interest-bearing deposits		3,428	4.08			3,869	3.31
Federal funds sold		1,614	5.20			1,229	4.56
Deposits		99,326	3.72			91,936	3.18
Federal Home Loan Bank advances		13,673	4.42			14,672	4.42

Net interest income for the three months ended March 31, 2007 decreased $76,000, or 8.3%, compared to the same period last year, as a result of a decrease in the interest rate spread to 2.29% from 2.50% offset by an increase in average interest-earning balances. Total interest income increased as a result of the growth in average interest-earning assets to $125.5 million from $123.2 million, and by an increase in the average yield to 6.09% from 5.86% due to the higher market interest rate environment. Total interest expense increased as a result of a higher average balance of deposits and an increase in the average interest rate paid on deposits, which increased to 3.72% from 3.18%, due to the higher market interest rate environment and increase in higher costing certificates of deposit, offset by a decrease in the average balance of Federal Home Loan Bank borrowings to $13.7 million, compared to average borrowings of $14.7 million in 2006.

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Provision for Loan Losses. The following table summarizes the activity in the allowance for loan losses for the three months ended March 31, 2007 and 2006.

	Three Months Ended March 31,
	2007		2006
	(In thousands)
Allowance at beginning of period	$	402	$	406
Provision for loan losses		—		20
Charge-offs		—		—
Recoveries		—		—
Net charge-offs		—		—
Allowance at end of period	$	402	$	426

The provision for loan losses decreased from $20,000 for the three months ended March 31, 2006 to zero for the three months ended March 31, 2007. The decrease in the provision for loan losses reflects the absence of charge-offs and continued low non-performing assets.

The following table provides information with respect to our nonperforming assets at the dates indicated. The Company did not have any accruing loans past due 90 days or more or foreclosed real estate at the dates presented.

	At March 31, 2007			At June 30, 2006			% change
	(Dollars in thousands)
Nonaccruing loans:
One- to four-family	$	197		$	165		19.4	%
Mobile home		—			—		—
Total		197			165		19.4
Accruing loans past due 90 days or more		—			—		—
Foreclosed real estate		—			—		—
Other repossessed assets		57			51		11.8
Total non-performing assets	$	254		$	216		17.6
Total non-performing loans to total loans		0.17	%		0.15	%
Total non-performing loans to total assets		0.15			0.12
Total non-performing assets to total assets		0.19			0.16

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Noninterest Income. The following table summarizes noninterest income for the three months ended March 31, 2007 and 2006.

	Three Months Ended March 31,				% change
	2007		2006
	(Dollars in thousands)
Service fees on deposits	$	31	$	29	6.9	%
Service fees on loans		7		25	(72.0	)
Income from investment in life insurance policy		17		19	(10.5	)
Other income		13		10	30.0
Total	$	68	$	83	(18.1	)

The decrease in non-interest income was due to a decrease in the origination of participations sold and a decrease in late fees due to a lower level of past due loans.

Noninterest Expenses. The following table summarizes noninterest expenses for the three months ended March 31, 2007 and 2006.

	Three Months Ended March 31,						% change
	2007			2006
	(Dollars in thousands)
Compensation and related expenses	$	507		$	488		3.9	%
Occupancy		43			43		—
Data processing		69			79		(12.7	)
Foreclosed assets expense		7			—		—
Telephone and postage		15			15		—
Advertising		26			39		(33.3	)
Professional fees		49			44		11.4
Equipment		36			32		12.5
Other		111			99		12.1
Total	$	863		$	839		2.9
Efficiency ratio (1)		95.46	%		84.32	%

(1) Computed as noninterest expenses divided by the sum of net interest income and other income.

Total non-interest expenses increased $24,000, or 2.9%, primarily as a result of increases in compensation and other miscellaneous expenses. Compensation expense increased due to the addition of two additional executive officers and increased stock-based compensation expense. Other expenses increased $12,000, or 12.1%, as a result of start-up expenses for the introduction of new debit cards, increased information technology maintenance expenses and increased insurance bonds. Advertising decreased as the Company was able to attract new loans through aggressive pricing in lieu of additional advertising. Data processing costs decreased due to a refund received in the 2007 period for certain charges in a previous quarter.

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Income Taxes. Provision for income taxes decreased $35,000, or 64.8%, from $54,000 for the three months ended March 31, 2006 to $19,000 for the three months ended March 31, 2007. The effective tax rate was 39.7% for the three months ended March 31, 2006 compared to 46.3% for the three months ended March 31, 2007. The increase in the effective tax rate was due to an increase in non-deductible stock based compensation expense representing a larger percentage of taxable income.

Results of Operations for the Nine Months Ended March 31, 2007 and 2006

General. Net income decreased $382,000, or 91.2%, to $37,000 for the nine months ended March 31, 2007 compared to the same period in the prior year due primarily to increases in interest expense and non-interest expenses.

Net Interest Income. The following table summarizes changes in interest income and expense for the nine months ended March 31, 2007 and 2006.

	Nine Months Ended March 31,				% change
	2007		2006
	(Dollars in thousands)
Interest Income:
Loans, including fees	$	5,287	$	4,963	6.5	%
Investment securities		276		258	7.0
Other		154		124	24.2
Total interest income		5,717		5,345	7.0
Interest Expense:
Deposits		2,737		2,026	35.1
Federal Home Loan Bank advances		492		448	9.8
Total interest expense		3,229		2,474	30.5
Net interest income	$	2,488	$	2,871	(13.3	)

The following table summarizes average balances and average yield and costs for the nine months ended March 31, 2007 and 2006.

	Nine Months Ended March 31,
	2007				2006
	Average Balance			Yield/ Cost	Average Balance		Yield/ Cost
	(Dollars in thousands)
Loans	$	113,441	6.21%		$	107,420	6.16	%
Investment securities		7,319	5.03			7,585	4.58
Interest-earning deposits		3,409	4.15			3,880	2.96
Federal funds		1,152	5.56			1,140	4.09
Deposits		97,638	3.74			89,539	3.02
Federal Home Loan Bank advances		14,594	4.49			13,498	4.43

Net interest income for the nine months ended March 31, 2007 decreased $383,000, or 13.3%, compared to the same period last year, as a result of a decrease in the interest rate spread to 2.24% from 2.74%, offset by a larger average balance of interest-earning assets. Total interest income increased as a

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result of the growth in average interest-earning assets to $125.3 million from $120.0 million and an increase in the average yield to 6.08% from 5.94% due to the higher market interest rate environment. Total interest expense increased as a result of an increase in the average balance of Federal Home Loan Bank borrowings to $14.6 million, compared to average borrowings of $13.5 million in 2006. Interest expense on deposits increased due to an increase in the average balance of $8.1 million, or 9.1% and the average interest rate paid on deposits, which increased to 3.74% from 3.02%, due to the higher market interest rate environment.

Provision for Loan Losses. The following table summarizes the activity in the allowance for loan losses for the nine months ended March 31, 2007 and 2006.

	Nine Months Ended March 31,
	2007			2006
	(In thousands)
Allowance at beginning of period	$	410		$	349
Provision for loan losses		5			90
Charge-offs		(13	)		(25	)
Recoveries		—			12
Net charge-offs		(13	)		(13	)
Allowance at end of period	$	402		$	426

The provision for loan losses decreased $85,000 to $5,000 for the nine months ended March 31, 2007. The decrease in the provision for loan losses reflects the continued low level of charge-offs and non-performing assets. The charge-off of $13,000 in fiscal 2007 was due to the repossession of one mobile home and the write down to fair value.

Noninterest Income. The following table summarizes noninterest income for the nine months ended March 31, 2007 and 2006.

	Nine Months Ended March 31,				% change
	2007		2006
	(Dollars in thousands)
Service fees on deposits	$	88	$	86	2.3	%
Service fees on loans		21		39	(46.2	)
Income from investment in life insurance		66		57	15.8
Other income		36		55	(34.5	)
	$	211	$	237	(11.0	)

The decrease in noninterest income was due to a decrease in the origination of participations sold and a decrease in late fees due to a lower level of past due loans.

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Noninterest Expenses. The following table summarizes noninterest expenses for the nine months ended March 31, 2007 and 2006.

	Nine Months Ended March 31,						% change
	2007			2006
	(Dollars in thousands)
Compensation and related expenses	$	1,535		$	1,320		16.3	%
Occupancy		130			122		6.6
Data processing		217			217		—
Repossessed assets expense		23			—		100
Telephone and postage		47			48		(2.1	)
Advertising		76			89		(14.6	)
Professional fees		181			132		37.1
Equipment expense		105			96		9.4
Other		314			311		1.0
Total	$	2,628		$	2,335		12.5
Efficiency ratio (1)		97.37	%		75.13	%

(1) Computed as noninterest expenses divided by the sum of net interest income and other income.

Total non-interest expenses increased $293,000, or 12.5%, primarily as a result of increases in compensation and related expenses, repossessed assets expense and professional fees. Compensation expense increased due to the addition of two additional executive officers and additional stock based compensation expense. Repossessed assets expense increased due to repairs made to repossessed assets to prepare them for sale. Professional fees increased due to higher legal and accounting costs incurred during the year.

Income Taxes. Provision for income taxes decreased $235,000, or 89.0%, from $264,000 for the nine months ended March 31, 2006 to $29,000 for the nine months ended March 31, 2007. The effective tax rate was 43.9% for the nine months ended March 31, 2007 compared to 38.7% for the nine months ended March 31, 2006. The increase in the effective tax rate was due to an increase in non-deductible stock based compensation expense.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments and maturities and sales of investment securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

We regularly adjust our investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities and (4) the objectives of our asset/liability management program. Generally, excess liquid assets are invested in interest-earning deposits and short- and intermediate-term U.S. Treasury and federal agency securities.

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Our most liquid assets are cash and cash equivalents and interest-bearing deposits. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At March 31, 2007, cash and cash equivalents totaled $7.1 million, including interest-bearing deposits of $1.7 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $3.3 million at March 31, 2007. In addition, at March 31, 2007, we had the ability to borrow a total of approximately $40.2 million from the Federal Home Loan Bank of Atlanta. On that date, we had advances outstanding of $26.7 million.

At March 31, 2007, we had $1.6 million in loan commitments outstanding, which included $320,000 in commitments to purchase and originate mobile home loans. In addition to commitments to originate loans, we had $1.0 million in unused lines of credit and $5.4 million of construction loans in process. Certificates of deposit due within one year of March 31, 2007 totaled $22.2 million, or 22.2% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and lines of credit. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2007. We believe, however, based on past experience, that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in deposit accounts. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. We generally manage the pricing of our deposits to be competitive and to increase core deposits. Occasionally, we offer promotional rates on certain deposit products to attract deposits.

	Nine Months Ended March 31,
	2007			2006
	(In thousands)
Investing activities:
Loan originations	$	10,941		$	30,469
Loan and participation purchases		384			1,219
Securities purchases		103			76
Financing activities:
Increase in deposits		3,032			3,021
Increase (decrease) in Federal Home Loan Bank advances		(1,000	)		9,500

We are subject to various regulatory capital requirements administered by the Office of Thrift Supervision, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At March 31, 2007, we exceeded all of our regulatory capital requirements. We are considered “well capitalized” under regulatory guidelines.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit.

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For the nine months ended March 31, 2007 and the year ended June 30, 2006, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Item 3. Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. However, the initial draft of the financial statements are currently prepared by the chief financial officer. The absence of a second level of review of the financial statements disclosures may result in revisions to the draft financial statement disclosures (which are reflected in, and do not affect the final interim financial statement disclosures) as a result of the review by the auditors. There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13(a)-15(e) that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

BV Financial is not involved in any pending legal proceedings. Bay-Vanguard Federal is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to its financial condition and results of operations.

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

The following table sets forth information regarding the Company’s repurchases of its common stock during the quarter ended March 31, 2007.

Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2007 to January 31, 2007	—		—	—	113,250
February 1, 2007 to February 28, 2007	18,500	$	9.10	18,500	94,750
March 1, 2006 to March 31, 2007	—		—	—	94,750
Total	18,500	$	9.10	18,500

(1) On April 12, 2006, BV Financial announced the adoption of a stock repurchase program to acquire up to 132,250 shares, or 5.0%, of BV Financial’s outstanding shares of common stock. The program will continue until it is completed or terminated by the Board of Directors.

Item 3. Defaults upon Senior Securities

Not Applicable.

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

Not Applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

3.1	Charter of BV Financial, Inc. (1)
3.2	Bylaws of BV Financial, Inc. (1)
4.0	Stock Certificate of BV Financial, Inc. (1)
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.0	Section 1350 Certification

(1) Incorporated by reference into this document from the Exhibits filed with the Securities and Exchange Commission on the Registration Statement on Form SB-2, and any amendments thereto, Registration No. 333-119083.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BV FINANCIAL, INC.
Dated: May 15, 2007	By:	/s/ Carolyn M. Mroz
		Carolyn M. Mroz
		President and Chief Executive Officer
		(principal executive officer)
Dated: May 15, 2007	By:	/s/ Edmund T. Leonard
		Edmund T. Leonard
		Chairman of the Board
		and Chief Financial Officer
		(principal financial and accounting officer)