10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2009

OR

¨ TRANSITION REPORT PURSUANT TO 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 registrant 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

(Registrant’s telephone number)

Not Applicable

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

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

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller reporting company  x
(Do not check if a smaller reporting company)

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

As of May 13, 2009, there were 2,386,245 shares of the registrant’s common stock outstanding.

BV FINANCIAL, INC.

FORM 10-Q

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Statements of Financial Condition at March 31, 2009 and June 30, 2008 (unaudited)	1
	Consolidated Statements of Income for the three and nine months ended March 31, 2009 and 2008 (unaudited)	2
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended March 31, 2009 and 2008 (unaudited)	3
	Consolidated Statements of Cash Flows for the nine months ended March 31, 2009 and 2008 (unaudited)	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults upon Senior Securities	27
Item 4.	Submission of Matters to a Vote of Security Holders	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
SIGNATURES

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Financial Condition

(Unaudited)

	March 31,     2009			June 30,     2008
	(Dollars in thousands, except share data)
ASSETS
Cash	$	3,168		$	1,753
Federal funds sold		9,493			6,529
Cash and Cash Equivalents		12,661			8,282
Interest bearing time deposits in other banks		1,150			580
Securities trading		1,319			—
Securities available for sale		1,265			8,838
Securities held to maturity, fair value at March 31, 2009 – $9,542; at June 30, 2008 – $9,661		9,415			9,788
Loans receivable, net of allowance for loan losses March 31, 2009 – $692; June 30, 2008 – $709		124,188			124,843
Premises and equipment, net		3,071			3,117
Federal Home Loan Bank of Atlanta stock, at cost		687			654
Investment in life insurance		2,100			2,054
Accrued interest receivable		589			670
Goodwill		3,940			3,940
Other intangible assets, net		308			390
Other assets		952			869
Total Assets	$	161,645		$	164,025
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Noninterest bearing deposits	$	5,424		$	6,040
Interest bearing deposits		130,244			130,992
Total deposits		135,668			137,032
Federal Home Loan Bank advances		6,500			7,500
Official checks		1,015			657
Advance payments by borrowers for taxes and insurance		813			1,187
Other liabilities		1,163			1,304
Total Liabilities		145,159			147,680
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; 2,386,245 and 2,385,192 shares outstanding as of March 31, 2009 and June 30, 2008, respectively		26			26
Paid-in capital		11,123			11,123
Unearned employee stock ownership plan shares		(704	)		(756	)
Treasury stock, at cost; 258,755 shares and 259,808 shares as of March 31, 2009 and June 30, 2008, respectively		(2,088	)		(2,140	)
Retained earnings		8,103			8,129
Accumulated other comprehensive income (loss)		26			(37	)
Total Stockholders’ Equity		16,486			16,345
Total Liabilities and Stockholders’ Equity	$	161,645		$	164,025

See Notes to Unaudited Consolidated Financial Statements.

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BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2009			2008			2009			2008
	(Dollars in thousands, except per share data)
INTEREST INCOME
Loans, including fees	$	1,959		$	1,866		$	5,930		$	5,636
Investment securities – taxable		121			203			546			390
Other		2			118			17			644
Total Interest Income		2,082			2,187			6,493			6,670
INTEREST EXPENSE
Deposits		931			1,217			2,847			3,598
Federal Home Loan Bank advances		80			90			287			379
Total Interest Expense		1,011			1,307			3,134			3,977
Net Interest Income		1,071			880			3,359			2,693
PROVISION FOR LOAN LOSSES		23			118			44			162
Net Interest Income after Provision for Loan Losses		1,048			762			3,315			2,531
NONINTEREST INCOME
Service fees on deposits		29			27			84			91
Service fees on loans		7			8			25			22
Income from investment in life insurance		10			18			82			53
Loss on securities trading		(54	)		—			(479	)		—
Termination of split-dollar life insurance liability		—			—			240			—
Other income		22			19			64			58
Total Noninterest Income		14			72			16			224
NONINTEREST EXPENSES
Compensation and related expenses		549			595			1,684			1,711
Occupancy		82			74			207			191
Data processing		106			102			298			276
Telephone and postage		17			17			51			50
Advertising		24			29			86			91
Professional fees		58			55			170			172
Equipment		35			44			113			131
Amortization of intangible assets		28			32			83			80
FDIC insurance premiums		27			9			108			29
Other		104			97			308			282
Total Noninterest Expenses		1,030			1,054			3,108			3,013
Income (Loss) before Income Taxes (Benefit)		32			(220	)		223			(258	)
Provision (Benefit) For Income Taxes		74			(106	)		104			(117	)
Net (Loss) Income	$	(42	)	$	(114	)	$	119		$	(141	)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE	$	(0.02	)	$	(0.05	)	$	0.05		$	(0.06	)
DIVIDENDS DECLARED PER SHARE	$	0.05		$	0.05		$	0.15		$	0.15

See Notes to Unaudited Consolidated Financial Statements.

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BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2009			2008			2009		2008
	(In thousands)
Net Income (Loss)	$	(42	)	$	(114	)	$	119	$	(141	)
Unrealized net holding gains on available-for-sale securities, net of taxes of $0, $6, $42 and $12		—			9			63		18
Comprehensive Income (Loss)	$	(42	)	$	(105	)	$	182	$	(123	)

See Notes to Unaudited Consolidated Financial Statements.

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BV FINANCIAL, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended March 31,
	2009			2008
	(In thousands)
Cash Flows from Operating Activities
Net income (loss)	$	119		$	(141	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Net amortization of discounts and premiums		34			4
Provision for loan losses		44			162
Net change in securities trading		1,229			—
Amortization of deferred loan fees/costs		(127	)		53
Provision for depreciation		58			124
Amortization of intangible assets		82			80
Increase in cash surrender value of life insurance		(46	)		(53	)
Stock-based compensation expense		109			144
Termination of split-dollar life insurance liability		(240	)		—
Decrease (increase) in other assets		130			(778	)
Increase (decrease) in other liabilities		97			231
Net Cash Provided by (Used in) Operating Activities		1,489			(174	)
Cash Flows from Investing Activities
Net increase in interest bearing deposits in other banks		(570	)		(196	)
Purchases of securities available for sale		—			(6,117	)
Proceeds from maturities and calls of securities available for sale		5,000			—
Purchases of securities held to maturity		(3,060	)		(11,352	)
Proceeds from maturities and calls of securities held to maturity		2,000			2,500
Principal collected on mortgage backed securities		1,527			412
Net decrease (increase) in loans		566			(5,830	)
Purchase of premises and equipment		(12	)		(87	)
Purchase of Federal Home Loan Bank stock		(270	)		—
Proceeds from the sale of Federal Home Loan Bank stock		237			194
Net cash received in branch acquisition		—			46,913
Net Cash Provided by Investing Activities		5,418			26,437
Cash Flows from Financing Activities
Increase (decrease) in official checks		358			(1,184	)
Net decrease in deposits		(1,364	)		(12,268	)
Decrease in advance payments by borrowers for taxes and insurance		(374	)		(302	)
Advances from Federal Home Loan Bank		8,500			7,500
Repayment of advances from Federal Home Loan Bank		(9,500	)		(13,500	)
Cash dividends paid		(143	)		(155	)
Purchases of stock for treasury		(5	)		(1,016	)
Net Cash Used In Financing Activities		(2,528	)		(20,925	)
Net Increase in Cash and Cash Equivalents		4,379			5,338
Cash and Cash Equivalents – Beginning		8,282			5,357
Cash and Cash Equivalents – Ending	$	12,661		$	10,695
Supplementary Cash Flows Information
Interest paid	$	3,138		$	3,594
Income taxes paid	$	138		$	63
Net loans transferred to repossessed assets	$	171		$	42

See Notes to Unaudited Consolidated Financial Statements.

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BV FINANCIAL, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2009

(1) Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions for Form 10-Q 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, 2009 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-K for the year ended June 30, 2008.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, Bay-Vanguard Federal Savings Bank (the “Bank” or “Bay-Vanguard Federal”) and its wholly-owned subsidiary, Housing Recovery Corporation. All intercompany balances and transactions have been eliminated in consolidation.

Reclassification

Certain prior year amounts have been reclassified to conform with the current year’s presentation. Such reclassifications had no effect on net income.

(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 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. As of March 31, 2009 and 2008, the Company had 12,797 and 21,265 shares of unvested restricted stock, respectively, and 111,456 shares and 111,456 shares of unexercised stock options, respectively, none of which were dilutive.

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Information related to the calculation of earnings (loss) per share is summarized for the three and nine months ended March 31, 2009 and 2008 as follows:

	Three Months Ended March 31,												Nine Months Ended March 31,
	2009						2008						2009				2008
	Basic			Diluted			Basic			Diluted			Basic		Diluted		Basic			Diluted
	(In thousands, except per share data)
Net income (loss)	$	(42	)	$	(42	)	$	(114	)	$	(114	)	$	119	$	119	$	(141	)	$	(141	)
Weighted average common shares outstanding		2,321			2,321			2,353			2,353			2,315		2,315		2,383			2,383
Dilutive securities:
Restricted stock		—			—			—			—			—		—		—			—
Stock options		—			—			—			—			—		—		—			—
Adjusted weighted average shares		2,321			2,321			2,353			2,353			2,315		2,315		2,383			2,383
Per share amount	$	(0.02	)	$	(0.02	)	$	(0.05	)	$	(0.05	)	$	0.05	$	0.05	$	(0.06	)	$	(0.06	)

(3) Equity Incentive Plan

On November 8, 2005, stockholders approved the BV Financial, Inc. 2005 Equity Compensation Plan (the “Plan”) that enabled the Company to grant up to 181,447 stock options and restricted stock awards to employees and directors. On November 14, 2005, the Company granted stock options covering 111,456 shares of common stock to certain employees and directors of the Company, of which 64,646 and 43,486 were exercisable at March 31, 2009 and March 31, 2008, respectively. 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.

Stock options had no intrinsic value at March 31, 2009. The Company recognized $7,000 and $28,000 of expense relating to the granting of stock options during the three and nine months ended March 31, 2009, respectively, and $6,000 and $35,000 for the three and nine months ended March 31, 2008, respectively. There has been no exercise of vested stock options through March 31, 2009.

On November 14, 2005, the Company granted 44,577 shares of restricted stock to certain employees and directors of the Company. The Company purchased shares in the open market during 2006 to fund this plan. The awards vest over a five-year period and, therefore, the cost of such awards is accrued ratably over a five-year period as compensation expense. The Company recognized $20,000 and $57,000 of expense relating to the grant of shares of restricted stock during the three and nine months ended March 31, 2009, respectively, and $20,000 and $57,000 of expense during the three and nine months ended March 31, 2008, respectively. Shares vesting were 8,468 and 8,468 for the periods ended March 31, 2009 and 2008, respectively. Unvested shares were 12,797 at March 31, 2009.

At March 31, 2009, there was $203,000 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 1.5 years.

(4) Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141 (R) “Business Combinations” (“SFAS No. 141 (R)”). This Statement establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in the acquiree. The Statement also provides guidance for recognizing and measuring the goodwill acquired in the business

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combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective as of the beginning of a company’s fiscal year beginning after December 15, 2008. This new pronouncement will impact the Company’s accounting for business combinations completed beginning July 1, 2009.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS No. 160”). This Statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective as of the beginning of the Company’s fiscal year beginning July 1, 2009 and is not expected to have a significant impact on our financial statements.

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 policyholder 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 Principles 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 Company adopted this EITF effective July 1, 2007 and recorded a cumulative-effect adjustment to retained earnings of $(221,000). The Bank terminated its executive and director split-dollar life insurance retirement death benefit and recognized income of $240,000 in the quarter ended September 30, 2008.

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 was effective for the Company July 1, 2008. The Company elected to account for the Shay AMF Ultra Short Mortgage Fund mutual fund it holds at fair value and there was no impairment recognized with this adoption as the investment had been written down to fair value at June 30, 2008. Future gains and losses will be reflected through earnings.

In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 states that an entity should recognize a realized tax benefit associated with dividends on nonvested equity shares, nonvested equity share units and outstanding equity share options charged to retained earnings as an increase in additional paid in capital. The amount recognized in additional paid in capital should be included in the pool of excess tax benefits available to absorb potential future tax deficiencies on share-based payment awards. EITF 06-11 should be applied prospectively to income tax benefits of dividends on equity-classified share-based payment awards that are declared in fiscal years beginning after December 15, 2007. Adoption did not have a significant impact on the Company’s financial statements.

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In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This Statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The Company is currently evaluating the potential impact the new pronouncement will have on its financial statements.

In April 2008, the FASB issued FASB Staff Position (“FSP”) FAS 142-3, “Determination of the Useful Life of Intangible Assets.” This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other GAAP. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the potential impact the new pronouncement will have on its financial statements.

In September 2008, the FASB issued FSP 133-1 and FIN 45-4, “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” (FSP 133-1 and FIN 45-4). FSP 133-1 and FIN 45-4 amends and enhances disclosure requirements for sellers of credit derivatives and financial guarantees. It also clarifies that the disclosure requirements of SFAS No. 161 are effective for quarterly periods beginning after November 15, 2008, and fiscal years that include those periods. FSP 133-1 and FIN 45-4 is effective for reporting periods (annual or interim) ending after November 15, 2008. The implementation of this standard did not have a material impact on our financial position and results of operations.

In September 2008, the FASB ratified the Emerging Issues Task Force (EITF) Issue No. 08-5, “Issuer’s Accounting for Liabilities Measured at Fair Value With a Third-Party Credit Enhancement” (EITF 08-5). EITF 08-5 provides guidance for measuring liabilities issued with an attached third-party credit enhancement (such as a guarantee). It clarifies that the issuer of a liability with a third-party credit enhancement should not include the effect of the credit enhancement in the fair value measurement of the liability. EITF 08-5 is effective for the first reporting period beginning after December 15, 2008. The implementation of this standard did not have a material impact on our financial position and results of operations.

In November 2008, the SEC released a proposed roadmap regarding the potential use by U.S. issuers of financial statements prepared in accordance with International Financial Reporting Standards (IFRS). IFRS is a comprehensive series of accounting standards published by the International Accounting Standards Board (“IASB”). Under the proposed roadmap, the Company may be required to prepare financial statements in accordance with IFRS as early as 2014. The SEC will make a determination in 2011 regarding the mandatory adoption of IFRS. The Company is currently evaluating the potential impact that this potential change would have on its financial statements, and it will continue to monitor the development of the potential implementation of IFRS.

In December 2008, the FASB issued FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets.” This FSP amends SFAS 132(R), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. The disclosures about plan assets

8

required by this FSP shall be provided for fiscal years ended after December 15, 2009. The Company is currently evaluating the potential impact the new pronouncement will have on its financial statements.

In November 2008, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 08-6, “Equity Method Investment Accounting Considerations.” EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. EITF 08-6 is effective for fiscal years beginning after December 15, 2008, with early adoption prohibited. The Company is currently evaluating the potential impact the new pronouncement will have on its financial statements.

In November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-7, “Accounting for Defensive Intangible Assets.” EITF 08-7 clarifies the accounting for certain separately identifiable intangible assets which an acquirer does not intend to actively use but intends to hold to prevent its competitors from obtaining access to them. EITF 08-7 requires an acquirer in a business combination to account for a defensive intangible asset as a separate unit of accounting which should be amortized to expense over the period the asset diminishes in value. EITF 08-7 is effective for fiscal years beginning after December 15, 2008, with early adoption prohibited. This new pronouncement will impact the Company’s accounting for any defensive intangible assets acquired in a business combination completed beginning July 1, 2009.

In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS 157-4). FASB Statement 157, Fair Value Measurements, defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. FSP FAS 157-4 provides additional guidance on determining when the volume and level of activity for the asset or liability has significantly decreased. The FSP also includes guidance on identifying circumstances when a transaction may not be considered orderly.

FSP FAS 157-4 provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with Statement 157.

This FSP clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly. In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly. The FSP provides a list of circumstances that may indicate that a transaction is not orderly. A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity early adopting FSP FAS 157-4 must also early adopt FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The Company is currently evaluating the potential impact the new pronouncement will have on its financial statements.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 clarifies the interaction of the factors that should be considered when determining whether

9

a debt security is other-than-temporarily impaired. For debt securities, management must assess whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery. These steps are done before assessing whether the entity will recover the cost basis of the investment. Previously, this assessment required management to assert it has both the intent and the ability to hold a security for a period of time sufficient to allow for an anticipated recovery in fair value to avoid recognizing an other-than-temporary impairment. This change does not affect the need to forecast recovery of the value of the security through either cash flows or market price.

In instances when a determination is made that an other-then-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, FSP FAS 115-2 and FAS 124-2 changes the presentation and amount of the other-than-temporary impairment recognized in the income statement. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity early adopting FSP FAS 115-2 and FAS 124-2 must also early adopt FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. The Company is currently evaluating the potential impact the new pronouncement will have on its financial statements.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and APB 28-1 amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods.

This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity early adopting FSP FAS 107-1 and APB 28-1 must also early adopt FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly and FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The Company is currently evaluating the potential impact the new pronouncement will have on its financial statements.

(5) FDIC Temporary Liquidity Guaranty Program

In October 2008, the FDIC increased the amount of insured bank deposits to $250,000 per account. Also, in October 2008, the FDIC also provided unlimited coverage for non-interest bearing deposit transaction accounts, which will last through December 31, 2009, unless otherwise extended by the FDIC. Effective December 5, 2008, insured depository institutions that have not opted out of the FDIC Temporary Liquidity Guarantee Program will be subject to a 0.10% surcharge applied to non-interest bearing transaction deposit account balances in excess of $250,000, which surcharge will be

10

added to the institution’s existing risk-based deposit insurance assessments. The Bank is participating in the FDIC Temporary Liquidity Guaranty Program.

(6) Goodwill, Other Intangible Assets and Branch Acquisition

On August 24, 2007, the Bank acquired a branch office in Pasadena, Maryland from Greater Atlantic Bank. The Bank paid a premium on the net liabilities, primarily on deposits of $51.5 million assumed at closing. The premium was comprised of goodwill totaling $3.9 million and identifiable intangibles (core deposit intangible) totaling $502,000. The goodwill is deductible for tax purposes. Core deposit intangibles are amortized on an accelerated basis over a 7-year period and goodwill is evaluated on an annual basis to determine impairment, if any. Any impairment of goodwill would be recorded against income in the period of impairment.

(7) Fair Values for Financial Instruments

In September 2006, the Financial Accounting Standards Board issued FASB Statement No. 157, “Fair Value Measurements,” (SFAS 157) which defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements. The new guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007, and for interim periods within those fiscal years. Effective July 1, 2008, the Company adopted SFAS 157. The primary effect of SFAS 157 on the Company was to expand the required disclosures pertaining to the methods used to determine fair values.

In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” that permits a one-year deferral in applying the measurement provisions of Statement No. 157 to non-financial assets and non-financial liabilities (non-financial items) that are not recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually). Therefore, if the change in fair value of a non-financial item is not required to be recognized or disclosed in the financial statements on an annual basis or more frequently, the effective date of application of Statement 157 to that item is deferred until fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The application of the provisions of (FSP) 157-2 did not materially affect our results of operations or financial condition as of and for the period ended March 31, 2009.

In October 2008, the FASB issued FASB Staff Position (FSP) 157-3, “Determining the Fair Value of a Financial Asset When The Market for That Asset is Not Active” (FSP 157-3), to clarify the application of the provisions of SFAS 157 in an inactive market and how an entity would determine fair value in an inactive market. FSP 157-3 became effective immediately and applies to our March 31, 2009 financial statements. The application of the provisions of (FSP) 157-3 did not materially affect our results of operations or financial condition as of and for the period ended March 31, 2009.

SFAS 157 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy under SFAS 157 are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

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Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported with little or no market activity).

An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Assets measured at fair value on a recurring basis by level within the fair value hierarchy used at March 31, 2009 are as follows:

	March 31, 2009		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Other Unobservable Inputs
	(In thousands)
Securities trading	$	1,319	$	—	$	1,319	$	—
Securities available for sale		1,265		—		1,265		—
Total	$	2,584	$	—	$	2,584	$	—

The following valuation techniques were used to measure the fair value of assets in the table above on a recurring basis as of March 31, 2009.

Securities trading – The fair value of securities trading was based on available market pricing for the security. A mutual fund is the only holding we have in this category and we rely on information provided to us by a third party pricing source.

Securities available for sale – The fair values of securities available for sale were based on available market pricing for the securities. We rely on third party brokers to obtain and provide us with this market pricing from a definitive security pricing source.

Assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy used at March 31, 2009 are as follows:

	March 31, 2009		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Other Unobservable Inputs
	(In thousands)
Impaired loans	$	3,064	$	—	$	—	$	3,064
Repossessed assets		151		—		—		151
Total	$	3,215	$	—	$	—	$	3,215

The following valuation techniques were used to measure the fair value of assets in the table above on a nonrecurring basis as of March 31, 2009.

Impaired Loans – Loans included in the above table are those that are accounted for under SFAS 114, Accounting by Creditors for Impairment of a Loan, in which the Company has measured impairment generally based on the fair value of the loan’s collateral. Fair value was determined based upon a

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discounted cash flow from the expected proceeds of the underlying collateral. This asset is included as Level 3 fair value, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of the loan balance reduced by any specific impairment reserve.

Repossessed Assets – Fair value of repossessed assets was based on the Company’s appraisal of the property. This value was determined from a current industry standard appraisal guide based on the value of similar properties adjusted for factors including condition and location of property.

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 was effective for the Company July 1, 2008. The Company elected to account for the AMF Ultra Short Mortgage Fund mutual fund it holds at fair value and recognized a trading loss of $479,000 during the nine months ended March 31, 2009. The Company made this election based on the availability of tax planning strategies to generate future capital gains if necessary to offset capital losses on the mutual fund. The fund pays monthly cash dividends which the Company records as interest income.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 that 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 Federal’s market area, changes in real estate market values in BV Financial and Bay-Vanguard Federal’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.

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General

BV Financial (the “Company”) 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 the Company and organized Bay-Vanguard, M.H.C. as a federally chartered mutual holding company that owned 55% of the common stock of the Company.

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 and using such funds to originate one-to four-family real estate, mobile home, construction, multi-family and commercial real estate and consumer loans.

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

The Bank has a wholly-owned subsidiary, Housing Recovery Corporation, which holds real estate and other assets acquired by the Bank through foreclosure or repossession.

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, fair value option for financial assets, the determination of other than temporary impairment of investments, intangible asset impairment and the deferred tax asset valuation allowance to be critical accounting policies.

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.

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 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

14

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.

Fair Value Option for Financial Assets and Financial Liabilities. SFAS 157 establishes a three level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets of liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Management has presented certain financial instruments measured at fair value on either a recurring or nonrecurring basis by level within the hierarchy. Management obtains fair values from various broker pricing sources on a monthly basis, at a minimum, and reviews the fair values for reasonableness. Although the Company believes that it uses the best information available to establish fair values for these certain financial instruments, future changes to the fair value may be significant if certain future events occur that cause actual results to differ from the assumptions used in making determinations about fair value. For example, market data used as inputs to calculate pricing for a particular financial instrument may change dramatically.

Other-than-Temporary Impairment of Investment Securities. There are certain securities in the Company’s portfolio in an unrealized loss position that management believes at this time are temporarily impaired. If the fair value of these securities does not recover in a reasonable period of time or management can no longer demonstrate the ability and intent to hold them until recovery, a write-down through the consolidated statements of income would be necessary.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or until maturity. In analyzing the issuer’s financial condition, management considers industry analysts’ reports, financial performance and projected target prices of investment analysts.

Intangible Asset Impairment. The Company has goodwill and core deposit intangible assets arising from a branch purchase. The goodwill is evaluated annually for impairment while the core deposit intangible is being amortized over seven years. The valuation techniques used by management to determine the carrying value of assets acquired in the branch purchase and the estimated lives of identifiable intangible assets involve estimates for discount rates, projected future cash flows and time period calculations, all of which are susceptible to change based on changes in economic conditions and other factors. Future events or changes in the estimates that were used to determine the carrying value of goodwill and identifiable intangible assets or that otherwise adversely affects their value or estimated lives could have a material adverse impact on future results of operations.

Deferred Tax Asset Valuation Allowance. We use the asset and liability method of accounting for income taxes as prescribed in Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing

15

assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. Management determined during the quarter ended March 31, 2009 that a valuation allowance was warranted based on a history of taxable income, the expectation of taxable income going forward and the availability of tax planning strategies to generate future income, including capital gains if necessary to offset capital losses on its mutual fund security. The valuation allowance results in additional income tax expense in the period, which negatively affected earnings.

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

Total assets decreased $2.4 million, or 1.5%, to $161.6 million at March 31, 2009 from $164.0 million at June 30, 2008 primarily due to a decrease in investment securities, offset by an increase in cash and cash equivalents.

Loans receivable decreased $655,000, or 0.5%, to $124.2 million at March 31, 2009 from $124.8 million at June 30, 2008. Decreases in consumer real estate and land loans were offset by increases in non-residential loans, which increased due to the Bank’s focus on shorter-term higher-rate loan products.

Securities decreased $6.6 million, or 35.5%, from $18.6 million at June 30, 2008 primarily due to the redemption of $750,000 of the AMF Ultra Short Mortgage mutual fund, a trading loss of $479,000 on the same mutual fund and principal payments of $8.5 million on U.S. government agencies securities, offset by $3.1 million in purchases of U.S. government agencies securities. Securities trading are carried at fair value with gains and losses being reflected through earnings.

Cash and cash equivalents increased $4.4 million, or 53.0%, from $8.3 million at June 30, 2008 to $12.7 million at March 31, 2009, primarily due to a $1.4 million increase in cash and a $4.0 million increase in federal funds sold with proceeds from maturing and called investment securities.

Deposits decreased $1.3 million, or 1.0%, to $135.7 million at March 31, 2009, primarily due to a decrease in commercial checking accounts primarily due to a realignment of corporate funds at BV Financial. Federal Home Loan Bank advances decreased $1.0 million, or 13.3%, to $6.5 million at March 31, 2009 due to our ability to pay down Federal Home Loan Bank advances from principal payments received on U.S. government agencies securities.

Total equity increased $141,000, or 1.0%, to $16.5 million at March 31, 2009 primarily as a result of net income of $119,000 for the period and a $63,000 increase in accumulated other comprehensive income, offset by the payment of dividends.

Results of Operations for the Three Months Ended March 31, 2009 and 2008

General. The Company recorded net loss of $42,000 for the three months ended March 31, 2009 compared to a net loss of $114,000 in the same period in the prior year. The net loss for 2009 was due primarily to the loss on securities trading of $54,000 and a tax provision of $74,000.

Net Interest Income. The following table summarizes interest income and expense for the three months ended March 31, 2009 and 2008.

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	Three Months Ended March 31,
	2009		2008		% change
	(Dollars in thousands)
Interest Income:
Loans, including fees	$	1,959	$	1,866	5.0	%
Investment securities – taxable		121		203	(40.4	)
Other		2		118	(98.3	)
Total interest income		2,082		2,187	(4.8	)
Interest Expense:
Deposits		931		1,217	(23.5	)
Federal Home Loan Bank advances		80		90	(11.1	)
Total interest expense		1,011		1,307	(22.6	)
Net interest income	$	1,071	$	880	21.7

The following table summarizes average balances and average yield and costs for the three months ended March 31, 2009 and 2008.

	Three Months Ended March 31,
	2009				2008
	Average Balance		Yield/ Cost		Average Balance		Yield/ Cost
	(Dollars in thousands)
Loans	$	126,918	6.17	%	$	120,560	6.19	%
Investment securities		12,280	3.91			16,244	5.00
Interest-bearing time deposits in other banks		610	0.66			545	3.67
Federal funds sold		6,916	0.12			14,084	3.21
Interest-bearing deposits		126,385	2.95			130,673	3.73
Federal Home Loan Bank advances		7,972	4.01			7,687	4.68

Net interest income for the three months ended March 31, 2009 increased $191,000, or 21.7%, compared to the same period last year, as a result of an increase in the loan portfolio and a decrease in the cost of interest-bearing deposits and FHLB advances. Total interest income decreased as a result of the decrease in average interest-earning assets to $146.7 million from $151.4 million. The decrease in average interest-earning assets was mainly due to a decrease in federal funds and investment securities, offset by loan growth. Total interest expense decreased as a result of a decrease in the average rate paid on deposits and a decrease in the average balance of deposits to $126.4 million, compared to average deposits of $130.7 million in 2008.

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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, 2009 and 2008.

	Three Months Ended March 31,
	2009			2008
	(In thousands)
Allowance at beginning of period	$	711		$	440
Provision for loan losses		23			118
Charge-offs		(42	)		(15	)
Allowance at end of period	$	692		$	543

The provision for loan losses decreased from $118,000 for the three months ended March 31, 2008 to $23,000 for the three months ended March 31, 2009. The decrease in the provision for loan losses was due to a decrease in nonperforming assets, offset by an increase in net charge-offs.

The following table provides information with respect to our nonperforming assets at the dates indicated.

	At March 31, 2009			At June 30, 2008			% change
	(Dollars in thousands)
Nonaccruing loans:
Construction	$	1,016		$	2,623		(61.3	)%
One- to four-family		655			—		N/A
Other consumer		—			62		(100.0	)
Total		1,671			2,685		(37.8	)
Accruing loans past due 90 days or more		19			—		N/A
Troubled debt restructuring (1)		—			46		(100.0	)
Foreclosed real estate		—			—		—
Other repossessed assets		151			41		268.3
Total non-performing assets	$	1,841		$	2,772		(33.6	)
Total non-performing loans to total loans		1.35	%		2.10	%
Total non-performing loans to total assets		1.03			1.64
Total non-performing assets to total assets		1.14			1.69

(1) As defined in Statement of Financial Accounting Standards No. 15.

Nonperforming assets decreased $931,000, or 33.6%, primarily due to a decrease in nonaccruing construction loans. The Bank refinanced one of the nonaccruing construction loans splitting the original loan amount between the two primary borrowers. Two of the properties were only 85% complete. The borrower who took this part of the refinancing provided additional properties for collateral so that there would be enough equity to finish the remaining 15% of the project. The project has been completed and the two units will be rented to improve cash flows for repayment. The borrower who refinanced the other properties is repaying a term loan that is secured by the two completed units, which are rented and producing income. The borrower is adding personal cash to help make the payments. Both of the refinanced loans were granted at the current market rates available and at the same risk and compliance as other such loans available.

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Noninterest Income. The following table summarizes noninterest income for the three months ended March 31, 2009 and 2008.

	Three Months Ended March 31,
	2009			2008		% change
	(In thousands)
Service fees on deposits	$	29		$	27	7.4	%
Service fees on loans		7			8	(12.5	)
Income from investment in life insurance		10			18	(44.4	)
Loss on securities trading		(54	)		—	N/A
Other income		22			19	15.8
Total	$	14		$	72	(80.6	)

The decrease in noninterest income was due to a loss on trading securities associated with a decline in the AMF Ultra Short Mortgage Fund. This mutual fund investment was transferred to securities trading from securities available for sale on July 1, 2008.

Noninterest Expenses. The following table summarizes noninterest expenses for the three months ended March 31, 2009 and 2008.

	Three Months Ended March 31,
	2009			2008			% change
	(Dollars in thousands)
Compensation and related expenses	$	549		$	595		(7.7	)%
Occupancy		82			74		10.8
Data processing		106			102		3.9
Telephone and postage		17			17		—
Advertising		24			29		(17.2	)
Professional fees		58			55		5.5
Equipment		35			44		(20.5	)
Amortization of intangible assets		28			32		(12.5	)
FDIC insurance premiums		27			9		200.0
Other		104			97		8.3
Total	$	1,030		$	1,054		(2.3	)
Efficiency ratio (1)		94.93	%		110.71	%

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

Total noninterest expenses decreased $24,000, or 2.3%. Compensation and related expenses decreased $46,000, or 7.7%, primarily as a result of the Bank reducing bonus compensation. FDIC insurance premiums increased $18,000, or 200.0%, as the FDIC increased its assessment rates.

Due to losses incurred by the Deposit Insurance Fund in 2008 from failed institutions and anticipated future losses, the Federal Deposit Insurance Corporation, pursuant to a Restoration Plan to replenish the fund, adopted an across the board seven basis point increase in the assessment range for the first quarter of 2009. The Federal Deposit Insurance Corporation adopted further refinements to its risk-

19

based assessment that are effective April 1, 2009 and effectively make the range seven to 77 ¹/2 basis points. The FDIC also established a program under which it fully guarantees all non-interest bearing transaction accounts and senior unsecured debt of a bank or its holding company. The Company is participating in the program and will be assessed ten basis points for non-interest bearing transaction account balances in excess of $250,000 and 75 basis points of the amount of debt issued.

Income Taxes. The provision for income taxes increased $180,000, or 169.8%, from a benefit of $106,000 for the three months ended March 31, 2008 to an expense of $74,000 for the three months ended March 31, 2009. The effective tax rate was 231.2% for the three months ended March 31, 2009 compared to 48.2% for the three months ended March 31, 2008. The primary reason for the significant change in the effective tax rate for the period ended March 31, 2009 was due to the valuation allowance on the AMF mutual fund deferred tax asset.

Results of Operations for the Nine Months Ended March 31, 2009 and 2008

General. Net income increased $260,000, or 184.4%, to $119,000 for the nine months ended March 31, 2009 compared to a net loss of $141,000 for the same period in the prior year primarily due to a $666,000 increase in net interest income, offset by a $208,000 decrease in noninterest income and a $95,000 increase in noninterest expenses.

Net Interest Income. The following table summarizes changes in interest income and expense for the nine months ended March 31, 2009 and 2008.

	Nine Months Ended March 31,
	2009		2008		% change
	(Dollars in thousands)
Interest Income:
Loans, including fees	$	5,930	$	5,636	5.2	%
Investment securities – taxable		546		390	40.0
Other		17		644	(97.4	)
Total interest income		6,493		6,670	(2.7	)
Interest Expense:
Deposits		2,847		3,598	(20.9	)
Federal Home Loan Bank advances		287		379	(24.3	)
Total interest expense		3,134		3,977	(21.2	)
Net interest income	$	3,359	$	2,693	24.7

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The following table summarizes average balances and average yield and costs for the nine months ended March 31, 2009 and 2008.

	Nine Months Ended March 31,
	2009				2008
	Average Balance		Yield/ Cost		Average Balance		Yield/ Cost
	(Dollars in thousands)
Loans	$	126,925	6.23	%	$	119,600	6.28	%
Investment securities		15,764	4.62			9,789	5.31
Interest-earning deposits		425	0.94			568	4.23
Federal funds		3,770	0.50			18,458	4.51
Interest-bearing deposits		124,650	3.05			129,935	3.69
Federal Home Loan Bank advances		10,135	3.78			10,302	4.91

Net interest income for the nine months ended March 31, 2009 increased $666,000, or 24.7%, compared to the same period last year, as a result of increases in the loan portfolio and investment securities and a decrease in interest expense due to a decrease in the cost of interest-bearing deposits and FHLB advances. Total interest income decreased as a result of the lower interest yields on average interest-earning assets.

Total interest expense decreased as a result of a decrease in the average rate paid on deposits along with a decrease in the average balance of deposits to $124.7 million, compared to average deposits of $129.9 million in 2008. Interest expense on FHLB advances decreased due primarily to a lower average rate paid on these advances.

Provision for Loan Losses. The following table summarizes the activity in the allowance for loan losses for the nine months ended March 31, 2009 and 2008.

	Nine Months Ended March 31,
	2009			2008
	(In thousands)
Allowance at beginning of period	$	709		$	402
Provision for loan losses		44			162
Charge-offs		(61	)		(21	)
Allowance at end of period	$	692		$	543

The provision for loan losses decreased $118,000 to $44,000 for the nine months ended March 31, 2009. The decrease in the provision for loan losses reflects a decrease in nonperforming assets, offset by an increase in net charge-offs.

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Noninterest Income. The following table summarizes noninterest income for the nine months ended March 31, 2009 and 2008.

	Nine Months Ended March 31,
	2009			2008		% change
	(Dollars in thousands)
Service fees on deposits	$	84		$	91	(7.7	)%
Service fees on loans		25			22	13.6
Income from investment in life insurance		82			53	54.7
Loss on securities trading		(479	)		—	N/A
Termination of split-dollar life insurance policy		240			—	N/A
Other income		64			58	10.3
	$	16		$	224	(92.9	)

The decrease in noninterest income was due to a loss on trading securities of $479,000 associated with a decline in the AMF Ultra Short Mortgage mutual fund, offset by $240,000 of income resulting from the termination of $3.9 million in split-dollar life insurance policies and $36,000 of income resulting from the proceeds from a life insurance policy on a former director.

Noninterest Expenses. The following table summarizes noninterest expenses for the nine months ended March 31, 2009 and 2008.

	Nine Months Ended March 31,
	2009			2008			% change
	(Dollars in thousands)
Compensation and related expenses	$	1,684		$	1,711		(1.6	)%
Occupancy		207			191		8.4
Data processing		298			276		8.0
Telephone and postage		51			50		2.0
Advertising		86			91		(5.5	)
Professional fees		170			172		(1.2	)
Equipment expense		113			131		(13.7	)
Amortization of intangible assets		83			80		3.8
FDIC insurance premiums		108			29		272.4
Other		308			282		9.2
Total	$	3,108		$	3,013		3.2
Efficiency ratio (1)		92.09	%		103.29	%

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

Total non-interest expenses increased $95,000, or 3.2%. FDIC insurance premiums increased $79,000, or 272.4%, as the FDIC increased its assessment rates. Data processing costs increased $22,000 or 8.0%, due to additional charges related to the branch acquisition. The increase in non-interest expenses was offset by a decrease in compensation and related expenses primarily as a result of the Bank reducing bonus compensation.

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Income Taxes. Provision for income taxes increased $221,000, or 188.9%, from a $117,000 benefit for the nine months ended March 31, 2008 to an expense of $104,000 for the nine months ended March 31, 2009. The effective tax rate was 46.6% for the nine months ended March 31, 2009 compared to 45.4% for the nine months ended March 31, 2008. The increase in the effective tax rate was due to the change in the Maryland income tax rate and the impact this had on deferred tax balances.

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. Excess liquid assets are invested generally in interest-earning deposits and short- and intermediate-term U.S. Treasury and federal agency securities.

Our most liquid assets are cash and cash equivalents and interest-bearing deposits in other banks. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At March 31, 2009, cash and cash equivalents totaled $12.7 million. Securities classified as trading and available-for-sale, which provide additional sources of liquidity, totaled $1.3 million and $1.3 million, respectively, at March 31, 2009. In addition, at March 31, 2009, we had the ability to borrow a total of approximately $40.0 million from the Federal Home Loan Bank of Atlanta. On that date, we had advances outstanding of $6.5 million. Additionally, at March 31, 2009, the Bank had a $2.0 million unsecured demand line of credit facility with M&T Bank, which had no outstanding balance.

At March 31, 2009, we had $457,000 in loan commitments outstanding. In addition to commitments to originate loans, we had $2.0 million in unused lines of credit and $1.4 million of construction loans in process. Certificates of deposit due within one year at March 31, 2009 totaled $34.1 million, or 25.1% 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 2009. 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.

We are subject to various regulatory capital requirements administered by the Office of Thrift Supervision, including risk-based capital measures. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet

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assets and off-balance sheet items to broad risk categories. At March 31, 2009, 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 described in the liquidity and capital resources section.

For the nine months ended March 31, 2009, 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. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable as the Company is a smaller reporting company.

Item 4. 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. 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 1A. Risk Factors

There are no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2008, which could materially and adversely affect the Company’s business, financial condition or future results other than as set forth below. The risks described in the Company’s Annual Report on Form 10-K and as included below are not the only risks that the Company faces. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

Future FDIC Assessments Will Hurt Our Earnings

In February 2009, the FDIC adopted an interim final rule imposing a special assessment on all insured institutions due to recent bank and savings association failures. The emergency assessment amounts to 20 basis points of insured deposits as of June 30, 2009. The assessment will be accrued for by the Company on June 30, 2009 and will be collected on September 30, 2009. The FDIC has indicated that it may reduce the special assessment to as low as 10 basis points if Congress increases the FDIC’s borrowing authority with the U.S. Department of the Treasury. The special assessment will negatively impact the Company’s earnings. In addition, the interim rule would also permit the FDIC to impose additional emergency special assessments after June 30, 2009, of up to 10 basis points per quarter if necessary to maintain public confidence in federal deposit insurance or as a result of deterioration in the deposit insurance fund reserve ratio due to institution failures. Any additional emergency special assessments imposed by the FDIC will further hurt the Company’s earnings.

A continuation of recent turmoil in the financial markets could have an adverse effect on our financial position or results of operations.

Beginning in 2008, United States and global markets have experienced severe disruption and volatility, and general economic conditions have declined significantly. Adverse developments in credit quality, asset values and revenue opportunities throughout the financial services industry, as well as general uncertainty regarding the economic and regulatory environment, have had a marked negative impact on the industry. The United States and the governments of other countries have taken steps to try to stabilize the financial system, including investing in financial institutions, and have also been working to design and implement programs to improve general economic conditions. Notwithstanding the actions of the United States and other governments, there can be no assurances that these efforts will be successful in restoring industry, economic or market conditions and that they will not result in adverse unintended consequences. Factors that could continue to pressure financial services companies, including BV Financial, are numerous and include (1) worsening credit quality, leading among other things to increases in loan losses and reserves, (2) continued or worsening disruption and volatility in financial markets, leading among other things to continuing reductions in asset values, (3) capital and liquidity concerns regarding financial institutions generally, (4) limitations resulting from or imposed in connection with governmental actions intended to stabilize or provide additional regulation of the

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financial system, and/or (5) recessionary conditions that are deeper or last longer than currently anticipated.

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, 2009.

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	(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2009 to January 31, 2009	—	$	—	—	47,830
February 1, 2009 to February 28, 2009	—		—	—	47,830
March 1, 2009 to March 31, 2009	—		—	—	47,830
Total	—	$	—	—

(1) On March 20, 2008, BV Financial announced the adoption of a stock repurchase program to acquire up to 97,830 shares, or 10%, of BV Financial’s outstanding shares of common stock, excluding shares held by Bay-Vanguard M.H.C. The program will continue until it is completed or terminated by the Board of Directors.

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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.

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)
10.1	Amended and Restated Employment Agreement between Bay-Vanguard Federal Savings Bank and Edmund T. Leonard
10.2	Amended and Restated Employment Agreement between BV Financial, Inc. and Edmund T. Leonard
10.3	Amended and Restated Employment Agreement between Bay-Vanguard Federal Savings Bank and Carolyn M. Mroz
10.4	Amended and Restated Employment Agreement between BV Financial, Inc. and Carolyn M. Mroz
10.5	Amended and Restated Employment Agreement between Bay-Vanguard Federal Savings Bank and Daniel J. Gallagher, Jr.
10.6	Amended and Restated Bay-Vanguard Federal Savings Bank Change in Control Severance Compensation Plan
10.7	Amended and Restated Bay-Vanguard Federal Savings Bank Supplemental Executive Retirement Plan
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

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

	BV FINANCIAL, INC.
Dated: May 13, 2009	By:	/s/ Carolyn M. Mroz
		Carolyn M. Mroz President and Chief Executive Officer (principal executive officer)
Dated: May 13, 2009	By:	/s/ Edmund T. Leonard
		Edmund T. Leonard Chairman of the Board and Chief Financial Officer (principal financial and accounting officer)

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED

BAY-VANGUARD FEDERAL SAVINGS BANK

EMPLOYMENT AGREEMENT

THIS AGREEMENT, originally entered into on 12th day of January, 2005 (the “Agreement”), by and between BAY-VANGUARD FEDERAL SAVINGS BANK, a federally-chartered savings bank (the “Bank”), and EDMUND T. LEONARD (“Executive”), is amended and restated in its entirety as of December 18, 2008. References to the “Company” herein shall mean BV FINANCIAL, INC., a federally-chartered corporation and the Bank holding company.

W I T N E S S E T H

WHEREAS, Executive serves in a position of substantial responsibility;

WHEREAS, the Bank wants to continue to assure Executive’s continued employment for the term of this Agreement;

WHEREAS, Executive desires to continue to remain employed by the Bank during the term of this Agreement; and

WHEREAS, the parties desire to amend and restate the Agreement in order to bring it into compliance with Section 409A of the Internal Revenue Code.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and upon the other terms and conditions provided for in this Agreement, the parties hereby agree as follows:

1. Employment. The Bank will employ Executive as Chairman and Chief Financial Officer. Executive will perform all duties and shall have all powers commonly incident to the offices of Chairman and Chief Financial Officer or which, consistent with those offices, the board of directors of the Bank delegates to Executive. Executive also agrees to serve, if elected, as an officer and/or director of any subsidiary of the Bank and to carry out the duties and responsibilities reasonably appropriate to that position.

2. Location and Facilities. The Bank will furnish Executive with the working facilities and staff customary for the positions of the Chairman and Chief Financial Officer. The Bank will locate the office and staff of Executive at the principal administrative offices of the Bank.

3. Term.

(a) The term of this Agreement shall include (i) the initial term, consisting of the period commencing on the date of this Agreement (the “Effective Date”) and ending on January 12, 2011, plus (ii) any and all extensions of the initial term made pursuant to this Section 3.

(b) Commencing on July 1, 2009 (the “Renewal Date”), and continuing on each anniversary thereafter, the disinterested members of the board of directors of the Bank may extend the term of this Agreement for an additional year so that the remaining term of the Agreement again becomes thirty-six (36) months (from the Renewal Date), unless Executive elects not to extend the term of this Agreement by giving written notice of his intentions in accordance with Section 20 of this Agreement. Each year, the Board of Directors of the Bank (the “Board”) will review Executive’s performance for purposes of determining whether to extend the term of this Agreement and will include the rationale and results of its review in the minutes of its

meeting. Executive shall receive notice as soon as possible after such review as to whether the Agreement will be extended for an additional year.

4. Base Compensation.

(a) The Bank agrees to pay the Executive an annual base salary of $151,980, payable in accordance with the customary payroll practices of the Bank.

(b) Each year, the Board will review the level of Executive’s base salary, based upon factors they deem relevant, in order to determine whether to maintain or increase Executive’s base salary.

5. Bonuses. Executive will participate in discretionary bonuses or other incentive compensation programs the Bank may sponsor or award from time to time to other senior management employees.

6. Benefit Plans. Executive will participate in life insurance, medical, dental, pension, profit sharing, other retirement and stock-based compensation plans and other programs and arrangements that the Bank may sponsor or maintain for the benefit of its employees. Executive will also be reimbursed for all out-of-pocket expenses associated with Executive’s annual medical physical. At the Executive’s election, the Bank will provide Executive’s spouse with medical and dental coverage.

7. Vacation and Leave.

(a) Executive may take vacation and other leave in accordance with the Bank’s policy for senior executives or otherwise as approved by the Board.

(b) In addition to paid vacations and other leave, the Board may grant Executive a leave of absence, with or without pay, at such time or times and upon such terms and conditions as the Board may determine in its discretion.

8. Expense Payments and Reimbursements. The Bank will reimburse Executive for all reasonable out-of-pocket business expenses incurred in connection with his services under this Agreement. Executive must substantiate the payment of all expenses in accordance with applicable policies of the Bank.

9. Automobile Allowance, Cellular Phone and Conference Attendance. During the term of this Agreement, the Bank will reimburse Executive for all costs associated with the business use of any automobile. Executive agrees to comply with reasonable reporting and expense limitations on the use of any automobile as may be established by the Bank from time to time, and the Bank will include any amount of income attributable to Executive’s personal use of an automobile on Executive’s Forms W-2. The Bank will also provide Executive with a cellular phone and will pay (or reimburse Executive) for all reasonable expenses related to the business use of such phone. In addition to the foregoing, Executive and his or her spouse, will be entitled to attend such conferences as may be approved by the Board of Directors of the Bank from time to time.

10. Loyalty and Confidentiality.

(a) During the term of this Agreement, Executive shall: (i) devote all his business time, attention, skill, and efforts to the faithful performance of his duties as Chairman and Chief Financial Officer of the Bank; provided, however, that from time to time, Executive may serve on the board of directors of, and hold any other offices or positions in, companies or organizations that will not present any conflict of interest with the Bank or the Company or any of their affiliates, and that will not unfavorably affect the performance of

2

Executive’s employment duties, and that will not violate any applicable statute or regulation. Executive shall not engage in any business or activity contrary to the business affairs or interests of the Bank or the Company.

(b) Nothing contained in this Agreement prevents or limits Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Bank or the Company, or, solely as a passive, minority investor, in any business.

(c) Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Bank and Company; the names or addresses of any borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Bank or the Company which he gains or of which he becomes aware during the course of his employment with the Bank. Executive further agrees that, unless required by law or specifically permitted by the Board in writing, he will not disclose to any person or entity, either during or subsequent to his employment, any of the above-mentioned information not generally known to the public, nor shall he use the information in any way other than for the benefit of the Bank.

11. Termination and Termination Pay. Subject to Section 12 of this Agreement, Executive or the Bank may terminate Executive’s employment under the following circumstances:

(a) Death. Executive’s employment under this Agreement shall terminate upon his death during the term of this Agreement, in which event Executive’s estate shall receive the compensation due to Executive through the last day of the calendar month in which his death occurred.

(b) Retirement. This Agreement shall terminate upon Executive’s retirement under the retirement benefit plan or plans in which he participates pursuant to Section 6 of this Agreement or otherwise. Notwithstanding the foregoing, in the event the Executive retires on or after the attainment of age 65, the Bank will provide the Executive and at the Executive’s election his spouse, with medical coverage for five (5) years following his retirement date.

(c) Disability.

(i) The Board or Executive may terminate Executive’s employment after having determined Executive has suffered a Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the Bank (or, if no such benefits exist, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of at least one hundred eighty (180) consecutive days). The Board, in good faith, shall determine whether or not Executive becomes and continues to be permanently disabled for purposes of this Agreement, based upon competent medical advice and other factors that the Board reasonably believes to be relevant. As a condition to any benefits, the Board may require Executive to submit to physical or mental evaluations and tests as the Board or its medical experts deem reasonably appropriate.

(ii) In the event of his Disability, Executive shall no longer be obligated to perform services under this Agreement. The Bank will pay Executive, as Disability pay, an amount equal to one hundred percent (100%) of Executive’s weekly rate of base salary in effect as of the date of his termination of employment due to Disability. The Bank will make Disability payments on a monthly basis commencing on the first day

3

of the month following the effective date of Executive’s termination of employment due to Disability and ending on the earlier of: (A) the date he returns to full-time employment at the Bank in the same capacity as he was employed prior to his termination for Disability; (B) his death; (C) his attainment of age 65; or (D) the date the Agreement would have expired had Executive’s employment not terminated by reason of Disability. The Bank will reduce Disability pay otherwise due to Executive under this provision by the amount of any short- or long-term disability benefits payable to Executive under any other disability programs sponsored by the Bank. In addition, during any period of Executive’s Disability, the Bank shall continue to provide Executive and his dependents, to the greatest extent possible, all benefits (including, without limitation, benefits under retirement plans and medical, dental and life insurance plans) provided to Executive and his dependents prior to his Disability, on the same terms as if Executive remained actively employed by the Bank.

(d) Termination for Cause.

(i) The board of directors of the Bank may, by written notice to Executive in the form and manner specified in this paragraph, immediately terminate Executive’s employment at any time, for “Cause”. Executive shall have no rights to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:

(1) Personal dishonesty;

(2) Incompetence;

(3) Willful misconduct;

(4) Breach of fiduciary duty involving personal profit;

(5) Intentional failure to perform duties under this Agreement;

(6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that reflects adversely on the reputation of the Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; or

(7) Material breach by Executive of any provision of this Agreement.

(ii) Notwithstanding the foregoing, Executive’s termination for Cause will not become effective unless the Bank has delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the board, at a meeting of the board called and held for the purpose of finding that, in the good faith opinion of the Board (after reasonable notice to Executive and an opportunity for Executive to be heard before the board with counsel), Executive was guilty of the conduct described above and specifying the particulars of his conduct.

4

(e) Voluntary Termination by Executive. In addition to his other rights to terminate employment under this Agreement, Executive may voluntarily terminate employment during the term of this Agreement upon at least sixty (60) days prior written notice to the board. Upon Executive’s voluntary termination, Executive will receive only his compensation, vested rights and employee benefits up to the date of his termination.

(f) Without Cause or With Good Reason.

(i) In addition to termination pursuant to Sections 11(a) through 11(e), the Board, may, upon providing written notice to Executive, immediately terminate his employment at any time for a reason other than Cause (a termination “Without Cause”) and Executive may, upon providing written notice to the Board, terminate his employment under this Agreement for “Good Reason” as defined below (a termination “With Good Reason”).

(ii) Subject to Section 12 of this Agreement, in the event of his termination of employment under this Section 11(f), Executive shall receive his base salary for the remaining term of the Agreement paid in one lump sum within ten (10) calendar days of his termination. Executive shall also receive, for the remaining term of the Agreement, the benefits he would have received under any retirement programs (whether tax-qualified or non-qualified) in which he participated prior to his termination (with the amount of benefits determined by reference to the benefits Executive received or which the Bank accrued on his behalf during the twelve (12) months preceding his termination). Executive shall also continue to participate in any health (including medical and dental), life, disability or similar insurance coverage or benefit plans for the remaining term of the Agreement, upon terms no less favorable than the most favorable terms provided to senior executives of the Bank during such period.

(iii) For the purposes of this Agreement “Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent:

(1) The assignment to Executive of duties that constitute a material diminution of his authority, duties, or responsibilities (including reporting requirements);

(2) A material diminution in Executive’s Base Salary;

(3) Relocation of Executive to a location outside a radius of 25 miles of the Bank’s Baltimore, Maryland office; or

(4) Any other action or inaction by the Bank that constitutes a material breach of this Agreement;

provided, that within ninety (90) days after the initial existence of such event, the Bank shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by Executive. Executive’s resignation hereunder for Good Reason shall not occur later than one hundred fifty (150) days following the initial date on which the event Executive claims constitutes Good Reason occurred.

5

(g) Continuing Covenant Not to Compete or Interfere with Relationships. Regardless of anything in this Agreement to the contrary, following Executive’s termination of employment pursuant to Section 11(f):

(1) Executive’s obligations under Section 10(c) of this Agreement will continue in effect; and

(2) During the period ending on the first anniversary of Executive’s termination, Executive shall not serve as an officer, director or employee of any bank holding company, bank, savings bank, savings and loan holding company, mortgage company or other financial institution that offers products or services competing with those offered by the Bank from any office within thirty-five (35) miles from the main office or any branch of the Bank and, further, Executive shall not interfere with the relationship of the Bank with any of its employees, agents, or representatives.

12. Termination in Connection with a Change in Control.

(a) Definition of Change in Control. For purposes of this Agreement, a Change in Control means any of the following events:

(1) Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and, as a result, persons who were stockholders of the Company immediately before the merger or consolidation hold less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation.

(2) Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner(s) of 25% or more of a class of the Company’s voting securities, but this clause (2) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(3) Change in Board Composition: If, during any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (d), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds ( ²/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of the two-year period; or

(4) Sale of Assets: The Company sells to a third party all or substantially all of its assets.

Notwithstanding anything in this Agreement to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full

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stock holding company form of organization (including the elimination of the mutual holding company) constitute a “Change in Control” for purposes of this Agreement.

(b) Termination. If, within the period ending one year after a Change in Control, (i) the Bank terminates Executive’s employment Without Cause, or (ii) Executive voluntarily terminates his employment With Good Reason, the Bank shall, within ten calendar days of the termination of Executive’s employment, make a lump-sum cash payment to him equal to 2.99 times Executive’s average Annual Compensation over the five (5) most recently completed calendar years ending with the year immediately preceding the effective date of the Change in Control. In determining Executive’s average Annual Compensation, Annual Compensation shall include base salary and any other taxable income, including, but not limited to, amounts related to the granting, vesting or exercise of restricted stock awards or stock options, commissions, bonuses, retirement benefits, director or committee fees and fringe benefits paid to Executive or accrued or paid on Executive’s behalf during any applicable calendar year. Annual Compensation shall also include profit sharing, employee stock ownership plan and other retirement contributions or benefits, including those made to or accrued on behalf of Executive under any tax-qualified or non-qualified plan or arrangement (whether or not such amounts are taxable) during any applicable calendar year. The cash payment made under this Section 12(b) shall be made in lieu of any payment also required under Section 11(f) of this Agreement because of a termination of Executive’s employment; however, Executive’s rights under Section 11(f) are not otherwise affected by this Section 12.

Also, upon termination under this Section 12, Executive shall receive for a thirty-six (36) month period the benefits he would have received under any retirement programs (whether tax-qualified or non-qualified) in which he participated prior to his termination. The amount of these retirement benefits will be determined by reference to the benefits Executive received or which the Bank accrued on Executive’s behalf under the benefit programs during the twelve (12) months preceding the Change in Control. Executive will also continue to participate in any Bank-sponsored health (including medical and dental), life, disability or similar insurance coverage or benefit plans for a thirty-six (36) month period, under terms no less favorable than the most favorable terms provided to senior executives during such period.

(c) The provisions of this Section 12 and Sections 14 through 26, including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or two years following a Change in Control.

13. Indemnification and Liability Insurance.

(a) Indemnification. The Bank agrees to indemnify Executive (and his heirs, executors, and administrators) under this Agreement, and to advance expenses related to this indemnification, to the fullest extent permitted under applicable law and regulations against any and all expenses and liabilities that Executive reasonably incurs in connection with or arising out of any action, suit, or proceeding in which he becomes involved by reason of his service as a director or Executive of the Bank or any of its subsidiaries (whether or not Executive continues to serve as a director or Executive at the time of incurring the expenses or liabilities). Covered expenses and liabilities include, without limitation, judgments, court costs, attorneys’ fees and the costs of reasonable settlements (subject to Board approval), provided legal action is brought against Executive in his capacity as an Executive or director of the Bank or any of its subsidiaries. Indemnification for expenses shall not extend to matters related to Executive’s termination for Cause. Notwithstanding anything in this Section 13(a) to the contrary, the Bank shall not be required to provide any indemnification otherwise prohibited by applicable law or regulation. The obligations of this Section 13(a) shall survive the term of this Agreement by a period of six (6) years.

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(b) Insurance. During the period in which the Bank must indemnify Executive, the Bank, at its expense, will arrange for Executive’s coverage (and his heirs, executors, and administrators) under a directors’ and executives’ liability policy at least equivalent to the insurance coverage provided to directors and senior executives of the Bank.

14. Reimbursement of Executive’s Expenses to Enforce this Agreement. The Bank will reimburse Executive for all out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees, that Executive incurs in connection with his successful enforcement of the Bank’s obligations under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Bank take some action specified by this Agreement: as a result of court order; or otherwise following an initial failure by the Bank to pay such money or take such action promptly following receipt of a written demand from Executive stating the reason that the Bank must make payment or take action under this Agreement.

15. Limitation of Benefits Under Certain Circumstances. If the payments and benefits pursuant to Section 12 of this Agreement, either alone or together with other payments and benefits which Executive has the right to receive from the Bank, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits pursuant to Section 12 shall be reduced or revised, in the manner determined by Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under Section 12 being non-deductible to the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The Bank’s independent public accountants shall determine any reduction in the payments and benefits to be made pursuant to Section 12, and the Bank shall pay for the accountant’s opinion with respect to such reduction. If the Bank and/or Executive do not agree with the accountant’s opinion, the Bank shall pay to Executive the maximum amount of payments and benefits pursuant to Section 12, as selected by Executive, which the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible to the Bank and subject to the imposition of the excise tax imposed under Section 4999 of the Code. The Bank may also request, and Executive shall have the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits pursuant to Section 12 have such tax consequences. The Bank shall promptly prepare and file the request for a ruling from the IRS, but in no event shall the Bank make such filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request shall also be subject to the Executive’s approval prior to filing; Executive shall not unreasonably withhold his approval. The Bank and Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which Executive may be entitled upon termination of employment other than pursuant to Section 12 hereof, or a reduction in the payments and benefits specified in Section 12, below zero.

16. Injunctive Relief. Upon a breach or threatened breach of Section 11(g) of this Agreement or the prohibitions upon disclosure contained in Section 10(c) of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and the Bank shall be entitled to injunctive relief restraining Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy for a breach of this Agreement. The parties to this Agreement further agree that Executive, without limitation, may seek injunctive relief to enforce the Bank’s obligations under this Agreement.

17. Source of Payments.

(a) All payments provided for in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

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(b) Notwithstanding any provision herein to the contrary, to the extent that payments and benefits, as provided by this Agreement, are paid to or received by Executive under the Employment Agreement in effect between Executive and the Company (the “Company Agreement”), such compensation payments and benefits paid by the Company will be subtracted from any amount due simultaneously to Executive under similar provisions of this Agreement. Payments pursuant to this Agreement and the Company Agreement shall be allocated in proportion to the level of activity and the time expended on such activities by Executive as determined by the Company and the Bank.

18. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Bank. Since the Bank has contracted for the unique and personal skills of Executive, Executive shall not assign or delegate his rights or duties hereunder without first obtaining the written consent of the Bank.

19. No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no payment under this Agreement shall be offset or reduced by any compensation or benefits provided to Executive in any subsequent employment.

20. Notices. All notices, requests, demands and other communications made in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the Bank at its principal business office and to Executive at his home address as maintained in the records of the Bank.

21. No Plan Created by this Agreement. Executive and the Bank expressly declare and agree that this Agreement was negotiated between them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary. Any party who makes such an assertion in any judicial or administrative filing, hearing, or process shall have materially breached this Agreement upon making the assertion.

22. Amendments. No amendments or additions to this Agreement will bind the parties unless made in writing and signed by all of the parties, except as herein otherwise specifically provided.

23. Applicable Law. Except to the extent preempted by federal law, Maryland law shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.

24. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Agreement.

25. Headings. Headings contained in this Agreement are for convenience of reference only.

26. Entire Agreement. This Agreement, together with any understanding or modifications agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter of this Agreement, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6.

27. Required Provisions. In the event any of the foregoing provisions of this Section 27 are in conflict with the terms of this Agreement, this Section 27 shall prevail.

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(a) The Bank may terminate Executive’s employment at any time, but any termination by the Bank, other than Termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause as defined in Section 7 of this Agreement.

(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1813(x)(1), all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(e) All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the institution: (i) by the Director of the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1823(c); or (ii) by the Director of the OTS (or his designee) at the time the Director (or his designee) approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(f) Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon compliance with 12 U.S.C. Sec.1828(k) and 12 C.F.R. Sec. 545.121 and any rules and regulations promulgated thereunder.

28. Section 409A of the Code.

(a) This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the

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designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

(b) If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 11(f)(ii) or 12(b) to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(c) If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 11(f)(ii) or 12(b) it is not possible to continue coverage for Executive and his dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had Executive’s employment not terminated, assuming continued coverage for 36 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 28(b) applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(d) References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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IN WITNESS WHEREOF, the parties hereto have executed this amended and restated Agreement as of December 18, 2008.

Attest:	BV FINANCIAL, INC.
	(as Guarantor)
/s/ Robert R. Kern, Jr.	By:	/s/ Carolyn M. Mroz
Attest:	BAY-VANGUARD FEDERAL SAVINGS BANK
/s/ Robert R. Kern, Jr.	By:	/s/ Carolyn M. Mroz
Attest:	EXECUTIVE
/s/ Claudia L. Kraft	By:	/s/ Edmund T. Leonard
		Edmund T. Leonard

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EX-10.2

Exhibit 10.2

AMENDED AND RESTATED

BV FINANCIAL, INC.

EMPLOYMENT AGREEMENT

THIS AGREEMENT, originally entered into this 12^th day of January, 2005 (the “Agreement”), by and between BV FINANCIAL, INC., a federally-chartered corporation (the “Company”) and EDMUND T. LEONARD (“Executive”), is amended and restated in its entirety as of December 18, 2008. References to the “Bank” herein shall mean BAY-VANGUARD FEDERAL SAVINGS BANK, a federally chartered savings institution.

W I T N E S S E T H

WHEREAS, Executive serves in a position of substantial responsibility;

WHEREAS, the Company wants to continue to assure Executive’s services for the term of this Agreement;

WHEREAS, Executive desires to continue to serve in the employ of the Company during the term of this Agreement; and

WHEREAS, the parties desire to amend and restate the Agreement in order to bring it into compliance with Section 409A of the Internal Revenue Code.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and upon the other terms and conditions provided for in this Agreement, the parties hereby agree as follows:

1. Employment. The Company will employ Executive as Chairman and Chief Financial Officer. Executive will perform all duties and shall have all powers commonly incident to the offices of Chairman and Chief Financial Officer or which, consistent with those offices, the board of directors of the Company delegate to Executive. Executive also agrees to serve, if elected, as an officer and/or director of any subsidiary of the Company and to carry out the duties and responsibilities reasonably appropriate to that position.

2. Location and Facilities. Executive will be furnished with the working facilities and staff customary for the positions of Chairman and Chief Financial Officer. The location of such facilities and staff will be at the principal administrative offices of the Company or the Bank, or at such other site or sites customary for such offices.

3. Term.

(a) The term of this Agreement shall include (i) the initial term, consisting of the period commencing on the date of this Agreement (the “Effective Date”) and ending on January 12, 2011, plus (ii) any and all extensions of the initial term made pursuant to this Section 3.

(b) Commencing on July 1, 2009 (the “Renewal Date”), and continuing on each anniversary thereafter, the disinterested members of the boards of directors of the Bank and the Company may extend the term of this Agreement for an additional year so that the remaining term of the Agreement again becomes thirty-six (36) months (from the Renewal Date), unless Executive elects not to extend the term of this Agreement by giving written notice of his intentions in accordance with Section 19 of this Agreement. Each year, the Board of Directors of the Company (the “Board”) will review Executive’s performance for purposes of determining whether to extend the term of this Agreement and will include the rationale and results of its

review in the minutes of its meeting. Executive shall receive notice as soon as possible after such review as to whether the Agreement will be extended for an additional year.

4. Base Compensation.

(a) The Company agrees to pay the Executive an annual base salary of $151,980 payable in accordance with the customary payroll practices of the Bank.

(b) Each year, the Board will review the level of Executive’s base salary, based upon factors they deem relevant, in order to determine whether to maintain or increase Executive’s base salary.

5. Bonuses. Executive will participate in discretionary bonuses or other incentive compensation programs the Company may sponsor or award from time to time to other senior management employees.

6. Benefit Plans. Executive will participate in life insurance, medical, dental, pension, profit sharing, other retirement and stock-based compensation plans and other programs and arrangements that the Company may sponsor or maintain for the benefit of its employees. Executive will also be reimbursed for all out-of-pocket expenses associated with Executive’s annual medical physical. At the Executive’s election, the Company will provide Executive’s spouse with medical and dental coverage.

7. Vacation and Leave.

(a) Executive may take vacation and other leave in accordance with the Company’s policy for senior executives or otherwise as approved by the Board.

(b) In addition to paid vacations and other leave, the Board may grant Executive a leave of absence, with or without pay, at such time or times and upon such terms and conditions as the Board may determine in its discretion.

8. Expense Payments and Reimbursements. The Company will reimburse Executive for all reasonable out-of-pocket business expenses incurred in connection with his services under this Agreement. Executive must substantiate the payment of all expenses in accordance with applicable policies of the Company.

9. Automobile Allowance, Cellular Phone and Conference Attendance. During the term of this Agreement, the Company will reimburse Executive for all costs associated with the business use of any automobile. Executive agrees to comply with reasonable reporting and expense limitations on the use of any automobile as may be established by the Company from time to time, and the Company will include any amount of income attributable to Executive’s personal use of an automobile on Executive’s Forms W-2. The Company will also provide Executive with a cellular phone and will pay (or reimburse Executive) for all reasonable expenses related to the business use of such phone. In addition to the foregoing, Executive and his or her spouse, will be entitled to attend such conferences as may be approved by the Board of Directors of the Bank from time to time.

10. Loyalty and Confidentiality.

(a) During the term of this Agreement, Executive shall: (i) devote all his business time, attention, skill, and efforts to the faithful performance of his duties as Chairman and Chief Financial Officer of the Company; provided, however, that from time to time, Executive may serve on the boards of directors of, and hold any other offices or positions in, companies or organizations that will not present any conflict of interest

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with the Bank or the Company or any of their affiliates, and that will not unfavorably affect the performance of Executive’s employment duties with the Company, and that will not violate any applicable statute or regulation. Executive shall not engage in any business or activity contrary to the business affairs or interests of the Bank or the Company.

(b) Nothing contained in this Agreement prevents or limits Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Bank or the Company, or, solely as a passive, minority investor, in any business.

(c) Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Bank and Company; the names or addresses of any borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Bank or the Company which he gains or of which he becomes aware during the course of his employment with the Company. Executive further agrees that, unless required by law or specifically permitted by the Board in writing, he will not disclose to any person or entity, either during or subsequent to his employment, any of the above-mentioned information not generally known to the public, nor shall he use the information in any way other than for the benefit of the Company.

11. Termination and Termination Pay. Subject to Section 12 of this Agreement, Executive or the Company may terminate Executive’s employment under the following circumstances:

(a) Death. Executive’s employment under this Agreement shall terminate upon his death during the term of this Agreement, in which event Executive’s estate shall receive the compensation due to Executive through the last day of the calendar month in which his death occurred.

(b) Retirement. This Agreement shall terminate upon Executive’s retirement under the retirement benefit plan or plans in which he participates pursuant to Section 6 of this Agreement or otherwise. Notwithstanding the foregoing, in the event the Executive retires on or after the attainment of age 65, the Company will provide the Executive and at the Executive’s election his spouse, with medical coverage for five (5) years following his retirement date.

(c) Disability.

(i) The Board or Executive may terminate Executive’s employment after having determined Executive has suffered a Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the Company (or, if no such benefits exist, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of at least one hundred eighty (180) consecutive days). The Board, in good faith, shall determine whether or not Executive becomes and continues to be permanently disabled for purposes of this Agreement, based upon competent medical advice and other factors that the Board reasonably believes to be relevant. As a condition to any benefits, the Board may require Executive to submit to physical or mental evaluations and tests as the Board or its medical experts deem reasonably appropriate.

(ii) In the event of his Disability, Executive shall no longer be obligated to perform services under this Agreement. The Company will pay Executive, as Disability pay, an amount equal to one hundred percent (100%) of Executive’s weekly rate of base

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salary in effect as of the date of his termination of employment due to Disability. The Company will make Disability payments on a monthly basis commencing on the first day of the month following the effective date of Executive’s termination of employment due to Disability and ending on the earlier of: (A) the date he returns to full-time employment at the Company in the same capacity as he was employed prior to his termination for Disability; (B) his death; (C) his attainment of age 65; or (D) the date the Agreement would have expired had Executive’s employment not terminated by reason of Disability. The Company will reduce Disability pay otherwise due to Executive under this provision by the amount of any short- or long-term disability benefits payable to Executive under any other disability programs sponsored by the Company. In addition, during any period of Executive’s Disability, the Company shall continue to provide Executive and his dependents, to the greatest extent possible, all benefits (including, without limitation, benefits under retirement plans and medical, dental and life insurance plans) provided to Executive and his dependents prior to his Disability, on the same terms as if Executive remained actively employed by the Company.

(d) Termination for Cause.

(i) The board of directors of the Company may, by written notice to Executive in the form and manner specified in this paragraph, immediately terminate Executive’s employment at any time, for “Cause”. Executive shall have no rights to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:

(1) Personal dishonesty;

(2) Incompetence;

(3) Willful misconduct;

(4) Breach of fiduciary duty involving personal profit;

(5) Intentional failure to perform duties under this Agreement;

(6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that reflects adversely on the reputation of the Bank or the Company, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; or

(7) Material breach by Executive of any provision of this Agreement.

(ii) Notwithstanding the foregoing, Executive’s termination for Cause will not become effective unless the Company has delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the board, at a meeting of the board called and held for the purpose of finding that, in the good faith opinion of the Board (after reasonable notice to Executive and an opportunity for Executive to be heard before the board with counsel), Executive was guilty of the conduct described above and specifying the particulars of his conduct.

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(e) Voluntary Termination by Executive. In addition to his other rights to terminate employment under this Agreement, Executive may voluntarily terminate employment during the term of this Agreement upon at least sixty (60) days prior written notice to the board. Upon Executive’s voluntary termination, Executive will receive only his compensation, vested rights and employee benefits up to the date of his termination.

(f) Without Cause or With Good Reason.

(i) In addition to termination pursuant to Sections 11(a) through 11(e), the Board, may, upon providing written notice to Executive, immediately terminate his employment at any time for a reason other than Cause (a termination “Without Cause”) and Executive may, upon providing written notice to the Board, terminate his employment under this Agreement for “Good Reason” as defined below (a termination “With Good Reason”).

(ii) Subject to Section 12 of this Agreement, in the event of his termination of employment under this Section 11(f), Executive shall receive his base salary for the remaining term of the Agreement paid in one lump sum within ten (10) calendar days of his termination. Executive shall also receive, for the remaining term of the Agreement, the benefits he would have received under any retirement programs (whether tax-qualified or non-qualified) in which he participated prior to his termination (with the amount of benefits determined by reference to the benefits Executive received or which the Company accrued on his behalf during the twelve (12) months preceding his termination). Executive shall also continue to participate in any health (including medical and dental), life, disability or similar insurance coverage or benefit plans for the remaining term of the Agreement, upon terms no less favorable than the most favorable terms provided to senior executives of the Company during such period.

(iii) For the purposes of this Agreement “Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent:

(1) The assignment to Executive of duties that constitute a material diminution of his authority, duties, or responsibilities (including reporting requirements);

(2) A material diminution in Executive’s Base Salary;

(3) Relocation of Executive to a location outside a radius of 25 miles of the Company’s Baltimore, Maryland office; or

(4) Any other action or inaction by the Company that constitutes a material breach of this Agreement;

provided, that within ninety (90) days after the initial existence of such event, the Company shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by Executive. Executive’s resignation hereunder for Good Reason shall not occur later than one hundred fifty (150) days following the initial date on which the event Executive claims constitutes Good Reason occurred.

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(g) Continuing Covenant Not to Compete or Interfere with Relationships. Regardless of anything in this Agreement to the contrary, following Executive’s termination of employment pursuant to Section 11(f):

(1) Executive’s obligations under Section 10(c) of this Agreement will continue in effect; and

(2) During the period ending on the first anniversary of Executive’s termination, Executive shall not serve as an officer, director or employee of any bank holding company, bank, savings bank, savings and loan holding company, mortgage company or other financial institution that offers products or services competing with those offered by the Bank from any office within thirty-five (35) miles from the main office or any branch of the Bank and, further, Executive shall not interfere with the relationship of the Company and the Bank with any of their employees, agents, or representatives.

12. Termination in Connection with a Change in Control.

(a) Definition of Change in Control. For purposes of this Agreement, a Change in Control means any of the following events:

(1) Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and, as a result, persons who were stockholders of the Company immediately before the merger or consolidation hold less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation.

(2) Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner(s) of 25% or more of a class of the Company’s voting securities, but this clause (2) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(3) Change in Board Composition: If, during any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (d), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds ( ²/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of the two-year period; or

(4) Sale of Assets: The Company sells to a third party all or substantially all of its assets.

Notwithstanding anything in this Agreement to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full

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stock holding company form of organization (including the elimination of the mutual holding company) constitute a “Change in Control” for purposes of this Agreement.

(b) Termination. If, within the period ending one year after a Change in Control, (i) the Company terminates Executive’s employment Without Cause, or (ii) Executive voluntarily terminates his employment With Good Reason, the Company shall, within ten calendar days of the termination of Executive’s employment, make a lump-sum cash payment to him equal to 2.99 times Executive’s average Annual Compensation over the five (5) most recently completed calendar years ending with the year immediately preceding the effective date of the Change in Control. In determining Executive’s average Annual Compensation, Annual Compensation shall include base salary and any other taxable income, including, but not limited to, amounts related to the granting, vesting or exercise of restricted stock awards or stock options, commissions, bonuses, retirement benefits, director or committee fees and fringe benefits paid to Executive or accrued or paid on Executive’s behalf during any applicable calendar year. Annual Compensation shall also include profit sharing, employee stock ownership plan and other retirement contributions or benefits, including those made to or accrued on behalf of Executive under any tax-qualified or non-qualified plan or arrangement (whether or not such amounts are taxable) during any applicable calendar year. The cash payment made under this Section 12(b) shall be made in lieu of any payment also required under Section 11(f) of this Agreement because of a termination of Executive’s employment; however, Executive’s rights under Section 11(f) are not otherwise affected by this Section 12.

Also, upon termination under this Section 12, Executive shall receive for a thirty-six (36) month period the benefits he would have received under any retirement programs (whether tax-qualified or non-qualified) in which he participated prior to his termination. The amount of these retirement benefits will be determined by reference to the benefits Executive received or which the Company accrued on Executive’s behalf under the benefit programs during the twelve (12) months preceding the Change in Control. Executive will also continue to participate in any Company -sponsored health (including medical and dental), life, disability or similar insurance coverage or benefit plans for a thirty-six (36) month period, under terms no less favorable than the most favorable terms provided to senior executives during such period.

(c) The provisions of this Section 12 and Sections 14 through 26, including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or two years following a Change in Control.

13. Indemnification and Liability Insurance.

(a) Indemnification. The Company agrees to indemnify Executive (and his heirs, executors, and administrators) under this Agreement, and to advance expenses related to this indemnification, to the fullest extent permitted under applicable law and regulations against any and all expenses and liabilities that Executive reasonably incurs in connection with or arising out of any action, suit, or proceeding in which he becomes involved by reason of his service as a director or Executive of the Company, or any of its subsidiaries (whether or not Executive continues to serve as a director or Executive at the time of incurring the expenses or liabilities). Covered expenses and liabilities include, without limitation, judgments, court costs, attorneys’ fees and the costs of reasonable settlements (subject to Board approval), provided legal action is brought against Executive in his capacity as an Executive or director of the Company or any of its subsidiaries. Indemnification for expenses shall not extend to matters related to Executive’s termination for Cause. Notwithstanding anything in this Section 13(a) to the contrary, the Company shall not be required to provide any indemnification otherwise prohibited by applicable law or regulation. The obligations of this Section 13(a) shall survive the term of this Agreement by a period of six (6) years.

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(b) Insurance. During the period in which the Company must indemnify Executive, the Company, at its expense, will arrange for Executive’s coverage (and his heirs, executors, and administrators) under a directors’ and executives’ liability policy at least equivalent to the insurance coverage provided to directors and senior executives of the Company.

14. Reimbursement of Executive’s Expenses to Enforce this Agreement. The Company will reimburse Executive for all out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees, that Executive incurs in connection with his successful enforcement of the Company’s obligations under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Company take some action specified by this Agreement: as a result of court order; or otherwise following an initial failure by the Company to pay such money or take such action promptly following receipt of a written demand from Executive stating the reason that the Company must make payment or take action under this Agreement.

15. Limitation of Benefits Under Certain Circumstances. If the payments and benefits pursuant to Section 12 of this Agreement, either alone or together with other payments and benefits which Executive has the right to receive from the Company, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits pursuant to Section 12 shall be reduced or revised, in the manner determined by Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under Section 12 being non-deductible to the Company pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The Company’s independent public accountants shall determine any reduction in the payments and benefits to be made pursuant to Section 12, and the Company shall pay for the accountant’s opinion with respect to such reduction. If the Company and/or Executive do not agree with the accountant’s opinion, the Company shall pay to Executive the maximum amount of payments and benefits pursuant to Section 12, as selected by Executive, which the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible to the Company and subject to the imposition of the excise tax imposed under Section 4999 of the Code. The Company may also request, and Executive shall have the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits pursuant to Section 12 have such tax consequences. The Company shall promptly prepare and file the request for a ruling from the IRS, but in no event shall the Company make such filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request shall also be subject to the Executive’s approval prior to filing; Executive shall not unreasonably withhold his approval. The Company and Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which Executive may be entitled upon termination of employment other than pursuant to Section 12 hereof, or a reduction in the payments and benefits specified in Section 12, below zero.

16. Injunctive Relief. Upon a breach or threatened breach of Section 11(g) of this Agreement or the prohibitions upon disclosure contained in Section 10(c) of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and the Company shall be entitled to injunctive relief restraining Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy for a breach of this Agreement. The parties to this Agreement further agree that Executive, without limitation, may seek injunctive relief to enforce the Company’s obligations under this Agreement.

17. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company. Since the

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Company has contracted for the unique and personal skills of Executive, Executive shall not assign or delegate his rights or duties hereunder without first obtaining the written consent of the Company.

18. No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no payment under this Agreement shall be offset or reduced by any compensation or benefits provided to Executive in any subsequent employment.

19. Notices. All notices, requests, demands and other communications made in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the Company at its principal business office and to Executive at his home address as maintained in the records of the Company.

20. No Plan Created by this Agreement. Executive and the Company expressly declare and agree that this Agreement was negotiated between them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary. Any party who makes such an assertion in any judicial or administrative filing, hearing, or process shall have materially breached this Agreement upon making the assertion.

21. Amendments. No amendments or additions to this Agreement will bind the parties unless made in writing and signed by all of the parties, except as herein otherwise specifically provided.

22. Applicable Law. Except to the extent preempted by federal law, Maryland law shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.

23. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Agreement.

24. Headings. Headings contained in this Agreement are for convenience of reference only.

25. Entire Agreement. This Agreement, together with any understanding or modifications agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter of this Agreement, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6.

26. Source of Payments. Notwithstanding any provision herein to the contrary, to the extent payments and benefits, as provided by the Agreement, are paid or received by Executive under the Employment Agreement in effect between Executive and the Bank (the “Bank Agreement”), such compensation payment and benefits paid by the Bank will be subtracted from any amount or benefit due simultaneously to Executive under similar provisions of this Agreement. Payments pursuant to this Agreement will be allocated in proportion to the level of activity and the time expended on such activities by Executive as determined by the Company and the Bank.

27. Section 409A of the Code.

(a) This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects

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be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

(b) If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 11(f)(ii) or 12(b) to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(c) If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 11(f)(ii) or 12(b) it is not possible to continue coverage for Executive and his dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had Executive’s employment not terminated, assuming continued coverage for 36 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 27(b) applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(d) References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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IN WITNESS WHEREOF, the parties hereto have executed this amended and restated Agreement as of December 18, 2008.

Attest:	BV FINANCIAL, INC.
/s/ Robert R. Kern, Jr.	By:	/s/ Carolyn M. Mroz
Attest:	EXECUTIVE
/s/ Claudia L. Kraft	By:	/s/ Edmund T. Leonard
		Edmund T. Leonard

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EX-10.3

Exhibit 10.3

AMENDED AND RESTATED

BAY-VANGUARD FEDERAL SAVINGS BANK

EMPLOYMENT AGREEMENT

THIS AGREEMENT, originally entered into the 12th day of January, 2005 (the “Agreement”), by and between BAY-VANGUARD FEDERAL SAVINGS BANK, a federally-chartered savings bank (the “Bank”), and CAROLYN M. MROZ (“Executive”), is amended and restated in its entirety as of December 18, 2008. References to the “Company” herein shall mean BV FINANCIAL, INC., a federally-chartered corporation and the Bank holding company.

W I T N E S S E T H

WHEREAS, Executive serves in a position of substantial responsibility;

WHEREAS, the Bank wants to continue to assure Executive’s continued employment for the term of this Agreement;

WHEREAS, Executive desires to continue to remain employed by the Bank during the term of this Agreement; and

WHEREAS, the parties desire to amend and restate the Agreement in order to bring it into compliance with Section 409A of the Internal Revenue Code.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and upon the other terms and conditions provided for in this Agreement, the parties hereby agree as follows:

1. Employment. The Bank will employ Executive as President and Chief Executive Officer. Executive will perform all duties and shall have all powers commonly incident to the offices of President and Chief Executive Officer or which, consistent with those offices, the board of directors of the Bank delegates to Executive. Executive also agrees to serve, if elected, as an officer and/or director of any subsidiary of the Bank and to carry out the duties and responsibilities reasonably appropriate to that position.

2. Location and Facilities. The Bank will furnish Executive with the working facilities and staff customary for the positions of the President and Chief Executive Officer. The Bank will locate the office and staff of Executive at the principal administrative offices of the Bank.

3. Term.

(a) The term of this Agreement shall include (i) the initial term, consisting of the period commencing on the date of this Agreement (the “Effective Date”) and ending on January 12, 2011, plus (ii) any and all extensions of the initial term made pursuant to this Section 3.

(b) Commencing on July 1, 2009 (the “Renewal Date”), and continuing on each anniversary thereafter, the disinterested members of the board of directors of the Bank may extend the term of this Agreement for an additional year so that the remaining term of the Agreement again becomes thirty-six (36) months (from the Renewal Date), unless Executive elects not to extend the term of this Agreement by giving written notice of her intentions in accordance with Section 20 of this Agreement. Each year, the Board of Directors of the Bank (the “Board”) will review Executive’s performance for purposes of determining whether to extend the term of this Agreement and will include the rationale and results of its review in the minutes of its

meeting. Executive shall receive notice as soon as possible after such review as to whether the Agreement will be extended for an additional year.

4. Base Compensation.

(a) The Bank agrees to pay the Executive an annual base salary of $151,980, payable in accordance with the customary payroll practices of the Bank.

(b) Each year, the Board will review the level of Executive’s base salary, based upon factors they deem relevant, in order to determine whether to maintain or increase Executive’s base salary.

5. Bonuses. Executive will participate in discretionary bonuses or other incentive compensation programs the Bank may sponsor or award from time to time to other senior management employees.

6. Benefit Plans. Executive will participate in life insurance, medical, dental, pension, profit sharing, other retirement and stock-based compensation plans and other programs and arrangements that the Bank may sponsor or maintain for the benefit of its employees. Executive will also be reimbursed for all out-of-pocket expenses associated with Executive’s annual medical physical.

7. Vacation and Leave.

(a) Executive may take vacation and other leave in accordance with the Bank’s policy for senior executives or otherwise as approved by the Board.

(b) In addition to paid vacations and other leave, the Board may grant Executive a leave of absence, with or without pay, at such time or times and upon such terms and conditions as the Board may determine in its discretion.

8. Expense Payments and Reimbursements. The Bank will reimburse Executive for all reasonable out-of-pocket business expenses incurred in connection with her services under this Agreement. Executive must substantiate the payment of all expenses in accordance with applicable policies of the Bank.

9. Automobile Allowance, Cellular Phone and Conference Attendance. During the term of this Agreement, the Bank will reimburse Executive for all costs associated with the business use of any automobile. Executive agrees to comply with reasonable reporting and expense limitations on the use of any automobile as may be established by the Bank from time to time, and the Bank will include any amount of income attributable to Executive’s personal use of an automobile on Executive’s Forms W-2. The Bank will also provide Executive with a cellular phone and will pay (or reimburse Executive) for all reasonable expenses related to the business use of such phone. In addition to the foregoing, Executive and his or her spouse, will be entitled to attend such conferences as may be approved by the Board of Directors of the Bank from time to time.

10. Loyalty and Confidentiality.

(a) During the term of this Agreement, Executive shall: (i) devote all her business time, attention, skill, and efforts to the faithful performance of her duties as President and Chief Executive Officer of the Bank; provided, however, that from time to time, Executive may serve on the board of directors of, and hold any other offices or positions in, companies or organizations that will not present any conflict of interest with the Bank or the Company or any of their affiliates, and that will not unfavorably affect the performance of

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Executive’s employment duties, and that will not violate any applicable statute or regulation. Executive shall not engage in any business or activity contrary to the business affairs or interests of the Bank or the Company.

(b) Nothing contained in this Agreement prevents or limits Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Bank or the Company, or, solely as a passive, minority investor, in any business.

(c) Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Bank and Company; the names or addresses of any borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Bank or the Company which she gains or of which she becomes aware during the course of her employment with the Bank. Executive further agrees that, unless required by law or specifically permitted by the Board in writing, she will not disclose to any person or entity, either during or subsequent to her employment, any of the above-mentioned information not generally known to the public, nor shall she use the information in any way other than for the benefit of the Bank.

11. Termination and Termination Pay. Subject to Section 12 of this Agreement, Executive or the Bank may terminate Executive’s employment under the following circumstances:

(a) Death. Executive’s employment under this Agreement shall terminate upon her death during the term of this Agreement, in which event Executive’s estate shall receive the compensation due to Executive through the last day of the calendar month in which her death occurred.

(b) Retirement. This Agreement shall terminate upon Executive’s retirement under the retirement benefit plan or plans in which she participates pursuant to Section 6 of this Agreement or otherwise. Notwithstanding the foregoing, in the event the Executive retires on or after the attainment of age 65, the Bank will provide the Executive with medical coverage for five (5) years following her retirement date.

(c) Disability.

(i) The Board or Executive may terminate Executive’s employment after having determined Executive has suffered a Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform her duties under this Agreement and results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the Bank (or, if no such benefits exist, that impairs Executive’s ability to substantially perform her duties under this Agreement for a period of at least one hundred eighty (180) consecutive days). The Board, in good faith, shall determine whether or not Executive becomes and continues to be permanently disabled for purposes of this Agreement, based upon competent medical advice and other factors that the Board reasonably believes to be relevant. As a condition to any benefits, the Board may require Executive to submit to physical or mental evaluations and tests as the Board or its medical experts deem reasonably appropriate.

(ii) In the event of her Disability, Executive shall no longer be obligated to perform services under this Agreement. The Bank will pay Executive, as Disability pay, an amount equal to one hundred percent (100%) of Executive’s weekly rate of base salary in effect as of the date of her termination of employment due to Disability. The Bank will make Disability payments on a monthly basis commencing on the first day of the month following the effective date of Executive’s termination of

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employment due to Disability and ending on the earlier of: (A) the date she returns to full-time employment at the Bank in the same capacity as she was employed prior to her termination for Disability; (B) her death; (C) her attainment of age 65; or (D) the date the Agreement would have expired had Executive’s employment not terminated by reason of Disability. The Bank will reduce Disability pay otherwise due to Executive under this provision by the amount of any short- or long-term disability benefits payable to Executive under any other disability programs sponsored by the Bank. In addition, during any period of Executive’s Disability, the Bank shall continue to provide Executive and her dependents, to the greatest extent possible, all benefits (including, without limitation, benefits under retirement plans and medical, dental and life insurance plans) provided to Executive and her dependents prior to her Disability, on the same terms as if Executive remained actively employed by the Bank.

(d) Termination for Cause.

(i) The board of directors of the Bank may, by written notice to Executive in the form and manner specified in this paragraph, immediately terminate Executive’s employment at any time, for “Cause”. Executive shall have no rights to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:

(1) Personal dishonesty;

(2) Incompetence;

(3) Willful misconduct;

(4) Breach of fiduciary duty involving personal profit;

(5) Intentional failure to perform duties under this Agreement;

(6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that reflects adversely on the reputation of the Bank, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; or

(7) Material breach by Executive of any provision of this Agreement.

(ii) Notwithstanding the foregoing, Executive’s termination for Cause will not become effective unless the Bank has delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the board, at a meeting of the board called and held for the purpose of finding that, in the good faith opinion of the Board (after reasonable notice to Executive and an opportunity for Executive to be heard before the board with counsel), Executive was guilty of the conduct described above and specifying the particulars of her conduct.

(e) Voluntary Termination by Executive. In addition to her other rights to terminate employment under this Agreement, Executive may voluntarily terminate employment during the term of this

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Agreement upon at least sixty (60) days prior written notice to the board. Upon Executive’s voluntary termination, Executive will receive only her compensation, vested rights and employee benefits up to the date of her termination.

(f) Without Cause or With Good Reason.

(i) In addition to termination pursuant to Sections 11(a) through 11(e), the Board, may, upon providing written notice to Executive, immediately terminate her employment at any time for a reason other than Cause (a termination “Without Cause”) and Executive may, upon providing written notice to the Board, terminate her employment under this Agreement for “Good Reason” as defined below (a termination “With Good Reason”).

(ii) Subject to Section 12 of this Agreement, in the event of her termination of employment under this Section 11(f), Executive shall receive her base salary for the remaining term of the Agreement paid in one lump sum within ten (10) calendar days of her termination. Executive shall also receive, for the remaining term of the Agreement, the benefits she would have received under any retirement programs (whether tax-qualified or non-qualified) in which she participated prior to her termination (with the amount of benefits determined by reference to the benefits Executive received or which the Bank accrued on her behalf during the twelve (12) months preceding her termination). Executive shall also continue to participate in any health (including medical and dental), life, disability or similar insurance coverage or benefit plans for the remaining term of the Agreement, upon terms no less favorable than the most favorable terms provided to senior executives of the Bank during such period.

(iii) For the purposes of this Agreement “Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent:

(1) The assignment to Executive of duties that constitute a material diminution of her authority, duties, or responsibilities (including reporting requirements);

(2) A material diminution in Executive’s Base Salary;

(3) Relocation of Executive to a location outside a radius of 25 miles of the Bank’s Baltimore, Maryland office; or

(4) Any other action or inaction by the Bank that constitutes a material breach of this Agreement;

provided, that within ninety (90) days after the initial existence of such event, the Bank shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by Executive. Executive’s resignation hereunder for Good Reason shall not occur later than one hundred fifty (150) days following the initial date on which the event Executive claims constitutes Good Reason occurred.

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(g) Continuing Covenant Not to Compete or Interfere with Relationships. Regardless of anything in this Agreement to the contrary, following Executive’s termination of employment pursuant to Section 11(f):

(1) Executive’s obligations under Section 10(c) of this Agreement will continue in effect; and

(2) During the period ending on the first anniversary of Executive’s termination, Executive shall not serve as an officer, director or employee of any bank holding company, bank, savings bank, savings and loan holding company, mortgage company or other financial institution that offers products or services competing with those offered by the Bank from any office within thirty-five (35) miles from the main office or any branch of the Bank and, further, Executive shall not interfere with the relationship of the Bank with any of its employees, agents, or representatives.

12. Termination in Connection with a Change in Control.

(a) Definition of Change in Control. For purposes of this Agreement, a Change in Control means any of the following events:

(1) Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and, as a result, persons who were stockholders of the Company immediately before the merger or consolidation hold less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation.

(2) Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner(s) of 25% or more of a class of the Company’s voting securities, but this clause (2) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(3) Change in Board Composition: If, during any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (d), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds ( ²/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of the two-year period; or

(4) Sale of Assets: The Company sells to a third party all or substantially all of its assets.

Notwithstanding anything in this Agreement to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full

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stock holding company form of organization (including the elimination of the mutual holding company) constitute a “Change in Control” for purposes of this Agreement.

(b) Termination. If, within the period ending one year after a Change in Control, (i) the Bank terminates Executive’s employment Without Cause, or (ii) Executive voluntarily terminates her employment With Good Reason, the Bank shall, within ten calendar days of the termination of Executive’s employment, make a lump-sum cash payment to her equal to 2.99 times Executive’s average Annual Compensation over the five (5) most recently completed calendar years ending with the year immediately preceding the effective date of the Change in Control. In determining Executive’s average Annual Compensation, Annual Compensation shall include base salary and any other taxable income, including, but not limited to, amounts related to the granting, vesting or exercise of restricted stock awards or stock options, commissions, bonuses, retirement benefits, director or committee fees and fringe benefits paid to Executive or accrued or paid on Executive’s behalf during any applicable calendar year. Annual Compensation shall also include profit sharing, employee stock ownership plan and other retirement contributions or benefits, including those made to or accrued on behalf of Executive under any tax-qualified or non-qualified plan or arrangement (whether or not such amounts are taxable) during any applicable calendar year. The cash payment made under this Section 12(b) shall be made in lieu of any payment also required under Section 11(f) of this Agreement because of a termination of Executive’s employment; however, Executive’s rights under Section 11(f) are not otherwise affected by this Section 12.

Also, upon termination under this Section 12, Executive shall receive for a thirty-six (36) month period the benefits she would have received under any retirement programs (whether tax-qualified or non-qualified) in which she participated prior to her termination. The amount of these retirement benefits will be determined by reference to the benefits Executive received or which the Bank accrued on Executive’s behalf under the benefit programs during the twelve (12) months preceding the Change in Control. Executive will also continue to participate in any Bank-sponsored health (including medical and dental), life, disability or similar insurance coverage or benefit plans for a thirty-six (36) month period, under terms no less favorable than the most favorable terms provided to senior executives during such period.

(c) The provisions of this Section 12 and Sections 14 through 26, including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or two years following a Change in Control.

13. Indemnification and Liability Insurance.

(a) Indemnification. The Bank agrees to indemnify Executive (and her heirs, executors, and administrators) under this Agreement, and to advance expenses related to this indemnification, to the fullest extent permitted under applicable law and regulations against any and all expenses and liabilities that Executive reasonably incurs in connection with or arising out of any action, suit, or proceeding in which she becomes involved by reason of her service as a director or Executive of the Bank or any of its subsidiaries (whether or not Executive continues to serve as a director or Executive at the time of incurring the expenses or liabilities). Covered expenses and liabilities include, without limitation, judgments, court costs, attorneys’ fees and the costs of reasonable settlements (subject to Board approval), provided legal action is brought against Executive in her capacity as an Executive or director of the Bank or any of its subsidiaries. Indemnification for expenses shall not extend to matters related to Executive’s termination for Cause. Notwithstanding anything in this Section 13(a) to the contrary, the Bank shall not be required to provide any indemnification otherwise prohibited by applicable law or regulation. The obligations of this Section 13(a) shall survive the term of this Agreement by a period of six (6) years.

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(b) Insurance. During the period in which the Bank must indemnify Executive, the Bank, at its expense, will arrange for Executive’s coverage (and her heirs, executors, and administrators) under a directors’ and executives’ liability policy at least equivalent to the insurance coverage provided to directors and senior executives of the Bank.

14. Reimbursement of Executive’s Expenses to Enforce this Agreement. The Bank will reimburse Executive for all out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees, that Executive incurs in connection with her successful enforcement of the Bank’s obligations under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Bank take some action specified by this Agreement: as a result of court order; or otherwise following an initial failure by the Bank to pay such money or take such action promptly following receipt of a written demand from Executive stating the reason that the Bank must make payment or take action under this Agreement.

15. Limitation of Benefits Under Certain Circumstances. If the payments and benefits pursuant to Section 12 of this Agreement, either alone or together with other payments and benefits which Executive has the right to receive from the Bank, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits pursuant to Section 12 shall be reduced or revised, in the manner determined by Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under Section 12 being non-deductible to the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The Bank’s independent public accountants shall determine any reduction in the payments and benefits to be made pursuant to Section 12, and the Bank shall pay for the accountant’s opinion with respect to such reduction. If the Bank and/or Executive do not agree with the accountant’s opinion, the Bank shall pay to Executive the maximum amount of payments and benefits pursuant to Section 12, as selected by Executive, which the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible to the Bank and subject to the imposition of the excise tax imposed under Section 4999 of the Code. The Bank may also request, and Executive shall have the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits pursuant to Section 12 have such tax consequences. The Bank shall promptly prepare and file the request for a ruling from the IRS, but in no event shall the Bank make such filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request shall also be subject to the Executive’s approval prior to filing; Executive shall not unreasonably withhold her approval. The Bank and Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which Executive may be entitled upon termination of employment other than pursuant to Section 12 hereof, or a reduction in the payments and benefits specified in Section 12, below zero.

16. Injunctive Relief. Upon a breach or threatened breach of Section 11(g) of this Agreement or the prohibitions upon disclosure contained in Section 10(c) of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and the Bank shall be entitled to injunctive relief restraining Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy for a breach of this Agreement. The parties to this Agreement further agree that Executive, without limitation, may seek injunctive relief to enforce the Bank’s obligations under this Agreement.

17. Source of Payments.

(a) All payments provided for in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

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(b) Notwithstanding any provision herein to the contrary, to the extent that payments and benefits, as provided by this Agreement, are paid to or received by Executive under the Employment Agreement in effect between Executive and the Company (the “Company Agreement”), such compensation payments and benefits paid by the Company will be subtracted from any amount due simultaneously to Executive under similar provisions of this Agreement. Payments pursuant to this Agreement and the Company Agreement shall be allocated in proportion to the level of activity and the time expended on such activities by Executive as determined by the Company and the Bank.

18. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Bank. Since the Bank has contracted for the unique and personal skills of Executive, Executive shall not assign or delegate her rights or duties hereunder without first obtaining the written consent of the Bank.

19. No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no payment under this Agreement shall be offset or reduced by any compensation or benefits provided to Executive in any subsequent employment.

20. Notices. All notices, requests, demands and other communications made in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the Bank at its principal business office and to Executive at her home address as maintained in the records of the Bank.

21. No Plan Created by this Agreement. Executive and the Bank expressly declare and agree that this Agreement was negotiated between them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary. Any party who makes such an assertion in any judicial or administrative filing, hearing, or process shall have materially breached this Agreement upon making the assertion.

22. Amendments. No amendments or additions to this Agreement will bind the parties unless made in writing and signed by all of the parties, except as herein otherwise specifically provided.

23. Applicable Law. Except to the extent preempted by federal law, Maryland law shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.

24. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Agreement.

25. Headings. Headings contained in this Agreement are for convenience of reference only.

26. Entire Agreement. This Agreement, together with any understanding or modifications agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter of this Agreement, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6.

27. Required Provisions. In the event any of the foregoing provisions of this Section 27 are in conflict with the terms of this Agreement, this Section 27 shall prevail.

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(a) The Bank may terminate Executive’s employment at any time, but any termination by the Bank, other than Termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause as defined in Section 7 of this Agreement.

(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1813(x)(1), all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(e) All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the institution: (i) by the Director of the OTS (or her designee), the FDIC or the Resolution Trust Corporation, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1823(c); or (ii) by the Director of the OTS (or her designee) at the time the Director (or her designee) approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(f) Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon compliance with 12 U.S.C. Sec.1828(k) and 12 C.F.R. Sec. 545.121 and any rules and regulations promulgated thereunder.

28. Section 409A of the Code.

(a) This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the

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designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

(b) If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 11(f)(ii) or 12(b) to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(c) If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 11(f)(ii) or 12(b) it is not possible to continue coverage for Executive and her dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had Executive’s employment not terminated, assuming continued coverage for 36 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 28(b) applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(d) References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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IN WITNESS WHEREOF, the parties hereto have executed this amended and restated Agreement as of December 18, 2008.

Attest:	BV FINANCIAL, INC.
	(as Guarantor)
/s/ Claudia L. Kraft	By:	/s/ Edmund T. Leonard
Attest:	BAY-VANGUARD FEDERAL SAVINGS BANK
/s/ Claudia L. Kraft	By:	/s/ Edmund T. Leonard
Attest:	EXECUTIVE
/s/ Daniel J. Gallagher, Jr.	By:	/s/ Carolyn M. Mroz
		Carolyn M. Mroz

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EX-10.4

Exhibit 10.4

AMENDED AND RESTATED

BV FINANCIAL, INC.

EMPLOYMENT AGREEMENT

THIS AGREEMENT, originally entered into the 12^th day of January, 2005 (the “Agreement”), by and between BV FINANCIAL, INC., a federally-chartered corporation (the “Company”) and CAROLYN M. MROZ (“Executive”), is amended and restated in its entirety as of December 18, 2008. References to the “Bank” herein shall mean BAY-VANGUARD FEDERAL SAVINGS BANK, a federally chartered savings institution.

W I T N E S S E T H

WHEREAS, Executive serves in a position of substantial responsibility;

WHEREAS, the Company wants to continue to assure Executive’s services for the term of this Agreement;

WHEREAS, Executive is willing to continue to serve in the employ of the Company during the term of this Agreement; and

WHEREAS, the parties desire to amend and restate the Agreement in order to bring it into compliance with Section 409A of the Internal Revenue Code.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and upon the other terms and conditions provided for in this Agreement, the parties hereby agree as follows:

1. Employment. The Company will employ Executive as President and Chief Executive Officer. Executive will perform all duties and shall have all powers commonly incident to the offices of President and Chief Executive Officer or which, consistent with those offices, the board of directors of the Company delegate to Executive. Executive also agrees to serve, if elected, as an officer and/or director of any subsidiary of the Company and to carry out the duties and responsibilities reasonably appropriate to that position.

2. Location and Facilities. Executive will be furnished with the working facilities and staff customary for the positions of President and Chief Executive Officer. The location of such facilities and staff will be at the principal administrative offices of the Company or the Bank, or at such other site or sites customary for such offices.

3. Term.

(a) The term of this Agreement shall include (i) the initial term, consisting of the period commencing on the date of this Agreement (the “Effective Date”) and ending on January 12, 2011, plus (ii) any and all extensions of the initial term made pursuant to this Section 3.

(b) Commencing on July 1, 2009 (the “Renewal Date”), and continuing on each anniversary thereafter, the disinterested members of the boards of directors of the Bank and the Company may extend the term of this Agreement for an additional year so that the remaining term of the Agreement again becomes thirty-six (36) months (from the Renewal Date), unless Executive elects not to extend the term of this Agreement by giving written notice of her intentions in accordance with Section 19 of this Agreement. Each year, the Board of Directors of the Company (the “Board”) will review Executive’s performance for purposes of determining whether to extend the term of this Agreement and will include the rationale and results of its

review in the minutes of its meeting. Executive shall receive notice as soon as possible after such review as to whether the Agreement will be extended for an additional year.

4. Base Compensation.

(a) The Company agrees to pay the Executive an annual base salary of $151,980 payable in accordance with the customary payroll practices of the Bank.

(b) Each year, the Board will review the level of Executive’s base salary, based upon factors they deem relevant, in order to determine whether to maintain or increase Executive’s base salary.

5. Bonuses. Executive will participate in discretionary bonuses or other incentive compensation programs the Company may sponsor or award from time to time to other senior management employees.

6. Benefit Plans. Executive will participate in life insurance, medical, dental, pension, profit sharing, other retirement and stock-based compensation plans and other programs and arrangements that the Company may sponsor or maintain for the benefit of its employees. Executive will also be reimbursed for all out-of-pocket expenses associated with Executive’s annual medical physical.

7. Vacation and Leave.

(a) Executive may take vacation and other leave in accordance with the Company’s policy for senior executives or otherwise as approved by the Board.

(b) In addition to paid vacations and other leave, the Board may grant Executive a leave of absence, with or without pay, at such time or times and upon such terms and conditions as the Board may determine in its discretion.

8. Expense Payments and Reimbursements. The Company will reimburse Executive for all reasonable out-of-pocket business expenses incurred in connection with her services under this Agreement. Executive must substantiate the payment of all expenses in accordance with applicable policies of the Company.

9. Automobile Allowance, Cellular Phone and Conference Attendance. During the term of this Agreement, the Company will reimburse Executive for all costs associated with the business use of any automobile. Executive agrees to comply with reasonable reporting and expense limitations on the use of any automobile as may be established by the Company from time to time, and the Company will include any amount of income attributable to Executive’s personal use of an automobile on Executive’s Forms W-2. The Company will also provide Executive with a cellular phone and will pay (or reimburse Executive) for all reasonable expenses related to the business use of such phone. In addition to the foregoing, Executive and his or her spouse, will be entitled to attend such conferences as may be approved by the Board of Directors of the Bank from time to time.

10. Loyalty and Confidentiality.

(a) During the term of this Agreement, Executive shall: (i) devote all her business time, attention, skill, and efforts to the faithful performance of her duties as President and Chief Executive Officer of the Company; provided, however, that from time to time, Executive may serve on the boards of directors of, and hold any other offices or positions in, companies or organizations that will not present any conflict of interest with the Bank or the Company or any of their affiliates, and that will not unfavorably affect the performance of

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Executive’s employment duties with the Company, and that will not violate any applicable statute or regulation. Executive shall not engage in any business or activity contrary to the business affairs or interests of the Bank or the Company.

(b) Nothing contained in this Agreement prevents or limits Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Bank or the Company, or, solely as a passive, minority investor, in any business.

(c) Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Bank and Company; the names or addresses of any borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Bank or the Company which she gains or of which she becomes aware during the course of her employment with the Company. Executive further agrees that, unless required by law or specifically permitted by the Board in writing, she will not disclose to any person or entity, either during or subsequent to her employment, any of the above-mentioned information not generally known to the public, nor shall she use the information in any way other than for the benefit of the Company.

11. Termination and Termination Pay. Subject to Section 12 of this Agreement, Executive or the Company may terminate Executive’s employment under the following circumstances:

(a) Death. Executive’s employment under this Agreement shall terminate upon her death during the term of this Agreement, in which event Executive’s estate shall receive the compensation due to Executive through the last day of the calendar month in which her death occurred.

(b) Retirement. This Agreement shall terminate upon Executive’s retirement under the retirement benefit plan or plans in which she participates pursuant to Section 6 of this Agreement or otherwise. Notwithstanding the foregoing, in the event the Executive retires on or after the attainment of age 65, the Company will provide the Executive with medical coverage for five (5) years following her retirement date.

(c) Disability.

(i) The Board or Executive may terminate Executive’s employment after having determined Executive has suffered a Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform her duties under this Agreement and results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the Company (or, if no such benefits exist, that impairs Executive’s ability to substantially perform her duties under this Agreement for a period of at least one hundred eighty (180) consecutive days). The Board, in good faith, shall determine whether or not Executive becomes and continues to be permanently disabled for purposes of this Agreement, based upon competent medical advice and other factors that the Board reasonably believes to be relevant. As a condition to any benefits, the Board may require Executive to submit to physical or mental evaluations and tests as the Board or its medical experts deem reasonably appropriate.

(ii) In the event of her Disability, Executive shall no longer be obligated to perform services under this Agreement. The Company will pay Executive, as Disability pay, an amount equal to one hundred percent (100%) of Executive’s weekly rate of base salary in effect as of the date of her termination of employment due to Disability. The Company will make Disability payments on a monthly basis commencing on the

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first day of the month following the effective date of Executive’s termination of employment due to Disability and ending on the earlier of: (A) the date she returns to full-time employment at the Company in the same capacity as she was employed prior to her termination for Disability; (B) her death; (C) her attainment of age 65; or (D) the date the Agreement would have expired had Executive’s employment not terminated by reason of Disability. The Company will reduce Disability pay otherwise due to Executive under this provision by the amount of any short- or long-term disability benefits payable to Executive under any other disability programs sponsored by the Company. In addition, during any period of Executive’s Disability, the Company shall continue to provide Executive and her dependents, to the greatest extent possible, all benefits (including, without limitation, benefits under retirement plans and medical, dental and life insurance plans) provided to Executive and her dependents prior to her Disability, on the same terms as if Executive remained actively employed by the Company.

(d) Termination for Cause.

(i) The board of directors of the Company may, by written notice to Executive in the form and manner specified in this paragraph, immediately terminate Executive’s employment at any time, for “Cause”. Executive shall have no rights to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:

(1) Personal dishonesty;

(2) Incompetence;

(3) Willful misconduct;

(4) Breach of fiduciary duty involving personal profit;

(5) Intentional failure to perform duties under this Agreement;

(6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that reflects adversely on the reputation of the Bank or the Company, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; or

(7) Material breach by Executive of any provision of this Agreement.

(ii) Notwithstanding the foregoing, Executive’s termination for Cause will not become effective unless the Company has delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the board, at a meeting of the board called and held for the purpose of finding that, in the good faith opinion of the Board (after reasonable notice to Executive and an opportunity for Executive to be heard before the board with counsel), Executive was guilty of the conduct described above and specifying the particulars of her conduct.

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(e) Voluntary Termination by Executive. In addition to her other rights to terminate employment under this Agreement, Executive may voluntarily terminate employment during the term of this Agreement upon at least sixty (60) days prior written notice to the board. Upon Executive’s voluntary termination, Executive will receive only her compensation, vested rights and employee benefits up to the date of her termination of employment.

(f) Without Cause or With Good Reason.

(i) In addition to termination pursuant to Sections 11(a) through 11(e), the Board, may, upon providing written notice to Executive, immediately terminate her employment at any time for a reason other than Cause (a termination “Without Cause”) and Executive may, upon providing written notice to the Board, terminate her employment under this Agreement for “Good Reason” as defined below (a termination “With Good Reason”).

(ii) Subject to Section 12 of this Agreement, in the event of her termination of employment under this Section 11(f), Executive shall receive her base salary for the remaining term of the Agreement paid in one lump sum within ten (10) calendar days of her termination. Executive shall also receive, for the remaining term of the Agreement, the benefits she would have received under any retirement programs (whether tax-qualified or non-qualified) in which she participated prior to her termination (with the amount of benefits determined by reference to the benefits Executive received or which the Company accrued on her behalf during the twelve (12) months preceding her termination). Executive shall also continue to participate in any health (including medical and dental), life, disability or similar insurance coverage or benefit plans for the remaining term of the Agreement, upon terms no less favorable than the most favorable terms provided to senior executives of the Company during such period.

(iii) For the purposes of this Agreement “Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent:

(1) The assignment to Executive of duties that constitute a material diminution of her authority, duties, or responsibilities (including reporting requirements);

(2) A material diminution in Executive’s Base Salary;

(3) Relocation of Executive to a location outside a radius of 25 miles of the Company’s Baltimore, Maryland office; or

(4) Any other action or inaction by the Company that constitutes a material breach of this Agreement;

provided, that within ninety (90) days after the initial existence of such event, the Company shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by Executive. Executive’s resignation hereunder for Good Reason shall not occur later than one hundred fifty (150) days following the initial date on which the event Executive claims constitutes Good Reason occurred.

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(g) Continuing Covenant Not to Compete or Interfere with Relationships. Regardless of anything in this Agreement to the contrary, following Executive’s termination of employment pursuant to Section 11(f):

(1) Executive’s obligations under Section 10(c) of this Agreement will continue in effect; and

(2) During the period ending on the first anniversary of Executive’s termination, Executive shall not serve as an officer, director or employee of any bank holding company, bank, savings bank, savings and loan holding company, mortgage company or other financial institution that offers products or services competing with those offered by the Bank from any office within thirty-five (35) miles from the main office or any branch of the Bank and, further, Executive shall not interfere with the relationship of the Company and the Bank with any of their employees, agents, or representatives.

12. Termination in Connection with a Change in Control.

(a) Definition of Change in Control. For purposes of this Agreement, a Change in Control means any of the following events:

(1) Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and, as a result, persons who were stockholders of the Company immediately before the merger or consolidation hold less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation.

(2) Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner(s) of 25% or more of a class of the Company’s voting securities, but this clause (2) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(3) Change in Board Composition: If, during any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (d), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds ( ²/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of the two-year period; or

(4) Sale of Assets: The Company sells to a third party all or substantially all of its assets.

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Notwithstanding anything in this Agreement to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full stock holding company form of organization (including the elimination of the mutual holding company) constitute a “Change in Control” for purposes of this Agreement.

(b) Termination. If, within the period ending one year after a Change in Control, (i) the Company terminates Executive’s employment Without Cause, or (ii) Executive voluntarily terminates her employment With Good Reason, the Company shall, within ten calendar days of the termination of Executive’s employment, make a lump-sum cash payment to her equal to 2.99 times Executive’s average Annual Compensation over the five (5) most recently completed calendar years ending with the year immediately preceding the effective date of the Change in Control. In determining Executive’s average Annual Compensation, Annual Compensation shall include base salary and any other taxable income, including, but not limited to, amounts related to the granting, vesting or exercise of restricted stock awards or stock options, commissions, bonuses, retirement benefits, director or committee fees and fringe benefits paid to Executive or accrued or paid on Executive’s behalf during any applicable calendar year. Annual Compensation shall also include profit sharing, employee stock ownership plan and other retirement contributions or benefits, including those made to or accrued on behalf of Executive under any tax-qualified or non-qualified plan or arrangement (whether or not such amounts are taxable) during any applicable calendar year. The cash payment made under this Section 12(b) shall be made in lieu of any payment also required under Section 11(f) of this Agreement because of a termination of Executive’s employment; however, Executive’s rights under Section 11(f) are not otherwise affected by this Section 12.

Also, upon termination under this Section 12, Executive shall receive for a thirty-six (36) month period the benefits she would have received under any retirement programs (whether tax-qualified or non-qualified) in which she participated prior to her termination. The amount of these retirement benefits will be determined by reference to the benefits Executive received or which the Company accrued on Executive’s behalf under the benefit programs during the twelve (12) months preceding the Change in Control. Executive will also continue to participate in any Company -sponsored health (including medical and dental), life, disability or similar insurance coverage or benefit plans for a thirty-six (36) month period, under terms no less favorable than the most favorable terms provided to senior executives during such period.

(c) The provisions of this Section 12 and Sections 14 through 26, including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or two years following a Change in Control.

13. Indemnification and Liability Insurance.

(a) Indemnification. The Company agrees to indemnify Executive (and her heirs, executors, and administrators) under this Agreement, and to advance expenses related to this indemnification, to the fullest extent permitted under applicable law and regulations against any and all expenses and liabilities that Executive reasonably incurs in connection with or arising out of any action, suit, or proceeding in which she becomes involved by reason of her service as a director or Executive of the Company, or any of its subsidiaries (whether or not Executive continues to serve as a director or Executive at the time of incurring the expenses or liabilities). Covered expenses and liabilities include, without limitation, judgments, court costs, attorneys’ fees and the costs of reasonable settlements (subject to Board approval), provided legal action is brought against Executive in her capacity as an Executive or director of the Company or any of its subsidiaries. Indemnification for expenses shall not extend to matters related to Executive’s termination for Cause. Notwithstanding anything in this Section 13(a) to the contrary, the Company shall not be required to provide any indemnification otherwise prohibited by applicable law or regulation. The obligations of this Section 13(a) shall survive the term of this Agreement by a period of six (6) years.

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(b) Insurance. During the period in which the Company must indemnify Executive, the Company, at its expense, will arrange for Executive’s coverage (and her heirs, executors, and administrators) under a directors’ and executives’ liability policy at least equivalent to the insurance coverage provided to directors and senior executives of the Company.

14. Reimbursement of Executive’s Expenses to Enforce this Agreement. The Company will reimburse Executive for all out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees, that Executive incurs in connection with her successful enforcement of the Company’s obligations under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Company take some action specified by this Agreement: as a result of court order; or otherwise following an initial failure by the Company to pay such money or take such action promptly following receipt of a written demand from Executive stating the reason that the Company must make payment or take action under this Agreement.

15. Limitation of Benefits Under Certain Circumstances. If the payments and benefits pursuant to Section 12 of this Agreement, either alone or together with other payments and benefits which Executive has the right to receive from the Company, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits pursuant to Section 12 shall be reduced or revised, in the manner determined by Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under Section 12 being non-deductible to the Company pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The Company’s independent public accountants shall determine any reduction in the payments and benefits to be made pursuant to Section 12, and the Company shall pay for the accountant’s opinion with respect to such reduction. If the Company and/or Executive do not agree with the accountant’s opinion, the Company shall pay to Executive the maximum amount of payments and benefits pursuant to Section 12, as selected by Executive, which the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible to the Company and subject to the imposition of the excise tax imposed under Section 4999 of the Code. The Company may also request, and Executive shall have the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits pursuant to Section 12 have such tax consequences. The Company shall promptly prepare and file the request for a ruling from the IRS, but in no event shall the Company make such filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request shall also be subject to the Executive’s approval prior to filing; Executive shall not unreasonably withhold her approval. The Company and Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which Executive may be entitled upon termination of employment other than pursuant to Section 12 hereof, or a reduction in the payments and benefits specified in Section 12, below zero.

16. Injunctive Relief. Upon a breach or threatened breach of Section 11(g) of this Agreement or the prohibitions upon disclosure contained in Section 10(c) of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and the Company shall be entitled to injunctive relief restraining Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy for a breach of this Agreement. The parties to this Agreement further agree that Executive, without limitation, may seek injunctive relief to enforce the Company’s obligations under this Agreement.

17. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company. Since the

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Company has contracted for the unique and personal skills of Executive, Executive shall not assign or delegate her rights or duties hereunder without first obtaining the written consent of the Company.

18. No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no payment under this Agreement shall be offset or reduced by any compensation or benefits provided to Executive in any subsequent employment.

19. Notices. All notices, requests, demands and other communications made in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the Company at its principal business office and to Executive at her home address as maintained in the records of the Company.

20. No Plan Created by this Agreement. Executive and the Company expressly declare and agree that this Agreement was negotiated between them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary. Any party who makes such an assertion in any judicial or administrative filing, hearing, or process shall have materially breached this Agreement upon making the assertion.

21. Amendments. No amendments or additions to this Agreement will bind the parties unless made in writing and signed by all of the parties, except as herein otherwise specifically provided.

22. Applicable Law. Except to the extent preempted by federal law, Maryland law shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.

23. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Agreement.

24. Headings. Headings contained in this Agreement are for convenience of reference only.

25. Entire Agreement. This Agreement, together with any understanding or modifications agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter of this Agreement, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6.

26. Source of Payments. Notwithstanding any provision herein to the contrary, to the extent payments and benefits, as provided by the Agreement, are paid or received by Executive under the Employment Agreement in effect between Executive and the Bank (the “Bank Agreement”), such compensation payment and benefits paid by the Bank will be subtracted from any amount or benefit due simultaneously to Executive under similar provisions of this Agreement. Payments pursuant to this Agreement will be allocated in proportion to the level of activity and the time expended on such activities by Executive as determined by the Company and the Bank.

27. Section 409A of the Code.

(a) This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects

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be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

(b) If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 11(f)(ii) or 12(b) to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(c) If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 11(f)(ii) or 12(b) it is not possible to continue coverage for Executive and her dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had Executive’s employment not terminated, assuming continued coverage for 36 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 27(b) applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(d) References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above.

Attest:	BV FINANCIAL, INC.
/s/ Claudia L. Kraft	By:	/s/ Edmund T. Leonard
Attest:	EXECUTIVE
/s/ Daniel J. Gallagher, Jr.	By:	/s/ Carolyn M. Mroz
		Carolyn M. Mroz

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EX-10.5

Exhibit 10.5

AMENDED AND RESTATED

BAY-VANGUARD FEDERAL SAVINGS BANK

TWO-YEAR EMPLOYMENT AGREEMENT

THIS AGREEMENT, originally entered into on the 12th day of January, 2005 (the “Agreement”), by and between BAY-VANGUARD FEDERAL SAVINGS BANK, a federally-chartered savings bank (the “Bank”), and DANIEL J. GALLAGHER, JR. (“Executive”), is amended and restated in its entirety as of December 18, 2008. References to the “Company” herein shall mean BV FINANCIAL, INC., a federally-chartered corporation and the Bank holding company.

W I T N E S S E T H

WHEREAS, Executive serves in a position of substantial responsibility;

WHEREAS, the Bank wants to continue to assure Executive’s continued employment for the term of this Agreement;

WHEREAS, Executive desires to continue to remain employed by the Bank during the term of this Agreement; and

WHEREAS, the parties desire to amend and restate the Agreement in order to bring it into compliance with Section 409A of the Internal Revenue Code.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and upon the other terms and conditions provided for in this Agreement, the parties hereby agree as follows:

1. Employment. The Bank will employ Executive as Senior Vice President-Commercial Lending. Executive will perform all duties and shall have all powers commonly incident to the offices of Senior Vice President-Commercial Lending or which, consistent with those offices, the Chairman of the Bank delegate to Executive. Executive also agrees to serve, if elected, as an officer and/or director of any subsidiary of the Bank or the Company and to carry out the duties and responsibilities reasonably appropriate to that position.

2. Location and Facilities. The Bank will furnish Executive with the working facilities and staff customary for the position of Senior Vice President-Commercial Lending. The Bank will locate the office and staff of Executive at the principal administrative offices of the Bank.

3. Term.

(a) The term of this Agreement shall include (i) the initial term, consisting of the period commencing on the date of this Agreement (the “Effective Date”) and ending on January 12, 2010, plus (ii) any and all extensions of the initial term made pursuant to this Section 3.

(b) Commencing on July 1, 2009 (the “Renewal Date”), and continuing on each anniversary thereafter, the disinterested members of the board of directors of the Bank may extend the term of this Agreement for an additional year so that the remaining term of the Agreement again becomes twenty-four (24) months (from the Renewal Date), unless Executive elects not to extend the term of this Agreement by giving written notice of his intentions in accordance with Section 19 of this Agreement. Each year, the Board of Directors of the Bank (the “Board”) will review Executive’s performance for purposes of determining whether to extend the term of this Agreement and will include the rationale and results of its review in the

minutes of its meeting. Executive shall receive notice as soon as possible after such review as to whether the Agreement will be extended for an additional year.

4. Base Compensation.

(a) The Bank agrees to pay the Executive an annual base salary of $117,300, payable in accordance with the customary payroll practices of the Bank.

(b) Each year, the Board of the Bank will review the level of Executive’s base salary, based upon factors they deem relevant, in order to determine whether to maintain or increase Executive’s base salary.

5. Bonuses. Executive will participate in discretionary and loan production bonuses, along with other incentive compensation programs the Bank may sponsor or award from time to time to other senior management employees.

6. Benefit Plans. Executive will participate in life insurance, medical, dental, pension, profit sharing, other retirement and stock-based compensation plans and other programs and arrangements that the Bank or the Company may sponsor or maintain for the benefit of their employees. In addition to Executive’s personal coverage, the Bank will pay $800 per month towards family coverage for Executive’s dependents.

7. Vacation and Leave.

(a) Executive may take vacation and other leave in accordance with the Bank’s policy for senior executives or otherwise as approved by the Board.

(b) In addition to paid vacations and other leave, the Board may grant Executive a leave of absence, with or without pay, at such time or times and upon such terms and conditions as the Board may determine in its discretion.

8. Expense Payments and Reimbursements. The Bank will reimburse Executive for all reasonable out-of-pocket business expenses incurred in connection with his services under this Agreement including, but not limited to, mileage reimbursement. Executive must substantiate the payment of all expenses in accordance with applicable policies of the Bank.

9. Conference Attendance and Cellular Phone. Executive and his spouse will be entitled to attend such conferences as may be approved by the Board of Directors of the Bank from time to time. The Bank will provide the Executive with a cellular phone and will pay (or reimburse) Executive for all reasonable expenses related to the business use of such phone.

10. Loyalty and Confidentiality.

(a) During the term of this Agreement, Executive shall: (i) devote all his business time, attention, skill, and efforts to the faithful performance of his duties as Senior Vice President-Commercial Lending of the Bank; provided, however, that from time to time, Executive may serve on the boards of directors of, and hold any other offices or positions in, companies or organizations that will not present any conflict of interest with the Bank or the Company or any of their affiliates, and that will not unfavorably affect the performance of Executive’s employment duties, and that will not violate any applicable statute or regulation. Executive

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shall not engage in any business or activity contrary to the business affairs or interests of the Bank or the Company.

(b) Nothing contained in this Agreement prevents or limits Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Bank or the Company, or, solely as a passive, minority investor, in any business.

(c) Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Bank and Company; the names or addresses of any borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Bank or the Company which he gains or of which he becomes aware during the course of his employment. Executive further agrees that, unless required by law or specifically permitted by the Board in writing, he will not disclose to any person or entity, either during or subsequent to his employment, any of the above-mentioned information not generally known to the public, nor shall he use the information in any way other than for the benefit of the Bank and the Company.

11. Termination and Termination Pay. Subject to Section 12 of this Agreement, Executive or the Bank may terminate Executive’s employment under the following circumstances:

(a) Death. Executive’s employment under this Agreement shall terminate upon his death during the term of this Agreement, in which event Executive’s estate shall receive the compensation due to Executive through the last day of the calendar month in which his death occurred.

(b) Retirement. This Agreement shall terminate upon Executive’s retirement under the retirement benefit plan or plans in which he participates pursuant to Section 6 of this Agreement or otherwise.

(c) Disability.

(i) The Board or Executive may terminate Executive’s employment after having determined Executive has suffered a Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the Bank or the Company (or, if no such benefits exist, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of at least one hundred eighty (180) consecutive days). The Board, in good faith, shall determine whether or not Executive becomes and continues to be permanently disabled for purposes of this Agreement, based upon competent medical advice and other factors that the Board reasonably believes to be relevant. As a condition to any benefits, the Board may require Executive to submit to physical or mental evaluations and tests as the Board or its medical experts deem reasonably appropriate.

(ii) In the event of his Disability, Executive shall no longer be obligated to perform services under this Agreement. The Bank will pay Executive, as Disability pay, an amount equal to one hundred percent (100%) of Executive’s bi-weekly rate of base salary in effect as of the date of his termination of employment due to Disability. The Bank will make Disability payments on a monthly basis commencing on the first day

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of the month following the effective date of Executive’s termination of employment due to Disability and ending on the earlier of: (A) the date he returns to full-time employment at the Bank in the same capacity as he was employed prior to his termination for Disability; (B) his death; (C) his attainment of age 65; or (D) the date the Agreement would have expired had Executive’s employment not terminated by reason of Disability. The Bank will reduce Disability pay otherwise due to Executive under this provision by the amount of any short- or long-term disability benefits payable to Executive under any other disability programs sponsored by the Bank. In addition, during any period of Executive’s Disability, the Bank shall continue to provide Executive and his dependents, to the greatest extent possible, all benefits (including, without limitation, benefits under retirement plans and medical, dental and life insurance plans) provided to Executive and his dependents prior to his Disability, on the same terms as if Executive remained actively employed by the Bank.

(d) Termination for Cause.

(i) The board of directors of the Bank may, by written notice to Executive in the form and manner specified in this paragraph, immediately terminate Executive’s employment at any time, for “Cause”. Executive shall have no rights to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:

(1) Personal dishonesty;

(2) Incompetence;

(3) Willful misconduct;

(4) Breach of fiduciary duty involving personal profit;

(5) Intentional failure to perform duties under this Agreement;

(6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that reflects adversely on the reputation of the Bank or the Company, any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order; or

(7) Material breach by Executive of any provision of this Agreement.

(ii) Notwithstanding the foregoing, Executive’s termination for Cause will not become effective unless the Bank has delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the board, at a meeting of the board called and held for the purpose of finding that, in the good faith opinion of the Board (after reasonable notice to Executive and an opportunity for Executive to be heard before the board with counsel), Executive was guilty of the conduct described above and specifying the particulars of his conduct.

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(e) Voluntary Termination by Executive. In addition to his other rights to terminate employment under this Agreement, Executive may voluntarily terminate employment during the term of this Agreement upon at least sixty (60) days prior written notice to the board. Upon Executive’s voluntary termination, Executive will receive only his compensation, vested rights and employee benefits up to the date of his termination.

(f) Without Cause or With Good Reason.

(i) In addition to termination pursuant to Sections 11(a) through 11(e), the Board, may, upon providing written notice to Executive, immediately terminate his employment at any time for a reason other than Cause (a termination “Without Cause”) and Executive may, upon providing written notice to the Board, terminate his employment under this Agreement for “Good Reason” as defined below (a termination “With Good Reason”).

(ii) Subject to Section 12 of this Agreement, in the event of his termination of employment under this Section 11(f), Executive shall receive his base salary for the remaining term of the Agreement paid in one lump sum within ten (10) calendar days of his termination. Executive shall also receive, for the remaining term of the Agreement, the benefits he would have received under any retirement programs (whether tax-qualified or non-qualified) in which he participated prior to his termination (with the amount of benefits determined by reference to the benefits Executive received or which the Bank or Company accrued on his behalf during the twelve (12) months preceding his termination). Executive shall also continue to participate in any health (including medical and dental), life, disability or similar insurance coverage or benefit plans for the remaining term of the Agreement, upon terms no less favorable than the most favorable terms provided to senior executives of the Company and the Bank during such period.

(iii) For the purposes of this Agreement “Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent:

(1) The assignment to Executive of duties that constitute a material diminution of his authority, duties, or responsibilities (including reporting requirements);

(2) A material diminution in Executive’s Base Salary;

(3) Relocation of Executive to a location outside a radius of 25 miles of the Bank’s Baltimore, Maryland office; or

(4) Any other action or inaction by the Bank that constitutes a material breach of this Agreement;

provided, that within ninety (90) days after the initial existence of such event, the Bank shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by Executive. Executive’s

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resignation hereunder for Good Reason shall not occur later than one hundred fifty (150) days following the initial date on which the event Executive claims constitutes Good Reason occurred.

(g) Continuing Covenant Not to Compete or Interfere with Relationships. Regardless of anything in this Agreement to the contrary, following Executive’s termination of employment pursuant to Section 11(f):

(1) Executive’s obligations under Section 10(c) of this Agreement will continue in effect; and

(2) During the period ending on the first anniversary of Executive’s termination of employment, Executive shall not serve as an officer, director or employee of any bank holding company, bank, savings bank, savings and loan holding company, mortgage company or other financial institution that offers products or services competing with those offered by the Bank from any office within thirty-five (35) miles from the main office or any branch of the Bank and, further, Executive shall not interfere with the relationship of the Company and the Bank with any of their employees, agents, or representatives.

12. Termination in Connection with a Change in Control.

(a) Definition of Change in Control. For purposes of this Agreement, a Change in Control means any of the following events:

(1) Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and, as a result, persons who were stockholders of the Company immediately before the merger or consolidation hold less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation.

(2) Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner(s) of 25% or more of a class of the Company’s voting securities, but this clause (2) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(3) Change in Board Composition: If, during any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (d), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds ( ²/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of the two-year period; or

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(4) Sale of Assets: The Company sells to a third party all or substantially all of its assets.

Notwithstanding anything in this Agreement to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full stock holding company form of organization (including the elimination of the mutual holding company) constitute a “Change in Control” for purposes of this Agreement.

(b) Termination. If, within the period ending one year after a Change in Control, (i) the Company and the Bank terminate Executive’s employment Without Cause, or (ii) Executive voluntarily terminates his employment With Good Reason, the Bank shall, within ten calendar days of the termination of Executive’s employment, make a lump-sum cash payment to him equal to two (2) times Executive’s average Annual Compensation over the five (5) most recently completed calendar years ending with the year immediately preceding the effective date of the Change in Control. In determining Executive’s average Annual Compensation, Annual Compensation shall include base salary and any other taxable income, including, but not limited to, amounts related to the granting, vesting or exercise of restricted stock awards or stock options, commissions, bonuses, retirement benefits, director or committee fees and fringe benefits paid to Executive or accrued or paid on Executive’s behalf during any applicable calendar year. Annual Compensation shall also include profit sharing, employee stock ownership plan and other retirement contributions or benefits, including those made to or accrued on behalf of Executive under any tax-qualified or non-qualified plan or arrangement (whether or not such amounts are taxable) during any applicable calendar year. The cash payment made under this Section 12(b) shall be made in lieu of any payment also required under Section 11(f) of this Agreement because of a termination of Executive’s employment; however, Executive’s rights under Section 11(f) are not otherwise affected by this Section 12.

Also, upon termination under this Section 12, Executive shall receive for a twenty-four (24) month period the benefits he would have received under any retirement programs (whether tax-qualified or non-qualified) in which he participated prior to his termination. The amount of these retirement benefits will be determined by reference to the benefits Executive received or which the Company or the Bank accrued on Executive’s behalf under the benefit programs during the twelve (12) months preceding the Change in Control. Executive will also continue to participate in any Bank-sponsored health (including medical and dental), life, disability or similar insurance coverage or benefit plans for a twenty-four (24) month period, under terms no less favorable than the most favorable terms provided to senior executives during such period.

(c) The provisions of this Section 12 and Sections 14 through 28, including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or two years following a Change in Control.

13. Indemnification and Liability Insurance.

(a) Indemnification. The Bank agrees to indemnify Executive (and his heirs, executors, and administrators) under this Agreement, and to advance expenses related to this indemnification, to the fullest extent permitted under applicable law and regulations against

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any and all expenses and liabilities that Executive reasonably incurs in connection with or arising out of any action, suit, or proceeding in which he becomes involved by reason of his service as a director or Executive of the Company, the Bank or any of their subsidiaries (whether or not Executive continues to serve as a director or Executive at the time of incurring the expenses or liabilities). Covered expenses and liabilities include, without limitation, judgments, court costs, attorneys’ fees and the costs of reasonable settlements (subject to Board approval), provided legal action is brought against Executive in his capacity as an Executive or director of the Company and the Bank or any of their subsidiaries. Indemnification for expenses shall not extend to matters related to Executive’s termination for Cause. Notwithstanding anything in this Section 13(a) to the contrary, the Bank shall not be required to provide any indemnification otherwise prohibited by applicable law or regulation. The obligations of this Section 13(a) shall survive the term of this Agreement by a period of six (6) years.

(b) Insurance. During the period in which the Bank must indemnify Executive, the Bank, at its expense, will arrange for Executive’s coverage (and his heirs, executors, and administrators) under a directors’ and executives’ liability policy at least equivalent to the insurance coverage provided to directors and senior executives of the Bank.

14. Reimbursement of Executive’s Expenses to Enforce this Agreement. The Bank will reimburse Executive for all out-of-pocket expenses, including, without limitation, reasonable attorneys’ fees, that Executive incurs in connection with his successful enforcement of the Bank’s obligations under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Bank take some action specified by this Agreement: as a result of court order; or otherwise following an initial failure by the Bank to pay such money or take such action promptly following receipt of a written demand from Executive stating the reason that the Bank must make payment or take action under this Agreement.

15. Limitation of Benefits Under Certain Circumstances. If the payments and benefits pursuant to Section 12 of this Agreement, either alone or together with other payments and benefits which Executive has the right to receive from the Bank, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits pursuant to Section 12 shall be reduced or revised, in the manner determined by Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under Section 12 being non-deductible to the Company or the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The Bank’s independent public accountants shall determine any reduction in the payments and benefits to be made pursuant to Section 12, and the Bank shall pay for the accountant’s opinion with respect to such reduction. If the Bank and/or Executive do not agree with the accountant’s opinion, the Bank shall pay to Executive the maximum amount of payments and benefits pursuant to Section 12, as selected by Executive, which the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible to the Bank and subject to the imposition of the excise tax imposed under Section 4999 of the Code. The Bank may also request, and Executive shall have the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits pursuant to Section 12 have such tax consequences. The Bank shall promptly prepare and file the request for a ruling from the IRS, but in no event shall the Bank make such filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request shall also be subject to the Executive’s approval prior to filing; Executive shall not unreasonably withhold his approval. The Bank and Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which Executive may be entitled upon termination of employment other than pursuant to Section 12 hereof, or a reduction in the payments and benefits specified in Section 12, below zero.

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16. Injunctive Relief. Upon a breach or threatened breach of Section 11(g) of this Agreement or the prohibitions upon disclosure contained in Section 10(c) of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and the Bank shall be entitled to injunctive relief restraining Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy for a breach of this Agreement. The parties to this Agreement further agree that Executive, without limitation, may seek injunctive relief to enforce the Bank’s obligations under this Agreement.

17. Source of Payments. All payments provided for in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

18. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company and the Bank. Since the Bank has contracted for the unique and personal skills of Executive, Executive shall not assign or delegate his rights or duties hereunder without first obtaining the written consent of the Bank.

19. No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no payment under this Agreement shall be offset or reduced by any compensation or benefits provided to Executive in any subsequent employment.

20. Notices. All notices, requests, demands and other communications made in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the Bank at their principal business offices and to Executive at his home address as maintained in the records of the Bank.

21. No Plan Created by this Agreement. Executive and the Bank expressly declare and agree that this Agreement was negotiated among them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary. Any party who makes such an assertion in any judicial or administrative filing, hearing, or process shall have materially breached this Agreement upon making the assertion.

22. Amendments. No amendments or additions to this Agreement will bind the parties unless made in writing and signed by all of the parties, except as herein otherwise specifically provided.

23. Applicable Law. Except to the extent preempted by federal law, Maryland law shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.

24. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions of this Agreement.

25. Headings. Headings contained in this Agreement are for convenience of reference only.

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26. Entire Agreement. This Agreement, together with any understanding or modifications agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter of this Agreement, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6.

27. Required Provisions. In the event any of the foregoing provisions of this Section 27 are in conflict with the terms of this Agreement, this Section 27 shall prevail.

(a) The Bank may terminate Executive’s employment at any time, but any termination by the Bank, other than Termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause as defined in Section 7 of this Agreement.

(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

(d) If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1813(x)(1), all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(e) All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the institution: (i) by the Director of the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. Sec. 1823(c); or (ii) by the Director of the OTS (or his designee) at the time the Director (or his designee) approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(f) Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

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28. Section 409A of the Code.

(a) This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

(b) If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 11(f)(ii) or 12(b) to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(c) If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 11(f)(ii) or 12(b) it is not possible to continue coverage for Executive and his dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 11(f)(ii) or 12(b) would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had Executive’s employment not terminated, assuming continued coverage for 24 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 28(b) applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

(d) References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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IN WITNESS WHEREOF, the parties hereto have executed this amended and restated Agreement as of December 18, 2008.

Attest:	BV FINANCIAL, INC.
	(as Guarantor)
/s/ Rose Searcy	By:	/s/ Edmund T. Leonard
Attest:	BAY-VANGUARD FEDERAL SAVINGS BANK
/s/ Rose Searcy	By:	/s/ Edmund T. Leonard
Attest:	EXECUTIVE
/s/ Rose Searcy	By:	/s/ Daniel J. Gallagher, Jr.
		Daniel J. Gallagher, Jr.

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EX-10.6

Exhibit 10.6

AMENDED AND RESTATED

BAY-VANGUARD FEDERAL SAVINGS BANK

CHANGE IN CONTROL SEVERANCE COMPENSATION PLAN

A. Purpose.

The purpose of the Bay-Vanguard Federal Savings Bank Change in Control Severance Compensation Plan (the “Plan”) is to ensure the successful continuation of the business of Bay-Vanguard Federal Savings Bank (the “Bank”) and the fair and equitable treatment of the Bank’s employee following a Change in Control (as defined below). The Bank has amended and restated this Plan to conform with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

B. Covered Employees.

Subject to paragraph C below, any employee of the Bank with at least one year of service as of his or her termination date shall be eligible to receive a Change in Control Severance Benefit (as defined below) if, within the period beginning on the effective date of a Change in Control and ending on the first anniversary of such date, (i) the employee’s employment with the Bank is involuntarily terminated or (ii) the employee terminates employment with the Bank voluntarily after being offered continued employment in a position that is not a Comparable Position (as defined below).

C. Limitations on Eligibility for Change in Control Severance Benefits.

1. No employee shall be eligible for a Change in Control Severance Benefit if (a) his or her employment is terminated for “Cause”, (b) he or she is offered a Comparable Position within the Bank and declines to accept such position or (c) the employee is, at the time of termination of employment, a party to an individual employment agreement or change in control agreement with the Bank and/or BV Financial, Inc. (the “Company”).

2. For purposes of this Plan, a termination of employment for “Cause” shall include termination because of the employee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or violation of any final cease-and- desist order, or material breach of any provision of the plan.

3. For purposes of this Plan, a “Comparable Position” shall mean a position that would (i) provide the employee with base compensation and benefits that are comparable in the aggregate to those provided to the employee prior to the Change in Control, (ii) provide the employee with an opportunity for variable bonus compensation that is comparable to the opportunity provided to the employee prior to the Change in Control, (iii) be in a location that would not require the employee to increase his or her daily one way commuting distance by more than twenty-five (25) miles as compared to the employee’s commuting distance immediately prior to the Change in Control and (iv) have job skill requirements and duties that are comparable to the requirements and duties of the position held by the employee prior to the Change in Control.

D. Definition of Change in Control.

For purposes of this Plan, “Change in Control” means the occurrence of any one of the following events:

(1) Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation.

(2) Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(3) Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds ( ²/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

(4) Sale of Assets: The Company sells to a third party all or substantially all of its assets.

Notwithstanding anything in this Plan to the contrary, in no event shall the reorganization of the Bank from the mutual holding company form of organization to the full stock holding company form of organization (including the elimination of the mutual holding company) constitute a “Change in Control” for purposes of this Plan.

E. Determination of the Change in Control Severance Benefit.

The Change in Control Severance Benefit payable to an eligible employee under this Plan shall be determined as follows:

(1) An eligible employee who become entitled to receive a Change in Control Severance Payment under the Plan shall receive a benefit determined under the following schedule:

(a) The basic benefit under the Plan shall be determined as the product of (i) the employee’s years of service from his or her hire date (including partial years) through the termination date and (ii) two (2) months of the employee’s Base Compensation (as defined below). A “year of service” shall mean each 12-month period of service following an employee’s hire date determined without regard the number of hours worked during such period(s).

(b) Notwithstanding anything in this Plan to the contrary, the minimum payment to an eligible employee under this Plan shall be two (2) months of Base Compensation and the maximum payment to an eligible employee shall not exceed 199% of the employee’s Base Compensation.

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(2) The Change in Control Severance payment shall be made in a lump sum not later than five (5) business days after the date of the employee’s termination of employment.

(3) For purpose of determinations under this paragraph D, “Base Compensation” shall mean:

(a) for salaried employees, the employee’s annual base salary at the rate in effect on his or her termination date or, if greater, the rate in effect on the date immediately preceding the Change in Control.

(b) for employees whose compensation is determined in whole or in part on the basis of commission income, the employee’s base salary at termination (or, if greater, the base salary on date immediately preceding the effective date of the Change in Control), if any, plus the commissions earned by the employee in the twelve (12) full calendar months preceding his or her termination date (or, if greater, the commissions earned in the twelve (12) full calendar months immediately preceding the effective date of the Change in Control).

(c) for hourly employees, the employee’s total hourly wages for the twelve (12) full calendar months preceding his or her termination date or, if greater, the twelve (12) full calendar months preceding the effective date of the Change in Control.

F. Withholding.

All payments will be subject to customary withholding for federal, state and local tax purposes.

G. Parachute Payment.

Notwithstanding anything in this Plan to the contrary, if a benefit to a employee who is a “Disqualified Individual” shall be in an amount which includes an “Excess Parachute Payment” taking into account payments under this Plan and otherwise, the benefit under this Plan to that employee shall be reduced to the maximum amount which does not include an Excess Parachute Payment. The terms “Disqualified Individual” and “Excess Parachute Payment” shall have the same meanings as under Section 280G of the Code, or any successor provision thereto.

H. Adoption by Subsidiaries.

Upon approval by the Board of Directors of the Bank, this Plan may be adopted by any “Subsidiary” of the Bank. Upon such adoption, the Subsidiary shall become an Employer hereunder and the provisions of the Plan shall be fully applicable to the Employees of that Subsidiary. The term “Subsidiary” means any corporation in which the Bank, directly or indirectly, holds a majority of the voting power of its outstanding shares of capital stock.

I. Administration.

The Plan is administered by the Board of Directors of the Bank, which shall have the discretion to interpret the terms of the Plan and to make all determinations about eligibility and payment of benefits. All decisions of the Board, any action taken by the Board with respect to the Plan and within the powers granted to the Board under the Plan, and any interpretation by the Board of any term or condition of the Plan, are conclusive and binding on all persons, and will be given the maximum possible deference allowed by law. The Board may delegate and reallocate any authority and responsibility with respect to the Plan.

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J. Source of Payments.

All amounts payable under the Plan will be paid in cash from the general funds of the Bank; no separate fund will be established under the Plan; and the Plan will have no assets.

K. Inalienability.

In no event may any Employee sell, transfer, anticipate, assign or otherwise dispose of any right or interest under the Plan. At no time will any such right or interest be subject to the claims of creditors, nor liable to attachment, execution or other legal process.

L. Governing Law.

The provisions of the Plan will be construed, administered and enforced in accordance with the laws of the State of Maryland, except to the extent that federal law applies.

M. Severability.

If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

N. No Employment Rights.

Neither the establishment nor the terms of this Plan shall be held or construed to confer upon any employee the right to a continuation of employment by the Bank, nor constitute a contract of employment, express or implied. The Bank reserves the right to dismiss or otherwise deal with any employee to the same extent and on the same basis as though this Plan had not been adopted. Nothing in this Plan is intended to alter the at-will status of the Bank’s employees, it being understood that, except to the extent otherwise expressly set forth to the contrary in an individual employment-related agreement, the employment of any employee may be terminated at any time by either the Bank or the employee with or without cause.

O. Amendment and Termination.

The Plan may be terminated or amended in any respect by resolution adopted by a majority of the Board of Directors of the Bank, unless a Change in Control has previously occurred. If a Change in Control occurs, the Plan no longer shall be subject to amendment, change, substitution, deletion, revocation or termination in any respect whatsoever. The form of any proper amendment or termination of the Plan shall be a written instrument signed by a duly authorized officer or officers of the Bank, certifying that the amendment or termination has been approved by the Board of Directors. A proper amendment of the Plan automatically shall effect a corresponding amendment to each Participant’s rights hereunder. A proper termination of the Plan automatically shall effect a termination of all employees’ rights and benefits hereunder.

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P. Section 409A.

If when termination of employment occurs an employee is a “specified employee” (within the meaning of Section 409A of the Code), and if the cash severance payment under paragraph E. would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available, the employee’s severance benefit shall be paid to the employee in a single lump sum, without interest, on the first payroll date of the seventh month after the month in which the employee’s employment terminates, provided the termination of employment constitutes a “separation from service” under Section 409A of the Code. References in this Plan to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Section 409A of the Code.

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Having been adopted by its Board of Directors, this Plan is executed by its duly authorized officer and effective December 17, 2008.

	BAY-VANGUARD FEDERAL SAVINGS BANK
	By:	/s/ Edmund T. Leonard
Attest:		For the Entire Board of Directors
/s/ Robert R. Kern, Jr.
Corporate Secretary

EX-10.7

Exhibit 10.7

AMENDED AND RESTATED

BAY-VANGUARD FEDERAL SAVINGS BANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As of December 17, 2008

Amended and Restated

Bay-Vanguard Federal Savings Bank

Supplemental Executive Retirement Plan

Table of Contents

Article I	Introduction	1
Article II	Definitions	1
Article III	Eligibility and Participation	3
Article IV	Benefits	3
Article V	Accounts	5
Article VI	Supplemental Benefit Payments	5
Article VII	Claims Procedures	6
Article VIII	Amendment and Termination	7
Article IX	General Provisions	8

Article I

Introduction

Section 1.01 Purpose, Design and Intent.

(a) The purpose of the Bay-Vanguard Federal Savings Bank Supplemental Executive Retirement Plan (the “Plan”) is to assist Bay-Vanguard Federal Savings Bank (the “Bank”) and its affiliates in retaining the services of key employees until their retirement, to induce such employees to use their best efforts to enhance the business of the Bank and its affiliates, and to provide certain supplemental retirement benefits to such employees.

(b) The Plan, in relevant part, is intended to constitute an unfunded “excess benefit plan” as defined in Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended. In this respect, the Plan is specifically designed to provide certain key employees with retirement benefits that would have been provided under various tax-qualified retirement plans sponsored by the Bank but for the applicable limitations placed on benefits and contributions under such plans by various provisions of the Internal Revenue Code of 1986, as amended (the “Code”).

(c) The Bank is amending and restating the Plan in its entirety effective as of January 1, 2005, to comply with Section 409A of the Code.

Article II

Definitions

Section 2.01 Definitions. In this Plan, whenever the context so indicates, the singular or the plural number and the masculine or feminine gender shall be deemed to include the other, the terms “he,” “his,” and “him,” shall refer to a Participant or a beneficiary of a Participant, as the case may be, and, except as otherwise provided, or unless the context otherwise requires, the capitalized terms shall have the following meanings:

(a) “Affiliate” means any corporation, trade or business, which, at the time of reference, is together with the Bank, a member of a controlled group of corporations, a group of trades or businesses (whether or not incorporated) under common control, or an affiliated service group, as described in Sections 414(b), 414(c), and 414(m) of the Code, respectively, or any other organization treated as a single employer with the Bank under Section 414(o) of the Code.

(b) “Applicable Limitations” means one or more of the following, as applicable:

(i) the maximum limitations on annual additions to a tax-qualified defined contribution plan under Section 415(c) of the Code;

(ii) the maximum limitation on the annual amount of compensation that may, under Section 401(a)(17) of the Code, be taken into account in determining contributions to and benefits under tax-qualified plans; and

(iii) the maximum limitations, under Sections 401(k), 401(m), or 402(g) of the Code, on pre-tax contributions that may be made to a qualified defined contribution plan.

(c) “Bank” means Bay-Vanguard Federal Savings Bank, and its successors.

(d) “Board of Directors” means the Board of Directors of the Bank.

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(e) “Change in Control” means the earliest occurrence of a “change in ownership,” “change in effective control,” or “change in ownership of a substantial portion of assets” for purposes of Section 409A of the Code, but excluding reorganization of the Bank from the mutual holding company form of organization to the full stock holding company form of organization (including the elimination of the mutual holding company).

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Committee” means the person(s) designated by the Board of Directors, pursuant to Section 9.02 of the Plan, to administer the Plan.

(h) “Common Stock” means the common stock of the Company.

(i) “Company” means BV Financial, Inc. and its successors.

(j) “Eligible Individual” means any Employee who participates in the ESOP or the 401(k) Plan, as the case may be, and whom the Board of Directors determines is one of a “select group of management or highly compensated employees,” as such phrase is used for purposes of Sections 101, 201, and 301 of ERISA.

(k) “Employee” means any person employed by the Bank or an Affiliate.

(l) “Employer” means the Bank or Affiliate thereof that employs the Employee.

(m) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(n) “ESOP” means the Bay-Vanguard Federal Savings Bank Employee Stock Ownership Plan, as amended from time to time.

(o) “ESOP Acquisition Loan” means a loan or other extension of credit incurred by the trustee of the ESOP in connection with the purchase of Common Stock on behalf of the ESOP.

(p) “ESOP Valuation Date” means any day as of which the investment experience of the trust fund of the ESOP is determined and individuals’ accounts under the ESOP are adjusted accordingly.

(q) “Effective Date” means July 1, 2004.

(r) “Participant” means an Eligible Employee who is entitled to benefits under the Plan.

(s) “Plan” means this Bay-Vanguard Federal Savings Bank Supplemental Executive Retirement Plan.

(t) “401(k) Plan” means the Bay-Vanguard Federal Savings Bank 401(k) Profit Sharing Plan, as amended from time to time.

(u) “Separation from Service” means a Participant’s separation from service with the Bank, within the meaning of Section 409A of the Code.

(v) “Specified Employee” means, as of a given date, a “specified employee” as of such date for purposes of Section 409A of the Code.

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(w) “Supplemental ESOP Account” means an account established by an Employer, pursuant to Section 5.01 of the Plan, with respect to a Participant’s Supplemental ESOP Benefit.

(x) “Supplemental ESOP Benefit” means the benefit credited to a Participant pursuant to Section 4.01 of the Plan.

(y) “Supplemental Savings Benefit” means the benefit credited to a Participant pursuant to Section 4.03 of the Plan.

(z) “Supplemental Savings Account” means an account established by an Employer, pursuant to Section 5.03 of the Plan, with respect to a Participant’s Supplemental Savings Benefit.

(aa) “Supplemental Stock Ownership Account” means an account established by an Employer, pursuant to Section 5.02 of the Plan, with respect to a Participant’s Supplemental Stock Ownership Benefit.

(bb) “Supplemental Stock Ownership Benefit” means the benefit credited to a Participant pursuant to Section 4.02 of the Plan.

Article III

Eligibility and Participation

Section 3.01 Eligibility and Participation.

(a) Each Eligible Employee may participate in the Plan. An Eligible Employee shall become a Participant in the Plan upon designation as such by the Board of Directors. An Eligible Employee whom the Board of Directors designates as a Participant in the Plan shall commence participation as of the date established by the Board of Directors. The Board of Directors shall establish an Eligible Employee’s date of participation at the same time it designates the Eligible Employee as a Participant in the Plan.

(b) The Board of Directors may, at any time, designate an Eligible Employee as a Participant for any or all supplemental benefits provided for under Article IV of the Plan.

Article IV

Benefits

Section 4.01 Supplemental ESOP Benefit.

As of the last day of each plan year of the ESOP, the Employer shall credit the Participant’s Supplemental ESOP Account with a Supplemental ESOP Benefit equal to the excess of (a) over (b), where:

(a) Equals the annual contributions made by the Employer and/or the number of shares of Common Stock released for allocation in connection with the repayment of an ESOP Acquisition Loan that would otherwise be allocated to the accounts of the Participant under the ESOP for the applicable plan year, if the provisions of the ESOP were administered without regard to any of the Applicable Limitations; and

(b) Equals the annual contributions made by the Employer and/or the number of shares of common stock released for allocation in connection with the repayment of an ESOP Acquisition Loan that are actually allocated to the accounts of the Participant under the provisions of the ESOP for that particular

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plan year, after giving effect to any reduction of such allocation required by any of the Applicable Limitations.

Section 4.02 Supplemental Stock Ownership Benefit.

(a) Upon a Change in Control, the Employer shall credit to the Participant’s Supplemental Stock Ownership Account a Supplemental Stock Ownership Benefit equal to (i) less (ii), the result of which is multiplied by (iii), where:

(i) Equals the total number of shares of Common Stock acquired with the proceeds of all ESOP Acquisition Loans (together with any dividends, cash proceeds, or other medium related to such ESOP Acquisition Loans) that would have been allocated or credited for the benefit of the Participant under the ESOP and/or this Plan, as the case may be, had the Participant continued in the employ of the Employer through the first ESOP Valuation Date following the last scheduled payment of principal and interest on all ESOP Acquisition Loans outstanding at the time of the Change in Control; and

(ii) Equals the total number of shares of Common Stock acquired with the proceeds of all ESOP Acquisition Loans (together with any dividends, cash proceeds, or other medium related to such ESOP Acquisition Loans) and allocated for the benefit of the Participant under the ESOP and/or this Plan, as the case may be, as of the first ESOP Valuation Date following the Change in Control; and

(iii) Equals the fair market value of the Common Stock immediately preceding the Change in Control.

(b) For purposes of clause (i) of subsection (a) of this Section 4.02, the total number of shares of Common Stock shall be determined by multiplying the sum of (i) and (ii) by (iii), where:

(i) equals the average of the total shares of Common Stock acquired with the proceeds of an ESOP Acquisition Loan and allocated for the benefit of the Participant under the ESOP as of the three most recent ESOP Valuation Dates preceding the Change in Control (or lesser number if the Participant has not participated in the ESOP for three full years);

(ii) equals the average number of shares of Common Stock credited to the Participant’s Supplemental ESOP Account for the three most recent plan years of the ESOP (such that the three most recent plan years coincide with the three most recent ESOP Valuation Dates referred to in (i) above); and

(iii) equals the original number of scheduled annual payments on the ESOP Acquisition Loans.

Section 4.03 Supplemental Savings Benefit.

A Participant’s Supplemental Savings Benefit under the Plan shall be equal to the excess of (a) over (b), where:

(a) is the sum of the matching contributions and other contributions of the Employer that would otherwise be allocated to an account of the Participant under the 401(k) Plan for a particular year, if the provisions of the 401(k) Plan were administered without regard to any of the Applicable Limitations; and

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(b) is the sum of the matching contributions and other contributions of the Employer that are actually allocated on account of the Participant under the provisions of the 401(k) Plan for that particular year, after giving effect to any reduction of such allocation required by any of the Applicable Limitations.

Article V

Accounts

Section 5.01 Supplemental ESOP Benefit Account.

For each Participant who is credited with a benefit pursuant to Section 4.01 of the Plan, the Employer shall establish, as a memorandum account on its books, a Supplemental ESOP Account. Each year, the Committee shall credit to the Participant’s Supplemental ESOP Account the amount of benefits determined under Section 4.01 of the Plan for that year. The Committee shall credit the account with an amount equal to the appropriate number of shares of Common Stock or other medium of contribution that would have otherwise been made to the Participant’s accounts under the ESOP but for the limitations imposed by the Code. Shares of Common Stock shall be valued under this Plan in the same manner as under the ESOP. Cash contributions credited to a Participant’s Supplemental ESOP Account shall be credited annually with interest at a rate equal to the combined weighted return provided to the Participant’s non-stock accounts under the ESOP.

Section 5.02 Supplemental Stock Ownership Account.

The Employer shall establish, as a memorandum account on its books, a Supplemental Stock Ownership Account. Upon a Change in Control, the Committee shall credit to the Participant’s Supplemental Stock Ownership Account the amount of benefits determined under Section 4.02 of the Plan. The Committee shall credit the account with an amount equal to the appropriate number of shares of Common Stock or other medium of contribution that would have otherwise been made to the Participant’s accounts under the ESOP. Shares of Common Stock shall be valued under this Plan in the same manner as under the ESOP. Cash contributions credited to a Participant’s Supplemental Stock Ownership Account shall be credited annually with interest at a rate equal to the combined weighted return provided to the Participant’s non-stock accounts under the ESOP.

Section 5.03 Supplemental Savings Account.

The Employer shall establish a memorandum account, the “Supplemental Savings Account” for each Participant on its books, and each year the Committee will credit the amount of contributions determined under Section 4.03 of the Plan. Contributions credited to a Participant’s Supplemental Savings Account shall be credited monthly with interest at a rate equal to the combined weighted return provided to the Participant’s account(s) under the 401(k) Plan.

Article VI

Supplemental Benefit Payments

Section 6.01 Payment of Supplemental ESOP Benefit.

(a) A Participant’s Supplemental ESOP Benefit shall be paid to the Participant or, in the event of the Participant’s death, to his beneficiary (as designated on a form acceptable to the Employer), in a single lump sum payment as soon as administratively practicable (but no later than 60 days) following the Participant’s Separation from Service. The form of the payment shall match the form (i.e., cash, stock or other medium) in which the Employer credited the benefit pursuant to Article V of the Plan.

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(b) A Participant shall have a non-forfeitable right to the Supplemental ESOP Benefit credited to him under this Plan in the same percentage as he has benefits allocated to him under the ESOP at the time the benefits become distributable to him under the ESOP.

Section 6.02 Payment of Supplemental Stock Ownership Benefit.

(a) A Participant’s Supplemental Stock Ownership Benefit shall be paid to the Participant or, in the event of the Participant’s death, to his beneficiary (as designated on a form acceptable to the Employer), in a single lump sum payment as soon as administratively practicable (but no later than 60 days) following the Participant’s Separation from Service. The form of the payment shall match the form (i.e., cash, stock or other medium) in which the Employer credited the benefit pursuant to Article V of the Plan.

(b) A Participant shall always have a fully non-forfeitable right to the Supplemental Stock Ownership Benefit credited to him under this Plan.

Section 6.03 Payment of Supplemental Savings Benefit.

(a) A Participant’s Supplemental Savings Benefit shall be paid to the Participant or, in the event of the Participant’s death, to his beneficiary (as designated on a form acceptable to the Employer), in a single lump sum payment as soon as administratively practicable (but no later than 60 days) following the Participant’s Separation from Service. The form of payment shall match the form (i.e., cash, stock or other medium) in which the Employer credited the benefit pursuant to Article V of the Plan.

(b) A Participant shall have a non-forfeitable right to his Supplemental Savings Benefit under this Plan in the same percentage as he has to his matching contributions under the 401(k) Plan at the time the benefits become distributable to him under the 401(k) Plan.

Article VII

Claims Procedures

Section 7.01 Claims Reviewer.

For purposes of handling claims with respect to this Plan, the “Claims Reviewer” shall be the Committee, unless the Committee designates another person or group of persons as Claims Reviewer.

Section 7.02 Claims Procedure.

(a) An initial claim for benefits under the Plan must be made by the Participant or his beneficiary or beneficiaries in accordance with the terms of this Section 7.02.

(b) Not later than ninety (90) days after receipt of such a claim, the Claims Reviewer will render a written decision on the claim to the claimant, unless special circumstances require the extension of such 90-day period. If such extension is necessary, the Claims Reviewer shall provide the Participant or the Participant’s beneficiary or beneficiaries with written notification of such extension before the expiration of the initial 90-day period. Such notice shall specify the reason or reasons for the extension and the date by which a final decision can be expected. In no event shall such extension exceed a period of ninety (90) days from the end of the initial 90-day period.

(c) In the event the Claims Reviewer denies the claim of a Participant or any beneficiary in whole or in part, the Claims Reviewer’s written notification shall specify, in a manner calculated to be understood by the claimant, the reason for the denial; a reference to the Plan or other document or form that is the

6

basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim; an explanation as to why such information or material is necessary; and an explanation of the applicable claims procedure.

(d) Should the claim be denied in whole or in part and should the claimant be dissatisfied with the Claims Reviewer’s disposition of the claimant’s claim, the claimant may have a full and fair review of the claim by the Committee upon written request submitted by the claimant or the claimant’s duly authorized representative and received by the Committee within sixty (60) days after the claimant receives written notification that the claimant’s claim has been denied. In connection with such review, the claimant or the claimant’s duly authorized representative shall be entitled to review pertinent documents and submit the claimant’s views as to the issues, in writing. The Committee shall act to deny or accept the claim within sixty (60) days after receipt of the claimant’s written request for review unless special circumstances require the extension of such 60-day period. If such extension is necessary, the Committee shall provide the claimant with written notification of such extension before the expiration of such initial 60-day period. In all events, the Committee shall act to deny or accept the claim within 120 days of the receipt of the claimant’s written request for review. The action of the Committee shall be in the form of a written notice to the claimant and its contents shall include all of the requirements for action on the original claim.

(e) In no event may a claimant commence legal action for benefits the claimant believes are due the claimant until the claimant has exhausted all of the remedies and procedures afforded the claimant by this Article VII.

Article VIII

Amendment and Termination

Section 8.01 Amendment of the Plan.

The Bank may from time to time and at any time amend the Plan; provided, however, that such amendment may not adversely affect the rights of any Participant or beneficiary with respect to any benefit under the Plan to which the Participant or beneficiary may have previously become entitled prior to the effective date of such amendment without the consent of the Participant or beneficiary. The Committee shall be authorized to make minor or administrative changes to the Plan, as well as amendments required by applicable federal or state law (or authorized or made desirable by such statutes); provided, however, that such amendments must subsequently be ratified by the Board of Directors.

Section 8.02 Termination in the Discretion of the Bank. Except as otherwise provided in Sections 8.03, the Bank in its discretion may terminate the Plan and distribute benefits to Participants subject to the following requirements and any others specified under Section 409A of the Code:

(a) All arrangements sponsored by the Bank that would be aggregated with the Plan under Section 1.409A-1(c) of the Treasury Regulations are terminated.

(b) No payments other than payments that would be payable under the terms of the Plan if the termination had not occurred are made within 12 months of the termination date.

(c) All benefits under the Plan are paid within 24 months of the termination date.

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(d) The Bank does not adopt a new arrangement that would be aggregated with the Plan under Section 1.409A-1(c) of the Treasury Regulations providing for the deferral of compensation at any time within 3 years following the date of termination of the Plan.

(e) The termination does not occur proximate to a downturn in the financial health of the Bank.

Section 8.03 Termination Upon Change in Control Event. If the Bank terminates the Plan within thirty days preceding or twelve months following a Change in Control, the Accounts (Supplemental ESOP Account, Supplemental Savings Account and Supplemental Stock Ownership Account) of each Participant shall become fully vested and payable to the Participant in a lump sum within twelve months following the date of termination, subject to the requirements of Section 409A of the Code.

Article IX

General Provisions

Section 9.01 Unfunded, Unsecured Promise to Make Payments in the Future.

The right of a Participant or any beneficiary to receive a distribution under this Plan shall be an unsecured claim against the general assets of the Bank or its Affiliates, and neither a Participant, nor his designated beneficiary or beneficiaries, shall have any rights in or against any amount credited to any account under this Plan or any other assets of the Bank or an Affiliate. The Plan at all times shall be considered entirely unfunded both for tax purposes and for purposes of Title I of ERISA. Any funds invested hereunder shall continue for all purposes to be part of the general assets of the Bank or an Affiliate and available to its general creditors in the event of bankruptcy or insolvency. Accounts under this Plan and any benefits which may be payable pursuant to this Plan are not subject in any manner to anticipation, sale, alienation, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of a Participant or a Participant’s beneficiary. The Plan constitutes a mere promise by the Bank or Affiliate to make benefit payments in the future. No interest or right to receive a benefit may be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such Participant or beneficiary, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

Section 9.02 Committee as Plan Administrator.

(a) The Plan shall be administered by the Committee designated by the Board of Directors of the Bank.

(b) The Committee shall have the authority, duty and power to interpret and construe the provisions of the Plan as it deems appropriate. The Committee shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. In addition, the Committee shall have the authority and power to delegate any of its administrative duties to employees of the Bank or an Affiliate, as they may deem appropriate. The Committee shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Bank with respect to the Plan. The interpretations, determinations, regulations and calculations of the Committee shall be final and binding on all persons and parties concerned.

Section 9.03 Expenses.

Expenses of administration of the Plan shall be paid by the Bank or an Affiliate.

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Section 9.04 Statements.

The Committee shall furnish individual annual statements of accrued benefits to each Participant, or current beneficiary, in such form as determined by the Committee or as required by law.

Section 9.05 Rights of Participants and Beneficiaries.

(a) The sole rights of a Participant or beneficiary under this Plan shall be to have this Plan administered according to its provisions and to receive whatever benefits he or she may be entitled to hereunder.

(b) Nothing in the Plan shall be interpreted as a guaranty that any funds in any trust which may be established in connection with the Plan or assets of the Bank or an Affiliate will be sufficient to pay any benefit hereunder.

(c) The adoption and maintenance of this Plan shall not be construed as creating any contract of employment or service between the Bank or an Affiliate and any Participant or other individual. The Plan shall not affect the right of the Bank or an Affiliate to deal with any Participants in employment or service respects, including their hiring, discharge, compensation, and other conditions of employment or service.

Section 9.06 Incompetent Individuals.

The Committee may, from time to time, establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to a Participant or beneficiary in the event that such Participant or beneficiary is declared incompetent and a conservator or other person is appointed and legally charged with that Participant’s or beneficiary’s care. Except as otherwise provided for herein, when the Committee determines that such Participant or beneficiary is unable to manage his financial affairs, the Committee may pay such Participant’s or beneficiary’s benefits to such conservator, person legally charged with such Participant’s or beneficiary’s care, or institution then contributing toward or providing for the care and maintenance of such Participant or beneficiary. Any such payment shall constitute a complete discharge of any liability of the Bank or an Affiliate and the Plan for such Participant or beneficiary.

Section 9.07 Sale, Merger or Consolidation of the Bank.

Subject to Section 8.03, the Plan may be continued after a sale of assets of the Bank, or a merger or consolidation of the Bank into or with another corporation or entity only if, and to the extent that, the transferee, purchaser or successor entity agrees to continue the Plan. Additionally, upon a merger, consolidation or other change in control any amounts credited to Participant’s deferral accounts shall be placed in a grantor trust to the extent not already in such a trust. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall be terminated subject to the provisions of Section 8.03 of the Plan. Any legal fees incurred by a Participant in determining benefits to which such Participant is entitled under the Plan following a sale, merger, or consolidation of the Bank or an Affiliate of which the Participant is an Employee or, if applicable, a member of the Board of Directors, shall be paid by the resulting or succeeding entity.

Section 9.08 Location of Participants.

Each Participant shall keep the Bank informed of his current address and the current address of his designated beneficiary or beneficiaries. The Bank shall not be obligated to search for any person. If such

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person is not located within three (3) years after the date on which payment of the Participant’s benefits payable under this Plan may first be made, payment may be made as though the Participant or his beneficiary had died at the end of such three-year period.

Section 9.09 Liability of the Bank and its Affiliates.

Notwithstanding any provision herein to the contrary, neither the Bank nor any individual acting as an employee or agent of the Bank shall be liable to any Participant, former Participant, beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Bank or any such employee or agent of the Bank.

Section 9.10 Governing Law.

All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the United States and, to the extent not preempted by such laws, by the laws of the State of Maryland.

Section 9.11 Aggregation of Employers.

To the extent required under Section 409A of the Code, if the Bank is a member of a controlled group of corporations or a group of trades or business under common control (as described in Section 414(b) or (c) of the Code), all members of the group shall be treated as a single employer for purposes of whether there has occurred a Separation from Service and for any other purposes under the Plan as Section 409A of the Code shall require.

Section 9.12 Specified Employees.

Notwithstanding any other provision of the Plan to the contrary, if when a Separation from Service occurs a Participant is a Specified Employee, the Participant’s benefit shall be paid to the Participant in a single lump sum without interest on the first payroll date of the seventh month following the date on which the Separation from Service occurs.

Section 9.13 Section 409A.

It is intended that the Plan is intended to be (a) a plan that is not qualified within the meaning of Section 401(a) of the Code, so as to prevent the inclusion in gross income of any benefits accrued hereunder in a taxable year prior to the taxable year or years in which such amount would otherwise be actually distributed or made available to the Participants. The Plan shall be administered and interpreted to the extent possible in a manner consistent with that intent.

Section 9.14 409A Application.

References in this Plan to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Section 409A of the Code.

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Having been adopted by its Board of Directors, this Plan as amended and restated in its entirety is executed by its duly authorized officer this 17^th day of December, 2008.

	BAY-VANGUARD FEDERAL SAVINGS BANK
Attest:	By:	/s/ Edmund T. Leonard
		For the Entire Board of Directors
/s/ Robert R. Kern, Jr.
Corporate Secretary

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EX-31.1

Exhibit 31.1

Certification

I, Carolyn M. Mroz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BV Financial, Inc.;

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

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

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

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

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

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

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

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

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

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

Date: May 13, 2009	/s/ Carolyn M. Mroz
	Carolyn M. Mroz
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Edmund T. Leonard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BV Financial, Inc.;

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

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

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

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

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

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

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

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

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

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

Date: May 13, 2009	/s/ Edmund T. Leonard
	Edmund T. Leonard
	Chairman of the Board and Chief Financial Officer

EX-32.0

Exhibit 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BV Financial, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2009, as filed with the Securities and Exchange Commission (the “Report”), I hereby certify pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

2. The information contained in this Report fairly presents, in all material respects, the consolidated financial condition and results of the Company as of and for the period covered by this Report.

By:	/s/ Carolyn M. Mroz
	Carolyn M. Mroz
	President and Chief Executive Officer
	May 13, 2009
By:	/s/ Edmund T. Leonard
	Edmund T. Leonard
	Chairman of the Board and Chief Financial Officer
	May 13, 2009