10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period ended September 30, 2010

or

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

For transition period from              to             

Commission File Number 001-34593

OBA FINANCIAL SERVICES, INC.

(Exact Name of Registrant as Specified in Charter)

Maryland	27-1898270
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)
20300 Seneca Meadows Parkway, Germantown, Maryland	20876
(Address of Principal Executive Offices)	(Zip Code)

(301) 916-0742

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, 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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See 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

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

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of the latest practicable date.

4,628,750 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of November 5, 2010.

OBA FINANCIAL SERVICES, INC. and Subsidiary

Form 10-Q Quarterly Report

Table of Contents

PART I – FINANCIAL INFORMATION
	Forward-Looking Statements Disclosure	2
Item 1.	Financial Statements
	Consolidated Statements of Condition (Unaudited) As of September 30, 2010 and June 30, 2010	4
	Consolidated Statements of Operations (Unaudited) for the three months ended September 30, 2010 and 2009	5
	Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Unaudited) for the three months ended September 30, 2010 and 2009	6
	Consolidated Statements of Cash Flows (Unaudited) for the three months ended September 30, 2010 and 2009	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
Item 4.	Controls and Procedures	25
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	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	[Reserved]	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
Signatures		26

1

Forward-looking Statements

This report, as well as other written communications made from time to time by OBA Financial Services, Inc., and its subsidiary, OBA Bank, (collectively, the “Company”) and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may,” “potential,” and words of similar meaning. These forward-looking statements include, but are not limited to:

• possible or assumed estimates with respect to the financial condition, expected or anticipated revenue, and results of operations and business of the Company, including earnings growth determined using accounting principles generally accepted in the United States of America (“U.S. GAAP”);

• estimates of revenue growth in retail banking, lending and other areas, and origination volume in the Company’s consumer, commercial, and other lending businesses;

• statements regarding the asset quality and levels of non-performing assets and impairment charges with respect to the Company’s investment portfolio;

• statements regarding current and future capital management programs, tangible capital generation, and market share;

• estimates of non-interest income levels, including fees from services and product sales, and expense levels;

• statements of the Company’s goals, intentions, and expectations;

• statements regarding the Company’s business plans, prospects, growth, and operating strategies; and

• estimates of the Company’s risks and future costs and benefits.

The Company cautions that a number of important factors could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Such factors include, but are not limited to:

• prevailing general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, that are different than expected;

• changes in the securities market, the banking industry, or competition among depository and other financial institutions;

• inflation and changes in interest rates, deposit flows, loan demand, real estate values, consumer spending, savings, and borrowing habits which can materially affect, among other things, consumer banking revenues, origination levels in the Company’s lending businesses and the level of defaults, losses, and prepayments on loans made by the Company, whether held in portfolio or sold in the secondary markets, and the Company’s net interest margin and fair value of financial instruments;

• changes in any applicable law, rule, government regulation, policy, or practice with respect to tax or legal issues affecting financial institutions, including changes in regulatory fees and capital requirements;

• risks and uncertainties related to the Company’s ability to successfully integrate any assets, liabilities, customers, systems, and management personnel the Company may acquire, if any, into its operations and its ability to realize related revenue synergies and cost savings within the expected time frame;

• the Company’s timely development of new and competitive products or services in a changing environment, and the acceptance of such products or services by the Company’s customers so the Company is able to enter new markets successfully and capitalize on growth opportunities;

• operational issues and/or capital spending necessitated by the potential need to adapt to industry changes in information technology systems, on which it is highly dependent;

• changes in accounting principles, policies, guidelines, and practices, as may be adopted by the Company’s regulatory agencies, the Financial Accounting Standards Board, the SEC, and the Public Company Accounting Oversight Board;

• litigation liability, including costs, expenses, settlements, and judgments, or the outcome of other matters before regulatory agencies, whether pending or commencing in the future;

• changes in the quality or composition of the investment and loan portfolios;

• changes in the Company’s organization, compensation and benefit plans;

• changes in other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products, and services; and

• the timing and occurrence or non-occurrence of events that may be subject to circumstances beyond the Company’s control.

2

These forward-looking statements are based on the Company’s current beliefs and expectations and are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Readers are cautioned not to place undue reliance on these forward-looking statements which are made as of the date of this report, and except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.

3

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Condition (Unaudited)

	September 30, 2010			June 30, 2010
(In thousands, except share data)
Assets:
Cash and due from banks	$	19,490		$	16,946
Federal funds sold		751			19,100
Cash and cash equivalents		20,241			36,046
Interest bearing deposits with other banks		7,205			5,072
Securities available for sale		27,122			29,346
Securities held to maturity (fair value of $4,630 and $4,809)		4,430			4,637
Federal Home Loan Bank stock, at cost		3,605			3,883
Loans		286,012			277,835
Less: allowance for loan losses		1,925			1,737
Net loans		284,087			276,098
Premises and equipment, net		6,377			6,231
Bank owned life insurance		8,367			8,297
Other assets		4,359			4,485
Total assets	$	365,793		$	374,095
Liabilities:
Deposits:
Noninterest-bearing	$	23,215		$	23,499
Interest-bearing		205,115			209,942
Total deposits		228,330			233,441
Securities sold under agreements to repurchase		20,242			20,292
Federal Home Loan Bank advances		34,305			36,834
Advance payments from borrowers for taxes and insurance		1,213			2,262
Other liabilities		1,262			1,044
Total liabilities		285,352			293,873
Stockholders’ Equity:
Preferred stock (par value $.01); authorized 50,000,000 shares; no shares issued or outstanding		—			—
Common stock (par value $.01); authorized 100,000,000 shares; issued and outstanding 4,628,750 shares at September 30, 2010 and June 30, 2010		46			46
Additional paid-in capital		44,764			44,759
Unearned ESOP shares		(3,564	)		(3,610	)
Retained earnings		38,536			38,284
Accumulated other comprehensive income		659			743
Total stockholders’ equity		80,441			80,222
Total liabilities and stockholders’ equity	$	365,793		$	374,095

See notes to consolidated financial statements.

4

OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Operations (Unaudited)

	Three Months Ended September 30,
	2010		2009
(In thousands, except per share data)
Interest and Dividend Income:
Loans receivable, including fees	$	3,757	$	3,744
Investment securities:
Interest - taxable		318		347
Dividends		7		14
Federal funds sold		18		10
Total interest and dividend income		4,100		4,115
Interest Expense:
Deposits		676		1,090
Federal Home Loan Bank advances		392		596
Securities sold under agreements to repurchase		65		66
Total interest expense		1,133		1,752
Net interest income		2,967		2,363
Less provision for loan losses		158		148
Net interest income after provision for loan losses		2,809		2,215
Non-Interest Income:
Customer service fees		116		120
Loan servicing fees		11		12
Bank owned life insurance income		70		82
Impairment losses on investment securities:
Total other-than-temporary impairment losses		—		(2	)
Losses previously recognized in other comprehensive income before taxes		—		(222	)
Net impairment losses recognized in income		—		(224	)
Net gain on the sale of investments		—		3
Net gain on sale of loans		25		5
Other non-interest income		31		19
Total non-interest income		253		17
Non-Interest Expense:
Salaries and employee benefits		1,461		1,181
Occupancy and equipment		451		374
Data processing		159		153
Directors’ fees		88		75
FDIC assessments		77		95
Other non-interest expense		449		344
Total non-interest expense		2,685		2,222
Income before income taxes		377		10
Income tax expense (benefit)		125		(35	)
Net income	$	252	$	45
Basic earnings per share	$	0.06		N/A
Basic weighted average shares outstanding		4,267,758		N/A

See notes to consolidated financial statements.

5

OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Unaudited)

Three Months Ended September 30, 2010 and 2009

	Common Stock		Additional Paid-in Capital		Unearned ESOP Shares			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
(In thousands)
Balances at July 1, 2010	$	46	$	44,759	$	(3,610	)	$	38,284	$	743		$	80,222
Comprehensive income:
Net income									252					252
Other comprehensive loss, net of tax:
Net unrealized losses on available for sale securities, net of tax benefit of ($54)											(84	)		(84	)
Total comprehensive income														168
ESOP shares committed to be released (4,629 shares)				5		46								51
Balances, September 30, 2010	$	46	$	44,764	$	(3,564	)	$	38,536	$	659		$	80,441
Balances at July 1, 2009	$	—	$	—	$	—		$	38,994	$	(492	)	$	38,502
Comprehensive loss:
Net income									45					45
Other comprehensive income (loss), net of tax:
Unrealized losses on debt securities for which a portion of impairment has been recognized in income, net of tax benefit of ($1)											(1	)		(1	)
Net unrealized gains on other available for sale securities, net of tax of $156											245			245
Reclassification adjustment for other-than-temporary impairment losses included in income, net of tax of $87											137			137
Reclassification adjustment for gain on sales of investments, net of tax benefit of ($1)											(2	)		(2	)
Total comprehensive income														424
Balances, September 30, 2009	$	—	$	—	$	—		$	39,039	$	(113	)	$	38,926

See notes to consolidated financial statements.

6

OBA Financial Services, Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

	Three Months Ended September 30,
	2010			2009
(in thousands)
Operating Activities:
Net income	$	252		$	45
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses		158			148
Depreciation and amortization of premises and equipment		139			132
Net amortization (accretion) of securities premiums and discounts		40			(1	)
Net gains on sale of investment securities		—			(3	)
Impairment losses on investment securities		—			224
Proceeds from sales of loans held for sale		948			361
Originated loans held for sale		(923	)		(356	)
Net gains on sales of loans		(25	)		(5	)
Amortization of net deferred loan fees		(19	)		(34	)
Earnings on investment in bank-owned life insurance		(70	)		(82	)
ESOP expense		51			—
Amortization of mortgage servicing rights		2			1
Amortization of brokered deposit premiums		7			7
Changes in other assets and liabilities, net		408			(480	)
Total adjustments		716			(88	)
Net cash provided by (used in) operating activities		968			(43	)
Investing Activities:
Principal collections and maturities of securities available for sale		2,050			1,682
Principal collections and maturities of securities held to maturity		203			23
Proceeds from sales of securities available for sale		—			2,478
Purchases of securities available for sale		—			(2,475	)
Purchases of securities held to maturity		—			(9,983	)
Redemption of Federal Home Loan Bank Stock, net		278			—
Purchases of interest bearing deposits with Banks, net		(2,133	)		—
Loan purchases		(4,140	)		—
Loan originations less principal collections		(4,007	)		3,332
Purchases of premises and equipment		(285	)		(89	)
Purchases of bank-owned life insurance		—			(2,500	)
Net cash used in investing activities		(8,034	)		(7,532	)
Financing Activities:
Decrease in deposits		(5,111	)		(1,224	)
Net increase (decrease) in securities sold under agreements to repurchase		(50	)		2,440
Repayment of advances from the FHLB		(2,529	)		(5,000	)
Net decrease in advance payments from borrowers for taxes and insurance		(1,049	)		(1,206	)
Net cash used in financing activities		(8,739	)		(4,990	)
Decrease in cash and cash equivalents		(15,805	)		(12,565	)
Cash and cash equivalents at beginning of period		36,046			33,657
Cash and cash equivalents at end of period	$	20,241		$	21,092
Supplemental Disclosures:
Interest paid	$	1,053		$	1,699
Income taxes paid		—			—
Non cash investing activities:
Loans transferred to foreclosed assets		—			47

See notes to consolidated financial statements.

7

OBA Financial Services, Inc. and Subsidiary

Notes to the Consolidated Financial Statements (Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Operations

In December 2007, OBA Bank (the “Bank”) reorganized into a three-tier mutual holding company structure. As part of the reorganization, the Bank converted from a mutual savings bank into a federally chartered stock savings bank and formed OBA Bancorp, Inc., a federally chartered mid-tier stock holding company, and OBA Bancorp, MHC, a federally chartered mutual holding company. The Bank became a wholly-owned subsidiary of OBA Bancorp, Inc. and OBA Bancorp, Inc. became a wholly-owned subsidiary of OBA Bancorp, MHC.

On January 21, 2010, OBA Bancorp, MHC completed its plan of conversion and reorganization from a mutual holding company to a stock holding company. In accordance with the plan, OBA Bancorp, MHC and OBA Bancorp, Inc. ceased to exist as separate legal entities and a stock holding company, OBA Financial Services, Inc. (of which OBA Bank became a wholly owned subsidiary) sold and issued shares of capital stock to eligible depositors of OBA Bank. A total of 4,628,750 shares were issued in the conversion at $10 per share, raising $46.3 million of gross proceeds. The OBA Financial Services, Inc.’s common stock began trading on the NASDAQ Capital Market under the symbol “OBAF” on January 22, 2010.

In accordance with Office of Thrift Supervision (“OTS”) regulations, at the time of the conversion from a mutual holding company to a stock holding company, OBA Bank substantially restricted retained earnings by establishing a liquidation account. The liquidation account will be maintained for the benefit of eligible account holders who continue to maintain their accounts at the Bank after conversion. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account. In the event of a complete liquidation of the Bank, and only in such event, each account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the adjusted qualifying account balances then held. The Bank may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

The Bank is a community-oriented savings institution, providing a variety of financial services to individuals and small businesses through its offices in Maryland and Washington, D.C. Its primary deposits are demand and time certificate accounts and its primary lending products are residential and commercial mortgage loans.

Basis of Presentation

The consolidated financial statements include the accounts of OBA Financial Services Inc., and OBA Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and are presented in accordance with instructions for Form 10-Q and Rule 10-01 of the Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation are of a normal and recurring nature and have been included.

Operating results for the three months ended September 30, 2010, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2011 or any other interim period. The consolidated financial statements presented in this report should be read in conjunction with the audited consolidated financial statements and the accompanying notes filed on Form 10-K for the fiscal years ended June 30, 2010 and 2009.

Use of Estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Statement of Condition and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. A material estimate that is particularly sensitive to significant change in the near term relates to the determination of the allowance for loan losses.

8

Recent Accounting Pronouncements

Accounting Standards Update 2009-16

In October 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860) – Accounting for Transfers of Financial Assets. This Update amends the Codification for the issuance of FASB Statement No. 166, Accounting for Transfers of Financial Assets – and amendment of FASB Statement No. 140.

The amendments in ASU 2009-16 eliminate the exceptions for qualifying special-purpose entities from the consolidation guidance and the exception that permitted sale accounting for certain mortgage securitizations when a transferor has not surrendered control over the transferred financial assets. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. Also, there are clarifications of the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting.

The effective date is at the start of a reporting entity’s first fiscal year beginning after November 15, 2009. Early application is not permitted. This update did not have an impact on the Company’s consolidated financial statements.

Accounting Standards Update 2009-17

In October 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810) – Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Update amends the Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R).

The amendments in ASU 2009-17 replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. Also, there are required additional disclosures about a reporting entity’s involvement in variable interest entities.

The effective date is at the start of a reporting entity’s first fiscal year beginning after November 15, 2009. Early application is not permitted. This update did not have an impact on the Company’s consolidated financial statements.

Accounting Standards Update 2010-06

In January 2010, the FASB issued Accounting Standards Update 2010-06, Fair Value Measurement and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.

This Update requires new disclosures and clarifies some existing disclosure requirements about fair value measurements as set forth in Codification Subtopic 820-10.

ASU 2010-06 is effective for fiscal years beginning after December 15, 2009 and for interim periods within those fiscal years except the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. This update did not and is not expected to have a material impact on the Company’s consolidated financial statements.

Accounting Standards Update 2010-20

In June 2010, the FASB issued Accounting Standards Update 2010-20, Receivables (Topic 310), Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.

The update requires a greater level of disaggregated information about the credit quality of financing receivables and the allowance for credit losses. The amendment also requires disclosures of credit quality indicators, past due information, and modifications of financing receivables.

ASU 2010-20 is effective for interim and annual reporting periods ending on or after December 15, 2010. The Company does not expect the adoption of this amendment to have a material impact on its consolidated financial statements.

9

NOTE 2 – COMPREHENSIVE INCOME

U.S. GAAP requires that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the Statement of Condition, such items, along with net income, are components of comprehensive income.

The components of other comprehensive income (loss) and related tax effects are as follows:

	Three Months Ended September 30,
	2010			2009
	(In thousands)
Unrealized losses on debt securities for which a portion of impairment has been recognized in income	$	—		$	(2	)
Unrealized gains (losses) on other available for sale securities		(138	)		401
Reclassification adjustment for OTTI losses included in income		—			224
Reclassification adjustment for gain on sale of investments		—			(3	)
Net unrealized gains (losses)		(138	)		620
Tax effect		(54	)		241
Net of tax amount	$	(84	)	$	379

Accumulated other comprehensive income consists of the following:

	September 30, 2010			June 30, 2010
	(In thousands)
Unrealized gains on available for sale securities	$	1,080		$	1,218
Tax effect		(421	)		(475	)
Total	$	659		$	743

10

NOTE 3 – SECURITIES

The amortized cost and fair value of securities with gross unrealized gains and losses are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2010
Securities available for sale:
Debt Securities:
Residential mortgage-backed securities (1)	$	25,862	$	1,101	$	—		$	26,963
Trust preferred securities		130		—		(21	)		109
Total debt securities available for sale		25,992		1,101		(21	)		27,072
Equity Securities		50		—		—			50
Total securities available for sale		26,042		1,101		(21	)		27,122
Securities held to maturity:
Debt Securities:
Residential mortgage-backed securities (1)		4,430		200		—			4,630
Total debt securities held to maturity		4,430		200		—			4,630
Total investment securities	$	30,472	$	1,301	$	(21	)	$	31,752
June 30, 2010
Securities available for sale:
Debt Securities:
Residential mortgage-backed securities (1)	$	27,944	$	1,243	$	—		$	29,187
Trust preferred securities		135		—		(26	)		109
Total debt securities available for sale		28,079		1,243		(26	)		29,296
Equity Securities		50		—		—			50
Total securities available for sale		28,129		1,243		(26	)		29,346
Securities held to maturity:
Debt Securities:
Residential mortgage-backed securities (1)		4,637		172		—			4,809
Total debt securities held to maturity		4,637		172		—			4,809
Total investment securities	$	32,766	$	1,415	$	(26	)	$	34,155

⁽¹⁾ All residential mortgage-backed securities were issued by United States government agencies including the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, or Government National Mortgage Association. The Company had no private label residential mortgage-backed securities at September 30, 2010 and June 30, 2010 or during the quarter or year then ended, respectively.

11

The amortized cost and fair value of debt securities by contractual maturity at September 30, 2010 are as follows:

	Available for sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Due after ten years	$	130	$	109	$	—	$	—
Residential mortgage-backed securities		25,862		26,963		4,430		4,630
Total	$	25,992	$	27,072	$	4,430	$	4,630

At September 30, 2010 and June 30, 2010, the carrying amount of securities pledged to secure repurchase agreements was $26.9 million and $22.3 million, respectively.

The following table presents a summary of cumulative credit losses related to other-than-temporary impairment charges recognized in income for trust preferred securities during the three months ended September 30, 2010 and 2009:

	Three Months Ended September 30,
	2010		2009
	(In thousands)
Beginning balance of cumulative credit losses	$	—	$	1,020
Additions to credit losses recorded on securities		—		224
Ending balance of cumulative credit losses	$	—	$	1,244

During the three month period ended September 30, 2009, the Company owned two bank and bank holding company backed pooled trust preferred securities (PreTSL VII and PreTSL VIII) which had a cumulative total of $1.2 million in other-than-temporary credit related charges. At September 30, 2009, the Company did not intend to sell the securities and believed it was not more likely than not that the Company would be required to sell the securities.

During the quarter ended March 31, 2010, the Company re-evaluated its intent regarding the pooled trust preferred securities. Due to the continued deterioration in the financial condition of some issuers, lack of improvements in the securities’ liquidity, the amount of management’s time and related costs of monitoring, valuing and accounting for the securities and tax related considerations, the Company decided to sell the securities. Consequently, the Company has zero cumulative credit losses related to other-than-temporary impairment charges at September 30, 2010.

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Information pertaining to securities with gross unrealized losses at September 30, 2010 and June 30, 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:

	Less than 12 Months				12 Months or More				Total
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
September 30, 2010
Trust preferred securities	$	—	$	—	$	21	$	109	$	21	$	109
June 30, 2010
Trust preferred securities	$	—	$	—	$	26	$	109	$	26	$	109

At September 30, 2010, the Company owned one trust preferred security backed by a total of 17 insurance and insurance holding companies. The security was purchased at par. The decline in the fair value of this security has been caused by (1) collateral deterioration due to failures and credit concerns across the financial services sector, (2) the widening of credit spreads for asset-backed securities, and (3) general illiquidity and, as a result, inactivity in the market for these securities.

The remaining pooled trust preferred security is in the senior tranche and is rated “AAA” by the rating agencies Moody’s and Fitch. Non-performing collateral as a percent of current collateral and excess subordination as a percent of current performing collateral are 9.0% and 66.7%, respectively, at September 30, 2010. The unrealized loss in the table above related to this security was not recognized in income as the Company does not intend to sell the security, believes it is not more than likely than not that the Company will be required to sell the security and believes the present value of expected cash flows is sufficient to recover the entire amortized cost basis.

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NOTE 4 – FAIR VALUE MEASUREMENTS AND DISCLOSURES

Management uses its best judgment in estimating the fair value of the Company’s assets and liabilities; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all assets and liabilities, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective reporting dates and have not been re-evaluated or updated for purposes of these assets and liabilities subsequent to those respective dates. As such, the estimated fair values of these assets and liabilities subsequent to the respective reporting dates may be different than the amounts reported at each reporting date. Accounting guidance related to fair value measurements and disclosures 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 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

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

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2010 and June 30, 2010 are as follows:

(In thousands)	September 30, 2010		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Description
Securities available for sale	$	27,122	$	—	$	27,013	$	109
Description	June 30, 2010		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Securities available for sale	$	29,346	$	—	$	29,237	$	109

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The following table presents a reconciliation of the securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2010:

(In thousands)
Beginning balance, July 1, 2010	$	109
Principal repayments		(5	)
Unrealized gains included in other comprehensive income		5
Ending balance, September 30, 2010	$	109

For assets measured at fair value on a nonrecurring basis at September 30, 2010 and June 30, 2010, the fair value measurements by level within the fair value hierarchy are as follows:

(In thousands)	September 30, 2010		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs
Description
Impaired loans	$	2,873	$	—		$	2,873
Foreclosed assets	$	193	$	—		$	193
Description	June 30, 2010		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs
Impaired loans	$	1,993	$	—		$	1,993
Foreclosed assets	$	193	$	—		$	193

The methods and assumptions used to estimate the fair values included in the above tables are included in the disclosures that follow.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate fair values at September 30, 2010 and June 30, 2010:

Cash and Cash Equivalents (Carried at Cost)

The carrying amounts of cash and short-term instruments approximate fair value.

15

Securities Available for Sale (Carried at Fair Value)

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

The market for pooled trust preferred securities is inactive. A significant widening of the bid/ask spreads in the markets in which these securities trade was followed by a significant decrease in the volume of trades relative to historical levels. The new issue market is also inactive and no new pooled trust preferred securities have been issued since 2007. Since there were limited observable market-based Level 1 and Level 2 inputs for trust preferred securities, the fair value of these securities was estimated using primarily unobservable Level 3 inputs. Fair value estimates for trust preferred securities were based on discounting expected cash flows using a risk-adjusted discount rate. The Company develops the risk-adjusted discount rate by considering the time value of money (risk-free rate) adjusted for an estimated risk premium for bearing the uncertainty in future cash flows and, given current adverse market conditions, a liquidity adjustment based on an estimate of the premium that a market participant would require assuming an orderly transaction.

Securities Held to Maturity (Carried at Amortized Cost)

A review of the investment portfolio may indicate that certain securities held to maturity are impaired. If necessary, the Company performs fair value modeling and evaluations on these securities. All processes and controls associated with determination of the fair value of those securities are consistent with these performed for securities available for sale.

Federal Home Loan Bank Stock (Carried at Cost)

The carrying amount of Federal Home Loan Bank stock approximates fair value and considers the limited marketability of such securities.

Loans Receivable (Carried at Cost)

The fair values of loans (except impaired loans) are estimated using discounted cash flow analyses which use market rates at the statement of condition date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (Generally Carried at Fair Value)

Impaired loans are those for which the Company has measured impairment generally based on the fair value of the loan’s collateral. Fair value of real estate collateral is generally determined based upon independent third-party appraisals of the properties, which consider sales prices of similar properties in the proximate vicinity or by discounting expected cash flows from the properties by an appropriate risk adjusted discount rate. Fair value of collateral other than real estate is based on an estimate of the liquidation proceeds. Impaired loans are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of the loan balances net of a valuation allowance.

Foreclosed Assets (Carried at Lower of Cost or Fair Value less Estimated Selling Costs)

Fair values of foreclosed assets are based on independent third party appraisals of the properties or discounted cash flows based upon the expected sales proceeds upon disposition of the assets. These values were generally determined based on the sales prices of similar properties in the proximate vicinity. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Mortgage Servicing Rights (Carried at Lower of Cost or Fair Value)

At origination, the Company estimates the fair value of mortgage servicing rights at 1% of the principal balances of loans sold. The Company amortizes that amount over the estimated period of servicing revenues or charges the entire amount to income upon prepayment of the related loan. Due to the small size of the balance of mortgage servicing rights at September 30, 2010 and June 30, 2010, the Company did not perform any further analysis or estimate their fair values. Therefore, the Company has disclosed that the carrying amounts of mortgage servicing rights approximate fair value.

Deposit Liabilities (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities.

16

Federal Home Loan Bank Advances (Carried at Cost)

Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms, and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Securities Sold Under Agreements to Repurchase (Carried at Cost)

The carrying amounts of securities sold under agreements to repurchase approximate fair value for short-term obligations. The fair values for longer term repurchase agreements are based on current market interest rates for similar transactions.

Accrued Interest Receivable and Payable (Carried at Cost)

The carrying amounts of accrued interest approximate fair value.

Off-Balance-Sheet Credit-Related Instruments (Disclosures at Cost)

Fair values for off-balance-sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these instruments is not material.

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The estimated fair values of the Company’s financial instruments were as follows:

	September 30, 2010				June 30, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Financial assets:
Cash and cash equivalents	$	20,241	$	20,241	$	36,046	$	36,046
Interest bearing deposits with other banks		7,205		7,205		5,072		5,072
Securities available for sale		27,122		27,122		29,346		29,346
Securities held to maturity		4,430		4,630		4,637		4,809
Federal Home Loan Bank stock		3,605		3,605		3,883		3,883
Loans receivable, net		284,087		293,214		276,098		283,876
Accrued interest receivable		1,185		1,185		1,206		1,206
Mortgage servicing rights		70		70		63		63
Financial liabilities:
Deposits		228,330		230,022		233,441		235,186
Securities sold under agreements to repurchase		20,242		20,584		20,292		20,539
Federal Home Loan Bank Advances		34,305		37,819		36,834		39,929
Accrued interest payable		321		321		241		241
Off-Balance sheet financial instruments		—		—		—		—

NOTE 5 – GUARANTEES

The Company has not issued any guarantees that would require liability recognition or disclosure, other than its letters of credit. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risks involved in issuing letters of credit are essentially the same as those that are involved in extending loan facilities to customers. The Company generally holds collateral and/or personal guarantees supporting these commitments. As of September 30, 2010, the Company had $506 thousand of outstanding letters of credit. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. Management believes that the current amount of the liability as of September 30, 2010 for guarantees under letters of credit issued is not material.

NOTE 6 – EMPLOYEE STOCK OWNERSHIP PLAN

Effective January 1, 2010, the Company adopted an Employee Stock Ownership Plan (ESOP) for eligible employees. The ESOP borrowed $3.7 million from the Company and used those funds to acquire 370,300 shares or 8% of the total number of shares issued by the Company in its initial public offering. The shares were acquired at a price of $10.00 per share.

The loan is secured by the shares purchased with the loan proceeds and will be repaid by the ESOP over the 20-year term of the loan with funds from OBA Bank’s contributions to the ESOP and dividends payable on stock, if any. The interest rate on the ESOP loan is an adjustable rate equal to the lowest prime rate, as published in The Wall Street Journal. The interest rate will adjust annually and will be the prime rate on the first business day of the calendar year.

Shares purchased by the ESOP will be held by a trustee in an unallocated suspense account, and shares will be released annually from the suspense account on a pro-rata basis as principal and interest payments are made by the ESOP to the Company. The trustee will allocate the shares released among participants on the basis of each participant’s proportional share of compensation relative to all participants. As shares are committed to be released from the suspense account, OBA Bank reports compensation expense based on the average fair value of shares committed to be released with a corresponding credit to stockholders’ equity. Compensation expense recognized for the three months ended September 30, 2010 amounted to $51 thousand.

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Shares held by the ESOP trust at September 30, 2010 were as follows:

Shares committed to be released		13,886
Unearned shares		356,414
Total ESOP shares		370,300
Fair value of unearned shares, in thousands	$	3,928

NOTE 7 – EARNINGS PER SHARE

Basic earnings per share are computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. The Company has no dilutive potential common shares for the three month period ended September 30, 2010. Because the mutual to stock conversion was not completed until January 21, 2010, per share earnings data is not presented for the three months ended September 30, 2009.

(Dollars in thousands, except per share data)	Three Months Ended September 30, 2010
Basic
Net income (loss)	$	252
Shares:
Weighted average common shares outstanding		4,267,758
Income per common share, basic	$	0.06

NOTE 8 – SUBSEQUENT EVENTS

The Company announced on September 27, 2010 that the Bank entered into a definitive agreement with EagleBank, Bethesda, Maryland to sell to EagleBank approximately $17.2 million of deposits of OBA Bank’s Washington, D.C. branch at 700 7^th Street, NW. EagleBank will operate a branch office at that location. The transaction, subject to regulatory approval, is expected to close in the first calendar quarter of 2011.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL REVIEW

The principal objective of this Financial Review is to provide an overview of the financial condition and results of operations of OBA Financial Services Inc., and its subsidiary, OBA Bank. The discussion and tabular presentations should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes.

Overview of Income and Expenses

Income

The Company has two primary sources of pre-tax income. Net interest income is the difference between interest income, which is the income the Company earns on its loans and investments, and interest expense, which is the interest the Company pays on its deposits and borrowings.

Non-interest income is the compensation received from providing products and services and from other income. The majority of the non-interest income is earned from service charges on deposit accounts, bank owned life insurance income, and loan servicing fees. The Company also earns income from the sale of residential mortgage loans and other fees and charges.

The Company recognizes gains or losses as a result of sales of investment securities, loans, foreclosed property, and premises and equipment. In addition, the Company recognizes losses on its investment securities that are considered other-than-temporarily impaired. Gains and losses are not a regular part of the Company’s primary sources of income.

Expenses

The expenses the Company incurs in operating its business consist of salaries and employee benefits, occupancy and equipment expense, external processing fees, FDIC assessments, Director fees, and other non-interest expenses.

Salaries and employee benefits expense consists primarily of the salaries and wages paid to employees, payroll taxes, and expenses for health care, retirement, and other employee benefits.

Occupancy expenses, which are fixed or variable costs associated with premises and equipment, consist primarily of lease payments, real estate taxes, depreciation charges, maintenance, and cost of utilities.

Equipment expense includes expenses and depreciation charges related to office and banking equipment.

External processing fees are paid to third parties mainly for data processing services.

Other expenses include expenses for attorneys, accountants and consultants, advertising and marketing, franchise taxes, charitable contributions, insurance, office supplies, postage, telephone, and other miscellaneous operating expenses.

Critical Accounting Policies and Estimates

There are no material changes to the critical accounting policies disclosed in OBA Financial Services, Inc.’s Form 10-K for the fiscal year ended June 30, 2010.

Comparison of Financial Condition at September 30, 2010 and June 30, 2010

Assets. Total assets decreased $8.3 million, or 2.2%, to $365.8 million at September 30, 2010 from $374.1 million at June 30, 2010. The decrease was primarily due to a decrease in cash and cash equivalents and partially offset by an increase in total loans.

Cash and Cash equivalents. Cash and cash equivalents decreased $15.8 million, or 43.8%, due primarily to an increase in total loans outstanding and a decrease in interest-bearing deposits and Federal Home Loan Bank borrowings.

Loans. At September 30, 2010, total gross loans were $286.0 million. During the three months ended September 30, 2010, the loan portfolio increased $8.2 million, or 2.9%. The increase was primarily due to an increase of $14.0 million in total commercial loans partially offset by a reduction in fixed rate residential mortgage loans of $5.6 million. The reduction in the fixed rate residential mortgage loan portfolio is a result of management’s decision to sell newly-originated, longer-term (primarily 30 year) fixed rate one- to four-family residential real estate loans to mitigate interest rate risk, as well as prepayments exceeding other originations that were held in the portfolio.

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Allowance for Loan Losses.

The following table summarizes activity in the allowance for loan losses for the three months ended September 30, 2010 and 2009:

	Three Months Ended September 30,
(in thousands)	2010			2009
Balance at beginning of period	$	1,737		$	1,167
Provision for loan losses		158			148
Loans recovered, net		30			—
Balance at end of period	$	1,925		$	1,315
Ratios:
Net charge-offs (recoveries) to average loans		(0.04	)%		—	%
Allowance for loan losses to loans		0.67			0.47

At September 30, 2010, the allowance for loan losses was $1.9 million compared with $1.7 million at June 30, 2010. The allowance for loan losses as a percentage of total loans at September 30, 2010 was 0.67% compared to 0.47% at September 30, 2009 and 0.63% at June 30, 2010. Net charge-offs (recoveries) as a percentage of average loans were (0.04) % for the three months ended September 30, 2010 and zero for the three months ended September 30, 2009. The increase in the allowance for loan losses is due primarily to the shift in loan concentration to commercial loans from residential one-to-four family mortgages, as discussed in “Loans” in Comparison of Financial Condition at September 30, 2010 and June 30, 2010.

Non-performing Assets. Loans are placed on non-accrual status when payment of principal or interest is 90 days or more delinquent. Loans are also placed on non-accrual status if collection of principal or interest in full is in doubt. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received. The loan may be returned to accrual status if both principal and interest payments are brought current and full payment of principal and interest is expected. At September 30, 2010 and June 30, 2010, the Company had $654 thousand and $639 thousand in total non-performing assets, respectively.

The following table summarizes non-performing assets as of September 30, 2010 and June 30, 2010:

(in thousands)	September 30, 2010			June 30, 2010
Non-performing assets
Non-accrual loans:
One-to four-family residential	$	461		$	446
Total non-accrual loans		461			446
Other real estate owned		193			193
Total non-performing assets	$	654		$	639
Asset quality ratios:
Non-performing loans to total loans		0.16	%		0.16	%
Non-performing assets to total assets		0.18			0.17

Non-performing loan and asset ratios are effectively unchanged since June 30, 2010. The non-performing loans to total loans ratio remained unchanged at 16 basis points as of September 30, 2010 as compared to June 30, 2010. The non-performing assets to total assets ratio increased one basis point from 17 basis points as of June 30, 2010 to 18 basis points as of September 30, 2010.

Troubled Debt Restructurings. Loans are periodically modified to make concessions to help a borrower remain current on the loan and to avoid foreclosure. Generally, the Bank does not forgive principal or interest on loans or modify the interest rate on loans to rates that are below market rates. At September 30, 2010 and June 30, 2010, the Bank had $4.3 million and $3.4 million of these modified loans, respectively. At September 30, 2010, the Bank had $2.2 million in one- to four family residential mortgage loans and home equity loans and lines of credit that were considered troubled debt restructures. At September 30, 2010, the Bank had $2.1 million in commercial real estate loans that were considered troubled debt restructures. At June 30, 2010, the Bank had $1.9 million in one- to four-residential real loans and home equity loans and lines of credit that were considered trouble debt restructures. At June 30, 2010, the Bank had $1.5 million in commercial real estate loans that were considered troubled debt restructures. Subsequent to the end of the quarter, one loan included in the above totals, in the amount of $662 thousand, paid off in October 2010.

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Securities. At September 30, 2010, the securities portfolio totaled $31.6 million, or 8.6% of total assets as compared to $34.0 million, or 9.1%, at June 30, 2010.

Deposits. During the three months ended September 30, 2010, deposits decreased by $5.1 million, or 2.2%. The decrease resulted primarily from the reduction of higher cost deposits. Specifically, total certificates of deposits decreased by $1.8 million, and total money market accounts decreased by $2.4 million. In addition, total checking accounts decreased by $654 thousand.

Borrowings. During the three months ended September 30, 2010, total borrowings decreased $2.6 million, or 4.5%, as management continues to allow higher costing borrowings to run off. At September 30, 2010, Federal Home Loan Bank advances totaled $34.3 million, or 12.0% of total liabilities, and decreased by 7.0%. Repurchase agreements totaled $20.2 million, or 7.1% of total liabilities were effectively unchanged from June 30, 2010.

At September 30, 2010, the Company had access to additional Federal Home Loan Bank advances of up to $48.8 million.

Equity. Equity totaled $80.4 million and $80.2 million for the periods ending September 30 and June 30, 2010, respectively. The increase of $219 thousand was primarily the result of increased retained earnings.

Capital and Liquidity. The Company’s goal is to maintain a strong capital position that supports its strategic goals while, at the same time, exceeding regulatory standards. At September 30, 2010, the Company exceeded all regulatory minimum capital requirements and met the definition of a “well-capitalized” institution; total risk-based capital ratio exceeding 10%, Tier 1 risk-based capital ratio exceeding 6%, and leverage capital ratio exceeding 5%.

The Company’s primary sources of funds are deposits, borrowed funds, amortization and prepayment of loans, maturities of investment securities and other short-term investments, and earnings and funds provided from operations. While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. In addition, the Company invests excess funds in short-term interest-earning and other assets which provide liquidity to meet lending requirements.

The Company is a member of the Federal Home Loan Bank of Atlanta, whose competitive advance programs provide the Company with a safe, reliable, and convenient source of funds. A significant decrease in liquidity could result in the Company seeking other sources of funds, including, but not limited to, additional borrowings, brokered deposits, negotiated time deposits, the sale of “available for sale” investment securities, and the sale of loans or other assets.

Comparison of Operating Results for the Three Months Ended September 30, 2010 and 2009

General. Net income increased $207 thousand, or 460.0%, to $252 thousand for the three months ended September 30, 2010 from net income of $45 thousand for the three months ended September 30, 2009. The increase in net income was primarily a result of an increase in net interest income of $604 thousand, or 25.6%, and non-interest income of $236 thousand. This was partially offset by an increase in non-interest expense of $463 thousand, or 20.8%.

Net Interest Income. Net interest income increased $604 thousand, or 25.6%, to $3.0 million for the three months ended September 30, 2010, compared to $2.4 million for the three months ended September 30, 2009. Interest expense decreased $619 thousand, or 35.3%, for the three months ended September 30, 2010 as low market interest rates resulted in the reduction of the cost of deposits and borrowings. Interest and dividend income decreased $15 thousand, or 0.4%, for the three months ended September 30, 2010. The net interest margin was 3.47% for the three months ended September 30, 2010, compared to 2.79% for the three months ended September 30, 2009. The improvement in the net interest margin was the result of a decrease in the average cost of interest-bearing liabilities of 62 basis points, which more than offset a six basis points decrease in the average yield on interest-earning assets.

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Interest and Dividend Income. Interest and dividend income decreased $15 thousand, or 0.4%, to $4.1 million for the three months ended September 30, 2010 compared to $4.1 million for the three months ended September 30, 2009. Interest income on loans increased $13 thousand, or 0.3%, to $3.8 million for the three months ended September 30, 2010 from $3.7 million for the three months ended September 30, 2009, as the average yield on loans increased ten basis points, to 5.36% for the three months ended September 30, 2010 from 5.26% for the three months ended September 30 2009, reflecting an increase in commercial loans.

Average loans decreased $4.4 million, or 1.6%, reflecting a reduction in the average balance of one- to four-family residential real estate loans of $27.5 million for the three months ended September 30, 2010. The reduction resulted from management’s decision to sell newly-originated, longer-term (primarily 30 year) fixed-rate one- to four-family residential real estate loans to help mitigate interest rate risk, as well as prepayments exceeding other originations that were held in the portfolio. The reduction in the residential real estate portfolio was partially offset by average balance increases in consumer and commercial loans of $447 thousand and $22.7 million, respectively, for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009, reflecting the recent focus on originating commercial loans. Commercial loans generally carry higher yields and assist in managing interest rate risk.

Interest income on securities decreased $29 thousand, or 8.4%, to $318 thousand for the three months ended September 30, 2010 from $347 thousand for the three months ended September 30, 2009, as the average yield on securities decreased 111 basis points to 3.12% for the three months ended September 30, 2010 from 4.23% for the three months ended September 30, 2009, reflecting continued low market interest rates and prepayments within the mortgage backed securities portfolio.

Interest Expense. Interest expense decreased $619 thousand, or 35.3%, to $1.1 million for the three months ended September 30, 2010 from $1.8 million for the three months ended September 30, 2009. Interest expense on both deposits and borrowings decreased. Continued low market interest rates and a decrease in higher-cost certificates of deposit allowed for the reduction of deposit expense by $414 thousand, or 38.0%, as the average rate paid on deposits decreased 60 basis points to 1.28% for the three months ended September 30, 2010 from 1.88% for three months ended September 30, 2009.

Interest expense on borrowings decreased $205 thousand, or 31.0%, to $457 thousand for the three months ended September 30, 2010 from $662 thousand for the three months ended September 30, 2009, due to a $15.2 million, or 21.3%, decrease in the average balance of borrowings (primarily in Federal Home Loan Bank advances), as well as a 44 basis points decrease in the average cost of borrowings to 3.17% for the three months ended September 30, 2010 from 3.61% for the three months ended September 30, 2009 (reflecting continued low market interest rates).

Provision for Loan Losses. The Company’s provision for loan losses for the three months ended September 30, 2010 was $158 thousand, an increase of $10 thousand from $148 thousand in the three month period ended September 30, 2009. The increase in the provision for loan losses was primarily a result of an increase in total commercial loans partially offset by a reduction in fixed rate residential mortgage loans. The reduction in the fixed rate residential mortgage loan portfolio is a result of management’s decision to sell newly-originated, longer-term (primarily 30 year) fixed rate one- to four-family residential real estate loans to mitigate interest rate risk, as well as prepayments exceeding other originations that were held in the portfolio. For further discussion related to the provision for loan losses, see Allowance for Loan Losses. For a further discussion related to loan portfolio performance, see Non-performing Assets.

Non-Interest Income. The following table summarizes changes in non-interest income between the three months ended September 30, 2010 and 2009.

	Three Months Ended September 30,					Change
	2010		2009			$			%
	(In thousands)
Customer service fees	$	116	$	120		$	(4	)		(3.3	)%
Loan servicing fees		11		12			(1	)		(8.3	)
Bank owned life insurance income		70		82			(12	)		(14.6	)
Impairment losses on investment securities		—		(224	)		224			(100.0	)
Net gain on the sale of investments		—		3			(3	)		(100.0	)
Net gain on sale of loans		25		5			20			400.0
Other non-interest income		31		19			12			63.2
Total non-interest income (loss)	$	253	$	17		$	236			1,388.2

23

The increase in non-interest income is primarily a result of the reduction in the amount of the other than temporary impairment charges related to the Company’s securities portfolio. The Company previously sold its bank and bank holding company backed pooled trust preferred securities. There were no other than temporary impairment charges during the three months ended September 30, 2010 as compared to a $224 thousand other than temporary impairment charge during the three months ended September 30, 2009.

Non-Interest Expense. The following table summarizes changes in non-interest expense between the three months ended September 30, 2010 and 2009.

	Three Months Ended September 30,				Change
	2010		2009		$			%
	(In thousands)
Salaries and employee benefits	$	1,461	$	1,181	$	280			23.7	%
Occupancy and equipment		451		374		77			20.6
Data processing		159		153		6			3.9
Directors’ fees		88		75		13			17.3
FDIC assessments		77		95		(18	)		(18.9	)
Other non-interest expense		449		344		105			30.5
Total non-interest expense	$	2,685	$	2,222	$	463			20.8

Salaries and benefits increased subsequent to the three months ended September 30, 2009, in connection with the mutual-to-stock conversion as the Company increased the depth of the management team by hiring a new Chief Financial Officer. The Company also hired three commercial bankers as part of the business strategy to increase the commercial loan portfolios and a manager of the residential real estate department. These positions were additions to staff. Occupancy and equipment includes a one-time charge of $72 thousand primarily to account for escalating lease costs and the opening of one new branch. Other non-interest expense increased primarily due to increased legal and accounting costs necessary to operate as a public company.

Income Taxes. The Company recorded an income tax expense of $125 thousand for the three months ended September 30, 2010, reflecting an effective tax rate of 33.2%, compared to income tax benefit of $35 thousand for the three months ended September 30, 2009, reflecting an effective tax rate of (350.0)%. The difference between the effective tax rate and statutory rate is primarily due to the amount of income received from bank-owned life insurance, which is tax-free for federal and state tax purposes, relative to total pre-tax income for each period.

24

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required, as the Registrant is a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2010. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended September 30, 2010, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of September 30, 2010, the Company was not subject to any legal actions.

ITEM 1A. RISK FACTORS

Not required, as the Registrant is a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. [Reserved]

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The exhibits required by Item 601 of Regulation S-K are included with this Form 10-Q and are listed on the “Exhibit Index” immediately following the Signatures.

25

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.

	OBA FINANCIAL SERVICES, INC.
	(Registrant)
Date: November 12, 2010	/S/    CHARLES E. WELLER
	Charles E. Weller
	President and Chief Executive Officer
Date: November 12, 2010	/S/    DAVID A. MILLER
	David A. Miller
	Senior Vice President and Chief Financial Officer

26

EXHIBIT INDEX

Exhibit Number	Description
31.1	Certification of Charles E. Weller, President and Chief Executive Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
31.2	Certification of David A. Miller, Senior Vice President and Chief Financial Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
32	Certification of Charles E. Weller, President and Chief Executive Officer, and David A. Miller, Senior Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

27

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Charles E. Weller, certify that:

1) I have reviewed this report on Form 10-Q of OBA Financial Services, 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 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)) 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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) 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

c) 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: November 12, 2010

/s/ Charles E. Weller

Charles E. Weller

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David A. Miller, certify that:

1) I have reviewed this report on Form 10-Q of OBA Financial Services, 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 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)) 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 subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) 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

c) 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: November 12, 2010

/s/ David A. Miller

David A. Miller

Senior Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of OBA Financial Services, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2010 as filed with the Securities and Exchange Commission (the “Report”), the undersigned, Charles E. Weller, President and Chief Executive Officer of the Company, and David A. Miller, Senior Vice President and Chief Financial Officer, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to best of his knowledge:

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

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

/s/ Charles E. Weller	Date: November 12, 2010
Charles E. Weller
President and Chief Executive Officer
/s/ David A. Miller	Date: November 12, 2010
David A. Miller
Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to OBA Financial Services, Inc. and will be retained by OBA Financial Services, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.