S-1

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Auburn Bancorp, Inc.
(Exact name of registrant as specified in its charter)

United States
(State or jurisdiction of incorporation or organization)

6035

(Primary Standard Industrial Classification Code Number)

26-2139168

(I.R.S. Employer Identification No.)

256 Court Street, P.O. Box 3157
Auburn, ME 04212
(Address and telephone number of registrant’s principal executive offices)

Allen T. Sterling
President & Chief Executive Officer
Auburn Bancorp, Inc. (In Organization)
256 Court Street, P.O. Box 3157
Auburn, ME 04212
(207) 782-6871
(Name, address and telephone number of agent for service)

Copy to:
Michelle L. Basil
Nutter, McClennen & Fish LLP
155 Seaport Boulevard
Boston, MA 02210
(617) 439-2000

Approximate date of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

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,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o   Accelerated filer o   Non-accelerated filer o   Smaller reporting company x

CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered	Amount to be Registered		Proposed Maximum Offering Price per Share		Proposed Maximum Aggregate Offering Price (1)		Amount of Registration Fee
Common Stock, $0.01 par value		351,124		$               10.00		$         3,511,240		$         137.99

(1)      Estimated solely for the purpose of calculating the registration fee.

          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

(Proposed Holding Company for Auburn Savings Bank)
Up to 305,325 Shares of Common Stock

          This is the initial public offering of shares of common stock of Auburn Bancorp, Inc., a federally-chartered corporation Auburn Savings Bank, FSB will form in connection with its reorganization into the mutual holding company form of organization. The shares we are offering will represent 45% of our outstanding common stock. Auburn Bancorp, MHC, a mutual holding company that Auburn Savings Bank will form in connection with its reorganization, will own 55% of our outstanding common stock. We intend to have our common stock quoted on the OTC Bulletin Board.

          If you are or were a depositor or borrower of Auburn Savings Bank:

• You may have priority rights to purchase shares of common stock.

          If you do not fit the above category, but are interested in purchasing shares of our common stock:

• You may have an opportunity to purchase shares of common stock after priority orders are filled.

          We are offering up to 305,325 shares of common stock for sale on a best efforts basis, subject to certain conditions. We must sell a minimum of 225,675 shares to complete the stock offering. The amount of capital being raised is based on an appraisal of Auburn Savings Bank. Most of the terms of this stock offering are required by regulations of the Office of Thrift Supervision. If, as a result of regulatory considerations, demand for the shares or changes in market conditions, the independent appraiser determines our market value has increased, we may sell up to 351,124 shares without giving you further notice or the opportunity to change or cancel your order.

          The stock offering is scheduled to terminate at 12:00 Noon, Eastern time, on [ ], 2008. We may extend this termination date without notice to you until [ ], 2008, unless the Office of Thrift Supervision approves a later date. Funds received before completion of the stock offering will be maintained at Auburn Savings Bank or, at our discretion, in an escrow account at an independent insured depository institution. All subscriptions received will earn interest at our passbook savings rate, which is currently 1.0% per annum.

          The minimum purchase is 25 shares. Once submitted, orders are irrevocable unless the stock offering is terminated or extended beyond [ ], 2008. If we extend the stock offering beyond [ ], 2008, we will promptly return the funds of all subscribers who do not reconfirm their subscriptions. If we terminate the stock offering because we fail to sell the minimum number of shares or for any other reason, we will promptly return your funds with interest at our passbook savings rate.

          Keefe, Bruyette & Woods, Inc. will use its best efforts to assist us in our selling efforts, but is not required to purchase any of the common stock that we are offering for sale. Purchasers will not pay a commission to purchase shares of common stock in the stock offering. All shares offered for sale are offered at a price of $10.00 per share.

          We expect our directors and executive officers, together with their associates, to subscribe for [ ] shares, which equals [ ]% of the shares offered for sale at the maximum of the offering range.

          The Office of Thrift Supervision conditionally approved our plan of reorganization and stock issuance plan on [ ], 2008. However, such approval does not constitute a recommendation or endorsement of this stock offering.

This investment involves a degree of risk, including the possible loss of principal.
Please read “ Risk Factors” beginning on page [ ].

OFFERING SUMMARY
Price Per Share: $10.00

	Minimum		Maximum		Maximum As Adjusted
Number of shares		225,675		305,325		351,124
Gross offering proceeds	$	2,256,750	$	3,053,250	$	3,511,240
Estimated offering expenses, excluding underwriting fees and expenses	$	445,000	$	445,000	$	445,000
Underwriting fees and expenses(1)	$	155,000	$	155,000	$	155,000
Estimated net proceeds	$	1,656,750	$	2,453,250	$	2,911,240
Estimated net proceeds per share	$	7.34	$	8.03	$	8.29

(1) Excludes fees to be paid to broker-dealers in the event a syndicated community offering is conducted. For information regarding underwriting compensation to be paid to Keefe Bruyette & Woods, Inc., see “The Reorganization and stock offering—Marketing Arrangements.”

          These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

          Neither the Securities and Exchange Commission, the Office of Thrift Supervision nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

          For assistance, please contact the stock information center at (207) [ ].

KEEFE, BRUYETTE & WOODS

The date of this prospectus is [ ], 2008

TABLE OF CONTENTS
RISK FACTORS	17
FORWARD-LOOKING STATEMENTS	24
SELECTED FINANCIAL AND OTHER DATA	25
USE OF PROCEEDS	27
DIVIDEND POLICY	28
MARKET FOR THE COMMON STOCK	29
CAPITALIZATION	30
REGULATORY CAPITAL COMPLIANCE	32
PRO FORMA DATA	33
BUSINESS OF AUBURN BANCORP, INC.	39
BUSINESS OF AUBURN SAVINGS BANK, FSB	39
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	61
MANAGEMENT	76
SUBSCRIPTIONS BY EXECUTIVE OFFICERS AND DIRECTORS	84
REGULATION AND SUPERVISION	84
FEDERAL AND STATE TAXATION	92
THE REORGANIZATION AND STOCK OFFERING	93
RESTRICTIONS ON ACQUISITION OF AUBURN BANCORP, INC.	115
DESCRIPTION OF AUBURN BANCORP, INC. CAPITAL STOCK	119
TRANSFER AGENT AND REGISTRAR	120
REGISTRATION REQUIREMENTS	120
LEGAL AND TAX OPINIONS	120
EXPERTS	120
WHERE YOU CAN FIND MORE INFORMATION	121
INDEX TO FINANCIAL STATEMENTS OF AUBURN SAVINGS BANK	122

          This summary highlights selected information from this document and may not contain all the information that is important to you. To understand the reorganization and stock offering fully, you should read this entire prospectus carefully, including the financial statements and notes to the financial statements that appear at the end of the prospectus. For assistance, please call our stock information center at (207) [ ].

The Companies

Auburn Bancorp, MHC
Auburn Bancorp, Inc.
Auburn Savings Bank
256 Court Street
P.O. Box 3157
Auburn, ME 04212
(207) 782-0400

          Auburn Bancorp, MHC is a federally-chartered mutual holding company that we are forming to own a majority of the common stock of Auburn Bancorp, Inc. As a mutual holding company, Auburn Bancorp, MHC will be a non-stock company that has as its members the depositors of Auburn Savings Bank. Upon completion of the stock offering, Auburn Bancorp, MHC will own 55% of Auburn Bancorp, Inc.’s common stock. As long as Auburn Bancorp, MHC exists, it will own a majority of the voting stock of Auburn Bancorp, Inc. and, through its board of directors, will be able to exercise voting control over most matters put to a vote of stockholders. Following the stock offering, Auburn Bancorp, MHC will not engage in any business activity other than owning a majority of the common stock of Auburn Bancorp, Inc. The initial directors of Auburn Bancorp, MHC will consist of the current directors of Auburn Savings Bank and Allen T. Sterling, President and Chief Executive Officer of Auburn Savings Bank.

          Auburn Bancorp, Inc. is a federally-chartered mid-tier stock holding company that we are forming to be the holding company of Auburn Savings Bank. This stock offering is made by Auburn Bancorp, Inc. Upon completion of the stock offering, Auburn Bancorp, Inc. will own all of Auburn Savings Bank’s capital stock and direct, plan and coordinate Auburn Savings Bank’s business activities. In the future, Auburn Bancorp, Inc. might also acquire or organize other operating subsidiaries, including other financial institutions or financial services companies, although it currently has no specific plans or agreements to do so.

          Auburn Savings Bank, FSB is a federally-chartered mutual savings bank that operates from two full-service locations in Auburn and Lewiston, Maine, located in Androscoggin County. Auburn Savings Bank is a community-oriented financial institution that offers a variety of deposit and loan products to individuals and small businesses located in Androscoggin County. In 2007, Androscoggin County had a total population of approximately 110,000. The largest industry in Androscoggin County is educational and health care services, which accounted for 25% of employment in the county, and the two largest employers in the area are both health service providers. At December 31, 2007, we had total assets of $63.5 million, deposits of $45.0 million and total retained earnings of $4.5 million.

The Reorganization and Our Corporate Structure

          Currently, Auburn Savings Bank is a federally-chartered mutual savings bank with no stockholders. The depositors and borrowers of Auburn Savings Bank currently have the right to vote on certain matters such as the election of directors and this reorganization.

1

          The mutual holding company reorganization process that we are now undertaking involves a series of transactions by which Auburn Savings Bank will convert its organization from the mutual form of organization to the mutual holding company form of organization. In the mutual holding company structure, Auburn Savings Bank will become a federally-chartered stock savings bank and all of its stock will be owned by Auburn Bancorp, Inc. Initially, 45% of Auburn Bancorp, Inc.’s stock will be owned by the public, including our employee stock ownership plan, and 55% of Auburn Bancorp, Inc.’s stock will be owned by Auburn Bancorp, MHC. The members of Auburn Savings Bank will become members of Auburn Bancorp, MHC and will have similar voting rights in Auburn Bancorp, MHC as they currently have in Auburn Savings Bank.

          The following diagram depicts our corporate structure immediately after the reorganization and stock offering:

          The normal business operations of Auburn Savings Bank will continue without interruption during the reorganization. The current directors of Auburn Savings Bank and Allen T. Sterling, President and Chief Executive Officer of Auburn Savings Bank, will serve as directors of Auburn Bancorp, MHC, Auburn Bancorp, Inc. and Auburn Savings Bank after the reorganization. The initial executive officers of Auburn Bancorp, MHC, Auburn Bancorp, Inc. and Auburn Savings Bank will be persons who are currently officers of Auburn Savings Bank.

Our Operating Strategy (page [ ])

• Remaining a community-oriented institution;

• Continuing to use conservative underwriting practices to maintain the high quality of our loan portfolios;

• Building core and other deposits;

• Continuing to grow our commercial real estate and commercial business loan portfolios; and

• Continuing to emphasize the origination of one- to four-family residential real estate lending.

2

Regulation and Supervision (page [ ])

          Auburn Savings Bank is, and upon completion of the reorganization and stock offering Auburn Bancorp, MHC and Auburn Bancorp, Inc. will be, subject to regulation, supervision and examination by the Office of Thrift Supervision. Auburn Savings Bank is also subject to regulation by the Federal Deposit Insurance Corporation.

The Offering

Purchase Price

          The purchase price is $10.00 per share. You will not pay a commission to buy any shares in the stock offering.

Number of Shares to be Sold

          We are offering for sale between 225,675 and 305,325 shares of Auburn Bancorp, Inc. common stock in this stock offering. The amount of capital being raised is based on an appraisal of the pro forma market value of Auburn Bancorp, Inc. Most of the terms of this stock offering are required by regulations of the Office of Thrift Supervision. With regulatory approval, we may increase the number of shares to be sold to 351,124 shares without giving you further notice or the opportunity to change or cancel your order. In considering whether to increase the offering size, the Office of Thrift Supervision will consider the level of subscriptions, the views of our independent appraiser, our financial condition and results of operations and changes in market conditions.

How We Determined the Offering Range (page [ ])

          We decided to offer between 225,675 and 305,325 shares, which is our offering range, based on an independent appraisal of our pro forma market value prepared by Keller & Company, Inc., an appraisal firm experienced in appraisals of financial institutions. Keller & Company will receive fees totaling $25,000 for the preparation and delivery of the original appraisal report and the final updated appraisal report, plus reimbursement of out-of-pocket expenses not to exceed $1,500, and $1,500 for the preparation and delivery of each additional required updated appraisal report. Keller & Company estimates that as of February 15, 2008, our pro forma market value on a fully converted basis was between $5.0 million and $6.8 million, with a midpoint of $5.9 million. The term “fully converted” means that Keller & Company assumed that 100% of our common stock had been sold to the public, rather than the 45% that will be sold in connection with this stock offering.

          In preparing its appraisal, Keller & Company considered the information in this prospectus, including our financial statements. Keller & Company also considered the following factors, among others:

• our historical, present and projected operating results and financial condition and the economic and demographic characteristics of our market area;

• a comparative evaluation of the operating and financial statistics of Auburn Savings Bank with those of other similarly-situated, publicly-traded savings banks and bank holding companies;

• the effect of the capital raised in this stock offering on our net worth and earnings potential; and

3

• the trading market for securities of comparable institutions and general conditions in the market for such securities.

          Our board of directors determined that the common stock should be sold at $10.00 per share and that 45% of the shares of our common stock should be offered for sale to the public in the stock offering. The following table shows the number of shares that will be sold in the stock offering, issued to Auburn Bancorp, MHC, based on the estimated valuation range and the purchase price.

	At Minimum of Offering Range		At Maximum of Offering Range		Percent of Shares Outstanding
Shares sold in the offering		225,675		305,325		45	%
Shares issued to Auburn Bancorp, MHC		275,825		373,175		55	%
Total		501,500		678,500		100	%

          Keller & Company considered the ratio of the offering price to the issuer’s “book value” and the ratio of the offering price to the issuer’s annual core earnings in preparing its appraisal, among other factors. Book value is the same as total equity and represents the difference between the value of the issuer’s assets and liabilities. Core earnings, for purposes of the appraisal, were defined as net earnings after taxes, excluding the after-tax portion of income from nonrecurring items. Keller & Company’s appraisal also incorporates an analysis of a peer group of publicly traded mutual holding companies that Keller & Company considered to be comparable to us.

          The following table presents a summary of selected pricing ratios for the peer group companies and pro forma pricing ratios for us utilized by Keller & Company in its appraisal. These ratios are based on earnings for the 12 months ended December 31, 2007 and book value as of December 31, 2007.

	Fully Converted Price to Core Earnings Multiple	Fully Converted Price to Book Value Ratio
Auburn Bancorp, Inc. (pro forma):
Minimum	36.55x	59.74%
Midpoint	42.53x	64.19%
Maximum	48.39x	67.93%
Maximum, as adjusted	54.97x	71.56%
Peer Group (on a fully-converted basis):
Average	35.51x	79.02%
Median	30.74x	78.45%

          Compared to the average pricing ratios of the peer group at the maximum of the offering range, our stock would be priced at discount of 14.03% to the peer group on a price-to-book basis and a premium of 36.27% on a price-to-core earnings basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group based on a book value per share basis and more expensive on a core earnings per share basis. The disparity between the pricing ratios results from Auburn Bancorp, Inc., on a pro forma basis, generally having higher levels of equity but lower earnings than the companies in the peer group. The appraisal concluded that these ranges represented the appropriate balance of the two approaches to valuing Auburn Bancorp, Inc., and the number of shares to be sold, in comparison to the peer group institutions.

          The independent appraisal does not indicate market value. You should not assume or expect that the valuation described above means that our common stock will trade at or above the $10.00 purchase price after the stock offering.

4

Mutual Holding Company Data

          The following table presents a summary of selected pricing ratios for publicly traded mutual holding companies and the pricing ratios for us, without the ratios being adjusted to the hypothetical case of being fully converted. These ratios are based on earnings for the 12 months ended December 31, 2007 and book value as of December 31, 2007.

	Non-Fully Converted Price to Core Earnings Multiple	Non-Fully Converted Price to Book Value Ratio
Auburn Bancorp, Inc. (pro forma):
Minimum	38.64x	85.48%
Midpoint	45.08x	94.83%
Maximum	51.43x	103.17%
Maximum, as adjusted	58.60x	111.71%
Publicly traded mutual holding companies as of February 15, 2008 (1):
Average	64.75x	138.92%
Median	46.94x	131.52%

(1) The information for publicly traded mutual holding companies may not be meaningful for investors because it presents average and median information for mutual holding companies that issued a different percentage of their stock in their offerings than the 45% that we are offering to the public. In addition, the effect of stock repurchases also affects the ratios to a greater or lesser degree depending upon repurchase activity.

Possible Change in Offering Range (page [ ])

          Keller & Company will update its appraisal before we complete the stock offering. If, as a result of regulatory considerations, demand for the shares or changes in market conditions, Keller & Company determines that our pro forma market value has increased, we may sell up to 351,124 shares without further notice to you. If our pro forma market value at that time is either below $5.0 million or above $7.8 million, then, after consulting with the Office of Thrift Supervision, we may: (i) terminate the stock offering and promptly return all funds with interest; (ii) promptly return all funds with interest, set a new offering range and give all subscribers the opportunity to place a new order; or (iii) take such other actions as may be permitted by the Office of Thrift Supervision and the U.S. Securities and Exchange Commission.

Possible Termination of the Offering

          We must sell a minimum of 225,675 shares to complete the stock offering. If we terminate the stock offering because we fail to sell the minimum number of shares or for any other reason, we will promptly return your funds with interest at our passbook savings rate and without deduction of any fees, and holds on funds authorized for withdrawal from deposit accounts will be released.

5

After-Market Performance of “First-Step” Mutual Holding Company Offerings

          The following table provides information regarding the after-market performance of all “first-step” mutual holding company offerings completed from January 1, 2007 through February 15, 2008. “First-step” mutual holding company offerings are initial public offerings by companies in the mutual holding company form of organization.

			Appreciation From Initial Offering Price
Issuer (Market/Symbol)	Date of IPO		After 1 Day			After 1 Week			After 4 Weeks			Through 2/15/08
Meridian Interstate Bancorp (NasdaqGS:EBSB)		01/23/08		(4.0	)%		(5.2	)%		NA	%		(5.0	)%
Sound Financial Inc. (OTCBB: SNFL)		01/09/08		(10.0	)%		(10.0	)%		(8.5	)%		(7.0	)%
Northfield Bancorp Inc. (NasdaqGS:NFBK)		11/08/07		4.5	%		13.0	%		4.9	%		3.8	%
LaPorte Bancorp Inc. (NasdaqCM:LPSB)		10/15/07		(8.1	)%		(13.8	)%		(21.0	)%		(29.0	)%
FSB Community Bankshares Inc. (NasdaqGM:FSBC)		08/15/07		0.0	%		0.0	%		(5.0	)%		(14.3	)%
Beneficial Mutual Bancorp (NasdaqGS:BNCL)		07/16/07		(7.9	)%		(6.8	)%		(11.5	)%		(6.3	)%
Hometown Bancorp Inc. (OTCBB: HTWC)		06/29/07		0.0	%		0.0	%		(5.0	)%		(28.0	)%
TFS Financial Corp (NasdaqGS:TFSL)		04/23/07		17.9	%		18.0	%		23.4	%		23.0	%
Sugar Creek Financial Corp (OTCBB: SUGR)		04/04/07		0.0	%		0.0	%		6.0	%		(9.0	)%
Delanco Bancorp Inc. (OTCBB: DLNO)		04/02/07		0.0	%		0.0	%		(5.0	)%		(25.0	)%
Oritani Financial Corp. (NasdaqGS:ORIT)		01/24/07		59.7	%		54.3	%		55.0	%		13.4	%
Average				4.7	%		4.5	%		3.3	%		(7.6	)%
Median				0.0	%		0.0	%		(5.0	)%		(7.0	)%

          This table is not intended to be indicative of how our stock may perform. Furthermore, this table presents only short-term price performance with respect to several companies that only recently completed their initial public offerings and may not be indicative of the longer-term stock price performance of these companies. Stock price appreciation is affected by many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount of proceeds a company raises in its offering; and numerous factors relating to the specific company, including the experience and ability of management, historical and anticipated operating results, the nature and quality of Auburn Bancorp, Inc.’s assets, Auburn Bancorp, Inc.’s market area, the quality of management and management’s ability to deploy proceeds (such as through loans and investments, the acquisition of other financial institutions or other businesses, the payment of dividends and common stock repurchases), the presence of professional and other investors who purchase stock on speculation, as well as other unforeseeable events not in the control of management. In addition, the companies listed in the table above may not be similar to Auburn Bancorp, Inc. with regard to market capitalization, offering size, earnings quality and growth potential, among other factors. Further, the pricing ratios for their offerings were in some cases different from the pricing ratios for Auburn Bancorp Inc.’s common stock and the market conditions in which these offerings were completed were, in some cases, different from current market conditions. Any or all of these differences may cause our stock to perform differently from these other offerings. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the “Risk Factors” section of this prospectus.

          You should be aware that, in certain market conditions, stock prices of thrift initial public offerings have decreased. For example, as the above table illustrates, the stock of eight companies traded at or below the initial offering price at various times through February 15, 2008. We can give you

6

no assurance that our stock will not trade below the $10.00 purchase price or that our stock will perform similarly to other recent mutual to stock conversions.

Conditions to Completing the Offering

          We are conducting the stock offering under the terms of our plan of reorganization and stock issuance plan. We cannot complete the stock offering unless we sell at least the minimum number of shares offered and we receive the final approval of the Office of Thrift Supervision to complete the stock offering.

Reasons for the Reorganization and Offering (page [ ])

          As part of our business planning process, our board of directors concluded that Auburn Savings Bank needed additional capital in order to increase profitability and support asset growth. The proceeds from the sale of our common stock in the stock offering will provide Auburn Savings Bank with additional capital. The reorganization and stock offering also will enable Auburn Bancorp, Inc. and Auburn Savings Bank to increase their capital in response to any future regulatory capital requirements. Although Auburn Savings Bank currently exceeds all regulatory capital requirements, the sale of common stock will assist Auburn Savings Bank with the orderly preservation and expansion of its capital base and will provide flexibility to respond to sudden and unanticipated capital needs.

          The stock offering will increase capital at Auburn Savings Bank and, as a result, increase the maximum amount that we may lend to one borrower. Although we intend to continue to use conservative underwriting practices to maintain the high quality of our loan portfolios, increased lending limits would provide Auburn Savings Bank with flexibility to make larger loans and to grow our loan portfolios in situations where we can do so while continue to use conservative underwriting practices to maintain the high quality of our loan portfolios;

          The stock offering will afford our directors, officers and employees the opportunity to become stockholders through various stock benefit plans, which we believe to be an effective performance incentive and an effective means of attracting and retaining qualified personnel. The stock offering also will provide our customers and local community members with an opportunity to acquire our stock.

          The board of directors determined that a minority stock issuance was preferable to a full stock conversion because it provides for the continued control of Auburn Bancorp, Inc. by Auburn Bancorp, MHC through its majority ownership position. We chose not to sell more than 45% of our shares of common stock to the public so that we would have the flexibility to issue authorized but unissued shares to fund future stock benefit plans without exceeding the regulatory limit on the percentage of shares that can be owned by persons other than Auburn Bancorp, MHC.

Benefits of the Offering to Management (page [ ])

          We intend to adopt the benefit plans and employment agreement described below. Auburn Bancorp, Inc. will recognize compensation expense related to the employee stock ownership plan and the equity incentive plan. The actual expense will depend on the market value of Auburn Bancorp, Inc.’s common stock and, with respect to the employee stock ownership plan, will increase as the value of Auburn Bancorp, Inc.’s common stock increases. As reflected under “Pro Forma Data,” based upon assumptions set forth therein, the annual expense related to the employee stock ownership plan and the equity incentive plan would be $10,000 and $38,000, respectively, assuming shares are sold at the

7

maximum of the offering range. See “Pro Forma Data” for a detailed analysis of the effects of each of these plans.

          Employee Stock Ownership Plan. We intend to establish an employee stock ownership plan that will purchase an amount of shares equal to 3.43% of the shares issued in the stock offering, including shares issued to Auburn Bancorp, MHC. The plan will use the proceeds from a 15-year loan from Auburn Bancorp, Inc. to purchase these shares. As the loan is repaid and shares are released from collateral, the shares will be allocated to the accounts of employee participants. Allocations will be based on a participant’s individual compensation as a percentage of total plan compensation. Non-employee directors are not eligible to participate in the employee stock ownership plan. We will incur additional compensation expense as a result of this plan. See “Pro Forma Data” for an illustration of the effects of this plan.

          Equity Incentive Plan. We intend to adopt an equity incentive plan no earlier than six months after completion of the reorganization and stock offering. Under current Office of Thrift Supervision regulations, the equity incentive plan must be approved by a majority of the total votes cast by our stockholders, other than Auburn Bancorp, MHC. The number of stock options granted under the plan may not exceed 4.90% of the total shares issued in the stock offering and the number of shares of restricted stock awarded under the plan may not exceed 1.47% of the total shares issued in the stock offering, in each case including shares issued to Auburn Bancorp, MHC. We will grant all stock options at an exercise price equal to 100% of the fair market value of the stock on the date of grant. We will grant restricted stock awards at no cost to recipients. We will incur additional compensation expense as a result of this plan.

          The following table presents the total value of all shares to be available for restricted stock awards under the equity incentive plan, based on a range of market prices from $8.00 per share to $14.00 per share. Ultimately, the value of the grants will depend on the actual trading price of our common stock, which depends on numerous factors.

		Value of
Share Price			7,372 Shares Awarded (Minimum of Range)		8,673 Shares Awarded (Midpoint of Range)		9,974 Shares Awarded (Maximum of Range)		11,470 Shares Awarded (15% Above Maximum of Range)
					(Dollars in Thousands)
$	8.00		$	59	$	69	$	80	$	92
	10.00			74		87		100		115
	12.00			88		104		120		138
	14.00			103		121		140		161

          The following table presents the total value of all stock options available for grant under the equity incentive plan, based on a range of market prices from $8.00 per share to $14.00 per share. For purposes of this table, the value of the stock options was determined using the Black-Scholes option-pricing formula. See “Pro Forma Data.” Ultimately, financial gains can be realized on a stock option only if the market price of the common stock increases above the price at which the option is granted.

8

					Value of
Exercise Price		Option Value			24,574 Options Granted (Minimum of Range)		28,910 Options Granted (Midpoint of Range)		33,247 Options Granted (Maximum of Range)		38,233 Options Granted (15% Above Maximum of Range)
				(Dollars in Thousands, Except Exercise Price and Option Value)
$	8.00	$	3.27		$	84	$	95	$	109	$	125
	10.00		4.08			104		118		136		156
	12.00		4.90			125		142		163		187
	14.00		5.72			146		165		190		219

          The following table summarizes, at the maximum of the offering range, the total number and value of the shares of common stock that the employee stock ownership plan expects to acquire and the total value of all restricted stock awards and stock options that are expected to be available under the equity incentive plan. At the maximum of the offering range, we will sell 305,325 shares and have 678,500 shares outstanding. The number of shares reflected for the benefit plans in the table below assumes the application of the net proceeds as described under “Use of Proceeds.”

	Number of Shares to be Granted or Purchased
	At Maximum of Offering Range		As a Percent of Common Stock Sold at Maximum of Range			As a Percent of Common Stock Outstanding			Total Estimated Value of Grants
			(Dollars in Thousands)
Employee stock ownership plan (1)		23,273		7.6	%		3.4	%	$	233
Restricted stock awards (1)		9,974		3.3			1.5			100
Stock options (2)		33,247		10.9			4.9			136
Total		66,494		21.8	%		9.8	%	$	469

(1)	Assumes the value of Auburn Bancorp, Inc. common stock is $10.00 per share for determining the total estimated value of the grants.
(2)	Assumes the value of a stock option is $4.08, which was determined using the Black-Scholes option-pricing formula.

          Employment Agreement. We intend to enter into an employment agreement with Allen T. Sterling, President and Chief Executive Officer of Auburn Savings Bank, who will also serve as President and CEO of Auburn Bancorp, Inc., immediately following the stock offering. The agreement will provide for severance benefits if Mr. Sterling is terminated without cause, or if he resigns within 90 days after an event constituting good reason under the agreement, which benefits vary depending on whether or not the termination occurs within one year following a change in control. Based solely on estimated taxable compensation and excluding any benefits that would be payable under any employee benefit plan, if a change in control of Auburn Bancorp, Inc. occurred and we terminated Mr. Sterling, the total cash payments due under the employment agreement would be approximately $190,685.

Tax Consequences (page [ ])

          As a general matter, the reorganization will not be a taxable transaction for purposes of federal or state income taxes to us or persons who receive or exercise subscription rights. We have received a federal tax opinion from our counsel and a state tax opinion from our accountants that we will not recognize any gain or loss as a result of the reorganization and that it is more likely than not that members

9

of Auburn Savings Bank will not realize any income upon the issuance or exercise of the subscription rights.

Persons Who Can Order Stock in the Offering (page [ ])

          We have granted rights to subscribe for shares of Auburn Bancorp, Inc. common stock in a “subscription offering” to the following persons in the following order of priority:

1.	Persons with deposits at Auburn Savings Bank with balances aggregating $50 or more (“qualifying deposits”) as of September 30, 2006 (“eligible account holders”). For this purpose, deposit accounts include all savings, time and demand accounts.
2.	Our employee stock ownership plan.
3.	Persons with qualifying deposits in Auburn Savings Bank as of March 31, 2008 (“supplemental eligible account holders”), other than our officers, directors and their associates.
4.	Depositors of Auburn Savings Bank as of [ ], 2008, who are not eligible or supplemental eligible account holders and borrowers as of July 1, 2006 whose loans continue to be outstanding at [ ], 2008 (“other members”).

          If we receive subscriptions for more shares than are to be sold in this stock offering, we may be unable to fill or may only partially fill your order. Shares will be allocated in order of the priorities described above under a formula outlined in the plan of reorganization and stock issuance plan. Generally, shares first will be allocated so as to permit each eligible subscriber, if possible, to purchase a number of shares sufficient to make the subscriber’s total allocation equal to 100 shares or the number of shares actually subscribed for, whichever is less. After that, unallocated shares will be allocated among the remaining eligible subscribers whose subscriptions remain unfilled in proportion to the amounts their respective qualifying deposits bear to the total qualifying deposits of all remaining eligible subscribers whose subscriptions remain unfilled. If we increase the number of shares to be sold above 305,325, Auburn Savings Bank’s employee stock ownership plan will have the first priority right to purchase any shares exceeding that amount to the extent that its subscription has not previously been filled. Any shares remaining will be allocated in the order of priorities described above. See “The Reorganization and stock offering—Subscription Offering and Subscription Rights” for a description of the allocation procedure.

          We may offer shares not sold in the subscription offering to the general public in a “direct community offering” that can begin concurrently with, during or immediately following the subscription offering. Orders received in the direct community offering will be subordinate to subscription offering orders. Natural persons who are residents of Androscoggin County, Maine will have first preference to purchase shares in the direct community offering. Shares of common stock not purchased in the subscription offering or the direct community offering may be offered for sale through a “syndicated community offering” managed by Keefe, Bruyette & Woods, Inc. We have the right to accept or reject, in our sole discretion, orders we receive in the direct community offering and syndicated community offering.

Subscription Rights are Not Transferable

          You are not allowed to transfer your subscription rights and we will act to ensure that you do not do so. You will be required to certify that you are purchasing shares solely for your own account and that you have no agreement or understanding with another person to sell or transfer subscription rights or the shares that you purchase. We will not accept any stock orders that we believe involve the transfer of

10

subscription rights. Eligible depositors who enter into agreements to allow ineligible investors to participate in the subscription offering may be violating federal and state law and may be subject to civil enforcement actions or criminal prosecution.

How to Purchase Common Stock (page [ ])

          In the subscription offering and the community offering, you may pay for your shares by:

1.	Personal check, bank check or money order made payable directly to Auburn Bancorp, Inc. (third-party checks of any type and cash will not be accepted); or
2.	Authorizing us to withdraw money from your Auburn Savings Bank deposit account(s) other than checking accounts or individual retirement accounts (“IRAs”). To use funds from accounts with check writing privileges, please submit a check. To use IRA funds, please see the next section.

          Auburn Savings Bank is not permitted to lend funds (including funds drawn on a Auburn Savings Bank line of credit) to anyone for the purpose of purchasing shares of common stock in the stock offering. Also, payment may not be made by wire transfer.

          Checks and money orders will be immediately cashed, so the funds must be available within the account when your stock order form is received by us. Do not overdraft your account. The funds will be deposited by us into a Auburn Savings Bank segregated escrow account. We will pay interest at Auburn Savings Bank’s passbook savings rate from the date those funds are processed until completion or termination of the stock offering. Withdrawals from certificates of deposit at Auburn Savings Bank for the purpose of purchasing common stock in the stock offering may be made without incurring an early withdrawal penalty. All funds authorized for withdrawal from deposit accounts with Auburn Savings Bank must be available within the deposit accounts at the time the stock order form is received. A hold will be placed on the amount of funds designated on your stock order form. Those funds will be unavailable to you during the stock offering; however, the funds will not be withdrawn from the accounts until the stock offering is completed and will continue to earn interest at the applicable contractual deposit account rate until the completion of the stock offering.

          You may submit your order form in one of three ways: by mail, using the reply envelope provided; by overnight courier to the address indicated on the order form; or by taking the stock order form and payment to either of our offices or our stock information center, which is located at Auburn Savings Bank’s Lewiston office. Once submitted, your order is irrevocable. We are not required to accept copies or facsimiles of order forms.

Using IRA Funds to Purchase Shares in the Offering (page [ ])

          You may be able to subscribe for shares of common stock using funds in your individual retirement account(s), or IRA, provided that such IRAs are not maintained at Auburn Savings Bank. If you wish to use some or all of the funds in your Auburn Savings Bank IRA, the applicable funds must first be transferred to a self-directed account maintained by an unaffiliated institutional trustee or custodian, such as a brokerage firm. If you do not have such an account, you will need to establish one and transfer your funds before placing your stock order. Our stock information center can give you guidance in this regard. Because processing this type of order takes additional time, we recommend that you contact our stock information center promptly, preferably at least two weeks before the [ ], 2008 offering deadline. Whether you may use retirement funds for the purchase of shares in the

11

stock offering will depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.

Purchase Limitations (page [ ])

          Our plan of reorganization and stock issuance plan establishes limitations on the purchase of stock in the stock offering. These limitations include the following:

• The minimum purchase is 25 shares.

• No individual (or individuals exercising subscription rights through a single deposit account held jointly) may purchase more than $100,000 of common stock (which equals 10,000 shares) in the stock offering.

• No individual together with any of his or her associates and no group of persons acting in concert may purchase more than $150,000 of common stock (which equals 15,000 shares) in the stock offering, or 5% of the common stock sold in the stock offering (which may be fewer than 15,000 shares under certain circumstances). For purposes of applying this limitation, your associates include:

O	Your spouse, or any relative of you or your spouse, who either lives in your home or who is a director or officer of Auburn Savings Bank;
O	Companies or other entities in which you are a director, officer or partner or have a 10% or greater beneficial ownership interest; and
O	Trusts or other estates in which you have a substantial beneficial interest or as to which you serve as a trustee or in another fiduciary capacity.

          Unless we determine otherwise, persons having the same address and persons exercising subscription rights through qualifying deposit accounts registered to the same address will be subject to this overall purchase limitation. We have the right to determine, in our sole discretion, whether prospective purchasers are associates or acting in concert.

          Subject to the Office of Thrift Supervision’s approval, we may increase or decrease the purchase limitations at any time. Our tax-qualified employee benefit plans, including our employee stock ownership plan, are authorized to purchase up to 10% of the shares issued in the stock offering, not including shares issued to Auburn Bancorp, MHC, without regard to these purchase limitations.

12

Deadline for Ordering Stock (page [ ])

          The subscription offering will end at 12:00 Noon, Eastern time, on [ ], 2008. If you wish to purchase shares, a properly completed and signed original stock order form, together with full payment for the shares of common stock, must be received by us (not postmarked) no later than this time. We expect that the direct community offering will terminate at the same time, although it may continue for up to 45 days after the end of the subscription offering, or longer if regulators approve a later date. No single extension may be for more than 90 days. If we extend the offering beyond [ ], 2008, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds with interest at our passbook savings rate or cancel your deposit account withdrawal authorization. If we intend to sell fewer than 225,675 shares or more than 351,124 shares, we will promptly return all funds with interest, set a new offering range and all subscribers will be notified and given the opportunity to confirm, change or cancel their orders.

13

How We Will Use the Proceeds of this Offering (page [ ])

          The following table summarizes how we will use the proceeds of this stock offering, based on the sale of shares at the minimum and maximum of the offering range.

	Based Upon the Sale at $10.00 Per Share of
	225,675 Shares (Minimum of Range)						265,500 Shares (Midpoint of Range)						305,325 Shares (Maximum of Range)						351,124 Shares (Maximum of Range, as adjusted) (1)
	Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds
	(Dollars in Thousands)
Gross offering proceeds	$	2,257					$	2,655					$	3,053					$	3,511
Less: offering expenses		(600	)					(600	)					(600	)					(600	)
Net offering proceeds		1,657			100.00	%		2,055			100.00	%		2,453			100.00	%		2,911			100.00	%
Less:
Proceeds contributed to Auburn Savings Bank		(1,032	)		(62.29	)		(1,430	)		(69.59	)		(1,828	)		(74.51	)		(2,286	)		(78.52	)
Proceeds used for loan to employee stock ownership plan		(172	)		(10.38	)		(202	)		(9.83	)		(233	)		(9.50	)		(268	)		(9.21	)
Proceeds contributed to Auburn Bancorp, MHC		(25	)		(1.51	)		(25	)		(1.22	)		(25	)		(1.02	)		(25	)		(0.86	)
Proceeds remaining for Auburn Bancorp, Inc.	$	428			25.82	%	$	398			19.37	%	$	367			14.96	%	$	332			11.41	%

(1) As adjusted to give effect to a 15% increase in the number of shares outstanding after the offering that could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares, or changes in market conditions or general financial and economic conditions following the commencement of the stock offering.

          Initially, Auburn Bancorp, Inc. intends to invest the proceeds it retains from the stock offering in short-term, liquid investments. In the future, we may liquidate our investments and use those funds to invest in securities, to repurchase shares of our common stock, subject to regulatory restrictions, and for general corporate purposes. Auburn Savings Bank initially intends to invest the proceeds it receives from the stock offering in short-term, liquid investments. Over time, Auburn Savings Bank may use the proceeds that it receives from the stock offering to fund new loans, to invest in securities, to pay down borrowings from the Federal Home Loan Bank of Boston and for general corporate purposes. Except as described above, neither Auburn Bancorp, Inc. nor Auburn Savings Bank has any specific plans for the investment of the proceeds of this stock offering and has not allocated a specific portion of the proceeds to any particular use.

14

Purchases by Directors and Executive Officers (page [ ])

          We expect that our directors and executive officers, together with their associates, will subscribe for [ ] shares, which equals [ ]% of the shares that would be sold at the maximum of the offering range. Our directors and executive officers will pay the same $10.00 per share price as everyone else who purchases shares in the stock offering. Like all of our depositors, our directors and executive officers have subscription rights based on their deposits and, in the event of an oversubscription, their orders will be subject to the allocation provisions set forth in our plan of reorganization and stock issuance plan. Purchases by our directors and executive officers will count towards the minimum number of shares we must sell to close the stock offering.

Market for Auburn Bancorp, Inc.’s Common Stock (page [ ])

          We intend to have the common stock of Auburn Bancorp, Inc. quoted on the OTC Bulletin Board. Keefe, Bruyette & Woods, Inc. currently intends to become a market maker in the common stock, but it is under no obligation to do so. We cannot assure you that other market makers will be obtained or that an active and liquid trading market for our common stock will develop or, if developed, will be maintained. After shares of the common stock begin trading, you may contact a stock broker to buy or sell shares. There can be no assurance that persons purchasing the common stock in the stock offering will be able to sell their shares at or above the $10.00 offering price, and brokerage firms typically charge commissions related to the purchase or sale of securities.

Auburn Bancorp, Inc.’s Dividend Policy (page [ ])

          We do not intend to pay cash dividends on the common stock of Auburn Bancorp, Inc. Our board of directors may decide to pay dividends in the future. Our ability to pay dividends will depend on a number of factors, including our financial condition and results of operations, capital requirements, tax considerations, statutory and regulatory limitations and general economic conditions. Dividends from Auburn Bancorp, Inc., if any, will depend in large part upon receipt of dividends from Auburn Savings Bank because Auburn Bancorp, Inc. initially will have no source of income other than dividends from Auburn Savings Bank, earnings from the investment of net proceeds from the sale of shares of common stock retained by Auburn Bancorp, Inc. and interest payments with respect to Auburn Bancorp, Inc.’s loan to the employee stock ownership plan. The ability of Auburn Savings Bank to dividend funds to Auburn Bancorp, Inc. is subject to regulatory limitations described in more detail in “Dividend Policy.” We anticipate that Auburn Bancorp, MHC will waive receipt of any dividends that we pay.

Possible Conversion of Auburn Bancorp, MHC to Stock Form (page [ ])

          In the future, we may undertake a transaction commonly known as a “second-step conversion” in which we would convert from the mutual holding company form of organization to the capital stock form of organization. In a second-step conversion, members of Auburn Bancorp, MHC would have subscription rights to purchase common stock of Auburn Bancorp, Inc. or its successor, and the public stockholders of Auburn Bancorp, Inc. would be entitled to exchange their shares of common stock for an equal percentage of shares of the new holding company. This percentage may be adjusted to reflect any assets owned by Auburn Bancorp, MHC. Auburn Bancorp, Inc.’s public stockholders, therefore, would own approximately the same percentage of the resulting entity as they owned before the second-step conversion. Any second-step conversion would require the approval of the stockholders of Auburn Bancorp, Inc., other than Auburn Bancorp, MHC, and the members of Auburn Bancorp, MHC. We have no current plan to undertake a second-step conversion transaction.

15

Delivery of Prospectus

          To ensure that each person receives a prospectus at least 48 hours before the offering deadline, we may not mail prospectuses any later than five days prior to such date or hand-deliver prospectuses later than two days prior to that date. Stock order forms may only be delivered if accompanied or preceded by a prospectus. We are not obligated to deliver a prospectus or order form by means other than U.S. mail.

          We will make reasonable attempts to provide a prospectus and offering materials to holders of subscription rights. The subscription offering and all subscription rights will expire at 12:00 Noon, Eastern time, on [ ], 2008 whether or not we have been able to locate each person entitled to subscription rights.

Delivery of Stock Certificates (page [ ])

          Certificates representing shares of common stock issued in the stock offering will be mailed to purchasers at the address provided on the order form as soon as practicable following completion of the stock offering and receipt of all necessary regulatory approvals.

Stock Information Center

          If you have any questions regarding the stock offering, please call the stock information center at Auburn Savings Bank’s Lewiston branch to speak to a registered representative of Keefe, Bruyette & Woods, Inc. The stock information center is open Monday through Friday from 9:00 a.m. to 5:00 p.m. Eastern time.

16

RISK FACTORS

You should consider carefully the following risk factors before purchasing Auburn Bancorp, Inc. common stock.

Risks Related to Our Business

Future changes in interest rates could reduce our profits.

          Our profitability, like that of most financial institutions, depends to a large extent upon our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowed funds. Accordingly, our results of operations depend largely on movements in market interest rates and our ability to manage our interest-rate-sensitive assets and liabilities in response to these movements. Short-term market rates of interest (which we use as a guide to price our deposits) have until recently risen from historically low levels, while longer-term market rates of interest (which we use as a guide to price our longer-term loans) have not. As a result, many financial institutions, including Auburn Savings Bank, experienced a narrowing or “compression” of their net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities. For the six months ended December 31, 2007, our interest rate spread was 2.39% compared to 2.39% and 2.50% for the fiscal years ended June 30, 2007 and 2006, respectively. If short-term interest rates rise, and if rates on our deposits reprice upwards faster than the rates on our loans and investments, we would experience further compression of our interest rate spread, which would have a negative effect on our profitability.

          From December 11, 2007 to January 30, 2008, the U.S. Federal Reserve decreased its target for the federal funds rate from 4.25% to 3.00%. Decreases in long-term interest rates can result in increased prepayments of loans and mortgage-related securities, if any, as borrowers refinance to reduce their borrowing costs. Under these circumstances, we are subject to reinvestment risk as we may have to redeploy such loan or securities proceeds into lower-yielding assets, which might also negatively impact our income.

          We principally manage interest rate risk by managing the volume and mix of our earning assets and funding liabilities. In a changing interest rate environment, we may not be able to manage this risk effectively. If we are unable to manage interest rate risk effectively, our business, financial condition and results of operations could be materially harmed. Changes in the level of interest rates also may negatively affect our ability to originate real estate loans, the value of our assets and our ability to realize gains from the sale of our assets, all of which ultimately affect our earnings. For further discussion of how changes in interest rates could impact us, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk.”

Strong competition within our market area could reduce our profits and slow growth.

          We face intense competition in making loans, attracting deposits and hiring and retaining experienced employees. This competition has made it more difficult for us to make new loans and attract deposits. Price competition for loans and deposits sometimes results in us charging lower interest rates on our loans and paying higher interest rates on our deposits, which reduces our net interest income. Competition also makes it more difficult and costly to attract and retain qualified employees. At June 30, 2007, which is the most recent date for which data is available from the Federal Deposit Insurance Corporation, we held 3.9% of the deposits in the metropolitan statistical area of Lewiston-Auburn, Maine. Some of the institutions with which we compete have substantially greater resources and lending limits than we have and may offer services that we do not provide. There also are a number of credit unions in Androscoggin County, which, as tax-exempt

17

organizations, are able to offer higher rates on retail deposits than banks. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability depends upon our continued ability to compete successfully in our market area. For more information about our market area and the competition we face, see “Business of Auburn Savings Bank, FSB-Market Area” and “Business of Auburn Savings Bank, FSB—Competition.”

A downturn in the local economy could reduce our profits.

          Nearly all of our real estate loans are secured by real estate in Androscoggin County. As a result of this concentration of our customers in Androscoggin County, a downturn in the local economy could cause significant increases in non-performing loans, which would hurt our profits. A decrease in asset quality could require additions to our allowance for loan losses through increased provisions for loan losses, which would hurt our profits. For a discussion of our market area, see “Business of Auburn Savings Bank, FSB—Market Area.”

A downturn in real estate values could reduce our profits.

          At December 31, 2007, $31.4 million, or 57.3%, of our loan portfolio consisted of one- to four-family residential real estate loans. After the stock offering, we intend to maintain a relatively high concentration of loans in one- to four-family lending. Although these types of loans generally expose a lender to less risk of non-payment and loss than commercial and construction loans, the market for loans on one- to four-family homes is significantly dependent on real estate values. A decline in real estate values could cause some of our one- to four-family residential real estate loans to become inadequately collateralized, which would expose us to a greater risk of loss. Additionally, a decline in real estate values could result in a decline in the origination of such loans.

Our increased emphasis on commercial and construction lending may expose us to increased lending risks.

          At December 31, 2007, our loan portfolio consisted of $8.9 million, or 16.2%, of commercial mortgage loans, $1.4 million, or 2.6%, of commercial business loans and $2.4 million, or 4.3%, of construction loans. We have grown these loan portfolios in recent years and intend to continue to emphasize these types of lending. These types of loans generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the property, the income stream of the borrowers and, for construction loans, the accuracy of the estimate of the property’s value at completion of construction and the estimated cost of construction. Such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential mortgage loans. Commercial business loans expose us to additional risks since they typically are made on the basis of the borrower’s ability to make repayments from the cash flow of the borrower’s business and are secured by non-real estate collateral that may depreciate over time. In addition, since commercial business loans generally entail greater risk than one- to four-family residential mortgage loans, we may need to increase our allowance for loan losses in the future to account for the likely increase in probable incurred credit losses associated with the growth of such loans. For a discussion of our lending activities, see “Business of Auburn Savings Bank, FSB—Lending Activities.”

18

Our business is continually subject to technological change, and we may have fewer resources than our competitors to continue to invest in technological improvements.

          The banking and financial services industry continually undergoes technological changes, with frequent introductions of new technology-driven products and services. In addition to serving customers better, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that enhance customer convenience, as well as create additional efficiencies in our operations. Many of our competitors have greater resources to invest in technological improvements than we do. We may not effectively implement new technology-driven products and services or do so as quickly, which could reduce our ability to effectively compete, and could adversely affect earnings.

We operate in a highly regulated environment and may be adversely affected by changes in laws and regulations.

          We are subject to extensive regulation, supervision and examination by the Office of Thrift Supervision, our chartering authority, and by the Federal Deposit Insurance Corporation, as insurer of the deposits of Auburn Savings Bank. Such regulation and supervision governs the activities in which an institution and its holding company may engage and are intended primarily for the protection of the insurance fund and the depositors and borrowers of Auburn Savings Bank rather than for the holders of Auburn Bancorp, Inc.’s common stock. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.

If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings will decrease.

          We make various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. If our assumptions are incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in additions to our allowance. Our allowance for loan losses was 0.56% of total loans at December 31, 2007, and material additions to our allowance could materially decrease our net income. In addition, bank regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities might have a material adverse effect on our financial condition and results of operations.

19

If we are unable to retain the services of our senior management team, our business may be adversely affected.

          The success of Auburn Bancorp, Inc. and Auburn Savings Bank will depend largely upon the efforts of our senior management team. The loss of the services of any member of our senior management team may adversely affect our business. Not unlike many small financial institutions, Auburn Savings Bank relies substantially on its President and Chief Executive Officer, Allen T. Sterling. The loss of the services of Mr. Sterling, which is not currently contemplated, may have a material adverse effect on our ability to implement our operating strategy. In connection with the reorganization and stock offering, we will enter into an employment agreement with Mr. Sterling. For a discussion of the terms of the employment agreement, see “Management—Proposed Employment Agreement.”

Risks Related to this Offering

We expect there to be a limited market for our common stock, which may adversely affect our stock price.

          Although we intend to have our shares of common stock quoted on the OTC Bulletin Board, there is no guarantee that the shares will be actively traded. If an active trading market for our common stock does not develop, you may not be able to sell your shares of common stock on short notice and the sale of a large number of shares at one time could temporarily depress the market price. There also may be a wide spread between the bid and asked price for our common stock. When there is a wide spread between the bid and asked price, the price at which you may be able to sell our common stock may be significantly lower than the price at which you could buy it at that time.

Our stock price may decline when trading commences.

          We cannot guarantee that if you purchase shares in the stock offering that you will be able to sell them at or above the $10.00 purchase price. After the shares of our common stock begin trading, the trading price of the common stock will be determined by the marketplace and will be influenced by many factors outside of our control, including prevailing interest rates, investor perceptions, securities analyst research reports and general industry, geopolitical and economic conditions. Publicly traded stocks, including stocks of financial institutions, often experience substantial market price volatility. These market fluctuations may not be related to the operating performance of particular companies whose shares are traded.

Additional expenses following the stock offering from new equity benefit plans will adversely affect our profitability.

          Following the reorganization and stock offering, we will recognize additional annual employee compensation expenses stemming from options and shares granted to employees, directors and executives under new benefit plans. These additional expenses will adversely affect our profitability. We cannot determine the actual amount of these new stock-related compensation expenses at this time because applicable accounting practices generally require that they be based on the fair market value of the options or shares of common stock at the date of the grant; however, we expect them to be material. We will recognize expenses for our employee stock ownership plan when shares are committed to be released to participants’ accounts and will recognize expenses for restricted stock awards and stock options over the vesting period of awards made to recipients. The pro forma benefit expenses for the year ended June 30, 2007 have been estimated to be approximately $48,000 at the maximum of the offering range, as set forth in the pro forma financial information under “Pro Forma Data,” assuming the $10.00 per share purchase price as fair market value. Actual expenses, however, may be higher or lower, depending on the

20

price of our common stock, the number of shares awarded under the plans and the timing of the implementation of the plans. For further discussion of these plans, see “Management—Benefit Plans.”

We will need to implement additional finance and accounting systems, procedures and controls in order to satisfy our new public company reporting requirements, which will increase our operating expenses.

          As a result of the completion of this stock offering, we will become a public reporting company. The federal securities laws and the regulations of the Securities and Exchange Commission require that we file annual, quarterly and current reports and that we maintain effective disclosure controls and procedures and internal controls over financial reporting. We expect that the obligations of being a public company, including substantial public reporting obligations, will require significant expenditures and place additional demands on our management team. Compliance with the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the Securities and Exchange Commission will require us to certify the adequacy of our internal controls and procedures, which will require us to upgrade our accounting systems. These reporting and compliance obligations will increase our operating expenses and could divert our management’s attention from our operations.

Our return on equity will initially be low compared to other publicly traded financial institutions. A low return on equity may negatively impact the trading price of our common stock.

          Net income divided by average equity, known as “return on equity,” is a ratio used by many investors to compare the performance of a financial institution with its peers. For the fiscal year ended June 30, 2007, our return on equity was 2.77%. Although we expect that our net income will increase following the reorganization and stock offering, we expect that our return on equity will be reduced as a result of the additional capital that we will raise in the stock offering. For example, our annualized pro forma return on average equity for the twelve months ended December 31, 2007 is 1.90%, assuming the sale of shares at the maximum of the offering range. In comparison, the peer group used by Keller & Company in its appraisal had an average return on equity of 3.01% for the twelve months ended December 31, 2007, the latest date for which data is available. Over time, we intend to use the net proceeds from this stock offering to increase earnings per share and book value per share, without assuming undue risk, with the goal of achieving a return on equity that is competitive with other publicly held companies. This goal could take a number of years to achieve, and we cannot assure you that it will be attained. Consequently, you should not expect a competitive return on equity in the near future. Failure to achieve a competitive return on equity might make an investment in our common stock unattractive to some investors and might cause our common stock to trade at lower prices than comparable companies with higher returns on equity. See “Pro Forma Data” for an illustration of the financial impact of this stock offering.

Our failure to utilize effectively the proceeds of the stock offering would reduce our profitability.

          We have broad discretion in investing the proceeds of the stock offering. At the maximum of the offering range, we intend to contribute approximately 74.5% of the net proceeds of the stock offering to Auburn Savings Bank. We expect to use a portion of the net proceeds to fund the purchase by our employee stock ownership plan of shares in the stock offering and $25,000 of the net proceeds to capitalize Auburn Bancorp, MHC. We may use the remaining net proceeds that we retain to, among other things, invest in securities, pay cash dividends or repurchase shares of common stock, subject to regulatory restrictions. Auburn Savings Bank may use the portion of the proceeds that it receives to fund new loans, invest in securities and expand its business activities. Auburn Bancorp, Inc. and Auburn Savings Bank may also use the proceeds of the stock offering to diversify their businesses and acquire other companies, although we have no specific plans to do so at this time. We have not allocated specific

21

amounts of proceeds for any of these purposes, and we will have significant flexibility in determining how much of the net proceeds we apply to different uses and the timing of such applications.

Issuance of shares for benefit programs may dilute your ownership interest.

          We intend to adopt an equity incentive plan following the stock offering. If stockholders approve the new equity incentive plan, we intend to issue shares to our officers and directors through this plan. We may fund the equity incentive plan through the purchase of common stock in the open market, subject to regulatory restrictions, by a trust established in connection with the plan or from authorized but unissued shares of Auburn Bancorp, Inc. common stock. If the restricted stock awards under the equity incentive plan are funded from authorized but unissued stock, your ownership interest in the shares could be diluted by up to approximately 1.4%, assuming awards of common stock equal to 1.47% of the shares issued in the stock offering, including shares issued to Auburn Bancorp, MHC, are awarded under the plan. If the shares issued upon the exercise of stock options under the equity incentive plan are issued from authorized but unissued stock, your ownership interest in the shares could be diluted by up to approximately 4.7%, assuming stock option grants equal to 4.9% of the shares issued in the stock offering, including shares issued to Auburn Bancorp, MHC, are granted under the plan. See “Pro Forma Data” and “Management—Benefit Plans—Future Equity Incentive Plan.”

Auburn Bancorp, MHC’s majority control of our common stock will enable it to exercise voting control over most matters put to a vote of stockholders and will prevent stockholders from forcing a sale or a second-step conversion transaction you may find advantageous.

          Auburn Bancorp, MHC will own a majority of Auburn Bancorp, Inc.’s common stock after the reorganization and stock offering and, through its board of directors, will be able to exercise voting control over most matters put to a vote of stockholders. The same directors and officers who will manage Auburn Bancorp, Inc. and Auburn Savings Bank will also manage Auburn Bancorp, MHC. As a federally-chartered mutual holding company, the board of directors of Auburn Bancorp, MHC must ensure that the interests of depositors of Auburn Savings Bank are represented and considered in matters put to a vote of stockholders of Auburn Bancorp, Inc. Therefore, the votes cast by Auburn Bancorp, MHC may not be in your personal best interests as a stockholder. For example, Auburn Bancorp, MHC may exercise its voting control to defeat a stockholder nominee for election to the board of directors of Auburn Bancorp, Inc. Auburn Bancorp, MHC’s ability to control the outcome of the election of the board of directors of Auburn Bancorp, Inc. restricts the ability of minority stockholders to effect a change of management. In addition, stockholders will not be able to force a merger or second-step conversion transaction without the consent of Auburn Bancorp, MHC, as such transactions require the approval of at least two-thirds of all outstanding voting stock, which can only be achieved if Auburn Bancorp, MHC voted to approve such transactions. Some stockholders may desire a sale or merger transaction, since stockholders typically receive a premium for their shares, or a second-step conversion transaction, since fully converted institutions tend to trade at higher multiples than mutual holding companies. While Auburn Bancorp, MHC could defeat such measures, it will not be able to force approval of second-step transactions and implementation of equity incentive plans, each of which require, under current Office of Thrift Supervision regulations and policies, approval by the stockholders other than Auburn Bancorp, MHC.

Office of Thrift Supervision regulations and anti-takeover provisions in our charter restrict the accumulation of our common stock, which may adversely affect our stock price.

          Office of Thrift Supervision regulations provide that, for a period of three years following the date of the completion of the stock offering, no person, acting alone, together with associates or in a

22

group of persons acting in concert, will directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of our common stock without the prior written approval of the Office of Thrift Supervision. In addition, Auburn Bancorp, Inc.’s charter provides that, for a period of five years from the date of the stock offering, no person, other than Auburn Bancorp, MHC, may acquire directly or indirectly the beneficial ownership of more than 10% of any class of any equity security of Auburn Bancorp, Inc. In the event a person acquires shares in violation of this charter provision, all shares beneficially owned by such person in excess of 10% will be considered “excess shares” and will not be counted as shares entitled to vote or counted as voting shares in connection with any matters submitted to the stockholders for a vote. These restrictions make it more difficult and less attractive for stockholders to acquire a significant amount of our common stock, which may adversely affect our stock price.

23

FORWARD-LOOKING STATEMENTS

          This prospectus contains a number of forward-looking statements regarding the financial condition, results of operations, earnings outlook, and business prospects of Auburn Bancorp, Inc. You can find many of these statements by looking for words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions. Forward-looking statements include:

• statements of our goals, intentions and expectations;

• statements regarding our business plans, prospects, growth and operating strategies;

• statements regarding the quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

          The forward-looking statements involve significant risks and uncertainties. Actual results may differ materially from those expressed in, or implied by, the forward-looking statements due to, among others, the factors discussed under “Risk Factors” as well as the following:

• changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;

• competitive pressures among financial services companies in our market area;

• general economic conditions, either nationally or in our market area, that are worse than expected;

• increased lending risks associated with increased commercial and construction lending;

• legislative or regulatory changes that adversely affect our business;

• changes in consumer spending, borrowing and savings habits;

• adverse changes in the securities markets; and

• changes in accounting policies and practices, as may be adopted by Auburn Savings Bank, regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board.

          Any of the forward-looking statements that we make in this prospectus and in other public statements we make may later prove incorrect because of inaccurate assumptions, the factors illustrated above or other factors that we cannot foresee. Because of these and other uncertainties, no forward-looking statement can be guaranteed, and you should not rely on such statement. Except to the extent required by applicable law or regulation, Auburn Bancorp, Inc. undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

24

SELECTED FINANCIAL AND OTHER DATA

          The summary financial information presented below is derived in part from our financial statements. The following is only a summary and you should read it in conjunction with the financial statements and notes beginning on page F-1. The information at June 30, 2007 and 2006 and for the fiscal years ended June 30, 2007 and 2006 is derived in part from the audited financial statements that appear in this prospectus. The information at December 31, 2007 and for the six months ended December 31, 2007 and 2006 was not audited, but in the opinion of management, reflects all adjustments necessary for a fair presentation. All of these adjustments are normal and recurring. The results of operations for the six months ended December 31, 2007 are not necessarily indicative of the results of operations that may be expected for the entire year.

	At December 31,		At June 30,
	2007		2007		2006
	(Dollars in Thousands)
Selected Financial Condition Data:
Total assets	$	63,458	$	62,404	$	64,170
Cash and cash equivalents		1,858		3,413		2,638
Loans, net		54,475		52,799		53,849
Total investments and certificates of deposit		1,707		2,365		3,455
Deposits		44,991		44,879		45,009
Borrowings		13,650		12,900		14,750
Total capital		4,481		4,350		4,163

	For the Six Months Ended December 31,					For the Fiscal Years Ended June 30,
	2007			2006		2007		2006
				(Dollars in Thousands)
Selected Operating Data:
Interest and dividend income	$	2,023		$	1,953	$	3,908	$	3,465
Interest expense		1,223			1,161		2,339		1,910
Net interest income		800			792		1,569		1,555
Provision for (recovery of) loan losses		(7	)		18		34		62
Net interest income after provision for (recovery of) loan losses		807			774		1,535		1,493
Non-interest income		68			36		90		86
Gain on sales of securities and loans, net		9			16		22		(3	)
Non-interest expense		764			727		1,477		1,414
Income before income tax expense		120			99		170		162
Income tax expense		36			30		50		36
Net income	$	84		$	69	$	120	$	126

25

	For the Six Months Ended December 31,						For the Years Ended June 30,
	2007			2006			2007			2006
Selected Ratios and Other Data:
Performance Ratios (1):
Return on assets (ratio of net income to average total assets)		0.27	%		0.22	%		0.19	%		0.21	%
Return on equity (ratio of net income to average equity)		3.73	%		3.21	%		2.77	%		3.01	%
Interest rate spread (2)		2.39	%		2.40	%		2.39	%		2.50	%
Net interest margin (3)		2.68	%		2.68	%		2.67	%		2.73	%
Efficiency ratio (4)		87.18	%		86.10	%		87.86	%		86.34	%
Non-interest expense to average total assets		2.43	%		2.32	%		2.38	%		2.33	%
Average interest-earning assets to average interest bearing liabilities		107.13	%		107.04	%		107.24	%		106.95	%
Asset Quality Ratios:
Non-performing assets to total assets		0.20	%		0.00	%		0.00	%		0.15	%
Non-performing loans to total loans		0.00	%		0.00	%		0.00	%		0.18	%
Allowance for loan losses to non-performing loans		NM			NM			NM			NM
Allowance for loan losses to total loans		0.56	%		0.58	%		0.60	%		0.54	%
Capital Ratios:
Tier 1 capital (to adjusted assets)		7.09	%		6.93	%		6.98	%		6.54	%
Tier 1 capital (to risk-weighted assets)		11.15	%		11.03	%		11.29	%		10.38	%
Total risk-based capital (to risk weighted assets)		11.97	%		11.89	%		12.17	%		11.16	%
Other Data:
Number of offices		2			2			2			2

(1)	Ratios for the six-month periods ending December 31, 2007 and December 31, 2006 have been annualized.
(2)	Represents the difference between the weighted-average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities for the period.
(3)	Represents net interest income as a percent of average interest-earning assets for the period.
(4)	Represents non-interest expense for the period divided by the sum of net interest income (before the loan loss provision) and non-interest income.

26

USE OF PROCEEDS

          The following table shows how we intend to use the net proceeds of the stock offering. The actual net proceeds will depend on the number of shares of common stock sold in the stock offering and the expenses incurred in connection with the stock offering. Payments for shares made through withdrawals from deposit accounts at Auburn Savings Bank will reduce Auburn Savings Bank’s deposits and will not result in the receipt of new funds for investment. See “Pro Forma Data” for the assumptions used to arrive at these amounts.

	Based Upon the Sale at $10.00 Per Share of
	225,675 Shares (Minimum of Range)						265,500 Shares (Midpoint of Range)						305,325 Shares Maximum of Range						351,124 Shares (1) (Maximum of Range,
																			as adjusted)
	Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds			Amount			Percent of Net Proceeds
	(Dollars in Thousands)
Gross offering proceeds	$	2,257					$	2,655					$	3,053					$	3,511
Less: offering expenses		(600	)					(600	)					(600	)					(600	)
Net offering proceeds		1,657			100.00	%		2,055			100.00	%		2,453			100.00	%		2,911			100.00	%
Less:
Proceeds contributed to Auburn Savings Bank		(1,032	)		(62.29	)		(1,430	)		(69.59	)		(1,828	)		(74.51	)		(2,286	)		(78.52	)
Proceeds used for loan to employee stock ownership plan		(172	)		(10.38	)		(202	)		(9.83	)		(233	)		(9.50	)		(268	)		(9.21	)
Proceeds contributed to Auburn Bancorp, MHC		(25	)		(1.51	)		(25	)		(1.22	)		(25	)		(1.02	)		(25	)		(0.86	)
Proceeds remaining for Auburn Bancorp, Inc.	$	428			25.82	%	$	398			19.37	%	$	367			14.96	%	$	332			11.41	%

(1) As adjusted to give effect to a 15% increase in the number of shares outstanding after the stock offering that could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares or changes in market conditions or general financial and economic conditions following the commencement of the stock offering.

          Auburn Bancorp, Inc. intends to invest the proceeds it retains from the stock offering initially in short-term, liquid investments. In addition, Auburn Bancorp, Inc. intends to use a portion of the net proceeds to fund a loan to the employee stock ownership plan to purchase shares of common stock in the stock offering and $25,000 of the net proceeds to capitalize Auburn Bancorp, MHC.

          In the future, Auburn Bancorp, Inc. may also use the proceeds we retain from the stock offering:

• to invest in securities;

• to repurchase shares of our common stock, including shares for our equity incentive plans; and

• for general corporate purposes.

          Under current Office of Thrift Supervision regulations, we may not repurchase shares of our common stock during the first year following the stock offering, except to fund equity benefit plans or, with prior regulatory approval, when extraordinary circumstances exist.

27

          Auburn Savings Bank intends to invest the proceeds it receives from the stock offering, which are shown in the table above as proceeds contributed to Auburn Savings Bank, initially in short-term, liquid investments.

          Over time, Auburn Savings Bank may use the proceeds that it receives from the stock offering:

• to fund new loans;

• to invest in securities;

• to pay down borrowings from the Federal Home Loan Bank of Boston; and

• for general corporate purposes.

          Our expected primary use of the stock offering proceeds is to fund loan growth, with continued emphasis on commercial real estate and one- to-four family mortgage lending. Our ability to deploy stock offering proceeds in assets that typically have higher yields than short-term securities will depend, in part, on factors outside of our control, such as loan demand, local competition, national, regional and local economic conditions, and the interest rate environment. Accordingly, we can give no assurances that we will be able to deploy stock offering proceeds in assets that have higher yields than short-term securities.

          Except as described above, neither Auburn Bancorp, Inc. nor Auburn Savings Bank has any specific plans for the investment of the proceeds of this stock offering and has not allocated a specific portion of the proceeds to any particular use. For a discussion of our business reasons for undertaking the stock offering, see “The Reorganization and Offering—Reasons for the Reorganization and Offering.”

DIVIDEND POLICY

          In order to retain capital to support the continued growth of Auburn Savings Bank, we do not intend to pay cash dividends on the common stock of Auburn Bancorp, Inc. Our board of directors may decide to pay dividends in the future. In determining to pay dividends in the future, our board of directors will take into account our financial condition and results of operations, capital requirements, tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that any dividends will be paid or that, if paid, any dividends will not be reduced or eliminated in future periods. Special cash dividends, stock dividends or returns of capital may, to the extent permitted by regulations, be paid in addition to, or in lieu of, regular cash dividends. Auburn Bancorp, Inc. intends to file consolidated tax returns with Auburn Savings Bank. Accordingly, it is anticipated that any cash distributions made by Auburn Bancorp, Inc. to its stockholders would be treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes. See “Federal and State Taxation.”

          Dividends from Auburn Bancorp, Inc., if any, will depend, primarily, upon receipt of dividends from Auburn Savings Bank because Auburn Bancorp, Inc. initially will have no source of income other than dividends from Auburn Savings Bank, earnings from the investment of net proceeds from the sale of shares of common stock retained by Auburn Bancorp, Inc. and interest payments with respect to Auburn Bancorp, Inc.’s loan to the employee stock ownership plan. A regulation of the Office of Thrift Supervision imposes limitations on “capital distributions” by savings institutions. See “Regulation and Supervision—Regulation of Federal Savings Associations—Limitation on Capital Distributions.”

          Auburn Bancorp, Inc. currently has no intention to initiate any action that leads to a return of capital (as distinguished from a dividend) to stockholders of Auburn Bancorp, Inc. Regulations of the

28

Office of Thrift Supervision prohibit a return of capital during the three-year term of the business plan submitted by Auburn Savings Bank to the Office of Thrift Supervision in connection with the conversion.

          If Auburn Bancorp, Inc. pays dividends to its stockholders, it also will be required to pay dividends to Auburn Bancorp, MHC, unless Auburn Bancorp, MHC elects to waive the receipt of dividends. We anticipate that Auburn Bancorp, MHC will waive any dividends that Auburn Bancorp, Inc. may pay. Any decision to waive dividends will be subject to the non-objection of the Office of Thrift Supervision. See “Regulation and Supervision—Holding Company Regulation—Waivers of Dividends by Auburn Bancorp, MHC.”

MARKET FOR THE COMMON STOCK

          We have not previously issued common stock, and there is currently no established market for the common stock. Upon completion of the reorganization and stock offering, we expect that our shares of common stock will be quoted on the OTC Bulletin Board. Keefe, Bruyette & Woods, Inc. intends to become a market maker in our common stock following the stock offering, but it is under no obligation to do so. We cannot assure you that other market makers will be obtained or that an active and liquid trading market for the common stock will develop or, if developed, will be maintained.

          The development of a public market having the desirable characteristics of depth, liquidity and orderliness depends on the existence of willing buyers and sellers, the presence of which is not within our control or that of any market maker. The number of active buyers and sellers of our common stock at any particular time may be limited, which may have an adverse effect on the price at which our common stock can be sold. There can be no assurance that persons purchasing the common stock will be able to sell their shares at or above the $10.00 price per share in the stock offering. Purchasers of our common stock should have a long-term investment intent and should recognize that there may be a limited trading market in the common stock.

29

CAPITALIZATION

          The following table presents the historical capitalization of Auburn Savings Bank at December 31, 2007 and the pro forma capitalization of Auburn Bancorp, Inc. after giving effect to the stock offering. The pro forma capitalization gives effect to the assumptions listed under “Pro Forma Data” based on the sale of the number of shares of common stock indicated in the table. A change in the number of shares to be issued in the stock offering may materially affect pro forma capitalization. We are offering our common stock on a best efforts basis. We must sell a minimum of 225,675 shares to complete the stock offering.

				Pro Forma Capitalization at December 31, 2007 Based Upon the Sale of Shares at $10.00 Per Share
	Auburn
	Savings Bank, FSB Historical at December 31, 2007			225,675 Shares (Minimum of Range)			265,500 Shares (Midpoint of Range)			305,325 Shares (Maximum of Range)			351,124 Shares (Maximum of Range, as Adjusted)(1)
	(Dollars in Thousands)
Deposits (2)	$	44,991		$	44,991		$	44,991		$	44,991		$	44,991
Borrowings		13,650			13,650			13,650			13,650			13,650
Total deposits and borrowed funds	$	58,641		$	58,641		$	58,641		$	58,641		$	58,641
Stockholders’ equity:
Preferred Stock:
1,000,000 shares, $0.01 par value per share, authorized; none issued or outstanding	$	—		$	—		$	—		$	—		$	—
Common Stock:
10,000,000 shares, $0.01 par value per share, authorized; specified number of shares assumed to be issued and outstanding (3)		—			5			6			7			8
Additional paid-in capital (3)		—			1,652			2,049			2,446			2,903
Retained earnings (4)		4,499			4,499			4,499			4,499			4,499
Accumulated other comprehensive income		(18	)		(18	)		(18	)		(18	)		(18	)
Less
Capitalization of Auburn Bancorp, MHC		—			25			25			25			25
Common Stock acquired by employee stock ownership plan (5)		—			172			202			233			268
Common stock to be acquired by equity incentive plan (6)		—			74			87			100			115
Total stockholders’ equity	$	4,481		$	5,867		$	6,222		$	6,576		$	6,984
Total pro forma stockholders’ equity as a percentage of pro forma total assets (2)(7)		7.06	%		9.04	%		9.54	%		10.03	%		10.59	%

(1)	As adjusted to give effect to a 15% increase in the number of shares outstanding after the stock offering that could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares or changes in market conditions or general financial and economic conditions following the commencement of the stock offering.
(2)	Does not reflect withdrawals from deposit accounts for the purchase of common stock in the stock offering. These withdrawals to purchase common stock will reduce pro forma deposits and assets by the amounts of the withdrawals.
(3)	Reflects total issued and outstanding shares of 501,500, 590,000, 678,500 and 780,275 at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively. No effect has been given to the issuance of additional shares of common stock pursuant to stock options to be grated under an equity incentive plan. We intend to adopt an equity incentive plan and to submit such plan to stockholders at a meeting of stockholders to be held at least six months following completion of the reorganization and stock offering. If the plan is approved by stockholders, an amount of shares of common stock equal to 4.9% of the aggregate shares of common stock to be outstanding after the reorganization and stock offering will be reserved for future issuance under the plan. See “Pro Forma Data” and “Management—-Benefit Plans— Future Equity Incentive Plan.”
(4)	Retained earnings are restricted by applicable regulatory capital requirements. Auburn Bancorp, MHC will have an initial capitalization of $25,000.
(5)	Assumes that 3.43% of the aggregate shares of common stock to be outstanding after the reorganization and stock offering (including shares issued to Auburn Bancorp, MHC) will be acquired by the employee stock ownership plan with funds borrowed from Auburn Bancorp, Inc. Under accounting principles generally accepted in the United States, the amount of common stock to be purchased by the employee stock ownership plan represents unearned compensation and is, accordingly, reflected as a reduction of stockholders’ equity. As shares are released to plan participants’ accounts, a corresponding reduction in the charge against stockholders’ equity will occur. Since the funds are borrowed from Auburn Bancorp, Inc., the borrowing will be

30

	eliminated in consolidation and no liability or interest expense will be reflected in the financial statements of Auburn Bancorp, Inc. See “Pro Forma Data” and “Management — Benefit Plans — Employee Stock Ownership Plan.”
(6)	Gives effect to the equity incentive plan expected to be adopted following the reorganization and stock offering. Assumes the purchase in the open market at $10.00 per share, for restricted stock awards under the proposed equity incentive plan, of a number of shares equal to 1.47% of the aggregate shares of common stock to be outstanding after the reorganization and stock offering (including shares issued to Auburn Bancorp, MHC). The shares are reflected as a reduction of stockholders’ equity. The equity incentive plan will be submitted to stockholders for approval at a meeting following the stock offering. See “Pro Forma Data” and “Management — Benefit Plans — Future Equity Incentive Plan.”
(7)	The equity-to-assets ratio was calculated by using the pro forma stockholders’ equity, as provided above, and the pro forma assets of $64.9 million, $65.2 million, $65.6 million and $66.0 million at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively.

31

REGULATORY CAPITAL COMPLIANCE

          The following table presents Auburn Savings Bank’s capital position relative to its regulatory capital requirements at December 31, 2007, on a historical and a pro forma basis, after giving effect to the reorganization and stock offering, based upon the sale of the indicated number of shares of common stock at $10.00 per share. For a discussion of the assumptions underlying the pro forma capital calculations presented below, see “Use of Proceeds,” “Capitalization” and “Pro Forma Data.” The definitions of the terms used in the table are those provided in the capital regulations issued by the Office of Thrift Supervision. For a discussion of the capital standards applicable to Auburn Savings Bank, see “Regulation and Supervision—Regulation of Federal Savings Associations—Capital Requirements.”

						Pro Forma at December 31, 2007 Based Upon Sale at $10.00 Per Share
	Auburn Savings Bank, FSB Historical at December 31, 2007					225,675 Shares (Minimum of Range)						265,500 Shares (Midpoint of Range)						305,325 Shares (Maximum of Range)						351,124 Shares (Maximum of Range, As Adjusted)(1)
	Amount		Percent of Assets (2)			Amount			Percent of Assets(2)			Amount			Percent of Assets (2)			Amount			Percent of Assets (2)			Amount			Percent of Assets (2)
	(Dollars in Thousands)
GAAP capital	$	4,481		7.1	%	$	5,341			8.3	%	$	5,709			8.8	%	$	6,076			9.3	%	$	6,499			9.9	%
Tier 1 capital to adjusted total assets:
Capital level		4,504		7.1			5,364			8.3			5,732			8.8			6,099			9.4			6,522			9.9
Requirement		3,174		5.0			3,221			5.0			3,240			5.0			3,259			5.0			3,281			5.0
Excess	$	1,330		2.1	%	$	2,143			3.3	%	$	2,492			3.8	%	$	2,840			4.4	%	$	3,241			4.9	%
Tier 1 capital to risk-weighted assets:
Capital level		4,504		11.2			5,364			14.0			5,732			15.0			6,099			15.9			6,522			16.9
Requirement		2,284		6.0			2,295			6.0			2,300			6.0			2,304			6.0			2,310			6.0
Excess	$	2,220		5.2	%	$	3,069			8.0	%	$	3,432			9.0	%	$	3,795			9.9	%	$	4,212			10.9	%
Total capital to risk-weighted assets:
Capital level (3)		4,554		12.0			5,414			14.2			5,782			15.1			6,149			16.0			6,572			17.1
Requirement		3,806		10.0			3,825			10.0			3,833			10.0			3,841			10.0			3,849			10.0
Excess	$	748		2.0	%	$	1,589			4.2	%	$	1,949			5.1	%	$	2,308			6.0	%	$	2,723			7.1	%
Reconciliation of capital contributed to Auburn Savings Bank:
Net proceeds of offering						$	1,657					$	2,055					$	2,453					$	2,911
Net proceeds contributed to Auburn Savings Bank						$	1,032					$	1,430					$	1,828					$	2,286
Less: common stock acquired by employee stock ownership plan							(172	)					(202	)					(233	)					(268	)
Pro forma increase in GAAP and regulatory capital						$	860					$	1,228					$	1,595					$	2,018

(1)	As adjusted to give effect to a 15% increase in the number of shares outstanding after the stock offering that could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares or changes in market conditions or general financial and economic conditions following the commencement of the stock offering.
(2)	Shown as a percentage of total assets under generally accepted accounting principles (GAAP) in the United States of America, adjusted total assets, or adjusted total risk-weighted assets, as appropriate.
(3)	Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk-weighting.

32

PRO FORMA DATA

          The following tables show information about our net income and stockholders’ equity reflecting the stock offering. The information provided illustrates our pro forma net income and stockholders’ equity based on the sale of common stock at the minimum of the offering range, the midpoint of the offering range, the maximum of the offering range and 15% above the maximum of the offering range. The actual net proceeds from the sale of the common stock cannot be determined until the stock offering is completed. Net proceeds indicated in the following tables are based upon the following assumptions:

• All shares of stock will be sold in the subscription and direct community offerings;

• Our employee stock ownership plan will purchase a number of shares equal to 3.43% of the shares to be outstanding after the stock offering (including shares issued to Auburn Bancorp, MHC) at a price of $10.00 per share with a loan from Auburn Bancorp, Inc. that will be repaid in equal installments over 15 years; and

• Total expenses of the stock offering, including fees paid to Keefe, Bruyette & Woods, Inc., will be approximately $600,000.

          Actual expenses may vary from this estimate, and the amount of fees paid will depend upon whether a syndicate of broker-dealers or other means is necessary to sell the shares, which would increase stock offering expenses, and other factors.

          Pro forma net income for the six months ended December 31, 2007 and the fiscal year ended June 30, 2007 has been calculated as if the stock offering were completed at the beginning of each period, and the net proceeds had been invested at 2.71% for the six months ended December 31, 2007 and 4.90% for the year ended June 30, 2007, which represents the one-year treasury rate for each period end date. We believe that the one-year treasury rate represents a more realistic yield on the investment of the stock offering proceeds than the arithmetic average of the weighted average yield earned on our interest-earning assets and the weighted average rate paid on our deposits, which is the reinvestment rate required by Office of Thrift Supervision regulations.

          A pro forma after-tax return of 1.79% is used for the six months ended December 31, 2007 and of 3.23% for the year ended June 30, 2007, after giving effect to a combined federal and state income tax rate of 34% for each period. The actual rate experienced by Auburn Bancorp, Inc. may vary. Historical and pro forma per share amounts have been calculated by dividing historical and pro forma amounts by the number of shares of common stock indicated in the tables.

          When reviewing the following tables you should consider the following:

• The final column gives effect to a 15% increase in the offering range, which may occur without any further notice if Keller & Company increases its appraisal to reflect the results of this stock offering, changes in our financial condition or results of operations or changes in market conditions after the stock offering begins. See “The Reorganization and stock offering—How We Determined the Offering Range and the $10.00 Purchase Price.”

• Since funds on deposit at Auburn Savings Bank may be withdrawn to purchase shares of common stock, the amount of funds available for investment will be reduced by the amount of withdrawals for stock purchases. The pro forma tables do not reflect withdrawals from deposit accounts.

33

• Historical per share amounts have been computed as if the shares of common stock expected to be issued in the stock offering had been outstanding at the beginning of the period covered by the table. However, neither historical nor pro forma stockholders’ equity has been adjusted to reflect the investment of the estimated net proceeds from the sale of the shares in the stock offering, the additional employee stock ownership plan expense or the proposed equity incentive plan.

• Pro forma stockholders’ equity (“book value”) represents the difference between the stated amounts of our assets and liabilities. Book value amounts do not represent fair market values or amounts available for distribution to stockholders in the unlikely event of liquidation. The amounts shown do not reflect the federal income tax consequences of the restoration to income of Auburn Savings Bank’s special bad debt reserves for income tax purposes, which would be required in the unlikely event of liquidation. See “Federal and State Taxation.”

• The amounts shown as pro forma stockholders’ equity per share do not represent possible future price appreciation of our common stock.

• The pro forma tables do not reflect the impact of the new expenses that we expect to incur as a result of operating as a public company.

          The following pro forma data may not represent the actual financial effects of the stock offering or our operating results after the stock offering. The pro forma data rely exclusively on the assumptions outlined above and in the notes to the pro forma tables. The pro forma data do not represent the fair market value of our common stock, the current fair market value of our assets or liabilities, or the amount of money that would be available for distribution to stockholders if we were to be liquidated after the stock offering.

          We are offering our common stock on a best efforts basis. We must sell a minimum of 225,675 shares to complete the stock offering.

34

	At or For the Six Months Ended December 31, 2007 Based Upon the Sale at $10.00 Per Share of
	225,675 Shares (Minimum of Range)			265,500 Shares Midpoint of Range			305,325 Shares (Maximum of Range			351,124 Shares (15% Above Maximum of Range)(1)
	(Dollars in Thousands, Except Per Share Data)
Gross proceeds of offering	$	2,257		$	2,655		$	3,053		$	3,511
Estimated offering expenses		(600	)		(600	)		(600	)		(600	)
Estimated net proceeds, as adjusted	$	1,657		$	2,055		$	2,453		$	2,911
Common stock acquired by employee stock ownership plan (2)		(172	)		(202	)		(233	)		(268	)
Cash to Auburn Bancorp, MHC		(25	)		(25	)		(25	)		(25	)
Common stock to be acquired by equity incentive plan (3)		(74	)		(87	)		(100	)		(115	)
Estimated net proceeds available for investment	$	1,386		$	1,741		$	2,095		$	2,503
Pro Forma Net Income:
Net income (4):
Historical	$	84		$	84		$	84		$	84
Pro forma adjustments
Income on net proceeds available for investment		12			16			19			22
Employee stock ownership plan (2)		(4	)		(4	)		(5	)		(6	)
Shares granted under equity incentive plan (3)		(5	)		(6	)		(7	)		(8	)
Options granted under equity incentive plan (4)		(9	)		(11	)		(12	)		(14	)
Pro forma net income	$	78		$	79		$	79		$	78
Net income per share (4):
Historical	$	0.17		$	0.15		$	0.13		$	0.11
Pro forma adjustments
Income on adjusted net proceeds		0.02			0.03			0.03			0.03
Employee stock ownership plan (2)		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Shares granted under equity incentive plan (3)		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Options granted under equity incentive plan (4)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Pro forma net income per share	$	0.15		$	0.14		$	0.12		$	0.10
Offering price as a multiple of pro forma net income per share (annualized)		33.33	x		35.71	x		41.67	x		50.00	x
Number of shares used to calculate pro forma net income per share (5)		484,872			570,438			656,003			754,404
Pro Forma Stockholders’ Equity:
Stockholders’ equity (book value):
Historical	$	4,481		$	4,481		$	4,481		$	4,481
Estimated net proceeds		1,657			2,055			2,453			2,911
Capitalization of Auburn Bancorp, MHC		(25	)		(25	)		(25	)		(25	)
Common stock acquired by employee stock ownership plan (2)		(172	)		(202	)		(233	)		(268	)
Common stock to be acquired by equity incentive plan (3)		(74	)		(87	)		(100	)		(115	)
Pro forma stockholders’ equity	$	5,867		$	6,222		$	6,576		$	6,984
Stockholders’ equity per share:
Historical	$	8.94		$	7.59		$	6.60		$	5.74
Estimated net proceeds		3.30			3.48			3.62			3.73
Capitalization of Auburn Bancorp, MHC		(0.05	)		(0.04	)		(0.04	)		(0.03	)
Common stock acquired by employee stock ownership plan (2)		(0.34	)		(0.34	)		(0.34	)		(0.34	)
Common stock to be acquired by equity incentive plan (3)		(0.15	)		(0.15	)		(0.15	)		(0.15	)
Pro forma stockholders’ equity per share	$	11.70		$	10.54		$	9.69		$	8.95
Offering price as a percentage of pro forma stockholders’ equity per share		85.47	%		94.88	%		103.20	%		111.73	%
Number of shares used to calculate pro forma stockholders’ equity per share (5)		501,500			590,000			678,500			780,275

(Footnotes begin on page ___)

35

	At or For the Fiscal Year Ended June 30, 2007 Based Upon the Sale at $10.00 Per Share of
	225,675 Shares (Minimum of Range)			265,500 Shares (Midpoint of Range)			305,325 Shares (Maximum of Range)			351,124 Shares at (15% Above Maximum of Range)(1)
	(Dollars in Thousands, Except Per Share Data)
Gross proceeds of offering	$	2,257		$	2,655		$	3,053		$	3,511
Estimated offering expenses		(600	)		(600	)		(600	)		(600	)
Estimated net proceeds, as adjusted	$	1,657		$	2,055		$	2,453		$	2,911
Common stock acquired by employee stock ownership plan (2)		(172	)		(202	)		(233	)		(268	)
Cash to Auburn Bancorp, MHC		(25	)		(25	)		(25	)		(25	)
Common stock to be acquired by equity incentive plan (3)		(74	)		(87	)		(100	)		(115	)
Estimated proceeds available for investment	$	1,386		$	1,741		$	2,095		$	2,503
Pro Forma Net Income:
Net income (4):
Historical	$	120		$	120		$	120		$	120
Pro forma adjustment
Income on net proceeds available for investment		45			57			68			81
Employee stock ownership plan (2)		(8	)		(9	)		(10	)		(12	)
Shares granted under equity incentive plan (3)		(10	)		(11	)		(13	)		(15	)
Options granted under equity incentive plan (4)		(18	)		(22	)		(25	)		(29	)
Pro forma net income	$	129		$	135		$	140		$	145
Net income per share (4):
Historical	$	0.25		$	0.21		$	0.18		$	0.16
Pro forma adjustments
Income on adjusted net proceeds		0.09			0.10			0.10			0.11
Employee stock ownership plan (2)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Shares granted under equity incentive plan (3)		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Options granted under equity incentive plan (4)		(0.04	)		(0.04	)		(0.04	)		(0.04	)
Pro forma net income per share	$	0.26		$	0.23		$	0.20		$	0.19
Offering price as a multiple of pro forma net income per share (annualized)		38.46	x		43.48	x		50.00	x		52.63	x
Number of shares used to calculate pro forma net income per share (5)		485,446			571,112			656,779			755,296
Pro Forma Stockholders’ Equity:
Pro forma stockholders’ equity (book value):
Historical	$	4,350		$	4,350		$	4,350		$	4,350
Estimated net proceeds		1,657			2,055			2,453			2,911
Capitalization of Auburn Bancorp, MHC		(25	)		(25	)		(25	)		(25	)
Common stock acquired by employee stock ownership plan (2)		(172	)		(202	)		(233	)		(268	)
Common stock to be acquired by equity incentive plan (3)		(74	)		(87	)		(100	)		(115	)
Pro forma stockholders’ equity	$	5,736		$	6,091		$	6,445		$	6,853
Pro forma stockholders’ equity per share:
Historical	$	8.67		$	7.37		$	6.41		$	5.57
Estimated net proceeds		3.30			3.48			3.62			3.73
Capitalization of Auburn Bancorp, MHC		(0.05	)		(0.04	)		(0.04	)		(0.03	)
Common stock acquired by employee stock ownership plan (2)		(0.34	)		(0.34	)		(0.34	)		(0.34	)
Common stock to be acquired by equity incentive plan (3)		(0.15	)		(0.15	)		(0.15	)		(0.15	)
Pro forma stockholders’ equity per share	$	11.43		$	10.32		$	9.50		$	8.78
Offering price as a percentage of pro forma stockholders’ equity per share		87.49	%		96.90	%		105.26	%		113.90	%
Number of shares used to calculate pro forma stockholders’ equity per share (5)		501,500			590,000			678,500			780,275

(Footnotes begin on page ___)

36

(1)	As adjusted to give effect to a 15% increase in the number of shares outstanding after the stock offering that could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares or changes in market conditions or general financial and economic conditions following the commencement of the stock offering.
(2)	Assumes that the employee stock ownership plan will acquire 3.43% of the aggregate shares of common stock to be outstanding after the reorganization and stock offering (including shares issued to Auburn Bancorp, MHC), or 17,201, 20,237, 23,273 and 26,763 shares at the minimum, midpoint, maximum and adjusted maximum. The employee stock ownership plan will borrow the funds used to acquire these shares from the net proceeds of the stock offering retained by Auburn Bancorp, Inc. The amount to be borrowed has been reflected as a reduction from gross proceeds to determine estimated net proceeds available for investment. Auburn Savings Bank intends to make contributions to the employee stock ownership plan in amounts at least equal to the principal and interest requirement of the debt. Interest income that Auburn Bancorp, Inc. will earn on the loan will offset a portion of the compensation expense recorded by Auburn Savings Bank as it contributes to the employee stock ownership plan. As the debt is paid down, shares will be released for allocation to participants’ accounts and stockholders’ equity will be increased.
	The adjustment to pro forma net income for the employee stock ownership plan reflects the after-tax compensation expense associated with the plan. Applicable accounting principles require that compensation expense for the employee stock ownership plan be based upon shares committed to be released and that unallocated shares be excluded from earnings per share computations. An equal number of shares (1/15 of the total, based on a 15-year loan) will be released each year over the term of the loan. The valuation of shares committed to be released would be based upon the average market value of the shares during the year, which, for purposes of this calculation, was assumed to be equal to the $10.00 per share purchase price. If the average market value per share is greater than $10.00 per share, total employee stock ownership plan expense would be greater.
(3)	Gives effect to the equity incentive plan expected to be adopted following the reorganization and stock offering. Assumes that the equity incentive plan will acquire a number of shares of common stock equal to 1.47% of the aggregate shares to be outstanding after the reorganization and stock offering (including shares issued to Auburn Bancorp, MHC), or 7,372, 8,673, 9,974 and 11,470 shares of common stock at the minimum, midpoint, maximum and adjusted maximum of the estimated offering range, respectively, either through open market purchases or directly from Auburn Bancorp, Inc., and that the shares will be reissued as restricted stock awards under the equity incentive plan. Purchases will be funded with cash on hand at Auburn Bancorp, Inc. or with dividends paid to Auburn Bancorp, Inc., by Auburn Savings Bank. The cost of these shares has been reflected as a reduction from gross proceeds to determine estimated proceeds available for investment. In calculating the pro forma effect of restricted stock awards under the equity incentive plan, it is assumed that the required stockholder approval has been received and that the shares were acquired by the plan at the beginning of the period presented in open market purchases at $10.00 per share. If shares are acquired by the plan from authorized but unissued shares of our common stock instead of open market purchases would dilute the ownership interests of existing stockholders by approximately 1.4%.
	The adjustment to pro forma net income for the restricted stock awards reflects the after-tax compensation expense associated with the awards. It is assumed that the fair market value of a share of Auburn Bancorp, Inc. common stock was $10.00 at the time the awards were made, that shares of restricted stock issued under the equity incentive plan vest 20% per year, that compensation expense is recognized on a straight-line basis over each vesting period so that 20% of the value of the shares awarded was an amortized expense during each year and that the combined federal and state income tax rate was 34%. If the fair market value per share is greater than $10.00 per share on the date shares are awarded under the equity incentive plan, total equity incentive plan expense would be greater.
(4)	The adjustment to pro forma net income for stock options reflects the after-tax compensation expense associated with the stock options that may be granted under the equity incentive plan expected to be adopted following the reorganization and stock offering. If the equity incentive plan is approved by stockholders, a number of shares equal to 4.9% of the aggregate shares of common stock to be outstanding after the reorganization and stock offering (including shares issued to Auburn Bancorp, MHC), or 24,574, 28,910, 33,247 and 38,233 shares at the minimum, midpoint, maximum and adjusted maximum will be reserved for future issuance upon the exercise of stock options that may be granted under the plan. We will comply with Financial Accounting Standards Board Statement No. 123 (revised 2004), Share-Based Payment, to account for stock options issued. This standard requires compensation cost relating to share-based payment transactions be recognized in the financial statements over the period the employee is required to provide services for the award. The cost will be measured based on the fair value of the equity instruments issued. Applicable accounting standards do not prescribe a specific valuation technique to be used to estimate the fair value of employee stock options. Using the Black-Scholes option-pricing formula, the options are assumed to have a value of $4.08 for each option, based on the following assumptions: exercise price, $10.00; trading price on date of grant, $10.00; dividend yield, 0%; expected life, 10 years; expected volatility, 21.1%; and risk-free interest rate, 3.74%. Because there currently is no market for Auburn Bancorp, Inc. common stock, the assumed expected volatility is based on the SNL MHC Index for all publicly-traded mutual holding companies. The dividend yield is assumed to be 0% because there is no history of dividend payments and the board of directors has not

37

expressed an intention to commence dividend payments upon completion of the stock offering. It is assumed that stock options granted under the equity incentive plan vest 20% per year, that compensation expense is recognized on a straight-line basis over each vesting period so that 20% of the value of the options awarded was an amortized expense during each year, that 25% of the options awarded are non-qualified options and that the combined federal and state income tax rate is 34%. We plan to use the Black-Scholes option-pricing formula; however, if the fair market value per share is different than $10.00 per share on the date options are awarded under the equity incentive plan, or if the assumptions used in the option-pricing formula are different from those used in preparing this pro forma data, the value of the stock options and the related expense would be different. The issuance of authorized but unissued shares of common stock to satisfy option exercises instead of shares repurchased in the open market would dilute the ownership interests of existing stockholders by approximately 4.7%.

(5)

The number of shares used to calculate pro forma net income per share is equal to the total number of shares to be outstanding upon completion of the stock offering, less the number of shares purchased by the employee stock ownership plan not committed to be released within six months or one year, as applicable, following the stock offering as adjusted to effect a weighted average over the period. The number of shares used to calculate pro forma stockholders’ equity per share is equal to the total number of shares to be outstanding upon completion of the stock offering.

38

BUSINESS OF AUBURN BANCORP, INC.

          Auburn Bancorp, Inc. will be organized as a federal corporation upon completion of the reorganization. As a result of the reorganization, we will own all of the issued and outstanding common stock of Auburn Savings Bank, FSB. We will retain up to $600,000 of the net proceeds from the stock offering. A portion of the net proceeds we retain will be used for the purpose of making a loan to fund the purchase of our shares of common stock by the Auburn Savings Bank employee stock ownership plan. We will contribute the remaining net proceeds to Auburn Savings Bank as additional capital. We intend to invest our capital as discussed in “Use of Proceeds.”

          In the future, Auburn Bancorp, Inc., as the holding company of Auburn Savings Bank, will be authorized to pursue other business activities permitted by applicable laws and regulations for savings and loan holding companies, which may include the acquisition of banking and financial services companies. We have no plans for any mergers or acquisitions or other diversification of the activities of Auburn Bancorp, Inc. at the present time.

          Our cash flow will depend on earnings from the investment of the net proceeds we retain from the stock offering and any dividends received from Auburn Savings Bank. Initially, Auburn Bancorp, Inc. will neither own nor lease any property, but will instead use the premises, equipment and furniture of Auburn Savings Bank. At the present time, we intend to employ only persons who are officers of Auburn Savings Bank to serve as officers of Auburn Bancorp, Inc. We will, however, use the support staff of Auburn Savings Bank from time to time. All of these persons will be paid by Auburn Savings Bank under the terms of a management agreement with Auburn Bancorp, Inc. Auburn Bancorp, Inc. may hire additional employees, as appropriate, to the extent it expands its business in the future.

BUSINESS OF AUBURN SAVINGS BANK, FSB

          Auburn Savings Bank, FSB is a community-oriented savings bank. We were originally established in 1887 as a state-chartered loan and building association named “Auburn Loan and Building Association” and later converted to a state-chartered savings and loan association named “Auburn Savings and Loan Association.” In July 2006, the bank converted from a state-chartered savings and loan association to a federal mutual savings bank and changed its name to “Auburn Savings Bank, FSB.”

          Our principal business consists of attracting retail deposits from the general public in the areas surrounding our main office in Auburn, Maine and our branch office in Lewiston, Maine and investing those deposits, together with funds generated from operations, primarily in one- to four-family residential mortgage loans and home equity loans and lines of credit, commercial and multi-family real estate loans, and, to a lesser extent, commercial business loans, construction loans, consumer loans, and investment securities. Our revenues are derived principally from interest on loans and securities. We also generate revenues from fees and service charges and other income. Our primary sources of funds are deposits, borrowings and principal and interest payments on loans and securities.

          Our website address is www.auburnsavings.com. Information on our website should not be considered a part of this prospectus.

Market Area

          We primarily serve communities located in Androscoggin County, Maine. We are headquartered in Auburn, Maine. In addition to our main office, we operate a full-service branch office in Lewiston, Maine. Lewiston and Auburn are in Androscoggin County, Maine, approximately 35 miles northeast of

39

Portland, Maine. Historically, substantially all of our loans have been made to borrowers who resided within Androscoggin County.

          During the past several years, the population in the Lewiston-Auburn area as well as in Androscoggin County has increased moderately. In 2007, Androscoggin County’s total population was approximately 110,000, a 5.9% increase from the county’s population in 2000. Similarly, the total population in each of Lewiston and Auburn increased 4.1% from 2000 to 2007, with Auburn’s total population at approximately 24,000 in 2007 and Lewiston’s total population at approximately 37,000 in 2007. Auburn Savings Bank’s market area is projected to continue to experience modest population growth through 2012. Based on census data, the population in Lewiston and Auburn during this period is expected to increase by 3.6% and 3.2%, respectively, and the population in Androscoggin County during this period is expected to increase by 4.2%.

          The largest industry in Androscoggin County is educational services, health care and social assistance, which accounted for 25% of employment in the county, followed by retail trade, accounting for 14% of employment in the county. The two largest employers in the area, Central Maine Medical Center and St. Mary’s Health Systems, are both health service providers. The median household income in Androscoggin County in 2007 was $43,000, below the Maine and national median household incomes in 2007 of $45,000 and 53,100, respectively. As of December 2007, the unemployment rate in Androscoggin County was 5.0%, equal to that of the United States and below the Maine unemployment rate of 5.1%.

Competition

          We face significant competition for the attraction of deposits and origination of loans. Our most direct competition for deposits has historically come from the many financial institutions operating in our market area and, to a lesser extent, from other financial service companies such as brokerage firms and insurance companies. Federal and state credit unions accounted for approximately 24% of market deposits in the Lewiston-Auburn metropolitan statistical area as of June 30, 2007 and have the competitive advantage of not paying state and federal income tax while having a broad range of banking powers. In addition, several large holding companies operate banks in our market area, including TD Banknorth, N.A., Bank of America and KeyBank, as well as several Maine-based banks including Androscoggin Savings Bank, Mechanics Savings Bank and Northeast Bank. These institutions are significantly larger than us and, therefore, have significantly greater resources. We also face competition for investors’ funds from money market funds, mutual funds and other corporate and government securities. At June 30, 2007, which is the most recent date for which data is available from the Federal Deposit Insurance Corporation, we held 3.9% of the deposits in the Lewiston-Auburn metropolitan statistical area.

          Our competition for loans comes primarily from financial institutions in our market area and, to a lesser extent, from other financial service providers, such as mortgage companies and mortgage brokers. Competition for loans also comes from the increasing number of non-depository financial service companies entering the mortgage market, such as insurance companies, securities companies and specialty finance companies.

          We expect competition to remain intense in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Technological advances, for example, have lowered barriers to entry, allowed banks to expand their geographic reach by providing services over the Internet and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks. Changes in federal law permit affiliation among banks, securities firms and insurance companies, which promotes a

40

competitive environment in the financial services industry. Competition for deposits and the origination of loans could limit our growth in the future.

Lending Activities

          We originate one- to four-family residential loans and home equity loans. We also originate commercial and multi-family real estate loans and, to a lesser extent, commercial business loans, construction loans and consumer loans. We believe that originating a limited amount of non-residential and multi-family loans allows us to provide more comprehensive financial services to families and businesses within our community as well as increase the yield and interest rate sensitivity of our loan portfolio.

          Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan as of the dates indicated.

	At December 31,						At June 30,
	2007						2007						2006
	Amount			Percent			Amount			Percent			Amount			Percent
							(Dollars in Thousands)
Mortgage loans:
One- to four-family residential	$	31,424			57.3	%	$	31,817			59.9	%	$	33,366			61.6	%
Commercial		8,901			16.2			7,553			14.2			6,211			11.5
Construction		2,359			4.3			1,041			1.9			3,245			6.0
Equity lines of credit		10,887			19.9			11,106			20.9			10,371			19.1
Undisbursed portion of construction loan		(707	)		(1.3	)		(123	)		(0.2	)		(902	)		(1.7	)
Total mortgage loans on real estate	$	52,864			96.4	%	$	51,394			96.7	%	$	52,291			96.5	%
Other loans:
Commercial loans		1,443			2.6			1,257			2.4			1,374			2.5
Consumer loans		552			1.0			501			0.9			542			1.0
Total loans	$	54,859			100.0	%	$	53,152			100.0	%	$	54,207			100.0	%
Other items:
Deferred loan origination costs	$	139					$	135					$	125
Deferred loan origination fees		(214	)					(170	)					(193	)
Allowance for loan losses		(309	)					(318	)					(290	)
Total loans, net	$	54,475					$	52,799					$	53,849

          One- to Four-Family Residential Loans. Our primary lending activity consists of the origination of one- to four-family residential mortgage loans, substantially all of which are secured by properties located in our primary market area. We offer fixed-rate mortgage loans, which generally have terms of 15, 20 or 30 years. We also offer adjustable-rate mortgage loans (“ARMs”) with interest rates and payments that adjust annually or every three years. Interest rates and payments on our adjustable-rate loans generally are adjusted to a rate equal to a percentage above the one-year U.S. Treasury index, in the case of one-year ARMs, and the three-year U.S. Treasury index, in the case of three-year ARMs. The

41

maximum amount by which the interest rate may be increased or decreased is generally 1% per adjustment period with a lifetime interest rate cap of 5% over the initial interest rate of the loan on one-year ARM loans and 2% per adjustment period with a lifetime rate cap of 6% over the initial interest rate of the loan on three-year ARM loans.

          At December 31, 2007, $31.4 million, or 57.3% of our loan portfolio, consisted of one- to four-family residential mortgage loans. Of the one- to four-family residential mortgage loans outstanding on December 31, 2007, $21.9 million were fixed-rate mortgage loans with an average yield of 6.22%, and $9.5 million were adjustable-rate loans with an average yield of 7.19%.

          Borrower demand for adjustable-rate loans compared to fixed-rate loans is a function of the level of interest rates, the expectations of changes in the level of interest rates, and the difference between the interest rates and loan fees offered for fixed-rate mortgage loans as compared to the interest rates and loan fees for adjustable-rate loans. The relative amount of fixed-rate and adjustable-rate mortgage loans that can be originated at any time is largely determined by the demand for each in a competitive environment. The loan fees, interest rates and other provisions of mortgage loans are determined by us on the basis of our own pricing criteria and competitive market conditions.

          Adjustable-rate loans help to reduce our exposure to changes in interest rates. However, adjustable-rate loans generally possess an element of credit risk not inherent in fixed-rate mortgage loans, because borrowers are potentially exposed to increases in debt service requirements over the life of the loan in the event market interest rates rise. Higher payments may increase the risk of default. In addition, although adjustable–rate mortgage loans make our asset base more responsive to changes in interest rates, the extent of this interest sensitivity is limited by the annual and lifetime interest rate adjustment limit.

          We underwrite all residential real estate loans to secondary market credit standards. While one- to four-family residential real estate loans are normally originated with up to 30-year terms, such loans typically remain outstanding for substantially shorter periods because borrowers often prepay their loans in full either upon sale of the property pledged as security or upon refinancing the original loan. Therefore, average loan maturity is a function of, among other factors, the level of purchase and sale activity in the real estate market, prevailing interest rates and the interest rates payable on outstanding loans. We do not offer loans with negative amortization and generally do not offer interest only loans. We generally do not make loans known as subprime or Alt-A loans.

          We generally do not make loans with a loan-to-value ratio of more than 80% without private mortgage insurance. We make first mortgage loans on owner-occupied one-to-four family dwellings up to 95% of value and loans on condominium units up to 80% of value. We generally require all properties securing mortgage loans to be appraised by a board-approved independent appraiser. We generally require title insurance on all first mortgage loans. Borrowers must obtain hazard insurance, and flood insurance is required for loans on properties located in a flood zone.

          Our residential mortgage loans customarily include due-on-sale clauses giving us the right to declare the loan immediately due and payable in the event that, among other things, the borrower sells or otherwise disposes of the property subject to the mortgage and the loan is not repaid.

          At December 31, 2007, our largest one- to four-family residential real estate loan had a principal balance of $324,553 and was secured by a residence located in Auburn. This loan was performing according to its original repayment terms at December 31, 2007.

          Home Equity Loans. We offer home equity lines of credit and home equity loans. At December 31, 2007, we had $10.9 million of home equity lines-of-credit and loans outstanding,

42

representing 19.9% of our loan portfolio. At December 31, 2007, the unadvanced amounts of home equity lines of credit totaled $2.7 million.

          Home equity lines of credit and loans are secured by a mixture of first and second mortgages on one- to four-family owner occupied properties. The procedures for underwriting home equity lines of credit and loans include a determination of the applicant’s credit history, an assessment of the applicant’s ability to meet existing obligations and payments on the proposed loan and the value of the collateral securing the loan. We generally require all properties securing second mortgage loans to be appraised by a board-approved independent appraiser unless the first mortgage is also held by Auburn Savings Bank. Home equity lines of credit and loans are made in amounts such that the combined first and second mortgage balances do not exceed 90% of value.

          Home equity loans are offered with fixed interest rates and generally have terms of five, 10 or 15 years. Our home equity lines of credit have adjustable rates of interest, which are adjusted monthly to a rate equal to a percentage above the Prime Rate as published by The Wall Street Journal on the last business day of the month. Home equity lines of credit have a maturity of 40 years with a five-year draw period.

          Commercial and Multi-Family Real Estate Loans. In 1999, we began to expand our loan product line to include commercial real estate and commercial business lending in our primary market area in order to diversify our portfolio and better serve our primary market base. We now offer commercial real estate loans, including commercial business, and multi-family real estate loans that are generally secured by five or more unit apartment buildings and properties used for business purposes such as small office buildings or retail facilities substantially all of which are located in our primary market area. We have placed increasing emphasis on commercial real estate loans over the past several years. As a result, these loans have grown from $5.0 million at December 31, 2005 to $8.9 million at December 31, 2007. At December 31, 2007, commercial and multi-family real estate loans represented 16.2% of our loan portfolio. We intend to grow further these segments of our loan portfolio, both in absolute terms and as a percentage of our loan portfolio.

          We typically offer adjustable rate commercial and multi-family real estate loans with terms of up to 20 years. Interest rates on our commercial and multi-family real estate loans adjust annually from the outset of the loan or after a five-year initial fixed rate period. In general, rates on commercial and multi-family real estate loans are initially priced at a percentage above the corresponding Federal Home Loan Bank borrowing rate and, thereafter, interest rate adjustments are based upon a percentage above either the Prime Rate published by The Wall Street Journal on the last business day of the month or the corresponding Federal Home Loan Bank borrowing rate. Commercial and multi-family real estate loan amounts generally do not exceed 80% of the lesser of the property’s appraised value or sales price.

          We generally require title insurance for commercial and multi-family real estate loans, an appraisal on all such loans if the total amount of loans with that borrower is in excess of $250,000, and an evaluation of the property by an approved appraiser for loans between $100,000 and $250,000. We may require a full appraisal on property securing any loan less than $250,000.

          In reaching a decision on whether to make a multi-family or commercial real estate loan, we consider the net operating income of the property, the borrower’s expertise and credit history, and the profitability of the underlying business and the value of the underlying property. In addition, with respect to real estate rental properties, we will also consider the term of the lease and the quality of the tenants. We generally require that the properties securing these real estate loans have debt service coverage ratios (the ratio of earnings before debt service to debt service) of at least 1.2 times. Generally, multi-family and commercial real estate

43

loans made to corporations, partnerships and other business entities require the principals to execute the loan agreements in their individual capacity as well as signing on behalf of such business entity.

          A commercial borrower’s financial information is monitored on an ongoing basis by requiring periodic financial statement updates, payment history reviews and periodic face-to-face meetings with the borrower. We generally require commercial borrowers to provide federal tax returns and financial statements annually. These requirements also apply to the individual principals of our commercial borrowers. We may require borrowers with rental investment property to provide an annual report of income and expenses for the property, including a tenant list and copies of leases, as applicable.

          Loans secured by commercial real estate, including multi-family properties, generally involve larger principal amounts and a greater degree of risk than one- to four-family residential mortgage loans. Because payments on loans secured by commercial real estate, including multi-family properties, are often dependent on successful operation or management of the properties, repayment of such loans may be affected by adverse conditions in the real estate market or the economy.

          At December 31, 2007, our largest commercial real estate loan was for $460,995 and was secured by real estate in Lisbon Falls, Maine. This loan was performing according to its original repayment terms at December 31, 2007 and was paid in full in January 2008. At December 31, 2007, our largest multi-family real estate loan was for $222,989, was secured by real estate in Poland, Maine and was performing according to its original repayment terms at December 31, 2007. For more information on our commercial and multi-family real estate loans, see “Risk Factors—Our increased emphasis on commercial and construction lending may expose us to increased lending risks.”

          Construction Loans. We also offer construction loans for the development of one- to four-family residential properties located in our primary market area. Residential construction loans are generally offered to individuals for construction of their personal residences. Our construction loans were $2.6 million at December 31, 2005 as compared to $2.4 million at December 31, 2007. At December 31, 2007, residential construction loans represented 4.3% of our loan portfolio. At December 31, 2007, the unadvanced portion of these construction loans totaled $707,000.

          Our residential construction loans generally provide for the payment of interest only during the construction phase, which is usually six months. In the case of construction loans to individuals for the construction of their primary residences, our policies require that the loan convert to a permanent mortgage loan at the end of the construction phase. Residential construction loans can be made with a maximum loan-to-value ratio of 95%, provided that the borrower obtains private mortgage insurance on the loan if the loan balance exceeds 80% of the appraised value of the secured property.

          At December 31, 2007, the largest outstanding residential construction loan commitment was for $375,000 of which $176,898 was outstanding. This loan was performing according to its terms at December 31, 2007. Residential construction loans are generally made on the same terms as our one- to four-family mortgage loans.

          Before making a commitment to fund a residential construction loan, we require an appraisal on the property by an independent licensed appraiser. We also review and inspect each property before disbursement of funds during the terms of the construction loan. Loan proceeds are disbursed after inspection based on the percentage of completion method.

          Construction and development financing is generally considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at

44

completion of construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction cost proves to be inaccurate, we may be required to advance funds beyond the amount originally committed in order to protect the value of the property. Additionally, if the estimate of value proves to be inaccurate, we may be confronted with a project, when completed, having a value which is insufficient to assure full repayment.

          Commercial Loans. We make commercial business loans primarily in our market area to a variety of small businesses, professionals and sole proprietorships. Our commercial business loan portfolio has grown from $1.3 million at December 31, 2005 to $1.4 million at December 31, 2007. At December 31, 2007, commercial business loans represented 2.6% of our loan portfolio. We intend to grow further these segments of our loan portfolio, both in absolute terms and as a percentage of our loan portfolio.

          Commercial lending products include term loans and revolving lines of credit. The maximum amount of a commercial business loan is limited by our loans-to-one-borrower limit of 15% of unimpaired capital, which at December 31, 2007 was $718,000. Commercial business loans are generally used for longer-term working capital purposes such as purchasing equipment or furniture. Commercial loans are made with either adjustable or fixed rates of interest. Adjustable rate loans are based on the Prime Rate, as published in The Wall Street Journal, plus a margin. The rate adjusts monthly from the outset of the loan. Our adjustable rate commercial business loans amortize over terms up to 15 years and may carry prepayment penalties. Fixed rate commercial loans are set at percentage above either the corresponding Federal Home Loan Bank borrowing rate or the Prime Rate.

          When making commercial loans, we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities of the borrower, the projected cash flows of the business and the value of the collateral. Commercial loans are generally secured by a variety of collateral, primarily accounts receivable, inventory and equipment, and we also require the business principals to execute such loans in their individual capacities. Depending on the amount of the loan and the collateral used to secure the loan, commercial loans are made in amounts of up to 50-80% of the value of the collateral securing the loan, or up to 100% of the value of the collateral securing the loan if the collateral consists of cash or cash equivalents. We generally do not make unsecured commercial loans. We require adequate insurance coverage including, where applicable, title insurance, flood insurance, builder’s risk insurance and environmental insurance.

          Commercial loans generally have greater credit risk than residential mortgage loans. Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial loans generally are made on the basis of the borrower’s ability to repay the loan from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself. Further, any collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. We seek to minimize these risks through our underwriting standards.

          At December 31, 2007, our largest commercial business loan was a $150,000 line of credit secured by equipment, machinery and other business assets located in our primary market area. This loan was performing according to its terms at December 31, 2007. For more information on our commercial business loans, see “Risk Factors—Our increased emphasis on commercial and construction lending may expose us to increased lending risks.”

          Consumer Loans. We offer a limited range of consumer loans, primarily to our customers residing in our primary market area. Our consumer loans generally consist of loans on new and used

45

automobiles, loans secured by deposit accounts and unsecured personal loans. As of December 31, 2007, these loans totaled $552,000, or 1.0% of our loan portfolio.

          Our automobile loans have fixed interest rates and generally have terms up to five years for new automobiles and four years for used automobiles. We will generally offer automobile loans with a maximum loan-to-value ratio of 80% of the base vehicle price plus accessories or, if less for used cars, the average retail value taken form a current month’s issue of the “NADA Used Car Guide.”

          The procedures for underwriting consumer loans include an assessment of the applicant’s payment history on other debts and ability to meet existing obligations and payments on the proposed loan. Although the applicant’s creditworthiness is a primary consideration, the underwriting process also includes a comparison of the value of the collateral, if any, to the proposed loan amount.

          Consumer loans may entail greater risk than do residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as motor vehicles. In the latter case, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower. Consumer loan collections depend on the borrower’s continuing financial stability, and therefore are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

          Origination, Sale and Servicing of Loans. We originate real estate and other loans through marketing efforts, our customer base, walk-in customers and referrals from real estate brokers, builders and attorneys. We generally do not purchase loans or participation interests in loans.

          Since 2000, we have sold a portion of the fixed-rate one- to four-family mortgages that we originate to the Federal Home Loan Bank of Boston. We generally make decisions regarding the amount of loans that we wish to sell based on an evaluation of asset/liability position and similar factors. See “Management’s Discussion and Analysis – Management of Market Risk.” During the six months ended December 31, 2007 and fiscal year 2007, we sold $0.3 million and $2.5 million, respectively, in loans to the Federal Home Loan Bank of Boston. We retained servicing on all but one of those loans. At December 31, 2007, we serviced $9.5 million of mortgage loans that were sold by us to the Federal Home Loan Bank of Boston.

          We account for the sale of participation interests in loans in accordance with paragraphs 9 to 11 of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets.” In accordance with SFAS No. 140, we account for a transfer of financial assets, or a portion of a financial asset, as a sale when we surrender control of the transferred assets. Servicing rights and other retained interests in the sold assets are recorded by allocating the previously recorded investment between the assets sold and interest retained based on their relative fair values at the date of transfer. We determine the fair values of servicing rights and other retained interests at the date of transfer using a method that approximates the present value of estimated future cash flows, using assumptions that market participants would use in their estimates of values.

46

          The following table shows our loan originations, sales and repayment activities for the periods indicated.

	Six Months Ended December 31,			Fiscal Year Ended June 30,
	2007			2007			2006
	(Dollars in Thousands)
Originations by type:
Adjustable rate:
Mortgage loans:
One- to four-family residential	$	590		$	1,498		$	1,333
Commercial		1,689			2,666			2,175
Construction		—			—			—
Equity Lines of Credit		345			586			1,489
Undisbursed portion of construction loan		—			—			—
Commercial loans		238			566			1,190
Consumer loans		—			—			—
Total adjustable rate	$	2,862		$	5,316		$	6,187
Fixed rate:
Mortgage loans:
One- to four-family residential		1,606			3,637			8,134
Commercial		—			150			—
Construction		1,874			1,406			4,352
Equity Lines of Credit		1,100			3,433			3,418
Undisbursed portion of construction loan		(584	)		778			(449	)
Commercial loans		—			—			—
Consumer loans		212			297			365
Total fixed rate	$	4,208		$	9,701		$	15,820
Sales and repayments:
Sales and loan participations sold		324			2,464			1,499
Principal repayments		5,038			13,610			14,727
Total reductions		5,362			16,074			16,226
Net increase (decrease)	$	1,708		$	(1,057	)	$	5,781

          Loan Approval Procedures and Authority. Our lending activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by the board of directors of Auburn Savings Bank. The board of directors has granted loan approval authority to certain officers up to prescribed individual limits based on the type and amount of the loan request, whether the loan is secured or unsecured, and the officer’s position at Auburn Savings Bank. Residential mortgage loans over $225,000, home equity loans over $125,000, commercial mortgage loans over $300,000, secured commercial business loans over $125,000 and unsecured commercial business loans over $5,000 must be approved by the management loan committee of Auburn Savings Bank, which consists of the President, Senior Loan Officer and Commercial Loan Officer. Residential mortgage loans over $300,000, home equity loans over $150,000, commercial mortgage loans over $400,000, secured commercial business loans over $150,000 and unsecured commercial business loans over $20,000 must be approved by either the loan committee of the board of directors or the full board of directors of Auburn Savings Bank based upon the type and amount of the loan request.

          Loans to One Borrower. The maximum amount that we may lend to one borrower and the borrower’s related entities is limited by regulation, generally to 15% of our unimpaired capital and reserves. At December 31, 2007, our regulatory limit on loans to one borrower was $718,000. At that date, our largest lending relationship was $661,064 and was secured by multi-family real estate located in our primary market area. As a result of the stock offering, we expect our regulatory loans to one borrower limit will increase. At the midpoint of the offering range, our pro forma lending limit on loans to one borrower will be increased to approximately $944,000.

47

          Loan Commitments. We issue commitments for fixed- and adjustable-rate mortgage loans conditioned upon the occurrence of certain events. Commitments to originate mortgage loans are legally binding agreements to lend to our customers. Generally, our loan commitments expire after 45 days.

          Loan Maturity. The following tables set forth certain information at June 30, 2007 regarding the dollar amount of loan principal repayments becoming due during the periods indicated. The tables do not reflect scheduled principal payments, unscheduled prepayments, or the ability of certain loans to reprice prior to maturity dates. Demand loans, loans having no stated repayment schedule, and overdraft loans are reported as being due in one year or less.

48

	Mortgage loans
	One- to four-family Residential					Commercial					Construction					Equity Lines of Credit					Undisbursed Portion of Construction Loan						Commercial					Consumer					Total
	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount			Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
	(Dollars in Thousands)
Due
Within 1 year	$	12		7.71	%	$	—		—	%	$	1,041		8.55	%	$	2,969		8.71	%	$	(123	)		8.03	%	$	744		9.24	%	$	15		14.05	%	$	4,658		8.76	%
After 1 year through 3 years		37		7.65	%		—		—	%		—		—	%		181		5.88	%		—			—	%		44		7.48	%		89		9.65	%		351		7.22	%
After 3 years through 5 years		27		7.42	%		294		8.76	%		—		—	%		674		5.93	%		—			—	%		358		7.42	%		127		7.88	%		1,480		7.05	%
After 5 years through 10 years		571		7.68	%		4,796		8.06	%		—		—	%		3,024		5.34	%		—			—	%		111		7.71	%		129		8.73	%		8,631		7.09	%
After 10 years though 15 years		4,646		5.97	%		399		8.70	%		—		—	%		4,258		6.70	%		—			—	%		—		—	%		33		9.31	%		9,336		6.43	%
After 15 years		26,524		6.44	%		2,064		6.77	%		—		—	%		—		—	%		—			—	%		—		—	%		108		9.10	%		28,696		6.47	%
Total	$	31,817		6.39	%	$	7,553		7.77	%	$	1,041		8.55	%	$	11,106		6.81	%	$	(123	)		8.03	%	$	1,257		8.52	%	$	501		8.97	%	$	53,152		6.79	%

49

          The following tables sets forth the scheduled repayments of fixed- and adjustable-rate loans at June 30, 2007 that are contractually due after June 30, 2008.

	Due after June 30, 2008
	Fixed		Adjustable		Total
June 30, 2007	(Dollars in Thousands)
Mortgage loans	$	30,776	$	16,719	$	47,495
Commercial loans		381		132		513
Consumer loans		485		0		486
Total loans	$	31,643	$	16,851	$	48,494

Asset Quality

          General. One of our most important operating objectives is to maintain a high level of asset quality. Management uses a number of strategies in furtherance of this goal including maintaining sound credit standards in loan originations, monitoring the loan portfolio through internal and third-party loan reviews, and employing active collection and workout processes for delinquent or problem loans.

          Delinquency Procedures. Management performs a monthly review of all delinquent loans. The actions taken with respect to delinquencies vary depending upon the nature of the delinquent loans and the period of delinquency. When a borrower fails to make a required payment on a loan, we attempt to cause the delinquency to be cured by contacting the borrower. A late notice is generated and is sent to all mortgage loans 15 days delinquent and to all consumer loans 15 days delinquent. The borrower is contacted by the collections officer between 30 and 45 days after the due date of all loans. Another late notice along with any required demand letters as set forth in the loan contract are sent up to 90 days after the due date. Additional written and verbal contacts may be made with the borrower between 60 and 90 days after the due date. If the delinquency is not cured by the 91^st day, the customer is normally provided 30 days written notice that the account will be referred to counsel for collection and foreclosure, if necessary. If it becomes necessary to foreclose, the property is sold at public sale and we may bid on the property to protect our interest. The decision to foreclose is made by our Senior Loan Officer.

          Non-Performing Assets. The table below sets forth the amounts and categories of non-performing assets in our loan portfolio at the dates indicated. Loans are placed on non-accrual status when reasonable doubt exists as to the full timely collection of interest and principal or when a loan becomes 90 days past due unless an evaluation clearly indicates that the loan is well-secured and in the process of collection. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Interest received on nonaccrual loans generally is applied against principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt.

          Real estate we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned until it is sold. When property is acquired, it is recorded at the lower of its cost, which is the unpaid balance of the loan plus foreclosure costs, or fair market value at the date of foreclosure. Holding costs and declines in fair market value after acquisition of the property result in charges against income. At each of the dates presented below, we did not have any troubled debt restructurings that involve forgiving a portion of interest or principal on any loans or making loans at a rate materially less than that of market rates or any accruing loans past due 90 days or more.

50

	At December 31,			At June 30,
	2007			2007			2006
	(Dollars in Thousands)
Non-accrual loans:
Mortgage loans	$	—		$	—		$	95
Commercial loans		—			—			—
Consumer loans		—			—			—
Total nonaccrual loans	$	—		$	—		$	95
Loans greater than 90 days delinquent and still accruing:
Mortgage loans	$	—		$	—		$	—
Commercial loans		—			—			—
Consumer loans		—			—			—
Total loans greater than 90 days delinquent still accruing	$	—		$	—		$	—
Other real estate owned	$	124		$	—		$	—
Total non-performing assets	$	124		$	—		$	95
Ratios:
Non-performing loans to total loans		0.00	%		0.00	%		0.18	%
Non-performing assets to total assets		0.20	%		0.00	%		0.15	%

          There was no interest income that would have been recorded for the six months ended December 31, 2007 and fiscal 2007 had our non-accruing loans been current in accordance with their original terms, nor was there any interest income recognized on such loans for the six months ended December 31, 2007 and fiscal 2007.

          Delinquent Loans. The following table sets forth our loan delinquencies by type and amount at the dates indicated.

	At December 31,				At June 30,
	2007				2007				2006
	30-59 days past due		60-89 days past due		30-59 days past due		60-89 days past due		30-59 days past due		60-89 days past due
	(Dollars in Thousands)
Mortgage loans:
One- to four-family residential	$	95	$	—	$	215	$	102	$	364	$	—
Commercial		—		316		108		—		—		—
Construction		—		—		—		—		—		—
Equity lines of credit		—		—		13		—		58		—
Undisbursed portion of construction loan		—		—		—		—		—		—
Commercial loans		31		12		14		—		—		—
Consumer loans		—		—		2		5		7		—
Total:	$	126	$	328	$	352	$	107	$	429	$	—

Classified Assets.

          Federal regulations require us to review and classify our assets on a regular basis. In addition, the Office of Thrift Supervision has the authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the

51

weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified “loss” is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations also provide for a “special mention” category, described as assets that do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. When we classify an asset as substandard or doubtful we establish a specific allowance for loan losses. If we classify an asset as loss, we charge off an amount equal to 100% of the portion of the asset classified loss.

          The aggregate amount of our classified assets at the dates indicated were as follows:

	At December 31,		At June 30,
	2007		2007		2006
	(Dollars in Thousands)
Special Mention	$	137	$	139	$	103
Substandard		6		9		106
Doubtful		—		—		—
Loss		—		—		—
Total Classified Assets	$	143	$	148	$	209

          Other than disclosed in the table above, there were no other loans that management has serious doubts about the ability of the borrowers to comply with the present loan repayment terms and would result in disclosure as nonaccrual, 90 days past due, restructured or impaired.

          Allowance for Loan Losses. In originating loans, we recognize that losses will be experienced on loans and that the risk of loss will vary with many factors, including the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan over the term of the loan. We maintain an allowance for loan losses that is intended to absorb losses inherent in the loan portfolio, and as such, this allowance represents management’s best estimate of the probable known and inherent credit losses in the loan portfolio as of the date of the financial statements. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

          The allowance for loan losses is evaluated on a quarterly basis by management and is based on management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

          The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired, whereby an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component relates to pools of non-impaired loans and is based on historical loss experience adjusted for qualitative factors.

          A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Management considers factors including payment status,

52

collateral value, and the probability of collecting scheduled principal and interest payments when due when determining impairment. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential loans for impairment disclosures. At December 31, 2007, we had no impaired loans and no established valuation allowance.

          The Office of Thrift Supervision, as an integral part of its examination process, periodically reviews our allowance for loan losses. The Office of Thrift Supervision may require us to make additional provisions for loan losses based on their judgments of information available to them at the time of their examination.

          At December 31, 2007, our allowance for loan losses represented 0.56% of total gross loans. No portion of the allowance was allocated to problem loans at December 31, 2007. The allowance for loan losses decreased by $8,366 from June 30, 2007 to December 31, 2007 due to charge-offs of $1,342 and a refund from the provision for loan losses of $7,024. In September 2007, we revised our methodology for estimating the allowance for loan losses under the guidelines set forth in a recently-issued Interagency Policy Statement on the Allowance for Loan and Lease Losses. The decision to decrease the allowance from June 30, 2007 to December 31, 2007 reflected management calculations using those guidelines.

          At June 30, 2007, our allowance for loan losses represented 0.60 % of total gross loans. The allowance for loan losses increased by $27,108 from June 30, 2006 to June 30, 2007, due primarily to a provision for loan losses of $34,000, offset by charge-offs of $1,276. The decision to increase the allowance reflected net loan growth and the mixture of loans in our portfolio.

53

The following table sets forth activity in our allowance for loan losses for the periods indicated:

	For the Six Months Ended December 31,			For the Years Ended June 30,
	2007			2007			2006
	(Dollars in Thousands)
Balance at beginning of period	$	318		$	290		$	238
Charge-offs:
Mortgage loans:
One- to four- family residential		—			—			(10	)
Commercial		—			—			—
Construction		—			—			—
Equity Lines of Credit		—			—			—
Undisbursed portion of construction loan		—			—			—
Commercial loans		(2	)		—			—
Consumer loans		—			(1	)		—
Total Charge-offs		(2	)		(1	)		(10	)
Recoveries:
Mortgage loans:		—			—			—
One- to four- family residential		—			—			—
Commercial		—			—			—
Construction		—			—			—
Equity Lines of Credit		—			—			—
Undisbursed portion of construction loan		—			—			—
Commercial loans		—			—			—
Consumer loans		—			—			—
Total recoveries		—			—			—
Net charge-offs		(2	)		(1	)		(10	)
Provision for loan loss		(7	)		34			62
Reclassification		—			(5	)		—
Balance at end of period	$	309		$	318		$	290
Ratios:
Net charge-offs to average loans outstanding		0.004	%		0.002	%		0.020	%
Allowance for loan losses to non-performing loans at end of period		NM			NM			NM
Allowance for loan losses to total loans at end of period		0.56	%		0.60	%		0.54	%

54

          The following table sets forth the allowance for loan losses by loan category, the total loan balances by category, and the percent of loans in each category to total loans at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

	At December 31,								At June 30,
	2007								2007								2006
	Allowance for Loan Losses		Loan Balance by Category			% of Loans in each Category to Total Loans			Allowance for Loan Losses		Loan Balance by Category			% of Loans in each Category to Total Loans			Allowance for Loan Losses		Loan Balance by Category			% of Loans in each Category to Total Loans
	(Dollars in Thousands)
Mortgage loans:
One- to four-family residential	$	130	$	31,424			57.3	%	$	137	$	31,817			59.9	%	$	134	$	33,366			61.6	%
Commercial		90		8,901			16.2			77		7,553			14.2			58		6,211			11.5
Construction		10		2,359			4.3			6		1,041			1.9			14		3,245			6.0
Equity Lines of Credit		55		10,887			19.9			74		11,106			20.9			61		10,371			19.1
Undisbursed portion of construction loan		0		(707	)		(1.3	)		0		(123	)		(0.2	)		0		(902	)		(1.7	)
Commercial loans		20		1,443			2.6			19		1,257			2.4			21		1,374			2.5
Consumer loans		4		552			1.0			5		501			0.9			3		542			1.0
Total loans	$	309	$	54,859			100.0	%	$	318	$	53,152			100.0	%	$	291	$	54,207			100.0	%

          Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while we believe we have established our allowance for loan losses in conformity with U.S. generally accepted accounting principles, there can be no assurance that regulators, in reviewing our loan portfolio, will not require us to increase our allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

Investment Activities

          We have legal authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various federal agencies and of state and municipal governments, mortgage-backed securities and certificates of deposit of federally insured institutions, overnight and short-term loans to other banks, corporate debt instruments and Fannie Mae and Freddie Mac equity securities. Within certain regulatory limits, we also may invest a portion of our assets in corporate securities and mutual funds. We also are required to maintain an investment in Federal Home Loan Bank of Boston stock.

          At December 31, 2007, our available for sale investment portfolio totaled $1.7 million, or 2.7% of total assets. We also held $1,965,000 in certificates of deposit and $901,000 in Federal Home Loan Bank of Boston stock at December 31, 2007. Our available for sale investment portfolio at December 31, 2007, at amortized cost, consisted of $987,000 in corporate debt obligations, $537,000 of mortgage-backed securities, $120,000 of two SBA pool securities and$90,000 in Fannie Mae and Freddie Mac common stock.

          Our investment objectives are to maintain high asset quality, provide and maintain liquidity, to establish an acceptable level of interest rate and credit risk, to provide an alternate source of low-risk investments when demand for loans is weak and to generate a favorable return. Our board of directors has the overall responsibility for the investment portfolio, including approval of our investment policy. The board of directors is also responsible for implementation of the investment policy and monitoring our investment performance. Our board of directors reviews the status of our investment portfolio on a monthly basis, or more frequently if warranted.

55

          The following table sets forth certain information regarding the amortized cost and market values of our securities available for sale at the dates indicated:

	At December 31,				At June 30,
	2007				2007				2006
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in Thousands)
Securities available for sale:
U.S. Government-sponsored enterprise obligations	$	—	$	—	$	650	$	648	$	650	$	641
Corporate bonds and other obligations		987		979		999		992		1,000		977
SBA pool securities		120		116		123		122		182		180
Mortgage-backed securities		537		538		611		603		858		829
Total debt securities		1,644		1,633		2,383		2,365		2,690		2,627
U.S. Government-sponsored enterprise securities		90		74		—		—		134		96
Preferred stock		—		—		—		—		750		732
Total marketable equity securities		90		74		—		—		884		828
Total securities available for sale	$	1,734	$	1,707	$	2,383	$	2,365	$	3,574	$	3,455

          We do not have any securities of one issuer the aggregate book value of which exceeds 10% of stockholders’ equity.

56

          The table below sets forth certain information regarding the amortized cost, weighted average yields and contractual maturities of the Bank’s debt securities portfolio at December 31, 2007. In the case of mortgage-backed securities, this table does not reflect scheduled principal payments, unscheduled prepayments, or the ability of certain of these securities to reprice prior to their contractual maturity:

	One Year or Less					More than One Year Through Five Years					More than Five Years Through Ten Years
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield
	(Dollars in Thousands)
U.S. Government-sponsored enterprise obligations	$	—		0.00	%	$	—		0.00	%	$	—		0.00	%
Corporate bonds and other obligations		499		3.93	%		488		4.13	%		—		0.00	%
SBA pool securities		—		0.00	%		—		0.00	%		11		8.13	%
Mortgage-backed securities		—		0.00	%		400		5.10	%		—		0.00	%
Total debt securities	$	499				$	888				$	11

	More than Ten Years					Total Securities
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield
	(Dollars in Thousands)
U.S. Government-sponsored enterprise obligations	$	—		0.00	%	$	—		0.00	%
Corporate bonds and other obligations		—		0.00	%		987		4.03	%
SBA pool securities		109		7.63	%		120		7.67	%
Mortgage-backed securities		137		6.69	%		537		5.47	%
Total debt securities	$	246				$	1,644

57

          Auburn Savings Bank does not have any interest-bearing assets that would be classified as non-accrual or past due if they were loans.

Sources of Funds

          General. Deposits, borrowings and loan repayments are the major sources of our funds for lending and other investment purposes. Scheduled loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general interest rates and money market conditions.

          Deposit Accounts. Most of our consumer and commercial deposits are gathered from our primary market area through the offering of a broad selection of deposit instruments, including interest-bearing demand accounts (such as NOW and money market accounts), savings accounts and certificates of deposit. In addition to accounts for individuals, we also offer business advantage and commercial checking accounts designed for the businesses operating in our market area. We have never and currently do not have any brokered deposits.

          Deposit account terms vary according to the minimum balance required, the time periods the funds must remain on deposit and the interest rate, among other factors. In determining the terms of our deposit accounts, we consider the rates offered by our competition, our liquidity needs, profitability to us, and customer preferences and concerns. We generally review our deposit mix and pricing weekly. Our deposit pricing strategy has generally been based on current market conditions, demand for loans, liquidity levels and FHLB advance rates.

          The following tables set forth certain information relative to the composition of our average deposit accounts and the weighted average interest rate on each category of deposits:

	Six Months Ended December 31,
	2007
	Average Balance		Percent			Weighted Average Rate
	(Dollars in Thousands)
Deposit type:
Demand deposits	$	2,563		5.66	%		0.00	%
Savings deposits		2,539		5.61	%		0.84	%
Money Market		9,283		20.51	%		3.36	%
NOW accounts		1,942		4.28	%		0.89	%
Total transaction accounts	$	16,327		36.06	%		2.14	%
Certificates of deposit		28,944		63.94	%		4.78	%
Total deposits	$	45,271		100.00	%		3.83	%

	Years Ended June 30,
	2007								2006
	Average Balance		Percent			Weighted Average Rate			Average Balance		Percent			Weighted Average Rate
	(Dollars in Thousands)
Deposit type:
Demand deposits	$	2,840		6.40	%		0.00	%	$	3,105		7.28	%		0.00	%
Savings deposits		2,662		6.00	%		0.83	%		2,957		6.93	%		0.85	%
Money Market		9,505		21.43	%		3.43	%		10,342		24.23	%		2.50	%
NOW accounts		1,627		3.67	%		0.55	%		1,158		2.71	%		0.46	%
Total transaction accounts	$	16,634		37.50	%		2.15	%	$	17,562		41.15	%		1.65	%
Certificates of deposit		27,726		62.50	%		4.55	%		25,116		58.85	%		3.60	%
Total deposits	$	44,360		100.00	%		3.65	%	$	42,678		100.0	%		2.80	%

          The following table sets forth the deposit activities for the periods indicated.

	Six Months Ended December 31,			Fiscal Year Ended June 30,
	2007			2007			2006
	(Dollars in Thousands)
Beginning balance	$	44,879		$	45,009		$	41,478
Net deposits (withdrawals) before interest credited		(756	)		(1,749	)		2,338
Interest credited		867			1,619			1,193
Net increase (decrease) in deposits		111			(130	)		3,531
Ending balance	$	44,990		$	44,879		$	45,009

58

          As of December 31, 2007, the aggregate amount of outstanding certificates of deposit in amounts greater than or equal to $100,000 was approximately $10.8 million. The following table sets forth the maturity of those certificates as of December 31, 2007:

	At December 31, 2007
	(Dollars in Thousands)
Three months or less	$	3,311
Over three months through six months		2,707
Over six months through one year		3,749
Over one year through three years		907
Over three years		100
Total	$	10,774

          The following table sets forth the time deposits of Auburn Savings Bank classified by interest rate as of the dates indicated:

	At December 31,		At June 30,
	2007		2007		2006
	(Dollars in Thousands)
Interest Rate:
Less than 2%	$	—	$	—	$	—
2.00% - 2.99%		11		39		1,285
3.00% - 3.99%		4,541		5,805		10,006
4.00% - 4.99%		13,831		7,384		12,397
5.00% - 5.99%		11,332		14,624		1,962
6.00% and above		—		54		110
Total	$	29,715	$	27,906	$	25,760

          The following table sets forth the amount and maturities of time deposits at December 31, 2007:

	At December 31, 2007
	Period to Maturity
	Less than One Year		One to Two Years		Two to Three Years		More than Three Years		Total		Percent of Total
	(Dollars in Thousands)
Interest Rate Range:
2.00% and below	$	—	$	—	$	—	$	—	$	—		0.00	%
2.01% to 3.00%		11		—		—		—		11		0.04
3.01% to 4.00%		3,868		647		101		41		4,657		15.67
4.01% to 5.00%		12,052		246		1,112		305		13,715		46.15
5.01% to 6.00%		9,533		1,799		—		—		11,332		38.14
6.01% and above		—		—		—		—		—		0.00
Total	$	25,464	$	2,692	$	1,213	$	346	$	29,715		100.00	%

          Borrowings. We utilize advances from the Federal Home Loan Bank of Boston to supplement our investable funds. The Federal Home Loan Bank functions as a central reserve bank providing credit for member financial institutions. As a member, we are required to own capital stock in the Federal Home Loan Bank and are authorized to apply for advances on the security of such stock and certain of our mortgage loans and other assets (principally securities that are obligations of, or guaranteed by, the United States), provided certain standards related to creditworthiness have been met. Advances are made under several different programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s net worth or on the Federal Home Loan Bank’s assessment of the institution’s creditworthiness.

          The following table sets forth information concerning balances and interest rates on our Federal Home Loan Bank of Boston advances at the dates and for the periods indicated.

59

	At or For the Six Months Ended December 31,						At or For the Fiscal Years Ended June 30,
	2007						2007						2006
	Long-Term Borrowings			Short-Term Borrowings(1)			Long-Term Borrowings			Short-Term Borrowings(1)			Long-Term Borrowings			Short-Term Borrowings(1)
	(Dollars in Thousands)
Balance at end of period	$	13,650		$	—		$	12,900		$	—		$	12,750		$	2,000
Average balance during period	$	12,921		$	—		$	11,765		$	1,313		$	13,081		$	354
Maximum outstanding at any month end	$	13,650		$	—		$	13,650		$	2,500		$	13,400		$	1,500
Weighted average interest rate at end of period		5.29	%		—	%		5.35	%		—	%		5.07	%		5.11	%
Average interest rate during period		5.32	%		—	%		5.32	%		5.36	%		5.14	%		4.99	%

(1) Represents short-term borrowings of less than one year.

Properties

          We conduct our business through our main office in Auburn, Maine and our branch office in Lewiston, Maine, both of which we own. The following is a list of our locations:

Location	Year Acquired		Net Book Value at December 31, 2007
	(Dollars in Thousands)
256 Court Street Auburn, ME 04212		1957	$	569
325 Sabattus St. Lewiston, ME 04240		2003	$	1,277

          The net book value of our land, buildings, furniture, fixtures and equipment was $2.0 million as of December 31, 2007.

Personnel

          As of December 31, 2007, we had 16 full-time employees and one part-time employee, none of whom is represented by a collective bargaining unit. We believe our relationship with our employees is good.

Legal Proceedings

          Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

Subsidiaries

          Auburn Savings Bank, FSB does not have any subsidiaries.

60

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

          This section is intended to help potential investors understand our views on our results of operations and financial condition. You should read this discussion in conjunction with the financial statements and notes to the financial statements that appear at the end of this prospectus.

Overview

          Our principal business is to acquire deposits from individuals and businesses in the communities surrounding our offices and to use these deposits to fund loans. We focus on providing our products and services to two segments of customers: individuals and businesses.

          Income. Our primary source of income is net interest income. Net interest income is the difference between interest income, which is the income that we earn on our loans and investments, and interest expense, which is the interest that we pay on our deposits and borrowings. Changes in levels of interest rates affect our net interest income. Short-term interest rates (which influence the rates we pay on deposits) have until recently increased, while longer-term interest rates (which influence the rates we earn on loans) have not. The narrowing of the spread between the interest we earn on loans and investments and the interest we pay on deposits has negatively affected our net interest income. A secondary source of income is non-interest income, which includes revenue that we receive from providing products and services. The majority of our non-interest income generally comes from loan service charges and service charges on deposit accounts.

          Allowance for Loan Losses. The allowance for loan losses is a valuation allowance for possible losses inherent in the loan portfolio. We evaluate the need to establish allowances against losses on loans on a regular basis. When additional allowances are necessary, a provision for loan losses is charged to earnings.

          Expenses. The non-interest expenses we incur in operating our business consist of expenses for salaries and employee benefits, occupancy and equipment, data processing, marketing and advertising, professional services and various other miscellaneous expenses. Our largest non-interest expense is salaries and employee benefits, which consist primarily of salaries and wages paid to our employees, payroll taxes, and expenses for health insurance, retirement plans and other employee benefits. Following the stock offering, we will recognize additional annual employee compensation expenses stemming from the adoption of new equity benefit plans. We cannot determine the actual amount of these new stock-related compensation and benefit expenses at this time because applicable accounting practices require that they be based on the fair market value of the shares of common stock at specific points in the future. For an illustration of these expenses, see “Pro Forma Data.” 

          Following completion of the reorganization and stock offering, we will incur additional non-interest expenses as a result of operating as a public company. These additional expenses will consist primarily of legal and accounting fees and expenses of stockholder communications and meetings.

Critical Accounting Policies

          We consider accounting policies that require management to exercise significant judgment or discretion, or make significant assumptions that have or could have a material impact on the carrying value of certain assets or on income, to be critical accounting policies. We consider the following to be our critical accounting policies:

61

          Allowance for loan losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based on management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

          The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired, whereby an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component relates to pools of non-impaired loans and is based on historical loss experience adjusted for qualitative factors.

          A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Management considers factors including payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due when determining impairment. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential loans for impairment disclosures.

          Actual loan losses may be significantly more than the allowance we have established, which could have a material negative effect on our financial results.

          Securities. We classify our investments as available for sale. These assets are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income or loss. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of investment securities available for sale below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (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) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

          Loans. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

62

          Loans past due 30 days or more are considered delinquent. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in process of collection. Consumer loans are typically charged off when they are no more than 180 days past due. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

          All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. Cash payments on these loans are applied to principal balances until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Operating Strategy

          Our mission is to operate and grow a profitable community-oriented financial institution. We plan to achieve this by executing on our strategy of:

• Remaining a community-oriented institution;

• Continuing to use conservative underwriting practices to maintain the high quality of our loan portfolios.

• Building core and other deposits;

• Continuing to grow our commercial real estate and commercial business loan portfolios; and

• Continuing to emphasize the origination of one- to four-family residential real estate lending;

          Remaining a community-oriented institution. We were established in Auburn, Maine in 1887 and have been operating continuously since that time. We have been, and continue to be, committed to meeting the financial needs of the communities in which we operate and remain dedicated to providing customer service as a means to attract and retain customers. We deliver personalized service and respond promptly to customer needs and inquiries. We believe that our community orientation is attractive to our customers and distinguishes us from the larger banks that operate in our area.

          Continue to use conservative underwriting practices to maintain the high quality of our loan portfolio. We believe that maintaining high asset quality is a key to long-term financial success. We have sought to grow our loan portfolio while keeping nonperforming assets to a minimum. We use underwriting standards that we believe are conservative, and we diligently monitor collection efforts. At December 31, 2007, we did not have any nonperforming loans in our total loan portfolio and had only one repossessed asset for $124,000. Although we intend to continue our efforts to originate commercial and multi-family loans after the stock offering, we intend to maintain our philosophy of managing loan exposure through our conservative approach to lending.

          Building Core and Other Deposits. We offer checking accounts, NOW accounts and savings accounts, which generally are lower-cost sources of funds than certificate of deposits and are less sensitive to withdrawal when interest rates fluctuate. In order to build our core deposit base, we intend to continue to offer a broad range of deposit products. As we grow our commercial loan portfolio, we

63

expect to attract core deposits from our new commercial loan customers. We also intend to allocate additional marketing funds for advertisements targeted toward core deposit growth.

          Continuing to grow our commercial real estate and commercial business loan portfolios. Our business plan anticipates that we will emphasize originating commercial real estate and commercial business loans. These loans provide higher returns than loans secured by one- to four-family real estate. Commercial real estate and commercial business loans, however, involve a greater degree of credit risk than one- to four-family residential mortgage loans. Because payments on these loans are often dependent on the successful operation or management of the properties or business, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. Commercial loans, including both commercial real estate and commercial business loans, increased $1.5 million, or 17.4%, from June 30, 2007 to December 31, 2007 and at December 31, 2007 comprised approximately 18.9% of total loans. As commercial development of industrial parks, new office space and retail shopping areas in Lewiston and Auburn creates new jobs and supports new and existing small businesses, we anticipate that there will be many commercial real estate and commercial business loan opportunities that we may pursue with what we believe are our conservative underwriting guidelines. We believe that our customer service in the commercial loan area will distinguish us from the larger banks that operate in this area.

          Continue to emphasize the origination of one- to four-family residential real estate lending. Our primary lending activity is the origination of residential real estate loans secured by homes in our market area. We intend to continue emphasizing the origination of residential real estate loans after completion of the stock offering. At December 31, 2007, 57.3% of our total loans were one- to four-family residential real estate loans. We believe our emphasis on residential real estate lending, which carries a lower credit risk than commercial and multi-family real estate lending, contributes to our high asset quality.

Comparison of Financial Condition at December 31, 2007 and June 30, 2007

          Total Assets. Total assets increased by $1.1 million, or 1.68%, from $62.4 million at June 30, 2007 to $63.5 million at December 31, 2007. This increase was largely the result of an increase in the number and dollar value of total loans.

          Cash and Cash Equivalents. Cash and correspondent bank balances increased by $370,000, or 41.9%, from $885,000 at June 30, 2007 to $1.3 million at December 31, 2007. This increase was primarily the result of a temporary increase in deposit balances in the Federal Reserve Bank of Boston clearing account of $439,000. Cash and short-term investments decreased by $1.5 million, or 45.6%, from $3.4 million at June 30, 2007 to $1.9 million at December 31, 2007.

          Certificates of deposit. Certificate of deposit balances at other banks increased by $1.4 million, or 230.8%, from $600,000 at June 30, 2007 to $2.0 million at December 31, 2007.

          Securities Available for Sale. The investment portfolio available for sale aggregated $1.7 million at December 31, 2007, a decrease of $658,000, or 27.8%, from $2.4 million at June 30, 2007. Within the securities portfolio, U.S. Government-sponsored enterprise obligations decreased by $648,000, partially offset by the purchase of U.S. Government-sponsored enterprise common stock securities with a fair value of $74,000. The decrease in U.S. Government-sponsored enterprise obligations was primarily related to maturity of agency bonds. Mortgage-backed securities decreased $65,000, or 10.8%, from $603,000 at June 30, 2007 to $538,000 million at December 31, 2007.

          Net Loans. Including loans held for sale, net loans increased $1.7 million, or 3.2%, from $52.8 million at June 30, 2007 to $54.5 million at December 31, 2007. Residential mortgage loans decreased

64

$393,000, or 1.2%, commercial real estate loans increased $1.3 million, or 17.8%, home equity loans decreased $219,000, or 2.0%, construction loans increased $734,000, or 80.0%, commercial loans increased $186,000, or 14.8%, consumer installment loans increased $51,000, or 10.3%.

          Deposits and Borrowed Funds. Deposits increased $111,000, from $44.9 million at June 30, 2007 to $45.0 million at December 31, 2007. Demand accounts decreased $593,000, or 21.2%, NOW accounts decreased $260,000, or 11.6%, savings accounts increased $23,000, or 0.9%, money market accounts decreased $852,000, or 9.1%, and certificates of deposits increased $1.8 million, or 6.5%. The decrease in demand accounts and NOW accounts is primarily related to an increase in the investment in higher rate certificates of deposit and the loss of a significant market deposit account customer to a brokerage firm.

          Total borrowings from the Federal Home Loan Bank of Boston increased $750,000, or 5.8%, from $12.9 million as of June 30, 2007 to $13.7 million as of December 31, 2007, as increases were used to fund growth in loans.

          Total Capital. Retained earnings increased by $137,000, comprised of net income of $84,000 and the cumulative effect of capitalizing mortgage servicing rights of $53,000, and was offset slightly by other comprehensive loss of $6,000 related to unrealized depreciation in investment securities available for sale, which led to an overall total capital increase of $131,000.

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

          Total Assets. Total assets decreased by $1.8 million, or 2.8%, from $64.2 million at June 30, 2006 to $62.4 million at June 30, 2007. This decrease in total assets resulted largely from decreases in net loans and investment securities available for sale of $2.1 million, partially offset by an increase in cash and cash equivalents of $775,000.

          Cash and Cash Equivalents. Cash and correspondent bank balances decreased by $1.6 million, or 63.9%, from $2.5 million at June 30, 2006 to $885,000 at June 30, 2007, primarily due to a decrease in deposit balances with Federal Reserve Bank of Boston of $1.0 million. Cash and short-term investments increased by $775,000, or 29.4%.

          Certificates of deposit. Certificate of deposit balances in other banks decreased by $202,000, or 25.3%, from $796,000 at June 30, 2006 to $594,000 at June 30, 2007.

          Securities Available for Sale. The investment portfolio available for sale aggregated $2.4 million at June 30, 2007, a decrease of $1.1 million, or 31.5%, from $3.5 million at June 30, 2006. The decrease was primarily related to the sale of $750,000 in Freddie Mac Preferred Stock. Mortgage-backed securities decreased $226,000, or 27.3%, from $829,000 at June 30, 2006 to $603,000 at June 30, 2007 and SBA securities decreased $60,000, or 32.8%, from $181,000 at June 30, 2006 to $121,000 at June 30, 2007. U.S. Government-sponsored enterprise obligations increased by $7,000, or 1.1%.

          Net Loans. Including loans held for sale, net loans decreased $1.1 million, or 2.0%, from $53.9 million at June 30, 2006 to $52.8 million at June 30, 2007. Residential mortgage loans decreased $1.5 million, or 4.7%, commercial real estate loans increased $1.3 million, or 21.6%, home equity loans increased $734,000, or 7.1%, construction loans decreased $1.4 million, or 60.8%, commercial loans decreased $117,000, or 8.5% and consumer installment loans decreased $42,000, or 7.7%.

          Deposits and Borrowed Funds. Deposits decreased slightly from $45.0 million at June 30, 2006 to $44.9 million at June 30, 2007. Demand accounts decreased $1.2 million, or 30.2%, NOW accounts

65

increased $1.1 million, or 81.4%, savings accounts decreased $245,000, or 8.7%, money market accounts decreased $1.8 million, or 15.9%, and certificates of deposits increased $2.1 million, or 8.3%. The decrease in demand accounts and savings accounts is primarily the result of customers transferring money into certificates of deposit with higher rates of interest.

          Total borrowings from the Federal Home Loan Bank of Boston decreased $1.9 million, or 12.5%, from $14.8 million as of June 30, 2006 to $12.9 million as of June 30, 2007. This decrease was the result of paying down Federal Home Loan Bank of Boston advances from the sale of $1.2 million in fixed rate mortgage loans and $670,000 in cash and due from bank balances.

          Total Capital. Retained earnings increased by $120,000, comprised solely of net income for the year ended June 30, 2007. Accumulated other comprehensive loss decreased from $(79,000) at June 30, 2006 to $(12,000) at June 30, 2007, a result of net unrealized gains arising during the year, which led to an overall total capital increase of $186,000.

Comparison of Operating Results For the Six Months Ended December 31, 2007 and December 31, 2006

          Net Income. Net income increased $14,000, or 20.6%, to $84,000 for the six months ended December 31, 2007 compared to $69,000 for the six months ended December 31, 2006. The increase was primarily the result of an increase in net interest income, offset by an increase in non-interest expense.

          Net Interest Income. The tables on pages [ ] set forth the components of our net interest income, yields on interest-earning assets and interest-bearing liabilities, and the effect on net interest income arising from changes in volume and rate. Net interest income increased $8,000 or 1.1%, from $792,000 in the six months ended December 31, 2006 to $800,000 in the six months ended December 31, 2007.

          The increase in volume of interest-earning assets increased interest income by $10,000, while the increase in the volume of interest-bearing liabilities increased interest expense by $10,000. The changes in volume had no effect on net interest income. Changes in rate had the effect of increasing net interest income by $8,000. The increase in net interest income attributable to higher yields on interest-earning assets totaled $60,000 compared to a $52,000 increase in net interest income attributable to higher rates on interest-bearing liabilities. Net interest margin was 2.68% for both the six months ended December 31, 2006 and for the six months ended December 31, 2007. During much of the six months ended December 31, 2007, short term interest rates remained comparatively high relative to long term rates. Management expects to see short-term interest rates decline faster than long-term rates as a result of actions taken by the Federal Reserve.

          Interest Income. Interest income increased from $1.9 million for the six months ended December 31, 2006 to $2.0 million for the six months ended December 31, 2007. This increase of $70,000, or 3.6% was due principally to increases rates. Interest income on loans increased by $49,000, or 2.7% and interest income on securities and interest-bearing deposits increased by $21,000, or 15%.

          Interest Expense. Interest expense increased by $62,000, or 5.3%, to $1.2 million for the six months ended December 31, 2007. The increase was due to an increase in deposits and an overall increase in interest rates on deposits. Average deposit balances increased $646,000, while average rates increased from 3.54% to 3.83%. Average borrowings balances decreased from $13.5 million to $13.0 million. The average rate on borrowings remained unchanged at 5.48%.

          Provision for Loan Losses. Our provision for loan losses decreased from $18,000 for the six months ended December 31, 2006 to $(7,000) for the six months ended December 31, 2007. Net loan

66

charge-offs for six months ended December 31, 2006 and 2007 were $1,200 and $1,300,respectively. The allowance for loan losses of $309,000 at December 31, 2007 represented 0.56% of total loans, as compared to an allowance of $302,000, representing 0.58% of total loans at December 31, 2006. Our analysis of the adequacy of the allowance considers economic conditions, historical losses and management’s estimate of losses inherent in the portfolio. For further discussion of our current methodology, please refer to “Our Business.”

          Non-interest Income. Total non-interest income increased $25,000, or 48.1%, to $77,000 for the six months ended December 31, 2007, as compared to $52,000 for the six months ended December 31, 2006. There was a $2,000 decrease in gains realized on the sale of fixed rate residential mortgage loans sold into the secondary market for the six months ended December 31, 2007 as compared to the six months ended December 31, 2006. This decrease was offset partially by an increase in consumer and commercial deposit fees of $8,000 and a $21,000 change in the value of our hedges.

          Non-interest Expense. Non-interest expense increased $38,000, or 5.3%, to $765,000 for the six months ended December 31, 2007 as compared to $726,000 for the six months ended December 31, 2006. The increase was primarily attributable to increases in salary and benefits, computer expense and consulting expenses of $24,000, $9,000 and $10,000, respectively. These increases were offset partially by decreases in occupancy and depreciation expenses of $12,000.

          Income Taxes. Income tax expense was $36,000 for the six months ended December 31, 2007, reflecting an effective tax rate of 29.9% compared to $30,000 for the six months ended December 31, 2006, reflecting an effective tax rate of 30.0%. The increase in income taxes was due to higher pre-tax earnings.

Comparison of Operating Results For the Years Ended June 30, 2007 and June 30, 2006

          Net Income. Net income decreased $6,000, or 4.9%, to $120,000 for the year ended June 30, 2007 compared to $126,000 for the year ended June 30, 2006. The decrease was primarily the result of an increase in non-interest income of $29,000 and a decrease in the provision for loan losses of $28,000, which were more than offset by an increase in non-interest expenses of $63,000.

          Net Interest Income. The tables on pages [ ] set forth the components of the Bank’s net interest income, yields on interest-earning assets and interest-bearing liabilities, and the effect on net interest income arising from changes in volume and rate. Net interest income increased $14,000, or 0.9%, from $1.55 million in the year ended June 30, 2006 to $1.57 million in the year ended June 30, 2007. The positive effects of an increase in volume of interest-earning assets and higher yields on interest-earning assets were partially offset by an increase in interest expense due to both an increase in volume of interest-bearing liabilities and increases in rates on interest-bearing liabilities.

          The increase in volume of interest-earning assets increased interest income by $129,000, while the increase in the volume of interest-bearing liabilities increased interest expense by $64,000. The changes in volume had the effect of increasing net interest income by $65,000. The increase in net interest income associated with volume was offset, however, by changes in rate, which had the effect of decreasing net interest income by $51,000. The increase in net interest income attributable to higher yields on interest-earning assets totaled $314,000 compared to a $365,000 increase in net interest income attributable to higher rates on interest-bearing liabilities. Net interest margin decreased from 2.73% for the year ended June 30, 2006 to 2.67% for the year ended June 30, 2007. During fiscal 2007, short-term market interest rates increased at a faster rate than did longer-term market interest rates.

67

          Interest and Dividend Income. Total interest and dividend income increased from $3.5 million for the year ended June 30, 2006 to $3.9 million for the year ended June 30, 2007. This increase of $443,000, or 12.8%, was due primarily to an increase in interest income on commercial real estate, multi-family and fixed rate home equity loans. Interest income on loans increased by $414,000, or 12.9%, and interest income on securities and interest-bearing deposits increased by $29,000, or 11.1%.

          Interest Expense. Interest expense increased by $429,000, or 22.5%, from the year ended June 30, 2006 to the year ended June 30, 2007, due primarily to rising interest rates on deposits. Average deposit balances increased $1.7 million, while average rates increased from 2.80% to 3.65%. Average borrowings decreased from $13.7 million to $13.2 million. The average rate on borrowings increased from 5.22% to 5.44%.

          Provision for Loan Losses. The Bank’s provision for loan losses decreased from $62,000 for the year ended June 30, 2006 to $34,000 for the year ended June 30, 2007. Net loan charge-offs for the years ended June 30, 2007 and 2006 were $2,000 and $10,000, respectively. The allowance for loan losses of $318,000 at June 30, 2007 represented 0.60% of total loans, as compared to an allowance of $290,000, representing 0.54% of total loans at June 30, 2006. Our analysis of the adequacy of the allowance considers economic conditions, historical losses, and management’s estimate of losses inherent in the portfolio. For further discussion of our current methodology, please refer to “Business of Auburn Savings Bank, FSB.”

          Non-interest Income. Total non-interest income increased from $83,000 for the year ended June 30, 2006 to $112,000 for the year ended June 30, 2007. The increase was due to a $21,000 increase in gains realized on the sale of loans into the secondary market for the year ended June 30, 2007, an increase of $4,000 in gains realized on the sales of investments and an increase in other non-interest income of $4,000.

          Non-interest Expense. Non-interest expense increased $63,000, or 4.5%, to $1.5 million for the year ended June 30, 2007 as compared to $1.4 million for the year ended June 30, 2006. The increase was primarily attributable to increases in employee salaries and benefits of $51,000, an increase in occupancy expense of $7,000, an increase in computer charges of $13,000 and an increase in other operating expenses of $7,000. These increases were offset partially by small decreases in depreciation, federal insurance premiums, advertising expense and consulting expense.

          Income Taxes. Income tax expense was $50,000 for the year ended June 30, 2007, reflecting an effective tax rate of 29.4%, compared $36,000 for the year ended June 30, 2006, reflecting an effective tax rate of 22.2%. The increase in income taxes was due to higher pre-tax earnings and an increase in the effective tax rate. The increase in the effective tax rate was due to the 2006 income on tax advantaged investments being higher as a percentage of pre-tax income than in 2007.

68

Analysis of Net Interest Income

          Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends upon the relative amounts of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.

          The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of deferred fees, and discounts and premiums that are amortized or accreted to interest income or expense. We do not accrue interest on loans on non-accrual status, however, the balance of these loans is included in the total average balance, which has the effect of lowering average loan yields.

69

							Six Months Ended December 31,
	At December 31, 2007
							2007								2006
	Outstanding Balance			Weighted Average Rate			Average Outstanding Balance			Interest		Yield/Rate(1)			Average Outstanding Balance			Interest		Yield/Rate(1)
	(Dollars in Thousands)
Interest-earning assets:
Loans	$	54,475			6.8	%	$	53,251		$	1,861		7.0	%	$	53,100		$	1,812		6.8	%
Investment securities(2)		2,608			5.5	%		2,837			77		5.4	%		4,333			97		4.5	%
Interest-earning deposits		2,568			4.7	%		3,563			85		4.8	%		1,667			44		5.3	%
Total interest-earning assets		59,651			6.7	%		59,651		$	2,023		6.8	%		59,100		$	1,953		6.6	%
Non-interest-earning assets		3,807						3,356								3,555
Total assets	$	63,458					$	63,007							$	62,655
Interest-bearing liabilities:
Savings deposits	$	2,609			0.8	%	$	2,539		$	11		0.8	%	$	2,746		$	12		0.8	%
NOW accounts		1,980			0.7	%		1,941			9		0.9	%		1,512			4		0.5	%
Money market accounts		8,488			3.1	%		9,284			156		3.4	%		9,982			167		3.4	%
Certificates of deposit		29,715			4.7	%		28,944			692		4.8	%		27,464			608		4.4	%
Total interest-bearing deposits		42,792			4.0	%		42,708			868		4.1	%		41,704			791		3.8	%
FHLB advances		13,650			5.4	%		12,973			355		5.5	%		13,510			370		5.5	%
Total interest-bearing liabilities	$	56,442			4.3	%	$	55,681		$	1,223		4.4	%	$	55,214		$	1,161		4.2	%
Non-interest-bearing liabilities:
Demand deposits	$	2,199					$	2,563							$	2,921
Other non-interest-bearing liabilities		336						261								216
Total liabilities		58,977						58,505								58,351
Total capital		4,481						4,502								4,304
Total liabilities and capital	$	63,458					$	63,007							$	62,655
Net interest income										$	800							$	792
Net interest rate spread(3)					2.4	%							2.4	%							2.4	%
Net Interest-earning assets(4)	$	3,209					$	3,970							$	3,886
Net interest margin(5)													2.7	%							2.7	%
Average of interest-earning assets to interest-bearing liabilities		105.7	%					107.1	%							107.0	%

(1)	Yield and rate for the six month periods ended December 31, 2007 and December 31, 2006 are annualized.
(2)	Consists entirely of taxable investment securities.
(3)	Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5)	Net interest margin represents net interest income divided by average total interest-earning assets.

70

	Fiscal Years Ended June 30,
	2007								2006
	Average Outstanding Balance			Interest		Yield/Rate			Average Outstanding Balance			Interest		Yield/ Rate
	(Dollars in Thousands)
Interest-earning assets:
Loans	$	52,773		$	3,616		6.9	%	$	50,545		$	3,202		6.3	%
Investment securities(1)		3,894			185		4.8	%		4,511			201		4.5	%
Interest-earning deposits		2,050			107		5.2	%		1,958			62		3.2	%
Total interest-earning assets		58,717		$	3,908		6.7	%		57,014		$	3,465		6.0	%
Non-interest-earning assets		3,439								3,782
Total assets	$	62,156							$	60,796
Interest-bearing liabilities:
Savings deposits	$	2,662		$	22		0.8	%	$	2,957		$	25		0.9	%
NOW accounts		1,628			9		0.6	%		1,158			5		0.5	%
Money market accounts		9,504			326		3.4	%		10,342			259		2.5	%
Certificates of deposit		27,726			1,262		4.6	%		25,116			904		3.6	%
Total interest-bearing deposits		41,520			1,619		3.9	%		39,573			1,193		3.0	%
FHLB advances		13,234			720		5.4	%		13,735			717		5.2	%
Total interest-bearing liabilities	$	54,754		$	2,339		4.3	%	$	53,308		$	1,910		3.6	%
Non-interest-bearing liabilities:
Demand deposits	$	2,840							$	3,105
Other non-interest-bearing liabilities		227								204
Total liabilities		57,821								56,617
Total capital		4,335								4,179
Total liabilities and capital	$	62,156							$	60,796
Net interest income				$	1,569							$	1,555
Net interest rate spread(2)							2.4	%							2.5	%
Net interest-earning assets(3)	$	3,963							$	3,706
Net interest margin(4)							2.7	%							2.7	%
Average of interest-earning assets to interest-bearing liabilities		107.2	%							107.0	%

(1)	Consists entirely of taxable investment securities.
(2)	Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(3)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(4)	Net interest margin represents net interest income divided by average total interest-earning assets.

71

Rate/Volume Analysis

          The following table presents the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances).

	Six Months Ended December 31, 2007 vs. 2006									Fiscal Years Ended June 30, 2007 vs. 2006
	Increase (Decrease) Due to						Net Increase (Decrease)			Increase (Decrease) Due to						Net Increase (Decrease)
	Volume			Rate						Volume			Rate
	(Dollars in Thousands)
Interest-earning assets:
Loans	$	5		$	44		$	49		$	153		$	261		$	414
Investment securities		(40	)		20			(20	)		(29	)		13			(16	)
Interest-earning deposits		45			(4	)		41			5			40			45
Total interest-earning assets	$	10		$	60		$	70		$	129		$	314		$	443
Interest-bearing liabilities:
Savings deposits	$	(1	)	$	—		$	(1	)	$	(2	)	$	(1	)	$	(3	)
NOW accounts		2			3			5			3			1			4
Money market accounts		(12	)		—			(12	)		(29	)		96			67
Certificates of deposit		36			49			85			119			239			358
Total deposits		25			52			77			91			335			426
Federal Home Loan Bank of Boston advances		(15	)		—			(15	)		(27	)		30			3
Repurchase agreements		—			—			—			—			—			—
Total interest-bearing liabilities	$	10		$	52		$	62		$	64		$	365		$	429
Change in net interest income	$	—		$	8		$	8		$	65		$	(51	)	$	14

Management of Market Risk

          General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has established an Asset/Liability Committee that is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives and for managing this risk consistent with the guidelines approved by the Board of Directors. Senior management monitors the level of interest rate risk on a regular basis and the Asset/Liability Committee meets at least on a quarterly basis to review our asset/liability policies and interest rate risk position.

          We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. In order to mitigate the potential effects of dramatic increases in market rates of interest, we have, among other things, implemented or will implement a number of strategies, including the following:

72

• emphasize growth of less interest rate sensitive and lower cost “core deposits” in the form of transaction accounts, such as checking and savings accounts;

• sell a portion of Auburn Savings Bank’s newly originated fixed-rate residential mortgage loans;

• reduce the interest rate sensitivity of interest-bearing liabilities through utilization of fixed rate borrowings with terms of more than one year;

• use interest rate caps and floors, as determined by the Asset Liability Management Committee, to attempt to preserve net interest income in periods of rising or declining short-term interest rates; and

• maintain a level of assets in shorter-term securities and adjustable-rate mortgage-backed securities.

          Depending on market conditions, we often place more emphasis on enhancing net interest margin rather than matching the interest rate sensitivity of our assets and liabilities. In particular, we believe that the increased net interest income resulting from a mismatch in the maturity of our asset and liabilities portfolios can, during periods of stable or declining interest rates provide high enough returns to justify increased exposure to sudden and unexpected increasing in interest rates. As a result of this philosophy, our results of operations and the economic value of our equity will remain vulnerable to increases in interest rates and to declines in the difference between long- and short-term interest rates.

          We have not engaged in hedging through the use of financial futures or interest rate swaps. However, we have entered into interest rate cap and floor agreements as part of our interest rate risk management process. These agreements are used to manage the effect of fluctuating interest rates on net interest income. In March 2006, we purchased a three-year, $5.0 million notional value interest rate cap, in order to limit our potential exposure to rising interest rates. The cost of the transaction was $14,750. The counter-party in the transaction, the Federal Home Loan Bank of Boston, will pay us if and when the three-month LIBOR rate is above the rate cap of 6%. The interest rate cap agreement expires in March 2009. In January 2007, we purchased a three-year, $5.0 million notional value interest rate floor, in order to limit our potential exposure to decreasing interest rates. The cost of the transaction was $17,000. The counter-party in the transaction, the Federal Home Loan Bank of Boston, will pay us if and when the three-month LIBOR rate is below the rate floor of 3.75%. The interest rate floor agreement expires in January 2009. We do not use hedge accounting for the interest rate cap and interest rate floor agreements and, therefore, changes in fair value of the agreements are reported in the statements of income. At December 31, 2007, the fair value of the interest rate floor and cap is $12,147 and $41, respectively, and is reflected on the balance sheet in prepaid expenses and other assets.

          Net Portfolio Value Simulation Analysis. An important measure of interest risk is the amount by which the net present value of an institution’s cash flow from assets, liabilities and off balance sheet items (the institution’s net portfolio value or “NPV”) changes in the event of a range of assumed changes in market interest rates. The Office of Thrift Supervision provides us with the information presented in the following table, which is based on information provided to the Office of Thrift Supervision by Auburn Savings Bank. It presents the estimated changes in Auburn Savings Bank’s net portfolio value at December 31, 2007 that would occur upon the assumed instantaneous changes in interest rates based on Office of Thrift Supervision assumptions and without giving effect to any steps that management might take, within the parameters established by our asset/liability management committee, to counter the effect of such interest rate changes. The Office of Thrift Supervision uses certain assumptions in assessing the interest rate risk of savings banks. These assumptions relate to interest rates, loan prepayment rates, deposit decay rates, and the market values of certain assets under differing interest rate scenarios.

73

	Net Portfolio Value								NPV as a Percentage of Present Value of Assets(3)
Change in Interest Rates (basis points) (1)	Amount		Change			Percent Change			NPV Ratio (4)			Increase (Decrease) (basis points)
	(Dollars in Thousands)
+300	$	3,035		(2,590	)		(46	%)		4.92	%	$	(371	)
+200		4,061		(1,565	)		(28	%)		6.45	%		(218	)
+100		4,928		(697	)		(12	%)		7.69	%		(95	)
+50		5,301		(324	)		(6	%)		8.20	%		(43	)
0		5,625		0			0	%		8.63	%		0
-50		5,879		254			5	%		8.96	%		33
-100		6,069		444			8	%		9.20	%		56
-200		6,334		708			13	%		9.50	%		87

          As indicated in the table above, the result of a 100 basis point increase in interest rates is estimated to decrease net portfolio value by 12%, 28% for a 200 basis point increase and 46% for a 300 basis point increase over a 12-month horizon, when compared to the flat rate scenario. The estimated change in net interest income from the flat rate scenario to a 100 basis point decrease in interest rates is estimated to increase net portfolio value by 8% and 13% for a 200 basis point decrease. Inherent in these estimates is the assumption that interest rates on interest bearing liabilities would change in direct proportion to changes in the U.S. Treasury yield curve. In all simulations, the lowest possible interest rate would be zero.

          There are shortcomings inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net portfolio value table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value table provides an indication of our interest rate risk exposures at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

          Liquidity Management. 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, loan sales and maturities of investment securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage and mortgage-backed security 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 federal funds sold. Our most liquid assets are cash and cash equivalents and interest-bearing deposits. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At December 31, 2007, cash and cash equivalents totaled $1.9 million, including interest-earning deposits of $603,000. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $1.7 million at December 31, 2007. On December 31, 2007, we had $13.7 million of outstanding borrowings from the Federal Home Loan Bank of Boston, and the ability to borrow an additional $8.9 million from the Federal Home Loan Bank of Boston. However, our internal policy limits Federal Home Loan Bank of Boston advances to 35.0% of assets, which was equal to $22.2 million, or an additional $8.5 million, at December 31, 2007.

74

          At December 31, 2007, we had $2.2 million in loan commitments outstanding. In addition to commitments to originate loans, we also had $707,000 in unused lines of credit. Certificates of deposit due within one year of December 31, 2007 totaled $27.1 million, or 60% 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. We believe, however, based on past experience, that a significant portion of our certificates of deposit will remain with us.

          Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in deposit accounts. However, we may from time to time utilize borrowings to fund a portion of our operations where the cost of such borrowings is more favorable than that of deposits of a similar duration. 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 to attract certain deposit products.

          The following table presents our primary investing and financing activities during the periods indicated.

	Six Months Ended December 31, 2007
				Years Ended June 30,
				2007			2006
	(Dollars in Thousands)
Cash flows from investing activities:
Loan originations, net of amortization and repayments	$	(1,693	)	$	1,074		$	(5,787	)
Principal repayments and maturities from securities		1,226			1,174			389
Purchases of securities		(577	)		0			(1,250	)
Cash flows from financing activities:
Increase in deposits	$	112		$	(130	)	$	3,531
Net increase (decrease) in borrowings	$	750		$	(1,850	)	$	1,350

          We are not aware of any known trends, events or uncertainties that will have or are reasonably likely to have a material effect on our liquidity, capital or operations, nor are we aware of any current recommendations by regulatory authorities, which if implemented, would have a material effect on liquidity, capital or operations.

          Capital Management. We are subject to various regulatory capital requirements, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At December 31, 2007, we exceeded all of our regulatory capital requirements. We are considered “well-capitalized” under regulatory guidelines. See “Supervision and Regulation—Federal Banking Regulation—Capital Requirements,” “Regulatory Capital Compliance” and note 11 of the notes to the financial statements.

          The capital from the stock offering will increase our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including repaying a portion of our borrowings. Our financial condition and results of operations will be enhanced by the capital from the reorganization, resulting in increased net interest-earning assets and net income. However, due to the increase in equity resulting from the capital raised in the stock offering, return on equity will be adversely affected following the reorganization.

75

Impact of Inflation and Changing Prices

          The financial statements, accompanying notes, and related financial data presented herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollar amounts without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of our operations. Most of our assets and liabilities are monetary in nature, and, therefore, the impact of interest rates has a greater impact on its performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Impact of Recent Accounting Standards

          On February 15, 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which provides companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for our 2009 fiscal year, with early adoption permitted for our 2008 fiscal year, provided that we also adopt SFAS No. 157 for fiscal year 2008. Management is currently evaluating the potential impacts of adopting this Statement on its financial statements.

          In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement is effective for us on July 1, 2008, with earlier adoption permitted for fiscal year 2008, and is not expected to have a material impact on our financial statements. In February 2008, FASB issued FASB Staff Position (FSP) No. 157-2 which delays by one year the effective date of SFAS No. 157 for certain types of nonfinancial assets and nonfinancial liabilities.

          In July 2006, the FASB issued Financial Accounting Standards Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attributable for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosures and transitions. FIN 48 was effective for Auburn Savings Bank on July 1, 2007, and did not have a material impact on its financial statements.

          In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets – an Amendment of FASB Statement No. 140. The Statement amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. Consistent with SFAS No. 140, SFAS No. 156 requires companies to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract. However, the Statement permits a company to choose either the amortized cost method or fair value measurement method for each class of separately recognized servicing assets. The Statement is effective as of the beginning of a company’s first fiscal year after September 15, 2006. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including interim financial statements. Auburn Savings Bank adopted SFAS No. 156 on July 1, 2007 using the amortized cost method, and the adoption of this Statement did not have a material impact on its financial statements.

76

MANAGEMENT

Board of Directors

          The initial board of directors of Auburn Bancorp, Inc. will consist of the seven current directors of Auburn Savings Bank and Allen T. Sterling, Auburn Savings Bank’s current President and Chief Executive Officer. The board of directors of Auburn Bancorp, Inc. will be elected to terms of three years, approximately one-third of whom will be elected annually. All of our directors are independent as defined under the Nasdaq Marketplace Rules, except for Allen T. Sterling, our President and Chief Executive Officer. Information regarding the directors is provided below. Unless otherwise stated, each person has held his or her current occupation for the last five years. Ages presented are as of December 31, 2007.

The following directors will have terms ending in 2008:

          M. Kelly Matzen is a Senior Partner at the law firm of Trafton & Matzen, LLP, where he has worked since 1973. Mr. Matzen has served as a director since 2001. Age 60.

          Allen T. Sterling has served as President and Chief Executive Officer of Auburn Savings Bank since June 1996. Prior to joining Auburn Savings Bank, Mr. Sterling was the Chief Financial Officer of Skowhegan Savings Bank, in Skowhegan, Maine, from 1973 to 1994. Age 54.

          Philip R. St. Pierre has owned and operated Victor News Company Inc., a convenience store located in Lewiston, Maine, since 1984. Mr. St. Pierre has served as a director since 1995 and as Vice Chairperson since 2001. Age 52.

The following directors will have terms ending in 2009:

          August M. Berta retired as Chief Executive Officer of Auburn Savings Bank in 1996, after serving as Chief Executive Officer from 1981 to 1996. Mr. Berta has served as a director since 1981. Age 79.

          Peter E. Chalke is the President and Chief Executive Officer of Central Maine Medical Center and Central Maine Healthcare. Mr. Chalke has served as a director since 1998. Age 58.

          Sharon A. Millett is President of Millett Realty, Inc., a commercial and residential real estate firm, where she has worked since 1989. Ms. Millett has served as a director since 2004. Age 59.

The following directors will have terms ending in 2010:

          Bonnie G. Adams retired as a small business owner in the travel industry in 2003. Since then, she has served as Director of Major Gifts and Annual Giving for Maine Public Broadcasting from 2003 to 2004 and as a hotel manager from 2004 to 2007. Ms. Adams is currently the personal representative for a commercial real estate developer. Ms. Adams has served as a director since 1998. Age 59.

          Claire D. Thompson is a CPA and shareholder at Austin Associates, PA, where she has worked since 1982. Ms. Thompson has served as a director since 1984, and as Chairperson since 1998. Age 56.

Executive Officers

          The initial executive officers of Auburn Bancorp, Inc. will be the same as those of Auburn Savings Bank. These executive officers are elected annually by the board of directors and serve at the

77

board’s discretion. The executive officers of Auburn Savings Bank are, and the executive officers of Auburn Bancorp, Inc. will be:

Name	Title
Allen T. Sterling	President and Chief Executive Officer
Bruce M. Ray	Senior Vice President and Senior Loan Officer
Martha L. Adams	Senior Vice President and Operations Officer
Rachel A. Haines	Senior Vice President and Treasurer
Jason M. Longley	Vice President and Commercial Loan Officer

          Below is information regarding our executive officers who will not also be directors of Auburn Bancorp, Inc. Ages presented are as of December 31, 2007.

          Bruce M. Ray has served as Senior Vice President and Senior Loan Officer since 1997. Prior to 1997, he served as Vice President and Lender at Mechanics Savings Bank from 1980 to 1996 and as Mortgage Loan Officer at Skowhegan Savings Bank from 1972 to 1980. Age 58.

          Martha L. Adams has served as Senior Vice President and Operations Officer since 2005, and has been employed at Auburn Savings Bank since December 2000. Age 44.

          Rachel A. Haines has served as Senior Vice President and Treasurer since 2005, and has been employed at Auburn Savings Bank since April, 1986. Age 41.

          Jason M. Longley has served as Commercial Loan Officer since 2005 and as Vice President since 2007, and has been employed at Auburn Savings Bank since 2005. Prior to joining Auburn Savings Bank, Mr. Longley was a Commercial Loan Analyst at Mechanic’s Savings Bank in Auburn, Maine from 2003 to 2005. Age 27.

Meetings and Committees of the Board of Directors

          We conduct business through meetings of our board of directors and its committees. During the fiscal year ended June 30, 2007, the board of directors of Auburn Savings Bank met 14 times.

          In connection with the formation of Auburn Bancorp, Inc., the board of directors will establish an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee prior to the closing of the stock offering.

          The Audit Committee will consist of Claire D. Thompson (Chairperson), Sharon A. Millett and Philip R. St. Pierre. The Audit Committee will be responsible for providing oversight relating to our financial statements and financial reporting process, systems of internal accounting and financial controls, internal audit function, annual independent audit and the compliance and ethics programs established by management and the board. Each member of the Audit Committee is independent in accordance with the listing standards of the Nasdaq Global Market. The board of directors of Auburn Bancorp, Inc. will designate Claire D. Thompson as an audit committee financial expert under the rules of the Securities and Exchange Commission. Auburn Bancorp, Inc.’s Audit Committee will operate under a written charter, which will govern its composition, responsibilities and operations.

          The Compensation Committee will consist of Peter E. Chalke (Chairperson), M. Kelly Matzen and Sharon A. Millett. The Compensation Committee will be responsible for determining the compensation of our Chief Executive Officer and our other executive officers, or for recommending the compensation of such persons to the full Board of Directors for approval. Each member of the

78

Compensation Committee is independent in accordance with the listing standards of the Nasdaq Global Market. The Compensation Committee will operate under a written charter, which will govern its composition, responsibilities and operations.

          The Nominating and Corporate Governance Committee will consist of M. Kelly Matzen (Chairperson), Bonnie G. Adams and August M. Berta. The Nominating and Corporate Governance Committee will be responsible for selecting director nominees, or recommending the selection of director nominees to the full Board of Directors, and for developing and recommending corporate governance principles for Auburn Bancorp, Inc. as a whole. Each member of the Nominating and Corporate Governance Committee is independent in accordance with the listing standards of the Nasdaq Global Market. The Nominating and Corporate Governance Committee will operate under a written charter, which will govern its composition, responsibilities and operations.

          Initially, all of the directors of Auburn Bancorp, Inc. will also serve on the board of directors of Auburn Savings Bank. Auburn Savings Bank’s Board of Directors has established five additional committees—the Asset and Liability Committee, the Community Reinvestment Committee, the Marketing Committee, the Compliance Committee and the Loan Committee.

Corporate Governance Policies and Procedures

          In addition to establishing committees of the board of directors, Auburn Bancorp, Inc. will also adopt several policies to govern the activities of Auburn Bancorp, Inc. and cause Auburn Savings Bank to revise existing policies governing the activities of Auburn Savings Bank including a code of business conduct and ethics. The code of business conduct and ethics, which will apply to all employees and directors, will address conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. In addition, the code of business conduct and ethics will be designed to deter wrongdoing and to promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance with all applicable laws, rules and regulations.

79

Directors’ Compensation

          Upon completion of the reorganization and stock offering, each non-employee director of Auburn Auburn Bancorp, Inc. and Auburn Savings Bank will receive $350 per meeting of the board of directors, except for the Chairperson, who will receive $450 per meeting. In addition, each member of a committee of either Auburn Bancorp, Inc. or Auburn Savings Bank will receive $175 per meeting. Directors do not receive per meeting fees for any meeting that they do not attend. In the event that the board of directors of Auburn Bancorp, Inc. meets immediately before or after an Auburn Savings Bank board meeting the directors will not receive compensation with respect to the Auburn Bancorp, Inc. meeting. Directors do not receive annual retainers for their service on the board of directors of Auburn Bancorp, Inc. or Auburn Savings Bank.

          The following table provides compensation information for each director of Auburn Savings Bank for the fiscal year ended June 30, 2007. Allen T. Sterling, who will serve as a director of Auburn Savings Bank, Auburn Bancorp, Inc. and Auburn Bancorp, MHC after the reorganization and stock offering, did not serve as a director of Auburn Savings Bank before the reorganization and stock offering.

Name	Fees Earned or Paid in Cash		All Other Compensation (1)		Total
Bonnie G. Adams	$	5,425	$	—	$	5,425
August M. Berta		5,600		—		5,600
Peter E. Chalke		4,200		—		4,200
M. Kelly Matzen		4,200		—		4,200
Sharon A. Millett		4,550		—		4,550
Philip R. St. Pierre		6,475		—		6,475
Claire D. Thompson		7,875		—		7,875

(1) Auburn Savings Bank makes payments for travel accident and felonious assault insurance coverage for each director, which totaled $18 in fiscal 2007.

80

Executive Compensation

          Summary Compensation Table. The following table sets forth for the fiscal year ended June 30, 2007 certain information as to the total remuneration paid by Auburn Savings Bank to its Chief Executive Officer, who is the only executive officer to receive annual compensation in excess of $100,000.

Name and principal position	Year		Salary		Bonus		All Other Compensation			Total
Allen T. Sterling
President & Chief Executive Officer		2007	$	103,700	$	1,511	$	525	(1)	$	105,736

(1) Consists of employer matching contributions under the Auburn Savings & Loan 401(k) Plan.

Bonus Plan

          Auburn Savings Bank maintains an incentive program to reward employees when Auburn Savings Bank meets or exceeds the performance criteria determined annually by the board of directors. All employees who have satisfactorily completed one year of employment and who were in the employ of Auburn Savings Bank as of fiscal year-end are eligible to participate in the performance bonus system. Incentive payments are paid at the discretion of the board of directors. The board of directors may, at any time, vote to suspend or amend the incentive program if they feel it is necessary for the prudent operation of Auburn Savings Bank to do so. For fiscal 2007, each employee of Auburn Savings Bank received a bonus between 0.50% and 1.5% of his or her salary, depending on his or her level of responsibility. Mr. Sterling received a bonus equal to 1.5% of his salary.

Proposed Employment Agreement

          In connection with the reorganization and stock offering, Auburn Savings Bank intends to enter into an employment agreement with Allen T. Sterling. The employment agreement will provide for a two-year initial term, subject to annual renewal by the board of directors for an additional year beyond the then-current expiration date. Mr. Sterling’s initial base salary under the employment agreement will be $103,700 per year. The agreement provides for Mr. Sterling’s participation in discretionary bonus and other incentive compensation programs sponsored or awarded from time to time to senior management employees. The agreement also provides for Mr. Sterling’s participation in employee benefit plans and programs maintained for the benefit of employees generally, including retirement and stock-based compensation plans, life insurance and medical and dental insurance plans.

          Upon termination of employment for cause, as defined in the agreement, Mr. Sterling will receive no further compensation or benefits under the agreement. If we terminate Mr. Sterling without cause, or if he resigns within 90 days after an event constituting “good reason” under the agreement, Mr. Sterling will receive a lump sum payment in an amount equal to his base salary for one year. We will also continue to pay the costs of Mr. Sterling’s medical, dental and life insurance coverage for the remaining term of the agreement.

          “Good reason” exists under the agreement if, without Mr. Sterling’s express written consent, we materially breach any of our obligations under the Agreement, which material breach includes, without limitation: (i) a material reduction in Mr. Sterling’s responsibilities or authority in connection with his employment with Auburn Savings Bank; (ii) assignment of duties of a non-executive nature or duties for which he is not reasonably equipped by his skills and experience; (iii) failure to nominate or re-nominate Mr. Sterling to the Board; (iv) a reduction in salary or benefits contrary to the terms of the agreement or, any reduction in salary or material reduction in benefits following a change in control; (v) a termination of incentive and benefit plans, programs or arrangements that materially reduce their aggregate value, or

81

reduction of Mr. Sterling’s participation, that is not applicable to other executive officers; (vi) a requirement that Mr. Sterling relocate his principal business office or his principal place of residence outside of a thirty-five (35) mile radius from the current main office and any branch of Auburn Savings Bank, or the assignment of duties that would reasonably require such a relocation; or (vii) liquidation or dissolution of Auburn Savings Bank. A reduction or elimination of Mr. Sterling’s benefits under one or more benefit plans, programs or arrangements as part of a good faith, overall reduction or elimination of such plans or benefits, applicable to all participants in a manner that does not discriminate against Mr. Sterling, is not an event of good reason or a material breach of the agreement, if benefits of the same type are not available to other officers of Auburn Savings Bank or any affiliate under a plan or plans in or under which Mr. Sterling is not entitled to participate.

          If, within one year following a “change in control,” we terminate Mr. Sterling without cause, or if he resigns for good reason as defined above, he will receive a lump sum payment in an amount equal to two times his average taxable compensation (as reported on Form W-2) for the five preceding years. We will also continue to pay the costs of Mr. Sterling’s medical, dental and life insurance coverage until the earlier of (i) Mr. Sterling’s death, employment with another employer or 24 months after his termination. If Mr. Sterling had been terminated in connection with a change of control on December 31, 2007, he would have been entitled to a severance payment of $190,685 under the terms of his proposed employment agreement.

          A “change in control” means any of the following: (i) a merger of Auburn Bancorp, Inc. into or consolidation with another entity, or the merger of another corporation into Auburn Bancorp, Inc. if Auburn Bancorp, Inc. stockholders before the merger or consolidation hold less than a majority of the combined voting power of the resulting corporation immediately after the merger; (ii) a Schedule 13D or another form or schedule discloses that the filing person or persons acting in concert (other than Auburn Bancorp, MHC) is the beneficial owner of 25% or more of a class of Auburn Bancorp, Inc.’s voting securities; (iii) during any two-year period, individuals who constitute the board of directors at the beginning of the period and any directors elected by at least 2/3 of those directors no longer constitute at least a majority of board of directors; or (iv) Auburn Bancorp, Inc. or Auburn Savings Bank sells to a third party all or substantially all of its assets. The conversion Auburn Bancorp, MHC from mutual to stock form, i.e., a “second step conversion,” is not a “change in control” for purposes of the agreement.

          The agreement will provide for the reduction of change in control payments to Mr. Sterling to the extent necessary to ensure that they will not constitute or contribute to the creation of “excess parachute payments” under Section 280G of the Internal Revenue Code, and therefore will not (i) result in a loss of our deduction for compensation expense associated with such excess parachute payments, or (ii) be subject to the 20% excise tax imposed on such payments under Section 4999 of the Internal Revenue Code.

          We will agree to pay Mr. Sterling for reasonable costs and attorneys’ fees associated with the successful legal enforcement of our obligations under the employment agreement. The employment agreement also will provide for the indemnification of the executives to the fullest extent legally permissible. Upon termination of employment other than involuntary termination in connection with a change in control, Mr. Sterling will be required to adhere to one-year non-competition and non-solicitation provisions.

82

Benefit Plans

          401(k) Plan. Auburn Savings Bank maintains the Auburn Savings & Loan 401(k) Plan, which is a tax-qualified profit sharing plan (including a tax-exempt trust in which plan assets are held) with a salary deferral feature under Section 401(k) of the Code (the “401(k) Plan”). All employees (excluding non-resident aliens and certain union employees) who have attained age 21 and have completed three months of employment are eligible to participate. Under the 401(k) Plan, participants are permitted to make salary reduction contributions in any amount from a minimum of 2% to a maximum of 15% of covered compensation. For these purposes, “covered compensation” consists of wages reported on federal income tax form W-2, with all pre-tax contributions added, subject to the annual limits imposed under the Internal Revenue Code ($230,000 for 2008). Auburn Savings Bank may make matching contributions with respect to a plan year in an amount determined by Auburn Savings Bank in its discretion, subject to the annual limits imposed by the Internal Revenue Code. Employer matching contributions vest at a rate of 20% per year and are fully vested after five years. All employee contributions and earnings thereon are fully and immediately vested. A participant may request withdrawal of salary reduction contributions (and associated earnings) in the event the participant suffers a financial hardship. The 401(k) Plan permits loans to participants, subject to the limits and security requirements imposed by the Internal Revenue Code. The 401(k) Plan permits employees to direct the investment of their own accounts into the various investment options available under the 401(k) Plan. Participants are entitled to benefit payments upon termination of employment, including termination due to normal retirement, disability or death. Benefits will be distributed in the form of lump sum.

          Employee Stock Ownership Plan. In connection with the reorganization and stock offering, Auburn Savings Bank has authorized the adoption of an employee stock ownership plan for eligible employees of Auburn Savings Bank. Eligible employees who have attained age 21 and have been employed by us for three months at the closing date of the conversion will be eligible to participate in the plan. Thereafter, new employees of Auburn Savings Bank who have attained age 21 and completed 1,000 hours of service during a continuous 12-month period will be eligible to participate in the employee stock ownership plan as of the first entry date following completion of the plan’s eligibility requirements.

          Auburn Savings Bank’s Board of Directors will administer the employee stock ownership plan and has appointed the independent directors of Auburn Savings Bank as trustees of the employee stock ownership plan. It is anticipated that the employee stock ownership plan will purchase that number of shares equal to 3.43% of the shares of common stock sold in the stock offering (17,201, 20,237, 23,237 and 26,763 shares at the minimum, midpoint, maximum and 15% above the maximum of the offering range, respectively). It is anticipated that the employee stock ownership plan will fund its purchase in the stock offering from through a loan from Auburn Bancorp, Inc. The loan will equal 100% of the aggregate purchase price of the common stock. The loan to the employee stock ownership plan will be repaid principally from Auburn Savings Bank’s contributions to the employee stock ownership plan and dividends payable, if any, on common stock held by the employee stock ownership plan over the anticipated fifteen-year term of the loan. The interest rate for the employee stock ownership plan loan is expected to be the prime rate as published in The Wall Street Journal on the closing date of the stock offering. See “Pro Forma Data.”

          Shares purchased by the employee stock ownership plan with the proceeds of the employee stock ownership plan loan will be held in a suspense account and released on a pro rata basis as the loan is repaid. Shares released from the suspense account will be allocated among participants on the basis of each participant’s proportional share of compensation.

          Participants will vest in the benefits allocated under the employee stock ownership plan at a rate of 20% per year for each year of continuous service with Auburn Savings Bank over a five-year period, with

83

credit given to participants for years of service with Auburn Savings Bank prior to the adoption of the plan. A participant will become fully vested at retirement, upon death or disability or upon termination of the employee stock ownership plan. Benefits are generally distributable upon a participant’s separation from service. Any unvested shares that are forfeited upon a participant’s termination of employment will be reallocated among the remaining plan participants.

          Plan participants will be entitled to direct the plan trustees on how to vote common stock credited to their accounts. The trustees will vote allocated shares held in the employee stock ownership plan as instructed by the plan participants and unallocated shares and allocated shares for which no instructions are received will be voted in the same ratio on any matter as those shares for which instructions are given, subject to the fiduciary responsibilities of the trustees.

          Under applicable accounting requirements, compensation expenses for a leveraged employee stock ownership plan is recorded at the fair market value of the employee stock ownership plan shares when committed to be released to participants accounts. See “Pro Forma Data.”

          The employee stock ownership plan is intended to meet the requirements of Section 401(a) of the Internal Revenue Code as an employee stock ownership plan within the meaning of Section 4975(e) and to satisfy the applicable requirements of the Employee Retirement Income Security Act of 1974, as amended. We intend to request a favorable determination letter from the Internal Revenue Service regarding the tax-qualified status of the employee stock ownership plan. We expect, but cannot guarantee, that a favorable determination letter will be received.

          Future Equity Incentive Plan. Following the stock offering, we plan to adopt an equity incentive plan that will provide for grants of stock options and restricted stock awards to our officers and directors. In accordance with applicable regulations, the number of stock options granted under the plan may not exceed 4.90% of the total shares issued in the stock offering, including shares issued to Auburn Bancorp, MHC, and the number of shares of restricted stock awarded under the plan may not exceed 1.47% of the total shares issued in the stock offering.

          We may fund the equity incentive plan through the purchase of common stock in the open market by a trust established in connection with the plan or from authorized, but unissued, shares of Auburn Bancorp, Inc. common stock. The acquisition of additional authorized, but unissued, shares by the equity incentive plan after the stock offering would dilute the interests of existing stockholders. See “Pro Forma Data.”

          We will grant all stock options at an exercise price equal to 100% of the fair market value of the stock on the date of grant. We will grant restricted stock awards at no cost to recipients. Restricted stock awards and stock options generally will vest ratably over a five-year period (or as otherwise permitted by the Office of Thrift Supervision), but we may also make vesting contingent upon the satisfaction of performance goals established by the board of directors or the committee charged with administering the equity incentive plan. All outstanding awards will accelerate and become fully vested upon a change in control of Auburn Bancorp, Inc.

          The equity incentive plan will comply with all applicable Office of Thrift Supervision regulations. The equity incentive plan cannot be established sooner than six months after the stock offering. We will submit the equity incentive plan to stockholders for their approval, at which time we will provide stockholders with detailed information about the plan. Under current Office of Thrift Supervision regulations, the equity incentive plan must be approved by a majority of the total votes cast by our stockholders (excluding votes cast by Auburn Bancorp, MHC).

84

Transactions with Auburn Savings Bank

          Loans and Extensions of Credit. The aggregate amount of loans by Auburn Savings Bank to its executive officers and directors, and members of their immediate families, was $626,000 at December 31, 2007. As of that date, these loans were performing according to their original terms. The outstanding loans made to our directors and executive officers, and members of their immediate families, were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to Auburn Savings Bank, and did not involve more than the normal risk of collectibility or present other unfavorable features. For information about restrictions on our ability to make loans to insiders, see “Regulation and Supervision—Regulation of Federal Savings Associations—Transactions with Related Parties.”

Indemnification for Directors and Officers

          Auburn Bancorp, Inc.’s bylaws provide that Auburn Bancorp, Inc. shall indemnify all officers, directors and employees of Auburn Bancorp, Inc. to the fullest extent permitted under federal law against all expenses and liabilities reasonably incurred by them in connection with or arising out of any action, suit or proceeding in which they may be involved by reason of their having been a director or officer of Auburn Bancorp, Inc. Such indemnification may include payment for expenses judgments, court costs and attorneys’ fees and the cost of reasonable settlements. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Auburn Bancorp, Inc. pursuant to its bylaws or otherwise, Auburn Bancorp, Inc. has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

85

SUBSCRIPTIONS BY EXECUTIVE OFFICERS AND DIRECTORS

          The following table presents certain information as to the approximate purchases of common stock by our directors and executive officers, including their associates, if any, as defined by applicable regulations. No individual has entered into a binding agreement to purchase these shares and, therefore, actual purchases could be more or less than indicated. Directors and executive officers and their associates may not purchase more than 34% of the shares sold in the stock offering. Like all of our depositors, our directors and officers have subscription rights based on their deposits. For purposes of the following table, sufficient shares are assumed to be available to satisfy subscriptions in all categories. All directors and officers as a group would own [ ]% of our outstanding shares at the minimum of the offering range and [ ]% of our outstanding shares at the maximum of the offering range.

	Proposed Purchases of Stock in the Offering
Name	Number of Shares	Dollar Amount
Directors:
Bonnie G. Adams
August M. Berta
Peter E. Chalke
M. Kelly Matzen
Sharon A. Millett
Philip R. St. Pierre
Allen T. Sterling
Claire D. Thompson
Executive Officers Who Are Not Directors:
Martha L. Adams
Rachel A. Haines
Jason M. Longley
Bruce M. Ray
All directors and executive officers as a group (12 persons)

REGULATION AND SUPERVISION

General

          Auburn Savings Bank is subject to extensive regulation, examination and supervision by the Office of Thrift Supervision, as its primary federal regulator, and the Federal Deposit Insurance Corporation, as its deposit insurer. Auburn Savings Bank is a member of the Federal Home Loan Bank System and its deposit accounts are insured up to applicable limits by the Deposit Insurance Fund managed by the Federal Deposit Insurance Corporation. Auburn Savings Bank must file reports with the Office of Thrift Supervision and the Federal Deposit Insurance Corporation concerning its activities and financial condition in addition to obtaining regulatory approvals before entering into certain transactions such as mergers with, or acquisitions of, other financial institutions. There are periodic examinations by the Office of Thrift Supervision and, under certain circumstances, the Federal Deposit Insurance Corporation to evaluate Auburn Savings Bank’s safety and soundness and compliance with various regulatory requirements. This regulatory structure is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such policies, whether by the Office of Thrift Supervision, the Federal Deposit Insurance Corporation or Congress, could have a material adverse impact on Auburn Bancorp, Inc., Auburn Bancorp, MHC and Auburn Savings Bank and their operations. Auburn Bancorp, Inc. and Auburn Bancorp, MHC, as savings and loan holding companies, will be required to file certain reports with, will be subject to examination by, and otherwise must comply with the rules and regulations

86

of the Office of Thrift Supervision. Auburn Bancorp, Inc. will also be subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

          Certain of the regulatory requirements that are or will be applicable to Auburn Savings Bank, Auburn Bancorp, Inc. and Auburn Bancorp, MHC are described below. This description of statutes and regulations is not intended to be a complete explanation of such statutes and regulations and their effects on Auburn Savings Bank, Auburn Bancorp, Inc. and Auburn Bancorp, MHC and is qualified in its entirety by reference to the actual statutes and regulations.

Regulation of Federal Savings Associations

          Capital Requirements. The Office of Thrift Supervision’s capital regulations require federal savings institutions to meet three minimum capital standards: a 1.5% tangible capital to total assets ratio, a 4% leverage ratio (3% for institutions receiving the highest rating on the CAMELS examination rating system) and an 8% risk-based capital ratio. In addition, the prompt corrective action standards discussed below also establish, in effect, a minimum 2% tangible capital standard, a 4% leverage ratio (3% for institutions receiving the highest rating on the CAMELS system) and, together with the risk-based capital standard itself, a 4% Tier 1 risk-based capital standard. The Office of Thrift Supervision regulations also require that, in meeting the tangible, leverage and risk-based capital standards, institutions must generally deduct investments in and loans to subsidiaries engaged in activities as principal that are not permissible for a national bank.

          The risk-based capital standard requires federal savings institutions to maintain Tier 1 (core) and total capital (which is defined as core capital and supplementary capital) to risk-weighted assets of at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, recourse obligations, residual interests and direct credit substitutes, are multiplied by a risk-weight factor of 0% to 100%, assigned by the Office of Thrift Supervision capital regulation based on the risks believed inherent in the type of asset. Core (Tier 1) capital is defined as common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital currently include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and up to 45% of unrealized gains on available-for-sale equity securities with readily determinable fair market values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.

          The Office of Thrift Supervision also has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular circumstances. At December 31, 2007, Auburn Savings Bank met each of these capital requirements.

          Prompt Corrective Regulatory Action. The Office of Thrift Supervision is required to take certain supervisory actions against undercapitalized institutions, the severity of which depends upon the institution’s degree of undercapitalization. Generally, a savings institution that has a ratio of total capital to risk weighted assets of less than 8%, a ratio of Tier 1 (core) capital to risk-weighted assets of less than 4% or a ratio of core capital to total assets of less than 4% (3% or less for institutions with the highest examination rating) is considered to be “undercapitalized.” A savings institution that has a total risk-based capital ratio less than 6%, a Tier 1 capital ratio of less than 3% or a leverage ratio that is less than 3% is considered to be “significantly undercapitalized” and a savings institution that has a tangible capital to assets ratio equal to or less than 2% is deemed to be “critically undercapitalized.” Subject to a narrow

87

exception, the Office of Thrift Supervision is required to appoint a receiver or conservator within specified time frames for an institution that is “critically undercapitalized.” An institution must file a capital restoration plan with the Office of Thrift Supervision within 45 days of the date it receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company. In addition, numerous mandatory supervisory actions become immediately applicable to an undercapitalized institution, including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion. “Significantly undercapitalized” and “critically undercapitalized” institutions are subject to more extensive mandatory regulatory actions. The Office of Thrift Supervision could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors.

          Standards for Safety and Soundness. As required by statute, the federal banking agencies have adopted Interagency Guidelines prescribing Standards for Safety and Soundness. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the Office of Thrift Supervision determines that a savings institution fails to meet any standard prescribed by the guidelines, the Office of Thrift Supervision may require the institution to submit an acceptable plan to achieve compliance with the standard. Auburn Savings Bank has not received any notice from the Office of Thrift Supervision that it has failed to meet any standard prescribed by the guidelines.

          Limitation on Capital Distributions. Office of Thrift Supervision regulations impose limitations upon all capital distributions by a savings institution, including cash dividends, payments to repurchase its shares and payments to shareholders of another institution in a cash-out merger. Under the regulations, an application to and the prior approval of the Office of Thrift Supervision is required before any capital distribution if the institution does not meet the criteria for “expedited treatment” of applications under Office of Thrift Supervision regulations (i.e., generally, examination and Community Reinvestment Act ratings in the two top categories), the total capital distributions for the calendar year exceed net income for that year plus the amount of retained net income for the preceding two years, the institution would be undercapitalized following the distribution or the distribution would otherwise be contrary to a statute, regulation or agreement with the Office of Thrift Supervision. If an application is not required, the institution must still provide prior notice to the Office of Thrift Supervision of the capital distribution if, like Auburn Savings Bank, it is a subsidiary of a holding company. If Auburn Savings Bank’s capital were ever to fall below its regulatory requirements or the Office of Thrift Supervision notified it that it was in need of increased supervision, its ability to make capital distributions could be restricted. In addition, the Office of Thrift Supervision could prohibit a proposed capital distribution that would otherwise be permitted by the regulation, if the agency determines that such distribution would constitute an unsafe or unsound practice.

          Qualified Thrift Lender Test. Federal law requires savings institutions to meet a qualified thrift lender test. Under the test, a savings association is required to either qualify as a “domestic building and loan association” under the Internal Revenue Code or maintain at least 65% of its “portfolio assets” (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangibles, including goodwill; and (iii) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed securities) in at least 9 months out of each 12 month period. Education loans, consumer loans, credit card loans and small business loans may be considered “qualified thrift investments.” A savings institution that fails the qualified thrift lender test is subject to certain operating restrictions and may be required to convert to a bank charter. As of December 31, 2007, Auburn Savings Bank maintained 100.76% of its portfolio assets in qualified thrift investments.

88

          Asset Composition Limits. Some of the types of loans and other investments in which a federal savings institution, such as Auburn Savings Bank, may invest, sell or otherwise deal are limited to a percentage of the savings institution’s assets or capital under federal law. For example, the amount of commercial non-real estate loans in which Auburn Savings Bank may invest or sell is limited to up to 20% of assets, with the amount over 10% of assets limited to small business loans only, the amount of nonresidential real property loans is limited to 400% of the savings institution’s capital, unless the Office of Thrift Supervision permits them to exceed this limit, investments in tangible personal property are limited to 10% of assets and other loans for personal, family or household purposes are limited to between 30 and 35% of assets. Some other loans or investments are limited to five percent of the savings institution’s assets, including community development investments, and construction loans without security, among others, in which Auburn Savings Bank, as a federal savings institution, may invest or sell are all limited to a percentage of their assets fixed by statute.

          Grandfathering. Federal law permits a federal savings bank formerly chartered or designated as a mutual savings bank under state law, such as Auburn Savings Bank, which converted from a Maine-state savings institution to a federal savings institution in July 2006, to continue to exercise any authority it was authorized to exercise as a mutual savings bank under state law at the time of its conversion from a state mutual savings bank to a Federal charter. Unless otherwise determined by the OTS, a savings association, in the exercise of this grandfathered authority, may continue to follow applicable state laws and regulations in effect at the time of its conversion. A Federal savings association may also enjoying grandfathered rights under the Maine state law that were available only upon the occurrence of specific preconditions, such as the attainment of a particular future date or specified level of regulatory capital, which had not occurred at the time of conversion from a state mutual savings bank, provided they occur thereafter.

          Transactions with Related Parties. Federal law limits Auburn Savings Bank’s authority to lend to, and engage in certain other transactions with (collectively, “covered transactions”), “affiliates” (e.g., any company that controls or is under common control with an institution, including Auburn Bancorp, Inc., Auburn Bancorp, MHC and their non-savings institution subsidiaries). The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of the savings institution. The aggregate amount of covered transactions with all affiliates is limited to 20% of the savings institution’s capital and surplus. Loans and other specified transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low quality assets from affiliates is generally prohibited. Transactions with affiliates must be on terms and under circumstances that are at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies. In addition, savings institutions are prohibited from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies and no savings institution may purchase the securities of any affiliate other than a subsidiary.

          The Sarbanes-Oxley Act generally prohibits loans by Auburn Bancorp, Inc. to its executive officers and directors. However, the Sarbanes-Oxley Act contains a specific exemption from such prohibition for loans by Auburn Savings Bank to its executive officers and directors in compliance with federal banking regulations. Federal regulations require that all loans or extensions of credit to executive officers and directors of insured institutions must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and must not involve more than the normal risk of repayment or present other unfavorable features. Auburn Savings Bank is therefore prohibited from making any new loans or extensions of credit to executive officers and directors at different rates or terms than those offered to the general public. Notwithstanding this rule, federal regulations permit Auburn Savings Bank to make loans to executive officers and directors at reduced interest rates if the loan is made under a benefit program generally

89

available to all other employees and does not give preference to any executive officer or director over any other employee.

          In addition, loans made to a director or executive officer in an amount that, when aggregated with the amount of all other loans to the person and his or her related interests, are in excess of the greater of $25,000 or 5% of Auburn Savings Bank’s capital and surplus, up to a maximum of $500,000, must be approved in advance by a majority of the disinterested members of the board of directors. See “Management—Transactions with Related Persons.”

          Insurance of Deposit Accounts. Deposits of Auburn Savings Bank are insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation. The FDIC determines insurance premiums based on a number of factors, primarily the risk of loss that insured institutions pose to the Deposit Insurance Fund. Recent legislation eliminated the minimum 1.25% reserve ratio for the insurance funds, the mandatory assessments when the ratio fall below 1.25% and the prohibition on assessing the highest quality banks when the ratio is above 1.25%. The FDIC has the ability to adjust the new insurance fund’s reserve ratio between 1.15% and 1.5%, depending on projected losses, economic changes and assessment rates at the end of a calendar year. The FDIC has adopted regulations that set assessment rates that took effect at the beginning of 2007. The new assessment rates for most banks vary between five cents and seven cents for every $100 of deposits. A change in insurance premiums could have an adverse effect on the operating expenses and results of operations of Auburn Savings Bank. Auburn Savings Bank cannot predict what insurance assessment rates will be in the future. Assessment credits have been provided to institutions that paid high premiums in the past. As a result, Auburn Savings Bank had credits that offset all of its premiums in 2007 and will have credits that offset all of its premiums in 2008.

          Insurance of deposits may be terminated by the Federal Deposit Insurance Corporation upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the Federal Deposit Insurance Corporation or the Office of Thrift Supervision. We do not know of any practice, condition or violation that might lead to termination of deposit insurance.

          In addition to the assessment for deposit insurance, Auburn Savings Bank, as a savings institution, is required to make payments on bonds issued in the late 1980s by the Financing Corporation to recapitalize a predecessor deposit insurance fund.

          Federal Home Loan Bank System. Auburn Savings Bank is a member of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Banks provide a central credit facility primarily for member institutions. Auburn Savings Bank, as a member of the Federal Home Loan Bank of Boston, is required to acquire and hold shares of capital stock in that Federal Home Loan Bank. Auburn Savings Bank was in compliance with this requirement with an investment in Federal Home Loan Bank stock at December 31, 2007 of $901,000.

          The Federal Home Loan Banks are required to provide funds for the resolution of insolvent thrifts in the late 1980s and to contribute funds for affordable housing programs. These requirements could reduce the amount of dividends that the Federal Home Loan Banks pay to their members and could also result in the Federal Home Loan Banks imposing a higher rate of interest on advances to their members. If dividends were reduced, or interest on future Federal Home Loan Bank advances increased, Auburn Savings Bank’s net interest income would likely also be reduced.

          Community Reinvestment Act. Under the Community Reinvestment Act, as implemented by Office of Thrift Supervision regulations, a savings association has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community,

90

including low and moderate income neighborhoods. The Community Reinvestment Act does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the Community Reinvestment Act. The Community Reinvestment Act requires the Office of Thrift Supervision, in connection with its examination of a savings association, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution.

          The Community Reinvestment Act requires public disclosure of an institution’s rating and requires the Office of Thrift Supervision to provide a written evaluation of an association’s Community Reinvestment Act performance utilizing a four-tiered descriptive rating system. Auburn Savings Bank received an “Outstanding” rating as a result of its most recent Community Reinvestment Act assessment.

Privacy

          Under the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”), all financial institutions are required to establish policies and procedures to restrict the sharing of nonpublic customer data with nonaffiliated parties at the customer’s request and to protect customer data from unauthorized access. In addition, the Fair and Accurate Credit Transactions Act of 2003 (the “FACT Act”) includes many provisions concerning national credit reporting standards and permits consumers, including customers of Auburn Savings Bank, to opt out of information-sharing for marketing purposes among affiliated companies. The FACT Act also requires banks and other financial institutions to notify their customers if they report negative information about them to a credit bureau or if they are granted credit on terms less favorable than those generally available. The Federal Reserve Board and the Federal Trade Commission have extensive rulemaking authority under the FACT Act, to which Auburn Bancorp, MHC, Auburn Bancorp, Inc. and Auburn Savings Bank are subject. Auburn Savings Bank may also be subject to Maine state law restrictions on the disclosure of customer information.

Data Security

          The Office of Thrift Supervision and other federal bank regulatory agencies have adopted interagency guidelines establishing standards for safeguarding nonpublic personal information about customers that implement provisions of the GLBA (“Information Security Guidelines”). Among other things, the Information Security Guidelines require each financial institution, under the supervision and ongoing oversight of its Board of Directors or an appropriate committee thereof, to develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, to protect against any anticipated threats or hazards to the security or integrity of such information; and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer. In April 2005, the Office of Thrift Supervision and other bank regulatory agencies issued further guidance for the establishment of these information security standards, requiring financial institutions to develop and implement response programs designed to address incidents of unauthorized access to sensitive customer information maintained by the financial institution or its service provider, including customer notification procedures. Auburn Savings Bank may also be subject to Maine state law restrictions on data security.

Consumer Laws and Regulations

          In addition to the laws and regulations discussed herein, Auburn Savings Bank is also subject to certain laws and regulations designed to protect consumers in transactions with banks. While the list set forth herein is not exhaustive, these laws and regulations include the Truth in Lending Act, the Truth in Savings Act, the Electronic Funds Transfer Act and Regulation E promulgated thereunder, the Expedited

91

Funds Availability Act, Check Clearing for the 21^st Century Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, Fair Debt Collection Practices Act, Home Mortgage Disclosure Act of 1975, the Real Estate Settlement Procedures Act, Right to Financial Privacy Act and Title III of The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (referred to as the “USA PATRIOT Act”) and related regulations, among others. These laws and regulations require certain disclosures and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans to or engaging in other types of transactions with such customers. Failure to comply with these laws and regulations could lead to substantial monetary damages, penalties, operating restrictions and reputational damage to the financial institution. Interest and other charges collected or contracted for by Auburn Savings Bank are subject to federal laws concerning interest rates and, as applicable, state usury laws.

Holding Company Regulation

          General. Auburn Bancorp, Inc. and Auburn Bancorp, MHC will be savings and loan holding companies within the meaning of federal law. As such, they will be registered with the Office of Thrift Supervision and will be subject to Office of Thrift Supervision regulations, examinations, supervision, reporting requirements and regulations concerning corporate governance and activities. In addition, the Office of Thrift Supervision will have enforcement authority over Auburn Bancorp, Inc. and Auburn Bancorp, MHC and their non-savings institution subsidiaries. Among other things, this authority permits the Office of Thrift Supervision to restrict or prohibit activities that are determined to be a serious risk to Auburn Savings Bank.

          Restrictions Applicable to Mutual Holding Companies. According to federal law and Office of Thrift Supervision regulations, a mutual holding company, such as Auburn Bancorp, MHC, may generally engage in the following activities: (1) investing in the stock of a savings institution; (2) acquiring a mutual association through the merger of such association into a savings institution subsidiary of such holding company or an interim savings institution subsidiary of such holding company and (3) merging with or acquiring another holding company, one of whose subsidiaries is a savings institution. In some circumstances, a savings and loan holding company, such as Auburn Bancorp, MHC, may also engage in activities approved by the Federal Reserve Board for a bank holding company under Section 4(c) of the Bank Holding Company Act (other than activities begun by an acquisition, in whole or in part, of a going concern) if previously approved by Office of Thrift Supervision or if the savings and loan holding company receives a rating of “satisfactory” or above prior to January 1, 2008, or a composite rating of “1” or “2” thereafter, in its most recent examination and is not in a troubled condition. In certain circumstances, a mutual holding company, such as Auburn Bancorp, MHC, may also engage in activities permitted for financial holding companies, including certain insurance and securities activities.

          Federal law prohibits a savings and loan holding company, including a federal mutual holding company, from directly or indirectly, or through one or more subsidiaries, acquiring more than 5% of the voting stock of another savings institution, or its holding company, without prior written approval of the Office of Thrift Supervision. Federal law also prohibits a savings and loan holding company from acquiring more than 5% of a company engaged in activities other than those authorized for savings and loan holding companies by federal law; or acquiring or retaining control of a depository institution that is not insured by the Federal Deposit Insurance Corporation. In evaluating applications by holding companies to acquire savings institutions, the Office of Thrift Supervision must consider the financial and managerial resources and future prospects of Auburn Bancorp, Inc. and institution involved, the effect of the acquisition on the risk to the insurance funds, the convenience and needs of the community and competitive factors.

92

          The Office of Thrift Supervision is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, except: (1) the approval of interstate supervisory acquisitions by savings and loan holding companies, and (2) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

          If the savings institution subsidiary of a savings and loan holding company fails to meet the qualified thrift lender test, the holding company must register with the Federal Reserve Board as a bank holding company within one year of the savings institution’s failure to so qualify.

          Stock Holding Company Subsidiary Regulation. The Office of Thrift Supervision has adopted regulations governing the two-tier mutual holding company form of organization and subsidiary stock holding companies that are controlled by mutual holding companies. Auburn Savings Bank has adopted this form of organization and it will be in place after the proposed stock offering. Auburn Bancorp, Inc. will be the stock holding company subsidiary of Auburn Bancorp, MHC. Auburn Bancorp, Inc. will be permitted to engage in activities that are permitted for Auburn Bancorp, MHC subject to the same restrictions and conditions.

          Waivers of Dividends by Auburn Bancorp, MHC. Office of Thrift Supervision regulations require Auburn Bancorp, MHC to notify the Office of Thrift Supervision if it proposes to waive receipt of dividends from Auburn Bancorp, Inc. The Office of Thrift Supervision reviews dividend waiver notices on a case-by-case basis, and, in general, does not object to a waiver if: (i) the waiver would not be detrimental to the safe and sound operation of the savings association; and (ii) the mutual holding company’s board of directors determines that such waiver is consistent with such directors’ fiduciary duties to the mutual holding company’s members. The Office of Thrift Supervision has recently included a new condition in its approval of dividend waivers which requires a mutual holding company to certify that the dividends declared by its subsidiary holding company, distributed and waived by the mutual holding company for the last two calendar quarters or since the date of its minority stock issuance, whichever is later, and the current year do not exceed cumulative net income of the stock holding company subsidiary for the same period of time. We anticipate that Auburn Bancorp, MHC will waive its receipt of dividends that Auburn Bancorp, Inc. may pay, if any.

          Conversion of Auburn Bancorp, MHC to Stock Form. Office of Thrift Supervision regulations permit Auburn Bancorp, MHC to convert from the mutual form of organization to the capital stock form of organization. There can be no assurance when, if ever, a conversion transaction will occur, and the Board of Directors has no current intention or plan to undertake a conversion transaction. In a conversion transaction a new holding company would be formed as the successor to Auburn Bancorp, Inc., Auburn Bancorp, MHC’s corporate existence would end, and certain depositors of Auburn Savings Bank would receive the right to subscribe for additional shares of the new holding company. In a conversion transaction, each share of common stock held by stockholders other than Auburn Bancorp, MHC would be automatically converted into a number of shares of common stock of the new holding company based on an exchange ratio determined at the time of conversion that ensures that stockholders other than Auburn Bancorp, MHC own the same percentage of common stock in the new holding company as they owned in Auburn Bancorp, Inc. immediately before conversion. The total number of shares held by stockholders other than Auburn Bancorp, MHC after a conversion transaction would be increased by any purchases by such stockholders in the stock offering conducted as part of the conversion transaction.

          Acquisition of Control. Under the federal Change in Bank Control Act, a notice must be submitted to the Office of Thrift Supervision if any person (including a company), or group acting in concert, seeks to acquire “control” of a savings and loan holding company or savings association. An

93

acquisition of “control” can occur upon the acquisition of 10% or more of the voting stock of a savings and loan holding company or savings institution or as otherwise defined by the Office of Thrift Supervision. Under the Change in Bank Control Act, the Office of Thrift Supervision has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the anti-trust effects of the acquisition. Any company that so acquires control would then be subject to regulation as a savings and loan holding company.

Future Legislation

          Various legislation is from time to time introduced in Congress, and state legislatures with respect to the regulation of financial institutions. Such legislation may change Auburn Savings Banking statutes and the operating environment of Auburn Bancorp, MHC, Auburn Bancorp, Inc., Auburn Savings Bank and any future subsidiaries in substantial and unpredictable ways. Auburn Bancorp, Inc. cannot determine the ultimate effect that potential legislation, or implementing regulations, if enacted, would have upon the financial condition or results of operations of Auburn Bancorp, MHC, Auburn Bancorp, Inc., Auburn Savings Bank or any future subsidiaries.

FEDERAL AND STATE TAXATION

          General. We report our income on a fiscal year basis using the accrual method of accounting. The federal income tax laws apply to us in the same manner as to other corporations with some exceptions, including particularly our reserve for bad debts discussed below. The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to us. Our federal income tax returns have been either audited or closed under the statute of limitations through tax year 2004. For its 2007 fiscal year, Auburn Savings Bank’s maximum federal income tax rate was 35%.

          Auburn Bancorp, Inc. and Auburn Savings Bank will enter into a tax allocation agreement. Because Auburn Bancorp, Inc. will own 100% of the issued and outstanding capital stock of Auburn Savings Bank, Auburn Bancorp, Inc. and Auburn Savings Bank will be members of an affiliated group within the meaning of Section 1504(a) of the Internal Revenue Code, of which group Auburn Bancorp, Inc. will be the common parent corporation. As a result of this affiliation, Auburn Savings Bank may be included in the filing of a consolidated federal income tax return with Auburn Bancorp, Inc. and, if a decision to file a consolidated tax return is made, the parties agree to compensate each other for their individual share of the consolidated tax liability and/or any tax benefits provided by them in the filing of the consolidated federal income tax return.

          Bad Debt Reserves. Prior to 1996, thrift institutions that qualified under certain definitional tests and other conditions of the Internal Revenue Code were permitted to use certain favorable provisions to calculate their deductions from taxable income for annual additions to their bad debt reserve. A reserve could be established for bad debts on qualifying real property loans, generally secured by interests in real property improved or to be improved, under the percentage of taxable income method or the experience method. The reserve for nonqualifying loans was computed using the experience method. Federal legislation enacted in 1996 repealed the reserve method of accounting for bad debts and the percentage of taxable income method for tax years beginning after 1995 and require savings institutions to recapture or take into income certain portions of their accumulated bad debt reserves. Auburn Savings Bank has approximately $421,000 of accumulated bad debt reserves which would be recaptured into taxable income only if Auburn Savings Bank makes “non-dividend distributions” to Auburn Bancorp, Inc. as described below.

94

          Distributions. If Auburn Savings Bank makes “non-dividend distributions” to Auburn Bancorp, Inc., the distributions will be considered, for tax purposes, to have been made from Auburn Savings Bank’s unrecaptured bad debt reserves, including the balance of its reserves as of December 31, 2007, to the extent of the unrecaptured bad debt reserves and then from Auburn Savings Bank’s supplemental reserve for losses on loans, to the extent of those reserves, and an amount based on the amount distributed, but not more than the amount of those reserves, will be included in Auburn Savings Bank’s taxable income. Non-dividend distributions include distributions in excess of Auburn Savings Bank’s current and accumulated earnings and profits, as calculated for federal income tax purposes, distributions in redemption of stock, and distributions in partial or complete liquidation. Dividends paid out of Auburn Savings Bank’s current or accumulated earnings and profits will not be so included in Auburn Savings Bank’s taxable income.

          The amount of additional taxable income triggered by a non-dividend is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Therefore, if Auburn Savings Bank makes a non-dividend distribution to Auburn Bancorp, Inc., approximately one and one-half times the amount of the distribution not in excess of the amount of the reserves would be includable in income for federal income tax purposes, assuming a 25% federal corporate income tax rate. Auburn Savings Bank does not intend to make distributions that would result in a recapture of any portion of its bad debt reserves.

State Taxation

          Maine Taxation. Financial Institutions in Maine are subject to the Financial Institutions Franchise Tax under Maine Rev. Stat. Ann. tit. 36 § 5206 rather than the general corporate income tax. The Maine Financial Institutions Franchise Tax provides for two alternative methods of computing the tax due: (1) the tax equals the sum of 1.0% of the institution’s Maine income plus 0.008% of the value of its Maine assets; or (2) a tax on assets only equal to 0.039% of the value of the Institutions Maine assets. In the event that option (1) is used, Maine income is the institution’s net income or loss on its books. Financial institutions in Maine that are part of an affiliated group that operates in a unitary fashion must report their Maine income on a combined basis. Under Maine law, an affiliated group means any group of two or more financial institutions in which more than 50% of the combined voting power of each institution is directly or indirectly owned by a common parent. Auburn Savings Bank’s state tax returns are not currently under audit.

THE REORGANIZATION AND STOCK OFFERING

          This stock offering is being conducted pursuant to a plan of reorganization and stock issuance plan approved by the board of directors of Auburn Savings Bank. The plan of reorganization and stock issuance plan must be approved by members of Auburn Savings Bank. A special meeting of members has been called for this purpose. The Office of Thrift Supervision also conditionally approved the plan of reorganization and stock issuance plan; however, such approval does not constitute a recommendation or endorsement of the plan of reorganization and stock issuance plan by such agency.

General

          On January 11, 2008, the board of directors of Auburn Savings Bank unanimously adopted the plan of reorganization and stock issuance plan by which Auburn Savings Bank will reorganize into a two-tiered mutual holding company. This structure is called a two-tier structure because it will have two levels of holding companies. After the reorganization, Auburn Bancorp, Inc. will be the mid-tier stock holding company and Auburn Bancorp, MHC will be the top-tier mutual holding company. After the stock offering, purchasers in the stock offering will own 45% of Auburn Bancorp, Inc.’s outstanding shares of

95

common stock, and Auburn Bancorp, MHC will own 55% of Auburn Bancorp, Inc.’s outstanding shares of common stock.

          The amount of capital being raised in the stock offering is based on an appraisal of our estimated pro forma market value. The appraisal was prepared by Keller & Company, a consulting firm experienced in valuation and appraisal of savings institutions. Most of the terms of this stock offering are required by the regulations of the Office of Thrift Supervision. The Office of Thrift Supervision approved our plan of reorganization and stock issuance plan, subject to the fulfillment of certain conditions, including, approval of the plan of reorganization and stock issuance plan by Auburn Savings Bank’s members. The special meeting of Auburn Savings Bank’s members has been called for this purpose on [ ], 2008.

          The following is a brief summary of the pertinent aspects of the reorganization and stock offering. A copy of the plan of reorganization and stock issuance plan is available from Auburn Savings Bank upon request and is available for inspection at the offices of Auburn Savings Bank and at the Office of Thrift Supervision. The plan of reorganization and stock issuance plan is also filed as an exhibit to the registration statement, of which this prospectus forms a part, that we have filed with the Securities and Exchange Commission. See “Where You Can Find More Information.”

Reasons for the Reorganization and Offering

          As part of our business planning process, our board of directors concluded that Auburn Savings Bank needed additional capital in order to increase profitability and support asset growth. The proceeds from the sale of our common stock in the stock offering will provide Auburn Savings Bank with additional capital. The reorganization and stock offering will also enable Auburn Bancorp, Inc. and Auburn Savings Bank to increase their capital in response to any future regulatory capital requirements. Although Auburn Savings Bank currently exceeds all regulatory capital requirements, the sale of common stock will assist Auburn Savings Bank with the orderly preservation and expansion of its capital base and will provide flexibility to respond to sudden and unanticipated capital needs.

          The stock offering will increase capital at Auburn Savings Bank and, as a result, increase the maximum amount that we may lend to one borrower. Although we intend to continue to use conservative underwriting practices to maintain the high quality of our loan portfolios, increased lending limits would provide Auburn Savings Bank with flexibility to make larger loans and to grow our loan portfolios in situations where we are comfortable with the quality of the loans.

          The stock offering will afford our directors, officers and employees the opportunity to become stockholders through various stock benefit plans, which we believe to be an effective performance incentive and an effective means of attracting and retaining qualified personnel. The stock offering also will provide our customers and local community members with an opportunity to acquire our stock.

          The board of directors determined that a minority stock issuance was preferable to a full stock conversion because it permits us to control the amount of capital being raised by selecting the percentage of shares to be sold in the stock offering. The board of directors also preferred the mutual holding company structure because it provides for the continued control of Auburn Bancorp, Inc. by Auburn Bancorp, MHC through its majority ownership position We chose not to sell more than 45% of our shares of common stock to the public so that we would have the flexibility to issue authorized but unissued shares to fund future stock benefit plans without exceeding the regulatory limit on the percentage of shares that can be owned by persons other than Auburn Bancorp, MHC.

96

          Finally, as a subsidiary of a mutual holding company with a mid-tier stock holding company, Auburn Savings Bank will have greater flexibility in structuring mergers and acquisitions, including the form of consideration paid in a transaction. The current mutual structure, by its nature, limits any ability to offer any common stock as consideration in a merger or acquisition. The new mutual holding company structure will enhance Auburn Savings Bank’s ability to compete with other bidders when acquisition opportunities arise by better enabling it to offer stock or cash consideration, or a combination of the two. Although there are no current plans, arrangements, understandings or agreements regarding any such opportunities, Auburn Bancorp, Inc. will be in a position after the stock offering to take advantage of any such favorable opportunities that may arise. See “Use of Proceeds.”

          The disadvantages of the stock offering considered by the board of directors are the additional expense and effort of operating as a public company, the inability of stockholders other than Auburn Bancorp, MHC to obtain majority ownership of Auburn Bancorp, Inc. and Auburn Savings Bank, which may result in the perpetuation of our management and board of directors, and that new forms of corporate ownership and regulatory policies relating to the mutual holding company structure may be adopted from time to time which may have an adverse impact on stockholders other than Auburn Bancorp, MHC.

          Following the reorganization and stock offering, a majority of our voting stock will still be owned by Auburn Bancorp, MHC, which will be controlled by its board of directors. While this structure will permit management to focus on our long-term business strategy for growth and capital redeployment without undue pressure from stockholders, it will also serve to perpetuate our existing management and directors. Auburn Bancorp, MHC will be able to elect all of the members of Auburn Bancorp, Inc.’s board of directors, and will be able to control the outcome of most matters presented to our stockholders for resolution by vote. The matters as to which stockholders other than Auburn Bancorp, MHC will be able to exercise voting control are limited and include any proposal to implement a stock-based incentive plan. No assurance can be given that Auburn Bancorp, MHC will not take action adverse to the interests of other stockholders. For example, Auburn Bancorp, MHC could prevent the sale of control of Auburn Bancorp, Inc. or defeat a candidate for the board of directors of Auburn Bancorp, Inc. or other proposals put forth by stockholders.

          This stock offering does not preclude the conversion of Auburn Bancorp, MHC from the mutual to stock form of organization in the future. No assurance can be given when, if ever, Auburn Bancorp, MHC will convert to stock form or what conditions the Office of Thrift Supervision or other regulatory agencies may impose on such a transaction. See “Risk Factors – Risks Related to this Offering.”

          After considering the advantages and disadvantages of the stock offering, as well as applicable fiduciary duties, the board of directors of Auburn Savings Bank unanimously approved the stock offering as being in the best interests of Auburn Savings Bank’s depositors and the communities we serve.

Description of the Plan of Reorganization and Stock Issuance Plan

          Following receipt of all required regulatory approvals and approval of the plan of reorganization and stock issuance plan by Auburn Savings Bank’s members, the reorganization will be effected as follows or in any other manner approved by the Office of Thrift Supervision that is consistent with the purposes of the plan of reorganization and stock issuance plan and applicable laws and regulations:

(i)	Auburn Savings Bank will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim One”);
(ii)	Interim One will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim Two”);

97

(iii)	Interim One will organize Auburn Bancorp, Inc. as a wholly-owned subsidiary;
(iv)	Auburn Savings Bank will exchange its charter for a federal stock savings bank charter and Interim One will exchange its charter for a federal mutual holding company charter to become Auburn Bancorp, MHC;
(v)	simultaneously with step (iv), Interim Two will merge with and into Auburn Savings Bank with Auburn Savings Bank as the resulting institution;
(vi)	all of the initially issued stock of Auburn Savings Bank will be transferred to Auburn Bancorp, MHC in exchange for membership interests in Auburn Bancorp, MHC; and
(vii)	Auburn Bancorp, MHC will contribute the capital stock of Auburn Savings Bank to Auburn Bancorp, Inc. in, and Auburn Savings Bank will become a wholly-owned subsidiary of Auburn Bancorp, Inc.

          Concurrently with the reorganization, Auburn Bancorp, Inc. will sell up to 45% of its common stock representing up to [ ]% of the pro forma market value of Auburn Savings Bank on a fully converted basis. Auburn Savings Bank intends to capitalize Auburn Bancorp, MHC with $25,000 in cash.

          As a result of the reorganization, Auburn Savings Bank will be organized in stock form and will be wholly owned by Auburn Bancorp, Inc. The legal existence of Auburn Savings Bank will not terminate as a result of the reorganization. Instead, Auburn Savings Bank in stock form will be a continuation of Auburn Savings Bank in mutual form. All property of Auburn Savings Bank, including its right, title and interest in all property of any kind and nature, interest and asset of every conceivable value or benefit then existing or pertaining to Auburn Savings Bank, or which would inure to Auburn Savings Bank immediately by operation of law and without the necessity of any conveyance or transfer and without any further act or deed, will vest in Auburn Savings Bank in stock form. Auburn Savings Bank in stock form will continue to have, succeed to and be responsible for all the rights, liabilities and obligations of Auburn Savings Bank in the mutual form and will maintain its headquarters and operations at Auburn Savings Bank’s present locations.

Effects of Reorganization on Deposits, Borrowers and Members

          Continuity. During the reorganization process, the normal business of Auburn Savings Bank will continue without interruption, including continued regulation by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation. After reorganization, Auburn Savings Bank will continue to provide services for depositors and borrowers under current policies by its present management and staff.

          The current directors of Auburn Savings Bank plus Allen T. Sterling, the President and Chief Executive Officer of Auburn Savings Bank will serve as directors of Auburn Savings Bank after the reorganization. The board of directors of Auburn Bancorp, Inc. and Auburn Bancorp, MHC will be composed of current directors of Auburn Savings Bank plus Allen T. Sterling. All officers of Auburn Savings Bank at the time of reorganization will retain their positions after the reorganization.

          Deposit Accounts and Loans. The reorganization will not affect any deposit accounts or borrower relationships with Auburn Savings Bank. All deposit accounts in Auburn Savings Bank after the reorganization will continue to be insured up to the legal maximum by the Federal Deposit Insurance Corporation in the same manner as such deposit accounts were insured immediately before the reorganization. The reorganization will not change the interest rate or the maturity of deposits at Auburn Savings Bank.

98

          After the reorganization, each depositor of Auburn Savings Bank will have both a deposit account in Auburn Savings Bank and a pro rata ownership interest in the equity of Auburn Bancorp, MHC based upon the balance in the depositor’s account. This ownership interest is tied to the depositor’s account, has no tangible market value separate from the deposit account and may only be realized in the event of a liquidation of Auburn Bancorp, MHC. Any depositor who opens a deposit account obtains a pro rata ownership interest in the equity of Auburn Bancorp, MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives the balance in the account but receives nothing for his or her ownership interest in the equity of Auburn Bancorp, MHC, which is lost to the extent that the balance in the account is reduced. Consequently, depositors of Auburn Bancorp, MHC have no way to realize the value of their ownership interest in Auburn Bancorp, MHC, except in the unlikely event that Auburn Bancorp, MHC is liquidated.

          After the reorganization, all loans of Auburn Savings Bank will retain the same status that they had before the reorganization. The amount, interest rate, maturity and security for each loan will remain as they were contractually fixed prior to the reorganization.

          Effect on Voting Rights of Members. After the reorganization, Auburn Savings Bank will continue to be supervised by its board of directors. Auburn Bancorp, Inc., as the holder of all of the outstanding common stock of Auburn Savings Bank, will have exclusive voting rights with respect to any matters concerning Auburn Savings Bank requiring stockholder approval, including the election of directors.

          After the reorganization, stockholders of Auburn Bancorp, Inc. will have exclusive voting rights with respect to any matters concerning Auburn Bancorp, Inc. requiring stockholder approval. By virtue of its ownership of a majority of the outstanding shares of common stock of Auburn Bancorp, Inc., Auburn Bancorp, MHC will be able to control the outcome of most matters presented to the stockholders for resolution by vote. However, Auburn Bancorp, MHC will not be able to control the vote for second-step transactions and implementation of equity incentive plans, each of which require, under current Office of Thrift Supervision regulations and policies, approval by the stockholders other than Auburn Bancorp, MHC.

          As a federally chartered mutual holding company, Auburn Bancorp, MHC will have no authorized capital stock and, thus, no stockholders. Holders of deposit accounts of Auburn Savings Bank will become members of Auburn Bancorp, MHC. Such persons will be entitled to vote on all questions requiring action by the members of Auburn Bancorp, MHC, including the election of directors of Auburn Bancorp, MHC. In addition, all persons who become depositors of Auburn Savings Bank following the reorganization will have membership rights with respect to Auburn Bancorp, MHC. Borrowers of Auburn Savings Bank who were borrowers members of Auburn Savings and Loan Association on July 1, 2006 at the time the bank converted from a state-chartered savings and loan association to a federal mutual savings bank will have membership rights in Auburn Bancorp, MHC. Borrowers will not receive membership rights in connection with any borrowings made after July 1, 2006.

          Effect on Liquidation Rights. In the unlikely event of a complete liquidation of Auburn Savings Bank before the completion of the reorganization, each depositor would receive a pro rata share of any assets of Auburn Savings Bank remaining after payment of expenses and satisfaction of claims of all creditors. Each depositor’s pro rata share of such liquidating distribution would be in the same proportion as the value of such depositor’s deposit account was to the total value of all deposit accounts in Auburn Savings Bank at the time of liquidation.

99

          In the unlikely event of a complete liquidation of Auburn Savings Bank after the reorganization, each depositor would have a claim as a creditor of the same general priority as the claims of all other general creditors of Auburn Savings Bank. Except as described below, a depositor’s claim would be solely for the amount of the balance in such depositor’s deposit account plus accrued interest. Such depositor would not have an interest in the value or assets of Auburn Savings Bank above that amount. Instead, the holder of Auburn Savings Bank’s common stock (i.e., Auburn Bancorp, Inc.) would be entitled to any assets remaining upon a liquidation of Auburn Savings Bank.

          In the unlikely event of a complete liquidation of Auburn Bancorp, Inc. after the reorganization, the stockholders of Auburn Bancorp, Inc., including Auburn Bancorp, MHC, would be entitled to receive the remaining assets of Auburn Bancorp, Inc., following payment of all debts, liabilities and claims of greater priority of or against Auburn Bancorp, Inc.

          In the unlikely event of a complete liquidation of Auburn Bancorp, MHC after the reorganization, all depositors of Auburn Savings Bank at that time will be entitled, pro rata to the value of their deposit accounts, to a distribution of any assets of Auburn Bancorp, MHC remaining after payment of all debts and claims of creditors. Any “second step” conversion of Auburn Bancorp, MHC to stock form would not be considered a liquidation.

          There are no plans to liquidate Auburn Savings Bank, Auburn Bancorp, Inc. or Auburn Bancorp, MHC in the future.

Subscription Offering and Subscription Rights

          Under the plan of reorganization and stock issuance plan, we have granted rights to subscribe for our common stock to the following persons in the following order of priority:

1.	Persons with deposits in Auburn Savings Bank with balances aggregating $50 or more (“qualifying deposits”) as of September 30, 2006 (“eligible account holders”). For this purpose, deposit accounts include all savings, time and demand accounts.
2.	Our employee stock ownership plan.
3.	Persons with qualifying deposits in Auburn Savings Bank as of March 31, 2008 (“supplemental eligible account holders”), other than our officers, directors and their associates.
4.	Depositors of Auburn Savings Bank as of [ ], 2008, who are not eligible or supplemental eligible account holders and borrowers as of July 1, 2006 whose loans continue to be outstanding at [ ] (“other members”).

          The amount of common stock that any person may purchase will depend on the availability of the common stock after satisfaction of all subscriptions having prior rights in the subscription offering and to the maximum and minimum purchase limitations set forth in the plan of reorganization and stock issuance plan. See “—Limitations on Purchases of Shares.” All persons on a joint account will be counted as a single depositor for purposes of determining the maximum amount that may be subscribed for by owners of a joint account.

          We will strive to identify your ownership in all accounts, but cannot guarantee we will identify all accounts in which you have an ownership interest.

100

          Priority 1: Eligible Account Holders. Subject to the purchase limitations as described below under “—Limitations on Purchases of Shares,” each eligible account holder has the right to subscribe for up to the greater of:

• $100,000 of common stock (which equals 10,000 shares);

• one-tenth of one percent (0.1%) of the total stock offering of common stock to persons other than Auburn Bancorp, MHC; or

• 15 times the product, rounded down to the next whole number, obtained by multiplying the total number of shares of common stock to be sold by a fraction of which the numerator is the amount of qualifying deposits of the eligible account holder and the denominator is the total amount of qualifying deposits of all eligible account holders. The balance of qualifying deposits of all eligible account holders was $44.6 million.

          If there are insufficient shares to satisfy all subscriptions by eligible account holders, shares first will be allocated so as to permit each subscribing eligible account holder, if possible, to purchase a number of shares sufficient to make the person’s total allocation equal to the lesser of 100 shares or the number of shares actually subscribed for. After that, unallocated shares will be allocated among the remaining subscribing eligible account holders whose subscriptions remain unfilled in the proportion that the amounts of their respective qualifying deposits bear to the total qualifying deposits of all remaining eligible account holders whose subscriptions remain unfilled. Subscription rights of eligible account holders who are also executive officers or directors of Auburn Bancorp, Inc. or Auburn Savings Bank or their associates will be subordinated to the subscription rights of other eligible account holders to the extent attributable to increased deposits in Auburn Savings Bank in the one year period preceding September 30, 2006.

          To ensure a proper allocation of stock, each eligible account holder must list on his or her stock order form all deposit accounts in which such eligible account holder had an ownership interest at September 30, 2006. Failure to list an account, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation.

          Priority 2: Tax-Qualified Employee Benefit Plans. Subject to the purchase limitations as described below under “—Limitations on Purchases of Shares,” our tax-qualified employee benefit plans have the right to purchase up to 10% of the shares of common stock issued in the stock offering, other than shares issued to Auburn Bancorp, MHC. As a tax-qualified employee benefit plan, our employee stock ownership plan intends to purchase 3.43% (17,201 shares at the minimum of the offering range) of the shares issued in the stock offering, including shares issued to Auburn Bancorp, MHC. Subscriptions by the employee stock ownership plan will not be aggregated with shares of common stock purchased by any other participants in the stock offering, including subscriptions by our officers and directors, for the purpose of applying the purchase limitations in the plan of reorganization and stock issuance plan. If eligible account holders subscribe for all of the shares being sold, no shares will be available for our tax-qualified employee benefit plans. However, if we increase the number of shares offered above the maximum of the offering range, the employee stock ownership plan will have a first priority right to purchase any shares exceeding that amount up to the amount of its subscription. If the plan’s subscription is not filled in its entirety, the employee stock ownership plan may purchase shares in the open market or may purchase shares directly from us with the approval of the Office of Thrift Supervision.

101

          Priority 3: Supplemental Eligible Account Holders. Subject to the purchase limitations as described below under “—Limitations on Purchases of Shares,” each supplemental eligible account holder has the right to subscribe for up to the greater of:

• $100,000 of common stock (which equals 10,000 shares);

• one-tenth of one percent (0.1%) of the total stock offering of common stock to persons other than Auburn Bancorp, MHC; or

• 15 times the product, rounded down to the next whole number, obtained by multiplying the total number of shares of common stock to be sold by a fraction of which the numerator is the amount of qualifying deposits of the eligible account holder and the denominator is the total amount of qualifying deposits of all eligible account holders. The balance of qualifying deposits of all supplemental eligible account holders was $[ ] million.

          If eligible account holders and the employee stock ownership plan subscribe for all of the shares being sold, no shares will be available for supplemental eligible account holders. If shares are available for supplemental eligible account holders but there are insufficient shares to satisfy all subscriptions by supplemental eligible account holders, shares first will be allocated so as to permit each subscribing supplemental eligible account holder, if possible, to purchase a number of shares sufficient to make the person’s total allocation equal to the lesser of 100 shares or the number of shares actually subscribed for. After that, unallocated shares will be allocated among the remaining subscribing supplemental eligible account holders whose subscriptions remain unfilled in the proportion that the amounts of their respective qualifying deposits bear to the total qualifying deposits of all remaining supplemental eligible account holders whose subscriptions remain unfilled.

          To ensure a proper allocation of stock, each supplemental eligible account holder must list on his or her stock order form all deposit accounts in which such supplemental eligible account holder had an ownership interest at March 31, 2008. Failure to list an account, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock allocation.

          Priority 4: Other Members. Subject to the purchase limitations as described below under “—Limitations on Purchases of Shares,” each other member has the right to purchase up to the greater of $100,000 of common stock (which equals 10,000 shares); provided that Auburn Savings Bank may increase such maximum purchase limitation to 5% of the maximum number of shares offered to persons other than Auburn Bancorp, MHC, or decrease such maximum purchase limitation to 0.1% of the maximum number of shares total stock offering of common stock to persons other than Auburn Bancorp, MHC. If shares are available for other members but there are insufficient shares to satisfy all subscriptions by other members, shares first will be allocated among subscribing other members on a pro rata basis based on the size of such other members’ orders.

          To ensure a proper allocation of stock, each other member must list on his or her stock order form all deposit accounts in which such other member had an ownership interest at [ ] or each loan for Auburn Savings Bank that was outstanding on July 1, 2006 that continues to be outstanding on [ ]. Failure to list an account or providing incorrect information could result in the loss of all or part of a subscriber’s stock allocation.

          Expiration Date for the Subscription Offering. The subscription offering, and all subscription rights under the plan of reorganization and stock issuance plan, will terminate at 12:00 Noon, Eastern time, on [ ], 2008. We will not accept orders for common stock in the subscription offering received after that time. We will make reasonable attempts to provide a prospectus and related

102

stock offering materials to holders of subscription rights; however, all subscription rights will expire on the expiration date whether or not we have been able to locate each person entitled to subscription rights.

          Office of Thrift Supervision regulations require that we complete the sale of common stock within 45 days after the close of the subscription offering. If the sale of the common stock is not completed within that period, all funds received will be returned promptly with interest at our passbook savings rate and without deduction of any fees and all withdrawal authorizations will be canceled unless we receive approval of the Office of Thrift Supervision to extend the time for completing the stock offering. If regulatory approval of an extension of the time period has been granted, we will notify all subscribers of the extension and of the duration of any extension that has been granted, and subscribers will have the right to modify or rescind their purchase orders. If we do not receive an affirmative response from a subscriber to any resolicitation, the subscriber’s order will be rescinded and all funds received will be returned promptly with interest, or withdrawal authorizations will be canceled. No single extension can exceed 90 days.

          Persons in Non-Qualified States. We will make reasonable efforts to comply with the securities laws of all states in the United States in which persons entitled to subscribe for stock under the plan of reorganization and stock issuance plan reside. However, we are not required to offer stock in the subscription offering to any person who resides in a foreign country or who resides in a state of the United States in which (1) only a small number of persons otherwise eligible to subscribe for shares of common stock reside; (2) the granting of subscription rights or the offer or sale of shares to such person would require that we or our officers or directors register as a broker, dealer, salesman or selling agent under the securities laws of the state, or register or otherwise qualify the subscription rights or common stock for sale or qualify as a foreign corporation or file a consent to service of process; or (3) we determine that compliance with that state’s securities laws would be impracticable or unduly burdensome for reasons of cost or otherwise.

          Restrictions on Transfer of Subscription Rights and Shares. Subscription rights are nontransferable. You may not transfer, or enter into any agreement or understanding to transfer, the legal or beneficial ownership of your subscription rights issued under the plan of reorganization and stock issuance plan or the shares of common stock to be issued upon exercise of your subscription rights. Your subscription rights may be exercised only by you and only for your own account. When registering your stock purchase on the order form, you should not add the name(s) of persons who have no subscription rights or who qualify in a lower purchase priority than you do. Doing so may jeopardize your subscription rights. If you exercise your subscription rights, you will be required to certify that you are purchasing shares solely for your own account and that you have no agreement or understanding regarding the sale or transfer of such shares. Federal regulations also prohibit any person from offering, or making an announcement of an offer or intent to make an offer, to purchase such subscription rights or shares of common stock before the completion of the stock offering.

          If you sell or otherwise transfer your rights to subscribe for common stock in the subscription offering or subscribe for common stock on behalf of another person, you may forfeit those rights and face possible further sanctions and penalties imposed by the Office of Thrift Supervision or another agency of the U.S. Government. Illegal transfers of subscription rights, including agreements made prior to completion of the stock offering to transfer shares after the stock offering, have been subject to enforcement actions by the Securities and Exchange Commission as violations of Rule 10b-5 of the Securities Exchange Act of 1934.

          We intend to report to the Office of Thrift Supervision and the Securities and Exchange Commission anyone who we believe sells or gives away their subscription rights. We will pursue any and all legal and equitable remedies in the event we become aware of the transfer of

103

subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.

Community Offering

          To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, we may, in our discretion, offer shares to the general public in a direct community offering. In the direct community offering, preference will be given to natural persons and trusts of natural persons who are residents of Androscoggin County, Maine.

          We will consider a person to be resident of Androscoggin County if he or she occupies a dwelling in the county, has the intent to remain for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence together with an indication that such presence is something other than merely transitory in nature. We may utilize depositor or loan records or other evidence provided to us to make a determination as to a person’s resident status. In all cases, the determination of residence status will be made by us in our sole discretion.

          Purchasers in the community offering are eligible to purchase up to $100,000 of common stock (which equals 10,000 shares). If shares are available for preferred subscribers in the community offering but there are insufficient shares to satisfy all orders, the available shares will be allocated pro rata to cover orders of natural persons residing in Androscoggin County, and thereafter pro rata to cover orders of other members of the general public, so that each person in such category of the community offering may receive 1,000 shares. In addition, orders received for common stock in the community offering shall first be filled up to a maximum of two percent (2%) of the shares sold and thereafter, remaining shares will be allocated on an equal number of shares basis per order until all orders are filled.

          The community offering, if held, may commence concurrently with, during or subsequent to the subscription offering and will terminate no later than 45 days after the close of the subscription offering unless extended by us, with approval of the Office of Thrift Supervision. If we receive regulatory approval for an extension, all subscribers will be notified of the extension and of the duration of any extension that has been granted, and will have the right to modify or rescind their orders. If we do not receive an affirmative response from a subscriber to any resolicitation, the subscriber’s order will be rescinded and all funds received will be promptly returned with interest.

          The opportunity to subscribe for shares of common stock in the community offering is subject to our right to reject orders, in whole or part, either at the time of receipt of an order or as soon as practicable following the expiration date of the stock offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order.

Syndicated Community Offering

          All shares of common stock not purchased in the subscription offering and community offering may be offered for sale to the general public in a syndicated community offering to be managed by Keefe, Bruyette & Woods, Inc., acting as our agent. In such capacity, Keefe, Bruyette & Woods, Inc. may form a syndicate of other brokers-dealers who are NASD member firms. Neither Keefe, Bruyette & Woods, Inc. nor any registered broker-dealer will have any obligation to take or purchase any shares of the common stock in the syndicated community offering; however, Keefe, Bruyette & Woods, Inc. has agreed to use its best efforts in the sale of shares in any syndicated community offering. We have not selected any particular broker-dealers to participate in a syndicated community offering and will not do so until prior to the commencement of the syndicated community offering. The syndicated community

104

offering would terminate no later than 45 days after the expiration of the subscription offering, unless extended by us, with approval of the Office of Thrift Supervision. See “—Community Offering” above for a discussion of rights of subscribers in the event an extension is granted.

          The opportunity to subscribe for shares of common stock in the syndicated community offering is subject to our right in our sole discretion to accept or reject orders, in whole or part, either at the time of receipt of an order or as soon as practicable following the expiration date of the offering. If your order is rejected in part, you will not have the right to cancel the remainder of your order.

          Common stock sold in the syndicated community offering also will be sold at the $10.00 per share purchase price. Purchasers in the syndicated community offering are eligible to purchase up to $100,000 of common stock (which equals 10,000 shares). We may begin the syndicated community offering at any time following the commencement of the subscription offering.

          If we are unable to find purchasers from the general public for all unsubscribed shares, we will make other purchase arrangements, if feasible. Other purchase arrangements must be approved by the Office of Thrift Supervision and may provide for purchases for investment purposes by directors, officers, their associates and other persons in excess of the limitations provided in the plan of reorganization and stock issuance plan and in excess of the proposed director and executive officer purchases discussed earlier, although no such purchases are currently intended. If other purchase arrangements cannot be made, we may either: terminate the stock offering and promptly return all funds with interest; promptly return all funds with interest, set a new offering range and give all subscribers the opportunity to place a new order for shares of Auburn Bancorp, Inc. common stock; or take such other actions as may be permitted by the Office of Thrift Supervision and the Securities and Exchange Commission.

105

Limitations on Purchases of Shares

          In addition to the purchase limitations described above under “—Subscription Offering and Subscription Rights,” “—Community Offering” and “—Syndicated Community Offering,” the plan of reorganization and stock issuance plan provides for the following purchase limitations:

• The aggregate amount of our outstanding common stock owned or controlled by persons other than Auburn Bancorp, MHC at the close of the stock offering must be less than 50% of our total outstanding common stock.

• No individual (or individuals on a single deposit account) may purchase more than $100,000 of common stock (which equals 10,000 shares), subject to increase as described below.

• No Person by himself, or with an Associate or group of Persons acting in concert, may purchase more than $150,000 common stock (which equals 15,000 shares), or 5% of the common stock sold in the stock offering (which may be fewer than 15,000 shares under certain circumstances), other than common stock held by or through a tax-qualified employee plan, subject to increase as described below.

• All employee stock ownership plans or other tax-qualified employee stock benefit plans (collectively, “ESOPs”) may not purchase, in the aggregate, more than 4.9% of the common stock or 4.9% of Auburn Bancorp, Inc.’s stockholders’ equity.

• All ESOPs and management recognition plans (“MRPs”) may not purchase, in the aggregate, more than either 4.9% of the outstanding shares of the Holding Company’s Common Stock or 4.9% of the Holding Company’s stockholders’ equity at the close of the stock offering, but if Auburn Bancorp, Inc.’s tangible capital equals at least 10% at the time the Plan is implemented, subject to the approval of the OTS, such ESOPs and MRPs may encompass, in the aggregate, up to 5.88% of the outstanding common stock or stockholders’ equity at the close of this stock offering.

• All MRPs may not purchase, in the aggregate, more than either 1.47% of the Common Stock of the Holding Company or 1.47% of the Holding Company’s stockholders’ equity at the close of the stock offering, but if Auburn Bancorp, Inc.’s tangible capital equals at least 10% at the time the Plan is implemented, subject to the approval of the OTS, the MRPs may encompass, in the aggregate, up to 1.96% of the outstanding common stock or stockholders’ equity at the close of this stock offering.

• All stock option plans (“Option Plans”) may not purchase, in the aggregate, more than either 4.9% of the Holding Company’s outstanding Common Stock at the close of the proposed issuance or 4.9% of the Holding Company’s stockholders’ equity at the close of the stock offering.

• All Option Plans and MRPs may not purchase, in the aggregate, 25% or more of the outstanding common stock held by persons other than the MHC at the close of the stock offering.

• The aggregate amount of common stock acquired in the stock offering by all non-tax-qualified employee plans or management persons and their associates, exclusive of any common stock acquired by such plans or persons in the secondary market, may not exceed

106

34% of (i) the outstanding shares of common stock held by persons other than Auburn Bancorp, MHC at the conclusion of the stock offering or (ii) the stockholders’ equity of Auburn Bancorp, Inc. held by persons other than Auburn Bancorp, MHC at the conclusion of the stock offering. In calculating the number of shares held by management persons and their associates, shares held by any tax-qualified or non-tax-qualified employee stock benefit plan that are attributable to such persons will not be counted.

•

Each subscriber must subscribe for a minimum of the lesser of 25 shares or $500.

          We may, in our sole discretion, increase the individual or aggregate purchase limitation to up to 5% of the shares of common stock sold in the stock offering to persons other than Auburn Bancorp, MHC. We do not intend to increase the maximum purchase limitation unless market conditions warrant. If we decide to increase the purchase limitations, persons who subscribed for the maximum number of shares of common stock will be given the opportunity to increase their subscriptions accordingly, subject to the rights and preferences of any person who has priority subscription rights. We, in our discretion, also may give other large subscribers the right to increase their subscriptions.

          In the event that the maximum purchase limitation represents more than 2% of the shares sold in the stock offering, orders for common stock in the syndicated community offering will be filled first to a maximum of 2% of the total number of shares sold in the stock offering and thereafter any remaining shares will be allocated on an equal number of shares basis per order until all available shares have been allocated.

          In the event that we increase the maximum purchase limitation to 5% of the shares of common stock sold in the stock offering, we may, subject to approval by the OTS, further modify that limit to provide that any person, group of associated persons, or persons otherwise acting in concert subscribing for 5% of the shares of common stock sold in the stock offering may purchase up to 10% of the shares of common stock sold in the stock offering; provided that purchases in excess of 5% of the shares of common stock sold in the stock offering may not exceed 10% in the aggregate of the total shares sold in the stock offering.

          The plan of reorganization and stock issuance plan defines “acting in concert” to mean knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not by an express agreement or understanding; or a combination or pooling of voting or other interests in the securities of an issuer for a common purpose under any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. In general, a person who acts in concert with another party will also be deemed to be acting in concert with any person who is also acting in concert with that other party. We may presume that certain persons are acting in concert based upon, among other things, joint account relationships and the fact that persons may have filed joint Schedules 13D or 13G with the Securities and Exchange Commission with respect to other companies. For purposes of the plan of reorganization and stock issuance plan, our directors are not deemed to be acting in concert solely by reason of their board membership.

          The plan of reorganization and stock issuance plan defines “associate,” with respect to a particular person, to mean:

(i) any corporation or organization (other than Auburn Bancorp, MHC, Auburn Bancorp, Inc. or Auburn Savings Bank or a majority-owned subsidiary of Auburn Bancorp, MHC, Auburn Bancorp, Inc. or Auburn Savings Bank) of which a person is a senior officer or partner or is, directly or indirectly, beneficial owner of 10% or more of any class of equity securities of the corporation or organization;

107

(ii)	any trust or other estate in which a person has a substantial beneficial interest or serves as a trustee or fiduciary; and
(iii)	any person who is related by blood or marriage to such person and who lives in the same home as such person or who is a director or senior officer of Auburn Bancorp, MHC, Auburn Bancorp, Inc. or Auburn Savings Bank or any of their subsidiaries.

          For example, a corporation of which a person serves as an officer would be an associate of that person and, therefore, all shares purchased by the corporation would be included with the number of shares that the person could purchase individually under the purchase limitations described above. We have the right in our sole discretion to reject any order submitted by a person whose representations we believe to be false or who we otherwise believe, either alone or acting in concert with others, is violating or circumventing, or intends to violate or circumvent, the terms and conditions of the plan of reorganization and stock issuance plan. Directors and officers are not treated as associates of each other solely by virtue of holding such positions. We have the sole discretion to determine whether prospective purchasers are “associates” or “acting in concert.”

Marketing Arrangements

          Offering materials have been initially distributed through mailings to those eligible to subscribe in the subscription offering. To assist in the marketing of our common stock, we have retained Keefe, Bruyette & Woods, Inc. which is a broker-dealer registered with the Financial Industry Regulatory Authority. Keefe, Bruyette & Woods, Inc. will assist us in the stock offering by:

• Acting as our financial advisor for the stock offering, providing administrative services and managing the stock information center by assisting interested stock subscribers and by keeping records of all stock orders;

• Educating our employees about the stock offering;

• Targeting our sales efforts, including assisting in the preparation of marketing materials; and

• Assisting in the solicitation of proxies from Auburn Savings Bank’s members for use at the special meeting.

          For these services, Keefe, Bruyette & Woods, Inc. has received a management fee of $25,000 and will receive a success fee of $85,000 upon completion of the reorganization and stock offering. In the event that Keefe, Bruyette & Woods, Inc. sells common stock through a group of broker-dealers in a syndicated community offering, the total fees payable to the selected dealers (which may include Keefe, Bruyette & Woods, Inc. for the shares it sells) for the shares they sell shall not exceed 5.5% of the aggregate dollar amount of shares sold in the syndicated offering. Keefe, Bruyette & Woods, Inc. will also be reimbursed for its reasonable out-of-pocket expenses in an amount not to exceed $10,000 and for its legal fees and expenses in an amount not to exceed $35,000.

          We will indemnify Keefe, Bruyette & Woods, Inc. against liabilities and expenses, including legal fees, incurred in connection with certain claims or litigation arising out of or based upon untrue statements or omissions contained in the offering materials for the common stock, including liabilities under the Securities Act of 1933, as amended.

108

Description of Sales Activities

          Auburn Bancorp, Inc. will offer the common stock in the subscription offering and community offering principally by the distribution of this prospectus and through activities conducted at our stock information center. The stock information center is expected to operate Monday through Friday from 9:00 a.m. to 5:00 p.m., Eastern time, throughout the subscription offering. It is expected that at any particular time one or more Keefe, Bruyette & Woods, Inc. employees will be working at the stock information center. Employees of Keefe, Bruyette & Woods, Inc. will be responsible for responding to questions regarding the stock offering and processing stock orders.

          Sales of common stock will be made by registered representatives affiliated with Keefe, Bruyette & Woods, Inc. or by the selected dealers managed by Keefe, Bruyette & Woods, Inc. Auburn Savings Bank’s officers and employees may participate in the stock offering in clerical capacities, providing administrative support in effecting sales transactions or, when permitted by state securities laws, answering questions of a mechanical nature relating to the proper execution of the order form. Auburn Savings Bank’s officers may answer questions regarding our business when permitted by state securities laws. Other questions of prospective purchasers, including questions as to the advisability or nature of the investment, will be directed to registered representatives. Auburn Savings Bank’s officers and employees have been instructed not to solicit offers to purchase common stock or provide advice regarding the purchase of common stock.

          None of Auburn Savings Bank’s officers, directors or employees will be compensated, directly or indirectly, for any activities in connection with the offer or sale of securities issued in the reorganization.

          None of Auburn Savings Bank’s personnel participating in the stock offering is registered or licensed as a broker or dealer or an agent of a broker or dealer. Auburn Savings Bank’s personnel will assist in the above-described sales activities under an exemption from registration as a broker or dealer provided by Rule 3a4-1 promulgated under the Securities Exchange Act of 1934. Rule 3a4-1 generally provides that an “associated person of an issuer” of securities will not be deemed a broker solely by reason of participation in the sale of securities of the issuer if the associated person meets certain conditions. These conditions include, but are not limited to, that the associated person participating in the sale of an issuer’s securities not be compensated in connection with the stock offering at the time of participation, that the person not be associated with a broker or dealer and that the person observe certain limitations on his or her participation in the sale of securities. For purposes of this exemption, “associated person of an issuer” is defined to include any person who is a director, officer or employee of the issuer or a company that controls, is controlled by or is under common control with the issuer.

109

Procedure for Purchasing Shares in the Subscription and Community Offerings

          Prospectus Delivery. To ensure that each purchaser receives a prospectus at least 48 hours before the expiration date of the stock offering in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, no prospectus will be mailed any later than five days prior to the expiration date or hand delivered any later than two days prior to that date. We are not obligated to deliver a prospectus or order form by means other than U.S. Mail. Execution of an order form will confirm receipt of delivery of a prospectus in accordance with Rule 15c2-8. Order forms will be distributed only if preceded or accompanied by a prospectus.

          Termination of Offering; Rejection of Orders. We reserve the right in our sole discretion to terminate the stock offering at any time and for any reason, in which case we will cancel any deposit account withdrawal holds and promptly return all funds submitted, with interest calculated at Auburn Savings Bank’s applicable passbook savings rate from the date of receipt.

          We have the right to reject any order submitted in the stock offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of reorganization and stock issuance plan.

          Use of Order Forms. In order to purchase shares of common stock in the subscription offering and direct community offering, you must submit a properly completed and signed original stock order form. We will not be required to accept orders submitted on photocopied or facsimilied stock order forms. All order forms must be received by our stock information center (not postmarked) prior to 12:00 Noon, Eastern time, on [ ], 2008. Your order form must be accompanied by full payment for all of the shares subscribed for or include appropriate authorization in the space provided on the order form for withdrawal of full payment from a deposit account with Auburn Savings Bank. You may submit your order form and payment in one of three ways: by mail using the reply envelope provided; by overnight delivery to the indicated address noted on the form; or by hand delivery to either of our offices or our stock information center. Our interpretation of the terms and conditions of the plan of reorganization and stock issuance plan and of the acceptability of the order forms will be final.

          We need not accept order forms that are received after the expiration of the subscription offering or community offering, as the case may be, or that are executed defectively or that are received without full payment or without appropriate withdrawal instructions. We have the right to waive or permit the correction of incomplete or improperly executed order forms, but do not represent that we will do so. Once received, an executed order form may not be modified, amended or rescinded without our consent unless the stock offering has not been completed within 45 days after the end of the subscription offering, unless extended.

          To ensure that your stock purchase eligibility and priority are properly identified, you must list all accounts on the order form, giving all names in each account and the account number. We will strive to identify your ownership in all accounts, but cannot guarantee we will identify all accounts in which you have an ownership interest. When entering the stock registration on your stock order form, you should not add the name(s) of persons without subscription rights, or who qualify only in a lower purchase priority than you. Joint registration of shares purchased in the subscription offering will be allowed only if the qualifying deposit account is so registered.

          The reverse side of the order form contains a regulatorily mandated certification form. We will not accept order forms where the certification form is not executed. By executing and returning the certification form, you will be certifying that you received this prospectus and acknowledging that the

110

common stock is not a deposit account and is not insured or guaranteed by the federal government. You also will be acknowledging that you received disclosure concerning the risks involved in this stock offering. The certification form could be used as support to show that you understand the nature of this investment.

          Payment for Shares. Payment for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for shares may be made only by:

• Personal check, bank draft or money order made payable directly to Auburn Bancorp, Inc. (you may not remit Auburn Savings Bank line of credit checks, and we will not accept third party checks, including those payable to you and endorsed over to Auburn Bancorp, Inc.); or

• Authorization of withdrawal from the types of Auburn Savings Bank deposit account(s) provided for on the stock order form.

          In the case of payments made by check or money order, these funds must be available in the account(s) when the order is received. Please do not overdraft your Auburn Savings Bank account(s). No wire transfers will be accepted.

          Checks and money orders will be cashed immediately and the subscription funds will be held by Auburn Savings Bank or, at our discretion, in an escrow account at an independent insured depository institution.

          Interest will be paid on payments made by check, bank draft or money order at our passbook savings rate from the date payment is received at the stock information center until the completion or termination of the stock offering. If payment is made by authorization of withdrawal from deposit accounts, the funds authorized to be withdrawn from a deposit account will continue to accrue interest at the contractual rates until completion or termination of the stock offering, unless the certificate matures after the date of receipt of the order form but before closing or termination of the stock offering, in which case funds will earn interest at the passbook savings rate from the date of maturity until the stock offering is completed or terminated, but a hold will be placed on the funds, making them unavailable to the depositor until completion or termination of the stock offering. When the stock offering is completed, the funds received in the stock offering will be used to purchase the shares of common stock ordered. The shares of common stock issued in the stock offering cannot and will not be insured by the Federal Deposit Insurance Corporation or any other government agency. If the stock offering is not consummated for any reason, all funds submitted will be promptly refunded with interest as described above.

          If a subscriber authorizes us to withdraw the amount of the purchase price from his or her deposit account, we will do so as of the completion of the stock offering, though the account must contain the full amount necessary for payment at the time the subscription order is received. On your stock order form, please do not designate a withdrawal from accounts with check-writing privileges. Please submit a check instead. We will waive any applicable penalties for early withdrawal from certificate accounts. If the remaining balance in a certificate account is reduced below the applicable minimum balance requirement at the time funds are actually transferred under the authorization, the certificate will be canceled at the time of the withdrawal, without penalty, and the remaining balance will earn interest at our passbook savings rate. You may not authorize direct withdrawal from an Auburn Savings Bank IRA. If you wish to use funds in your Auburn Savings Bank IRA to purchase shares of our common stock, please refer to the following section.

111

          The employee stock ownership plan will not be required to pay for the shares subscribed for at the time it subscribes, but rather may pay for shares of common stock subscribed for upon the completion of the stock offering; provided that there is in force from the time of its subscription until the completion of the stock offering a loan commitment from an unrelated financial institution or from us to lend to the employee stock ownership plan, at that time, the aggregate purchase price of the shares for which it subscribed.

          We may, in our sole discretion, permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for such shares of common stock for which they subscribe in the community offering at any time prior to the 48 hours before the completion of the stock offering. This payment may be made by wire transfer.

          Using IRA Funds To Purchase Shares. Our individual retirement accounts (IRAs) do not permit investment in common stock. A depositor interested in using his or her IRA funds to purchase common stock must do so through a self-directed IRA. Since we do not offer those accounts, we will allow a depositor to make a trustee-to-trustee transfer of the IRA funds to a trustee offering a self-directed IRA program with the agreement that the funds will be used to purchase our common stock in the stock offering. There will be no early withdrawal or Internal Revenue Service interest penalties for such transfers. The new trustee would hold the common stock in a self-directed account in the same manner as we now hold the depositor’s IRA funds. An annual administrative fee may be payable to the new trustee. Depositors interested in using funds in an IRA with us to purchase common stock should contact the stock information center at least two weeks before the subscription offering because processing such transactions takes additional time.

Interpretation, Amendment and Termination of Plan

          To the extent permitted by law, all interpretations by us of the plan of reorganization and stock issuance plan will be final; however, such interpretations have no binding effect on the Office of Thrift Supervision. The plan of reorganization and stock issuance plan provides that, if deemed necessary or desirable, we may substantively amend the plan of reorganization and stock issuance plan as a result of comments from regulatory authorities or otherwise. If we materially amend terms of the plan of reorganization and stock issuance plan after the special meeting, however, we will be required to resolicit the members of Auburn Savings Bank for approval.

          We may terminate the plan of reorganization and stock issuance plan at any time prior to the earlier of [ ], 2008 and the approval of the of reorganization and stock issuance by the Office of Thrift Supervision, and may terminate the plan thereafter with the consent of the Office of Thrift Supervision. The plan of reorganization and stock issuance plan will be terminated if the members of Auburn Savings Bank do not approve the plan. Completion of the stock offering requires the sale of all shares of the common stock within 90 days following approval of the plan of reorganization and stock issuance plan by the Office of Thrift Supervision, unless an extension is granted by the Office of Thrift Supervision. The plan of reorganization and stock issuance plan will be terminated if the reorganization in not completed within 24 months after member approval.

How We Determined the Offering Range and the $10.00 Purchase Price

          Federal and state regulations require that the aggregate purchase price of the securities sold in connection with the stock offering be based upon our estimated pro forma value on a fully converted basis, as determined by an independent appraisal. The term “fully converted” means that the appraiser assumed that 100% of our stock had been sold to the public. We have retained Keller & Company, Inc., which is experienced in the evaluation and appraisal of business entities, to prepare the independent

112

appraisal. Keller & Company will receive fees totaling $25,000 for the preparation and delivery of the original appraisal report and the final updated appraisal report, plus reimbursement of out-of-pocket expenses not to exceed $1,500, and $1,500 for the preparation and delivery of each additional required updated appraisal report. We have agreed to indemnify Keller & Company under certain circumstances against liabilities and expenses, including legal fees, arising out of, related to, or based upon the stock offering.

          Keller & Company prepared the appraisal taking into account the pro forma impact of the stock offering. For its analysis, Keller & Company undertook substantial investigations to learn about our business and operations. We supplied financial information, including annual financial statements, information on the composition of assets and liabilities, and other financial schedules. In addition to this information, Keller & Company reviewed our reorganization and stock issuance applications as filed with the Office of Thrift Supervision and our registration statement as filed with the Securities and Exchange Commission. Furthermore, Keller & Company visited our facilities and had discussions with our management. Keller & Company did not perform a detailed individual analysis of the separate components of our assets and liabilities. We did not impose any limitations on Keller & Company in connection with its appraisal.

          In connection with its appraisal, Keller & Company reviewed the following factors, among others:

• the economic and demographic conditions of our primary market area;

• our financial performance and condition in relation to publicly traded subsidiaries of mutual holding companies that Keller & Company deemed comparable to us;

• the specific terms of the stock offering of our common stock;

• the pro forma impact of the additional capital raised in the stock offering;

• our proposed dividend policy;

• conditions of securities markets in general; and

• the market for thrift institution common stock in particular.

          Consistent with Office of Thrift Supervision appraisal guidelines, Keller & Company’s analysis utilized five selected valuation procedures: the price/book method; the price/tangible book method; the price/earnings method; the price/core earnings method and the price/assets method, all of which are described in its report. Keller & Company’s appraisal report is filed as an exhibit to the registration statement that we have filed with the Securities and Exchange Commission. See “Where You Can Find More Information.” Keller & Company placed the greatest emphasis on the price/core earnings and price book methods in estimating pro forma market value. Keller & Company compared the pro forma price/core earnings and price/book ratios for Auburn Bancorp, Inc. to the same ratios for a peer group of comparable companies. The peer group consisted of the 10 publicly traded subsidiaries of mutual holding companies with assets of $450 million in the New England, Mid-Atlantic or Midwest regions. The peer group constituted companies with:

• average assets of $323.6 million;

• average non-performing assets of 0.67% of total assets;

113

• average net loans of 68.97% of total assets;

• average equity of 14.88% of total assets; and

• average core income of 0.42% of average assets.

          On the basis of the analysis in its report, Keller & Company has advised us that, in its opinion, as of February 15, 2008, our estimated pro forma market value on a fully converted basis was within the valuation range of $5.0 million and $6.8 million with a midpoint of $5.9 million.

          The following table presents a summary of selected pricing ratios for the peer group companies and pro forma pricing ratios for Auburn Bancorp, Inc. used by Keller & Company in its appraisal. These ratios are based on earnings for the 12 months ended December 31, 2007 and book value and tangible book value as of December 31, 2007.

	Fully Converted Price to Core Earnings Multiple	Fully Converted Price to Book Value Ratio	Fully Converted Price to Tangible Book Value Ratio
Auburn Bancorp, Inc. (pro forma):
Minimum	36.55x	59.74%	59.61%
Midpoint	42.53x	64.19%	64.07%
Maximum	48.39x	67.93%	67.81%
Maximum, as adjusted	54.97x	71.56%	71.44%
Peer Group (on a fully-converted basis):
Average	35.51x	79.02%	81.87%
Median	30.74x	78.45%	82.10%

          Compared to the average pricing ratios of the peer group at the maximum of the offering range, our stock would be priced at discount of 14.03% to the peer group on a price-to-book basis and a premium of 36.27% on a price-to-core earnings basis. This means that, at the maximum of the offering range, a share of our common stock would be less expensive than the peer group based on a book value per share basis and more expensive on a core earnings per share basis. The disparity between the pricing ratios results from Auburn Bancorp, Inc., on a pro forma basis, generally having higher levels of equity but lower earnings than the companies in the peer group. The appraisal concluded that these ranges represented the appropriate balance of the two approaches to valuing Auburn Bancorp, Inc., and the number of shares to be sold, in comparison to the peer group institutions.

          Our board of directors reviewed Keller & Company’s appraisal report, including the methodology and the assumptions used by Keller & Company, and determined that the valuation range was reasonable and adequate. Our board of directors determined that 45% of the shares of our common stock should be sold in the stock offering at a purchase price of $10.00 per share. Multiplying this percentage by Keller & Company’s valuation range yielded an offering range of $2,256,750 to $3,053,250, with a midpoint of $2,655,000. Dividing these dollar amounts by the purchase price resulted in an offering range of between 225,675 and 305,325 shares, with a midpoint of 265,500 shares. The purchase price of $10.00 per share was determined by us, taking into account, among other factors, offering the common stock in a manner that will achieve the widest distribution of the stock and desired liquidity in the common stock after the stock offering.

          Since the outcome of the stock offering relates in large measure to market conditions at the time of sale, it is not possible for us to determine the exact number of shares that we will issue at this time. The offering range may be amended, with the approval of the Office of Thrift Supervision, if necessitated by developments following the date of the appraisal in, among other things, market conditions, our financial condition or operating results, regulatory guidelines or national or local economic conditions.

114

          If, upon completion of the subscription offering, at least the minimum number of shares are subscribed for, Keller & Company, after taking into account factors similar to those involved in its prior appraisal, will determine its estimate of our pro forma market value as of the close of the subscription offering. If, as a result of regulatory considerations, demand for the shares or changes in market conditions, Keller & Company determines that our pro forma market value has increased, we may sell up to 351,124 shares without any further notice to you.

          No shares will be sold unless Keller & Company confirms that, to the best of its knowledge and judgment, nothing of a material nature has occurred that would cause it to conclude that the actual total purchase price of the shares on an aggregate basis was materially incompatible with its appraisal. If, however, the facts do not justify that statement, the stock offering may be canceled, a new offering range and price per share set and new subscription, community and syndicated community offerings held. Under those circumstances, all funds would be promptly returned and all subscribers would be given the opportunity to place a new order. If the stock offering is terminated all subscriptions will be cancelled and subscription funds will be returned promptly with interest, and holds on funds authorized for withdrawal from deposit accounts will be released. If Keller & Company establishes a new valuation range, it must be approved by the Office of Thrift Supervision.

          In formulating its appraisal, Keller & Company relied upon the truthfulness, accuracy and completeness of all documents we furnished to it. Keller & Company also considered financial and other information from regulatory agencies, other financial institutions, and other public sources, as appropriate. While Keller & Company believes this information to be reliable, Keller & Company does not guarantee the accuracy or completeness of the information and did not independently verify the financial statements and other data provided by us or independently value our assets or liabilities. The appraisal is not intended to be, and must not be interpreted as, a recommendation of any kind as to the advisability of purchasing shares of common stock. Moreover, because the appraisal must be based on many factors that change periodically, there is no assurance that purchasers of shares in the stock offering will be able to sell shares after the stock offering at prices at or above the purchase price.

          Copies of the appraisal report of Keller & Company, including any amendments to the report, and the detailed memorandum of the appraiser setting forth the method and assumptions for such appraisal are available for inspection at our Lewiston, Maine office and the other locations specified under “Where You Can Find More Information.”

Mutual Holding Company Data

          The following table presents a summary of selected pricing ratios for publicly traded mutual holding companies and the pricing ratios for us, without the ratios being adjusted to the hypothetical case of being fully converted. These ratios are based on earnings for the 12 months ended December 31, 2007 and book value and price to tangible book value as of December 31, 2007.

	Non-Fully Converted Price to Core Earnings Multiple		Non-Fully Converted Price to Book Value Ratio			Non-Fully Converted Price to Tangible Book Value Ratio
Auburn Bancorp, Inc. (pro forma):
Minimum		38.64x		85.48	%		85.22	%
Midpoint		45.08x		94.83	%		94.55	%
Maximum		51.43x		103.17	%		102.88	%
Maximum, as adjusted		58.60x		111.71	%		111.42	%
Publicly traded mutual holding companies as of February 15, 2008:(1)
Average		64.75x		138.92	%		147.59	%
Median		46.94x		131.52	%		143.43	%

(1) The information for publicly traded mutual holding companies may not be meaningful for investors because it presents average and median information for mutual holding companies that issued a different percentage of their stock in their offerings than the 45% that we are offering to the public. In addition, the effect of stock repurchases also affects the ratios to a greater or lesser degree depending upon repurchase activity.

115

Possible Termination of the Offering

          We must sell a minimum of 225,675 shares to complete the stock offering. If we terminate the stock offering because we fail to sell the minimum number of shares or for any other reason, we will promptly return your funds with interest at our passbook savings rate and without deduction of any fees, and holds on funds authorized for withdrawal from deposit accounts will be released.

After-Market Performance of “First-Step” Mutual Holding Company Offerings

          The following table provides information regarding the after-market performance of all “first-step” mutual holding company offerings completed from January 1, 2007 through February 15, 2008. “First-step” mutual holding company offerings are initial public offerings by companies in the mutual holding company form of organization.

116

		Appreciation From Initial Offering Price
Issuer (Market/Symbol)	Date of IPO	After 1 Day		After 1 Week		After 4 Weeks		Through February 15, 2008
Oritani Financial Corp. (NasdaqGS:ORIT)	1/24/07	59.7	%	54.3	%	55.0	%	13.4	%
Delanco Bancorp Inc. (OTCBB: DLNO)	4/02/07	0.0	%	0.0	%	(5.0	)%	(25.0	)%
Sugar Creek Financial Corp (OTCBB: SUGR)	4/04/07	0.0	%	0.0	%	6.0	%	(9.0	)%
TFS Financial Corp (NasdaqGS:TFSL)	4/23/07	17.9	%	18.0	%	23.4	%	23.0	%
Hometown Bancorp Inc. (OTCBB: HTWC)	06/29/07	0.0	%	0.0	%	(5.0	)%	(28.0	)%
Beneficial Mutual Bancorp (NasdaqGS:BNCL)	07/16/07	(7.9	)%	(6.8	)%	(11.5	)%	(6.3	)%
FSB Community Bankshares Inc. (NasdaqGM:FSBC)	08/15/07	0.0	%	0.0	%	(5.0	)%	(14.3	)%
LaPorte Bancorp Inc. (NasdaqCM:LPSB)	10/15/07	(8.1	)%	(13.8	)%	(21.0	)%	(29.0	)%
Northfield Bancorp Inc. (NasdaqGS:NFBK)	11/08/07	4.5	%	13.0	%	4.9	%	3.8	%
Sound Financial Inc. (OTCBB: SNFL)	01/09/08	(10.0	)%	(10.0	)%	(8.5	)%	(7.0	)%
Meridian Interstate Bancorp (NasdaqGS:EBSB)	01/23/08	(4.0	)%	(5.2	)%	NA	%	(5.0	)%

          This table is not intended to be indicative of how our stock may perform. Furthermore, this table presents only short-term price performance with respect to several companies that only recently completed their initial public offerings and may not be indicative of the longer-term stock price performance of these companies. Stock price appreciation is affected by many factors, including, but not limited to: general market and economic conditions; the interest rate environment; the amount of proceeds a company raises in its stock offering; and numerous factors relating to the specific company, including the experience and ability of management, historical and anticipated operating results, the nature and quality of Auburn Bancorp, Inc.’s assets, Auburn Bancorp, Inc.’s market area, the quality of management and management’s ability to deploy proceeds (such as through loans and investments, the acquisition of other financial institutions or other businesses, the payment of dividends and common stock repurchases), the presence of professional and other investors who purchase stock on speculation, as well as other unforeseeable events not in the control of management. In addition, the companies listed in the table above may not be similar to Auburn Bancorp, Inc., with regard to market capitalization, offering size, earnings quality and growth potential, among other factors. Further, the pricing ratios for their stock offerings were in some cases different from the pricing ratios for Auburn Bancorp Inc.’s common stock and the market conditions in which these offerings were completed were, in some cases, different from current market conditions. Any or all of these differences may cause our stock to perform differently from these other offerings. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the “Risk Factors” section of this prospectus.

          You should be aware that, in certain market conditions, stock prices of thrift initial public offerings have decreased. For example, as the above table illustrates, the stock of eight companies traded at or below the initial offering price at various times through February 15, 2008. We can give you no assurance that our stock will not trade below the $10.00 purchase price or that our stock will perform similarly to other recent mutual to stock conversions.

Delivery of Certificates

          Certificates representing the common stock sold in the stock offering will be mailed by our transfer agent to the persons whose subscriptions or orders are filled at the addresses of such persons appearing on the stock order form as soon as practicable following completion of the stock offering. We will hold certificates returned as undeliverable until claimed by the persons legally entitled to the certificates or otherwise disposed of in accordance with applicable law. Until certificates for common stock are

117

available and delivered to subscribers, subscribers may not be able to sell their shares, even though trading of the common stock may have commenced.

Restrictions on Repurchase of Stock

          Under Office of Thrift Supervision regulations, for a period of one year from the date of the completion of the stock offering we may not repurchase any of our common stock from any person, except (1) in an offer made to all stockholders to repurchase the common stock on a pro rata basis, approved by the Office of Thrift Supervision, (2) the repurchase of qualifying shares of a director, (3) repurchases to fund tax-qualified employee stock benefit plans, or (4) repurchases to fund management recognition plans that have been ratified by stockholders, with prior written notice to the Office of Thrift Supervision. Where extraordinary circumstances exist, the Office of Thrift Supervision may approve the open market repurchase of up to 5% of our common stock during the first year following the stock offering. To receive such approval, we must establish compelling and valid business purposes for the repurchase to the satisfaction of the Office of Thrift Supervision. Furthermore, repurchases of any common stock are prohibited if they would cause Auburn Savings Bank’s regulatory capital to be reduced below the amount required under the regulatory capital requirements imposed by the Office of Thrift Supervision.

Restrictions on Transfer of Shares After the Reorganization Applicable to Officers and Directors

          Common stock purchased in the stock offering will be freely transferable, except for shares purchased by our directors and executive officers.

          Shares of common stock purchased by our directors and executive officers and their associates may not be sold for a period of one year following the stock offering, except upon the death of the stockholder or unless approved by the Office of Thrift Supervision. Shares purchased by these persons in the open market after the stock offering will be free of this restriction. Shares of common stock issued to directors and executive officers will bear a legend giving appropriate notice of the restriction and, in addition, we will give appropriate instructions to our transfer agent with respect to the restriction on transfers. Any shares issued to directors and executive officers as a stock dividend, stock split or otherwise with respect to restricted common stock will be similarly restricted.

          Persons affiliated with us, including our directors and executive officers, received subscription rights based only on their deposits with Auburn Savings Bank as account holders. While this aspect of the stock offering makes it difficult, if not impossible, for insiders to purchase stock for the explicit purpose of meeting the minimum of the offering, any purchases made by persons affiliated with us for the explicit purpose of meeting the minimum of the offering must be made for investment purposes only, and not with a view towards redistribution. Furthermore, as set forth above, Office of Thrift Supervision regulations restrict sales of common stock purchased in the stock offering by directors and executive officers for a period of one year following the stock offering.

          Purchases of outstanding shares of our common stock by directors, officers, or any person who becomes an executive officer or director after adoption of the plan of reorganization and stock issuance plan, and their associates, during the three-year period following the stock offering may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Office of Thrift Supervision. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock or to the purchase of stock under management or employee stock benefit plans.

118

          We have filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 for the registration of the common stock to be issued in the stock offering. This registration does not cover the resale of the shares. Shares of common stock purchased by persons who are not affiliates of us may be resold without registration. Shares purchased by an affiliate of us will have resale restrictions under Rule 144 of the Securities Act. If we meet the current public information requirements of Rule 144, each affiliate of ours who complies with the other conditions of Rule 144, including those that require the affiliate’s sale to be aggregated with those of certain other persons, would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of 1% of our outstanding shares or the average weekly volume of trading in the shares during the preceding four calendar weeks. We may make future provision to permit affiliates to have their shares registered for sale under the Securities Act under certain circumstances.

RESTRICTIONS ON ACQUISITION OF AUBURN BANCORP, INC.

General

          The plan of reorganization and stock issuance plan provides that Auburn Savings Bank will reorganize into the “two-tier” federal mutual holding company structure and includes the adoption of a federal stock charter and bylaws of Auburn Bancorp, Inc. Certain provisions in the charter and bylaws of Auburn Bancorp, Inc. may have antitakeover effects. In addition, regulatory restrictions may make it more difficult for persons or companies to acquire control of us.

Mutual Holding Company Structure

          Auburn Bancorp, MHC will own a majority of the outstanding common stock of Auburn Bancorp, Inc. after the stock offering and, through its board of directors, will be able to exercise voting control over most matters put to a vote of stockholders. For example, Auburn Bancorp, MHC may exercise its voting control to prevent a sale or merger transaction or to defeat a stockholder nominee for election to the board of directors of Auburn Bancorp, Inc. It will not be possible for another entity to acquire Auburn Bancorp, Inc. without the consent of Auburn Bancorp, MHC. Auburn Bancorp, MHC, as long as it remains in the mutual form of organization, will control a majority of the voting stock of Auburn Bancorp, Inc.

Charter and Bylaws of Auburn Bancorp, Inc.

          Although our board of directors is not aware of any effort that might be made to obtain control of us after the stock offering, the board of directors believed it appropriate to adopt certain provisions permitted by federal regulations that may have the effect of deterring a future takeover attempt that is not approved by our board of directors. The following description of these provisions is only a summary and does not provide all of the information contained in our charter and bylaws. See “Where You Can Find More Information” as to where to obtain a copy of these documents.

          Beneficial Ownership Limitation. Our charter provides that for a period of five years from the date of the consummation of the initial stock offering of Auburn Bancorp, Inc., no person other than Auburn Bancorp, MHC may acquire directly or indirectly the beneficial ownership of more than 10% of any class of an equity security of Auburn Bancorp, Inc. In the event a person acquires shares in violation of this provision, all shares beneficially owned by such person in excess of 10% will be considered “excess shares” and will not be counted as shares entitled to vote or counted as voting shares in connection with any matters submitted to the stockholders for a vote. This provision does not apply to a transaction in which Auburn Bancorp, Inc. fully converts from the mutual holding company form of organization.

          Board of Directors.

          Classified Board. Our board of directors is divided into three classes as nearly as equal in number as possible. The stockholders elect one class of directors each year for a term of three years. The classified

119

board makes it more difficult and time consuming for a stockholder group to fully use its voting power to gain control of the board of directors without the consent of the incumbent board of directors of Auburn Bancorp, Inc.

          Filling of Vacancies; Removal. The bylaws provide that any vacancy occurring in the board of directors, including a vacancy created by an increase in the number of directors, may be filled by a vote of a majority of the remaining directors although less than a quorum of the board of directors then in office. A person elected to fill a vacancy on the board of directors will serve until the next election of directors by the stockholders. Our bylaws provide that a director may be removed from the board of directors prior to the expiration of his or her term only for cause and only upon the vote of a majority of the outstanding shares of voting stock. These provisions make it more difficult for stockholders to remove directors and replace them with their own nominees.

          Elimination of Cumulative Voting. The charter of Auburn Bancorp, Inc. provides that no shares will be entitled to cumulative voting. The elimination of cumulative voting makes it more difficult for a stockholder group to elect a director nominee.

          Qualification. The bylaws provide that no person will be eligible to serve on the board of directors who (1) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, (2) is a person against who a banking agency has, within the past ten years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.

          Stockholder Action by Written Consent; Special Meetings of Stockholders. Our stockholders must act only through an annual or special meeting or by unanimous written consent. The bylaws provide that the chairman of the board of directors, the president or a majority of the board of directors or holders of 10% or more of our outstanding shares may request the calling of a special meeting. The provisions of our charter and bylaws limiting stockholder action by written consent and calling of special meetings of stockholders may have the effect of delaying consideration of a stockholder proposal until the next annual meeting, unless a special meeting is called in accordance with the provisions of the bylaws. These provisions also would prevent the holders of a majority of common stock from unilaterally using the written consent procedure to take stockholder action.

          Advance Notice Provisions for Stockholder Nominations and Proposals. Our bylaws establish an advance notice procedure for stockholders to nominate directors or bring other business before an annual meeting of stockholders. Advance notice of nominations or proposed business by stockholders gives the board of directors time to consider the qualifications of the proposed nominees, the merits of the proposals and, to the extent deemed necessary or desirable by the board of directors, to inform stockholders and make recommendations about those matters.

          Stockholder Nominations. A person may not be nominated for election as a director unless that person is nominated by or at the direction of the board of directors or by a stockholder who has given appropriate notice to Auburn Bancorp, Inc. before the meeting. Stockholder nominations must be in writing and delivered to the Secretary of Auburn Bancorp, Inc. at least 30 days prior to the date of the annual meeting, provided however, that in the event that less than 40 days notice or prior public disclosure of the date of the meeting is given or made, notice by a stockholder of his or her intention to nominate a director must be received not later than the close of business on the 10^th day following the day on which notice of the date of the annual meeting was mailed or such public disclosure of the annual meeting was made.

120

          Stockholder Proposals. A stockholder may not bring new business before an annual meeting unless the stockholder has given Auburn Bancorp, Inc. appropriate notice of its intention to bring that business before the meeting. A stockholder may propose new business at an annual meeting; however, such business must be stated in writing and filed with Auburn Bancorp, Inc.’s Secretary at least 30 days before the date of the annual meeting, provided however, that when public notice of the date of the annual meeting is less than 40 days, notice by the stockholder of a proposal must not be received later than the close of business on the 10^th day following the day on which notice of the date of the annual meeting was made to the public. Additionally, if such proposal is not presented, in writing, to Auburn Bancorp, Inc.’s Secretary at least 30 days prior to such meeting, such nomination or proposal shall be laid over for action at an adjourned, special or annual meeting taking place 30 days or more thereafter. A stockholder who desires to raise new business must provide certain information to Auburn Bancorp, Inc. concerning the nature of the new business, the stockholder and the stockholder’s interest in the business matter.

          Authorized but Unissued Shares of Capital Stock. Following the stock offering, we will have authorized but unissued shares of common and preferred stock. Our charter authorizes the board of directors to establish one or more series of preferred stock and, for any series of preferred stock, to determine the terms and rights of the series, including voting rights, conversion rates, and liquidation preferences. Although such shares of common and preferred stock could be issued by the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, it is anticipated that such uses will be unlikely given that Auburn Bancorp, MHC must always own a majority of our common stock.

Regulatory Restrictions

          Office of Thrift Supervision Regulations. The Office of Thrift Supervision regulations provide that for a period of three years following the date of the completion of the stock offering, no person, acting singly or together with associates in a group of persons acting in concert, may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of a class of our equity securities without the prior written approval of the Office of Thrift Supervision. Where any person acquires beneficial ownership of more than 10% of a class of our equity securities without the prior written approval of the Office of Thrift Supervision, the securities beneficially owned by such person in excess of 10% may not be voted by any person or counted as voting shares in connection with any matter submitted to the stockholders for a vote, and will not be counted as outstanding for purposes of determining the affirmative vote necessary to approve any matter submitted to the stockholders for a vote.

          Restrictions on Remutualization Transactions. Current Office of Thrift Supervision regulations permit a mutual holding company to be acquired by a mutual institution in a remutualization transaction. However, in June 2003 the Office of Thrift Supervision issued a policy statement indicating that it views remutualization transactions as raising significant issues concerning disparate treatment of minority stockholders and mutual members of the target entity and raising issues concerning the effect on the mutual members of the acquiring entity. Under certain circumstances, the Office of Thrift Supervision intends to give these issues special scrutiny and reject applications providing for the remutualization of a mutual holding company unless the applicant can clearly demonstrate that the Office of Thrift Supervision’s concerns are not warranted in the particular case. The Office of Thrift Supervision will require empirical data that demonstrates that the minority stockholders are receiving a reasonable value in proportion to their interest in Auburn Bancorp, Inc. If any of the pricing parameters specified by the Office of Thrift Supervision are exceeded, the Office of Thrift Supervision will consider requiring that the transaction be approved by a majority of the votes eligible to be cast by the members of the acquiring mutual and the target mutual holding company without the use of running proxies.

          Since the Office of Thrift Supervision policy on remutualization transactions was issued, there has been only two such transactions announced. It is likely that the pricing parameters imposed by the Office

121

of Thrift Supervision policy will make remutualization transactions less attractive to mutual holding companies.

          Change in Bank Control Act. The acquisition of 10% or more of our outstanding common stock may trigger the provisions of the Change in Bank Control Act. The Office of Thrift Supervision has also adopted a regulation under the Change in Bank Control Act which generally requires persons who at any time intend to acquire control of a federally chartered savings association or its holding company to provide 60 days prior written notice and certain financial and other information to the Office of Thrift Supervision.

          The 60-day notice period does not commence until the information is deemed to be substantially complete. Control for these purposes exists in situations in which the acquiring party has voting control of at least 25% of any class of our voting stock or the power to direct our management or policies. However, under Office of Thrift Supervision regulations, control is presumed to exist where the acquiring party has voting control of at least 10% of any class of our voting securities if specified “control factors” are present. The statute and underlying regulations authorize the Office of Thrift Supervision to disapprove a proposed acquisition on certain specified grounds.

DESCRIPTION OF AUBURN BANCORP, INC. CAPITAL STOCK

          The common stock of Auburn Bancorp, Inc. will represent nonwithdrawable capital, will not be an account of any type, and will not be insured by the Federal Deposit Insurance Corporation or any other government agency.

General

          Auburn Bancorp, Inc. is authorized to issue 10,000,000 shares of common stock having a par value of $0.01 per share and 1,000,000 shares of preferred stock having a par value of $0.01 per share. Each share of Auburn Bancorp, Inc.’s common stock will have the same relative rights as, and will be identical in all respects with, each other share of common stock. Upon payment of the purchase price for the common stock, as required by the plan of reorganization and stock issuance plan, all stock will be duly authorized, fully paid and nonassessable. Auburn Bancorp, Inc. will not issue any shares of preferred stock in the stock offering.

122

Common Stock

          Dividends. Auburn Bancorp, Inc. can pay dividends if, as and when declared by its board of directors. The payment of dividends by Auburn Bancorp, Inc. is limited by law and applicable regulation. See “Dividend Policy.” The holders of common stock of Auburn Bancorp, Inc. will be entitled to receive and share equally in dividends declared by the board of directors of Auburn Bancorp, Inc. If Auburn Bancorp, Inc. issues preferred stock, the holders of the preferred stock may have a priority over the holders of the common stock with respect to dividends.

          Voting Rights. After the reorganization, the holders of common stock of Auburn Bancorp, Inc. will possess exclusive voting rights in Auburn Bancorp, Inc. They will elect Auburn Bancorp, Inc.’s board of directors and act on other matters as are required to be presented to them under federal law or as are otherwise presented to them by the board of directors. Except as discussed in “Restrictions on Acquisition of Auburn Bancorp, Inc.,” each holder of common stock will be entitled to one vote per share and will not have any right to cumulate votes in the election of directors. If Auburn Bancorp, Inc. issues preferred stock, holders of Auburn Bancorp, Inc. preferred stock may also possess voting rights.

          Liquidation. If there is any liquidation, dissolution or winding up of Auburn Savings Bank, Auburn Bancorp, Inc., as the sole holder of Auburn Savings Bank’s capital stock, would be entitled to receive all of Auburn Savings Bank’s assets available for distribution after payment or provision for payment of all debts and liabilities of Auburn Savings Bank, including all deposit accounts and accrued interest. Upon liquidation, dissolution or winding up of Auburn Bancorp, Inc., the holders of its common stock would be entitled to receive all of the assets of Auburn Bancorp, Inc. available for distribution after payment or provision for payment of all its debts and liabilities. If Auburn Bancorp, Inc. issues preferred stock, the preferred stock holders may have a priority over the holders of the common stock upon liquidation or dissolution.

          Preemptive Rights; Redemption. Holders of the common stock of Auburn Bancorp, Inc. will not be entitled to preemptive rights with respect to any shares that may be issued. The common stock cannot be redeemed.

Preferred Stock

          Auburn Bancorp, Inc. will not issue any preferred stock in the stock offering and it has no current plans to issue any preferred stock after the stock offering. Preferred stock may be issued with designations, powers, preferences and rights as the board of directors may from time to time determine. The board of directors can, without stockholder approval, issue preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control.

          Any issuance of preferred stock could have an adverse effect on the voting and other rights of holders of common stock. Each series of preferred stock issued after the conversion may rank senior to shares of common stock with respect to dividend rights and liquidation preferences, may have full, limited or no voting rights and may be convertible into shares of common stock.

TRANSFER AGENT AND REGISTRAR

          The transfer agent and registrar for our common stock will be Registrar and Transfer Company.

123

REGISTRATION REQUIREMENTS

          We have registered our common stock with the Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934, as amended, and will not deregister our common stock for a period of at least three years following the stock offering. As a result of registration, the proxy and tender offer rules, insider trading reporting and restrictions, annual and periodic reporting and other requirements of that statute will apply.

LEGAL AND TAX OPINIONS

          The legality of our common stock has been passed upon for us by Nutter McClennen & Fish LLP, Boston, Massachusetts. The federal tax consequences of the reorganization and stock offering have been opined upon by Nutter McClennen & Fish LLP and the state tax consequences of the reorganization and stock offering have been opined upon by Berry, Dunn, McNeil & Parker. Nutter McClennen & Fish LLP and Berry, Dunn, McNeil & Parker have consented to the references to their opinions in this prospectus. Certain legal matters will be passed upon for Keefe, Bruyette & Woods, Inc. by Luse Gorman Pomerenk & Schick, PC, Washington, DC.

EXPERTS

          The financial statements of Auburn Savings Bank as of June 30, 2007 and for the fiscal year ended June 30, 2007 included in this prospectus and in the registration statement have been audited by Berry, Dunn, McNeil & Parker, Portland, Maine, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the registration statement (which report expresses an unqualified opinion), and has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

          The financial statements of Auburn Savings Bank as of June 30, 2006 and for the fiscal year ended June 30, 2006 included in this prospectus and in the registration statement have been audited by Baker Newman Noyes, LLC, Portland, Maine, an independent registered public accounting firm, as stated in their report appearing herein and elsewhere in the registration statement (which report expresses an unqualified opinion), and has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

          On September 19, 2006, we appointed Berry, Dunn, McNeil & Parker as our independent accountants and dismissed Baker Newman Noyes, LLC, which had performed an audit of our financial statements as of and for the year ended June 30, 2006. The Board of Directors participated in and approved decision to change independent accountants.

          Baker Newman Noyes, LLC’s report on our financial statements as of and for the fiscal year ended June 30, 2006 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended June 30, 2006 and 2005 and through September 19, 2006, there were no disagreements with Baker Newman Noyes, LLC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Baker Newman Noyes, LLC, would have caused them to make reference to the subject matter of the disagreements in its reports.

          Auburn Bancorp, Inc. requested that Baker Newman Noyes, LLC furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above

124

statements. A copy of such letter, dated March [ ], 2008 is filed as an exhibit to our Registration Statement under the Securities Act of 1933.

          Keller & Company, Inc. has consented to the summary in this prospectus of its report to us setting forth its opinion as to our estimated pro forma market value and to the use of its name and statements with respect to it appearing in this prospectus.

WHERE YOU CAN FIND MORE INFORMATION

          We have filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended, that registers the common stock offered in the stock offering. This prospectus forms a part of the registration statement. The registration statement, including the exhibits, contains additional relevant information about us and our common stock. The rules and regulations of the Securities and Exchange Commission allow us to omit certain information included in the registration statement from this prospectus. You may read and copy the registration statement at the Securities and Exchange Commission’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the Securities and Exchange Commission’s public reference rooms. The registration statement also is available to the public from commercial document retrieval services and at the Internet World Wide Website maintained by the Securities and Exchange Commission at “http://www.sec.gov.”

          Auburn Bancorp, Inc. has filed an application for approval of the plan of reorganization and stock issuance plan with the Office of Thrift Supervision. This prospectus omits certain information contained in the application. The application may be inspected, without charge, at the offices of the Office of Thrift Supervision, 1700 G Street, NW, Washington, D.C. 20552 and at the offices of the Regional Director of the Office of Thrift Supervision at the Northeast Regional Office of the Office of Thrift Supervision, Harborside Financial Center Plaza Five, Suite 1600, Jersey City, New Jersey 07311.

          A copy of the plan of reorganization and stock issuance plan and Auburn Bancorp, Inc.’s charter and bylaws are available without charge from Auburn Savings Bank.

          The appraisal report of Keller & Company, Inc. has been filed as an exhibit to our registration statement and to our application to the Office of Thrift Supervision. Portions of the appraisal report were filed electronically with the Securities and Exchange Commission and are available on its website as described above. The entire appraisal report is available at the public reference room of the Securities and Exchange Commission and the offices of the Office of Thrift Supervision as described above.

125

INDEX TO FINANCIAL STATEMENTS OF AUBURN SAVINGS BANK

	Page
Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets as of December 31, 2007 (unaudited) and June 30, 2007 and 2006	F-3
Statements of Income for the Six Months Ended December 31, 2007 and 2006 (unaudited) and for the Years Ended June 30, 2007 and 2006	F-4
Statements of Change in Capital for the Six Months Ended December 31, 2007 and 2006 (unaudited) and for the Years Ended June 30, 2007 and 2006	F-5
Statements of Cash Flows for the Six Months Ended December 31, 2007 and 2006 (unaudited) and for the Years Ended June 30, 2007 and 2006	F-6
Notes to Financial Statements	F-7

126

AUBURN SAVINGS BANK, FSB

FINANCIAL STATEMENTS

June 30, 2007 and 2006

With Independent Auditors’ Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Auburn Savings Bank, FSB

We have audited the accompanying balance sheet of Auburn Savings Bank, FSB as of June 30, 2007, and the related statements of income, changes in capital and cash flows for the year then ended. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Auburn Savings Bank, FSB as of June 30, 2007, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Berry, Dunn, McNeil & Parker
Portland, Maine
September 10, 2007
(except for Note 15, for which the report date is March 12, 2008)

F-1

INDEPENDENT AUDITORS’ REPORT

The Board of Directors
Auburn Savings Bank, F.S.B.
Auburn, Maine

We have audited the accompanying balance sheet of Auburn Savings Bank, F.S.B. (the Bank) as of June 30, 2006, and the related statements of income, changes in capital and cash flows for the year then ended. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Auburn Savings Bank, F.S.B. as of June 30, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Portland, Maine	/s/ Baker Newman & Noyes
August 10, 2006	Limited Liability Company

F-2

AUBURN SAVINGS BANK, FSB

Balance Sheets

December 31, 2007 (Unaudited),
June 30, 2007 and 2006

	December 31, 2007			June 30,
				2007			2006
	(Unaudited)
ASSETS
Cash and due from banks	$	1,255,439		$	884,546		$	2,450,887
Interest-bearing deposits		602,753			2,528,784			187,078
Total cash and cash equivalents		1,858,192			3,413,330			2,637,965
Certificates of deposit		1,965,150			594,000			795,501
Investment securities available for sale		1,706,658			2,364,564			3,454,822
Federal Home Loan Bank stock, at cost		901,100			901,100			1,016,700
Loans		54,784,446			53,116,112			54,139,864
Less allowance for loan losses		309,214			317,580			290,472
Net loans		54,475,232			52,798,532			53,849,392
Property and equipment, net		1,968,795			2,001,115			2,100,498
Foreclosed real estate		124,404			—			—
Accrued interest receivable		275,326			277,533			247,695
Prepaid expenses and other assets		183,325			54,270			66,954
		583,055			331,803			314,649
	$	63,458,182		$	62,404,444		$	64,169,527
LIABILITIES AND CAPITAL
Liabilities
Deposits	$	44,990,765		$	44,878,926		$	45,009,342
Federal Home Loan Bank advances		13,650,000			12,900,000			14,750,000
Accrued interest and other liabilities		225,032			127,207			183,218
Deferred income taxes		111,240			148,510			63,552
Total liabilities		58,977,037			58,054,643			60,006,112
Commitments and contingencies (Notes 6, 8 through 12)
Capital
Retained earnings		4,499,427			4,362,193			4,242,211
Accumulated other comprehensive loss		(18,282	)		(12,392	)		(78,796	)
Total capital		4,481,145			4,349,801			4,163,415
	$	63,458,182		$	62,404,444		$	64,169,527

The accompanying notes are an integral part of these financial statements.

F-3

AUBURN SAVINGS BANK, FSB

Statements of Income

Six Months Ended December 31, 2007 and 2006 (Unaudited) and
Years Ended June 30, 2007 and 2006

	Six Months Ended December 31,					Years Ended June 30,
	2007			2006		2007		2006
	(Unaudited)
Interest and dividend income
Interest on loans	$	1,860,600		$	1,811,738	$	3,615,936	$	3,202,011
Interest on investments and other interest-bearing deposits		132,829			107,856		227,223		214,724
Dividends on Federal Home Loan Bank stock		29,366			33,174		64,588		47,995
Total interest and dividend income		2,022,795			1,952,768		3,907,747		3,464,730
Interest expense
Interest on deposits and escrow accounts		867,358			790,640		1,619,026		1,193,004
Interest on Federal Home Loan Bank advances		355,248			370,382		720,320		717,144
Total interest expense		1,222,606			1,161,022		2,339,346		1,910,148
Net interest income		800,189			791,746		1,568,401		1,554,582
Provision for (recovery of) loan losses		(7,024	)		18,000		34,000		61,500
Net interest income after provision for (recovery of) loan losses		807,213			773,746		1,534,401		1,493,082
Non-interest income
Net gain (loss) on sales of loans		9,325			11,646		18,872		(2,604	)
Net gain (loss) on sales of investments		—			4,096		3,186		(772	)
Other noninterest income		67,644			36,226		89,976		85,955
Total non-interest income		76,969			51,968		112,034		82,579
Non-interest expenses
Salaries and employee benefits		429,715			405,540		814,900		763,815
Occupancy expense		52,066			55,274		104,602		97,594
Depreciation		51,931			60,387		116,550		121,378
Federal insurance premiums		2,559			2,265		5,386		5,458
Computer charges		73,319			64,806		134,828		122,081
Advertising expense		23,225			16,249		35,543		36,082
Consulting expense		18,975			8,850		26,378		35,654
Other operating expenses		112,899			113,050		238,311		231,400
Total non-interest expenses		764,689			726,421		1,476,498		1,413,462
Income before income taxes		119,493			99,293		169,937		162,199
Income tax expense		35,700			29,800		49,955		36,000
Net income	$	83,793		$	69,493	$	119,982	$	126,199

The accompanying notes are an integral part of these financial statements.

F-4

AUBURN SAVINGS BANK, FSB

Statements of Changes in Capital

Six Months Ended December 31, 2007 (Unaudited) and
Years Ended June 30, 2007 and 2006

	Retained Earnings		Accumulated Other Comprehensive Loss			Total
Balance, June 30, 2005	$	4,116,012	$	(21,317	)	$	4,094,695
Comprehensive income
Net income		126,199		—			126,199
Other comprehensive loss
Unrealized holding losses on securities, net of taxes of $(36,720)		—		(71,279	)		(71,279	)
Less reclassification adjustment for items included in net income, net of taxes of $7,109		—		13,800			13,800
Total comprehensive income		126,199		(57,479	)		68,720
Balance, June 30, 2006		4,242,211		(78,796	)		4,163,415
Comprehensive income
Net income		119,982		—			119,982
Other comprehensive income
Unrealized holding gains on securities, net of taxes of $31,406		—		60,961			60,961
Less reclassification adjustment for items included in net income, net of taxes of $2,804		—		5,443			5,443
Total comprehensive income		119,982		66,404			186,386
Balance, June 30, 2007		4,362,193		(12,392	)		4,349,801
Comprehensive income
Net income		83,793		—			83,793
Other comprehensive income
Unrealized holding losses on securities, net of taxes of $(3,034)		—		(5,890	)		(5,890	)
Total comprehensive income		83,793		(5,890	)		77,903
Effect of adoption of SFAS No. 156, net of tax effect of $17,812		53,441		—			53,441
Balance, December 31, 2007 (unaudited)	$	4,499,427	$	(18,282	)	$	4,481,145

The accompanying notes are an integral part of these financial statements.

F-5

AUBURN SAVINGS BANK, FSB

Statements of Cash Flows

Six Months Ended December 31, 2007 and 2006 (Unaudited) and
Years Ended June 30, 2007 and 2006

	Six Months Ended December 31,						Years Ended June 30,
	2007			2006			2007			2006
Cash flows from operating activities
Net income	$	83,794		$	69,493		$	119,982		$	126,199
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		51,931			60,387			116,550			121,378
Net amortization of premiums on investment securities available for sale		(76	)		12,160			11,433			20,137
Provision for (recovery of) loan losses		(7,024	)		18,000			34,000			61,500
Deferred income tax expense (benefit)		(61,706	)		32,700			50,748			65,407
(Gain) loss on investments		—			(4,096	)		(3,186	)		772
(Gain) loss on sales of loans		(9,325	)		(11,646	)		(18,872	)		2,604
Loss on disposal of property and equipment		—			—			864			—
Net (increase) decrease in prepaid expenses and other assets		(167,201	)		2,153			(17,260	)		(339	)
Net (increase) decrease in accrued interest receivable		2,207			(23,922	)		(29,838	)		(35,328	)
Net increase (decrease) in accrued interest and other liabilities		125,298			(44,827	)		(56,011	)		(11,794	)
Net cash provided by operating activities		17,898			110,402			208,410			350,536
Cash flows from investing activities
Purchase of investment securities available for sale		(576,519	)		—			—			(1,250,000	)
Proceeds from sales, maturities and principal paydowns on investment securities available for sale		1,225,574			897,122			1,174,133			389,134
Net proceeds from maturities of (investments in) certificates of deposit		(1,371,150	)		(99,744	)		201,501			788,499
Net decrease (increase) in loans to customers		(1,693,170	)		1,777,125			1,074,168			(5,787,472	)
Proceeds from redemption of Federal Home Loan Bank stock		—			92,800			115,600			42,200
Purchases of property and equipment		(19,611	)		(10,229	)		(18,031	)		(65,410	)
Net cash provided (used) by investing activities		(2,434,876	)		2,657,075			2,547,371			(5,883,049	)
Cash flows from financing activities
Advances from Federal Home Loan Bank		1,521,000			7,300,000			4,000,000			4,000,000
Repayment of advances from the Federal Home Loan Bank		(771,000	)		(9,850,000	)		(5,850,000	)		(2,650,000	)
Net increase (decrease) in deposits		111,840			226,760			(130,416	)		3,531,190
Net cash provided (used) by financing activities		861,840			(2,323,240	)		(1,980,416	)		4,881,190
Net increase (decrease) in cash and cash equivalents		(1,555,138	)		444,237			775,365			(651,323	)
Cash and cash equivalents, beginning of year		3,413,330			2,637,964			2,637,965			3,289,288
Cash and cash equivalents, end of year	$	1,858,192		$	3,082,201		$	3,413,330		$	2,637,965
Supplementary cash flow information:
Cash paid during the year for:
Interest	$	1,227,932		$	1,152,258		$	2,338,110		$	1,901,502
Taxes	$	10,000		$	21,876		$	46,076		$	38,842

The accompanying notes are an integral part of these financial statements.

F-6

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Six Months Ended December 31, 2007 and 2006 (Unaudited) and the
Years Ended June 30, 2007 and 2006

Nature of Business

Effective July 1, 2006, the Bank converted from a state to a federal charter and changed its name from Auburn Savings and Loan Association to Auburn Savings Bank, FSB (the “Bank”). The Bank grants residential, consumer and commercial loans to customers primarily throughout the Lewiston/Auburn, Maine area. The Bank is subject to competition from other financial institutions. The Bank is subject to the regulations of certain federal agencies and undergoes periodic examinations by those regulatory authorities.

1.	Summary of Significant Accounting Policies
	The accounting policies of the Bank are in conformity with accounting principles generally accepted in the United States of America and general practices within the banking industry. The following is a description of the significant accounting policies.
	Basis of Presentation
	The financial information included herein as of December 31, 2007, and for the interim periods ended December 31, 2007 and 2006, is unaudited; however, in the opinion of management, the information reflects all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation. The results shown for the six months ended December 31, 2007 and 2006 are not necessarily indicative of the results to be obtained for a full year.
	Use of Estimates
	In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
	Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management obtains independent appraisals for significant properties.

F-7

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Significant Group Concentrations of Credit Risk

A substantial portion of loans are secured by real estate in the Lewiston/Auburn, Maine area. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio is susceptible to changes in market conditions in the Lewiston/Auburn, Maine area.

The Bank’s policy for requiring collateral is to obtain security in excess of the amount borrowed. The amount of collateral obtained is based on management’s credit evaluation of the borrower. The Bank requires appraisals of real property held as collateral. For consumer loans, collateral varies depending on the purpose of the loan. Collateral held for commercial loans consists primarily of real estate.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks and interest-bearing deposits.

The Bank’s due from bank accounts, at times, may exceed federally insured limits. The Bank has not experienced any losses in such accounts. The Bank believes it is not exposed to any significant risk on cash and cash equivalents.

Securities

The Bank classifies its investments as available for sale. These assets are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income or loss.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of investment securities available for sale below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (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 Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Federal Home Loan Bank Stock

Federal Home Loan Bank (FHLB) stock is a non-marketable equity security carried at cost and evaluated for impairment.

F-8

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Loans past due 30 days or more are considered delinquent. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. Cash payments on these loans are applied to principal balances until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired, whereby an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component relates to pools of non-impaired loans and is based on historical loss experience adjusted for qualitative factors.

F-9

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.

Credit Related Financial Instruments

In the ordinary course of business, the Bank has entered into commitments to extend credit. Such financial instruments are recorded in the financial statements when they are funded.

Loan Servicing

The Bank adopted Statement of Financial Accounting Standards (SFAS) No. 156, Accounting for Servicing of Financial Assets – an amendment to FASB Statement No. 140, on July 1, 2007. In accordance with SFAS No. 156, the Bank capitalizes mortgage servicing rights at their fair value upon sale of the related loans. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. The effect of capitalizing loan servicing rights for loans sold and serviced was recorded as a cumulative effect adjustment at July 1, 2007.

Premises and Equipment

Land is carried at cost. Buildings, furniture and fixtures, and land improvements are carried at cost, less accumulated depreciation computed on the declining balance and straight-line methods over the estimated useful lives of the assets.

F-10

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Foreclosed Real Estate

Real estate properties acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed real estate.

Income Taxes

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

Derivative Financial Instruments

The Bank has limited exposure to derivative financial instruments. In 2006, the Bank entered into an interest rate floor and an interest rate cap agreement to manage its interest rate risk for movement in interest rates. The Bank does not enter into derivative financial instruments for trading or speculative purposes.

The Bank accounts for the interest rate floor and cap at fair value in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. The Bank does not use hedge accounting for the cap and floor and, therefore, changes in fair value of the agreements are reported in the statements of income. At December 31, 2007 (unaudited), June 30, 2007 and 2006, the fair value of the interest rate floor and cap is $12,188, $2,624 and $15,473, respectively, and is included on the balance sheet in prepaid expenses and other assets.

Comprehensive Income

Accounting principles generally require 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 investment securities available for sale, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

Advertising

Advertising costs are expensed as incurred.

F-11

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Reclassifications

Certain amounts in the 2006 financial statements have been reclassified to conform to the 2007 presentation.

Impact of Recent Accounting Standards

On February 15, 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which provides companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for the Bank’s 2009 fiscal year, with early adoption permitted for the Bank’s 2008 fiscal year, provided that the Bank also adopts SFAS No. 157 for fiscal year 2008. Management is currently evaluating the potential impacts of adopting this Statement on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement is effective for the Bank on July 1, 2008, with earlier adoption permitted for fiscal year 2008, and is not expected to have a material impact on the Bank’s financial statements. In February 2008, FASB issued FASB Staff Position (FSP) No. 157-2 which delays by one year the effective date of SFAS No. 157 for certain types of nonfinancial assets and nonfinancial liabilities.

In July 2006, the FASB issued Financial Accounting Standards Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attributable for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognizing, classification, interest and penalties, accounting in interim periods, disclosures and transitions. FIN 48 was effective for the Bank on July 1, 2007, and did not have a material impact on the Bank’s financial statements.

F-12

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

	In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets – an Amendment of FASB Statement No. 140. The Statement amends SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. Consistent with SFAS No. 140, SFAS No. 156 requires companies to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract. However, the Statement permits a company to choose either the amortized cost method or fair value measurement method for each class of separately recognized servicing assets. The Statement is effective as of the beginning of a company’s first fiscal year after September 15, 2006. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including interim financial statements. The Bank adopted SFAS No. 156 on July 1, 2007 using the amortized cost method, and the adoption of this Statement did not have a material impact on its financial statements.
2.	Cash and Due from Banks
	The Bank is required to maintain certain reserves of vault cash or deposits with the Federal Reserve Bank. The amount of this reserve requirement, included in cash and due from banks, was approximately $250,000, $250,000 and $400,000 as of December 31, 2007 (unaudited), June 30, 2007 and 2006, respectively.
3.	Securities
	The amortized cost and fair value of investment securities available for sale, with gross unrealized gains and losses, are as follows:
	December 31, 2007 (Unaudited)

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate obligations	$	986,887	$	—	$	(8,187	)	$	978,700
Mortgage-backed securities		536,785		863		—			537,648
Asset-backed securities		120,630		—		(4,370	)		116,260
U.S. government sponsored enterprise common stock securities		90,058		—		(16,008	)		74,050
Total investment securities available for sale	$	1,734,360	$	863	$	(28,565	)	$	1,706,658

F-13

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

June 30, 2007

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government sponsored enterprise obligations	$	650,000	$	—	$	(1,816	)	$	648,184
Corporate obligations		998,876		—		(6,694	)		992,182
Mortgage-backed securities		610,967		411		(8,534	)		602,844
Asset-backed securities		123,496		286		(2,428	)		121,354
Total investment securities available for sale	$	2,383,339	$	697	$	(19,472	)	$	2,364,564

June 30, 2006

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government sponsored enterprise obligations	$	650,000	$	—	$	(8,895	)	$	641,105
Corporate obligations		999,839		—		(23,049	)		976,790
Mortgage-backed securities		858,628		—		(30,012	)		828,616
Asset-backed securities		182,034		—		(1,423	)		180,611
FHLMC preferred stock		750,000		—		(18,500	)		731,500
FHLMC common stock		133,710		—		(37,510	)		96,200
Total investment securities available for sale	$	3,574,211	$	—	$	(119,389	)	$	3,454,822

F-14

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Investments with a fair value of approximately $1,632,608 and $2,364,564 at December 31, 2007 (unaudited) and June 30, 2007, respectively, are held in a custody account to secure certain deposits.

The amortized cost and fair value of debt securities by contractual maturity follow. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	December 31, 2007				June 30, 2007
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Unaudited)
One year or less	$	499,299	$	496,715	$	—	$	—
Over 1 year through 5 years		487,588		481,985		123,496		121,353
After 5 years through 10 years		11,146		11,250		1,648,876		1,640,367
More than 10 years		109,484		105,010		—		—
		1,107,517		1,094,960		1,772,372		1,761,720
Mortgage-backed securities		536,785		537,648		610,967		602,844
	$	1,644,302	$	1,632,608	$	2,383,339	$	2,364,564

F-15

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Information pertaining to securities with gross unrealized losses at December 31, 2007 (unaudited), June 30, 2007 and 2006, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
December 31, 2007 (Unaudited)
Corporate obligations	$	—	$	—	$	978,700	$	8,187	$	978,700	$	8,187
Asset-backed securities		—		—		116,260		4,370		116,260		4,370
U.S. Government sponsored enterprise common stock securities		74,050		16,008		—		—		74,050		16,008
Total	$	74,050	$	16,008	$	1,094,960	$	12,557	$	1,169,010	$	28,565
June 30, 2007
U.S. Government sponsored enterprise obligations	$	—	$	—	$	648,184	$	1,816	$	648,184	$	1,816
Corporate obligations		—		—		992,182		6,694		992,182		6,694
Mortgage-backed securities		21,092		76		486,115		8,458		507,207		8,534
Asset-backed securities		—		—		109,220		2,428		109,220		2,428
Total	$	21,092	$	76	$	2,235,701	$	19,396	$	2,256,793	$	19,472
June 30, 2006
U.S. Government sponsored enterprise obligations	$	641,105	$	8,895	$	—	$	—	$	641,105	$	8,895
Corporate obligations		976,790		23,049		—		—		976,790		23,049
Mortgage-backed securities		127,479		3,248		691,137		26,764		818,616		30,012
Asset-backed securities		19,858		14		160,753		1,409		180,611		1,423
FHLMC preferred stock		—		—		731,500		18,500		731,500		18,500
FHLMC common stock		—		—		96,200		37,510		96,200		37,510
Total	$	1,765,232	$	35,206	$	1,679,590	$	84,183	$	3,444,822	$	119,389

F-16

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

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 Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2007, (unaudited), nine debt securities with unrealized losses have depreciated 1% in total from the amortized cost basis. These unrealized losses related principally to current interest rates for similar types of securities compared to the underlying yields on these securities. In addition, the Bank had two U.S. Government sponsored enterprise common stock securities with unrealized losses of $16,008, which is attributed to normal market fluctuations. At June 30, 2007, the fifteen debt securities with unrealized losses have depreciated 1% in total from the amortized cost basis. These unrealized losses related principally to current interest rates for similar types of securities compared to the underlying yields on these securities. At June 30, 2006, unrealized losses in the debt securities portfolio were also a result of changes in market interest rates. In addition, the Bank had three preferred stock securities and two common stock securities with unrealized losses of $18,500 and $37,510, respectively, which is attributed to normal market fluctuations. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition and its ability to hold such securities. Management does not believe any of the Bank’s available for sale securities are other-than-temporarily impaired at December 31, 2007 (unaudited) and June 30, 2007 and 2006. here were no sales of securities available for sale during the six months ended December 31, 2007.

For the years ended June 30, 2007 and 2006, proceeds from sales of securities available for sale amounted to $886,896 and $0, respectively. Gross realized gains amounted to $4,096 and $391, respectively. Gross realized losses amounted to $910 and $1,163, respectively.

F-17

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

4. Loans

A summary of the balances of loans follows:

	December 31,			June 30,
	2007			2007			2006
	(Unaudited)
First mortgage loans on real estate
Residential 1-4 family	$	31,424,198		$	31,817,309		$	33,366,259
Commercial		1,580,594			1,608,310			1,166,667
Construction		1,980,100			442,000			1,677,600
Undisbursed portion of construction loans		(705,757	)		(89,555	)		(695,255	)
Subtotal		34,279,135			33,778,064			35,515,271
Commercial loans and commercial construction		9,140,449			7,766,583			7,778,659
Consumer and other loans
Automobile		292,791			252,943			240,135
Equity lines of credit and home improvement loans		10,909,323			11,123,037			10,402,450
Secured by deposits		51,849			59,116			147,261
Personal		42,341			26,041			15,296
Other		143,398			145,022			108,305
Subtotal		11,439,702			11,606,159			10,913,447
		54,859,286			53,150,806			54,207,377
Less:  Allowance for loans losses		309,214			317,580			290,472
Net deferred loan fees		74,840			34,694			67,513
Loans, net	$	54,475,232		$	52,798,532		$	53,849,392

Nonaccrual loans amounted to $0, $0 and $95,015 at December 31, 2007 (unaudited) and June 30, 2007 and 2006, respectively. Interest income, which would have been recognized on these loans if interest had been accrued, was not significant at June 30, 2006. There were no loans 90 days past due and still accruing interest at December 31, 2007 (unaudited) and June 30, 2007 and 2006.

F-18

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

An analysis of the allowance for loan losses follows:

	December 31,			Years Ended June 30,
	2007			2007			2006
	(Unaudited)
Balance at beginning of year	$	317,580		$	290,472		$	238,356
Provision for (recovery of) loan losses		(7,024	)		34,000			61,500
Loans charged off		(1,342	)		(1,276	)		(9,384	)
Reclassification		—			(5,616	)		—
Balance at end of year	$	309,214		$	317,580		$	290,472

	There were no impaired loans at December 31, 2007 (unaudited), June 30, 2007 and 2006, respectively.
	The Bank was servicing for others mortgage loans of approximately $9,500,000, $9,500,000, and $8,300,000 at December 31, 2007 (unaudited), June 30, 2007 and 2006, respectively.
	Mortgage servicing rights for mortgage loans sold are not material to the financial statements and, therefore, have not been capitalized as of June 30, 2007 and 2006. Mortgage servicing rights capitalized during the six months ended December 31, 2007 was $2,430 (unaudited) and the balance of mortgage servicing rights at December 31, 2007 was $72,803 (unaudited). Fair value approximates book value at December 31, 2007 (unaudited).
	There were no loans held for sale at December 31, 2007 (unaudited), June 30, 2007 and 2006.
5.	Property and Equipment
	A summary of the cost and accumulated depreciation of property and equipment is as follows:

	December 31,		Years Ended June 30,
	2007		2007		2006
	(Unaudited)
Land and land improvements	$	407,780	$	404,436	$	399,056
Buildings		1,933,379		1,924,374		1,922,441
Furniture and fixtures		512,641		505,379		507,914
		2,853,800		2,834,189		2,829,411
Less accumulated depreciation		885,005		833,074		728,913
Net property and equipment	$	1,968,795	$	2,001,115	$	2,100,498

F-19

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

6.	Deposits
	A summary of deposit balances, by type, follows:

	December 31,		Years Ended June 30,
	2007		2007		2006
	(Unaudited)
Demand accounts	$	2,198,816	$	2,791,567	$	4,002,049
Money market accounts		8,487,452		9,339,445		11,104,959
NOW accounts		1,980,216		2,240,626		1,293,842
Savings accounts		2,609,371		2,601,241		2,848,800
Certificates of deposit		18,940,973		20,779,185		18,507,055
Certificates of deposit, $100,000 and over		10,773,937		7,126,862		7,252,637
Total deposits	$	44,990,765	$	44,878,926	$	45,009,342

The scheduled maturities of time deposits as of December 31, 2007 and June 30, 2007 are as follows:

	December 31,		June 30,
	2007		2007
	(Unaudited)
2008	$	15,216,461	$	23,444,447
2009		12,705,658		4,024,775
2010		1,369,698		372,979
2011		77,903		53,436
2012		22,372		10,410
2013		322,818		—
	$	29,714,910	$	27,906,047

F-20

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

	The Bank maintains collateralization agreements with certain depositors whereby those deposits in excess of the $100,000 federally insured limit are secured by an interest in the Bank’s investment instruments maintained in a custodial account held by one of the Bank’s custodians. As part of the collateralization agreement, the Bank agrees to maintain the value of the collateral in the custodial account at a minimum level at least equal to 100% of the uninsured portion of these deposits. At December 31, 2007 (unaudited) and June 30, 2007 and 2006, the value of the collateral in the custodial account was approximately $3,876,000, $3,860,000, and $5,338,000, respectively, and the uninsured portion of the deposits was approximately $4,030,000, $3,294,000, and $5,405,000, respectively. Subsequent to December 31, 2007, the Bank purchased $297,000 in certificates of deposit that provided additional collateral.
7.	Federal Home Loan Bank Advances
	Pursuant to collateral agreements with the FHLB, advances are collateralized by all stock in the FHLB and qualifying first mortgages.
	The Bank’s fixed-rate advances of $13,650,00, $12,900,000 and $14,750,000 at December 31, 2007 (unaudited), June 30, 2007 and 2006, respectively, mature through 2015. At December 31, 2007 (unaudited) and June 30, 2007 and 2006, the interest rates on fixed-rate advances ranged from 3.72 percent to 6.56 percent, 3.33 percent to 6.56 percent, and from 2.85 percent to 6.56 percent, respectively.
	The Bank’s callable advance of $1,000,000 at December 31, 2007 (unaudited) and June 30, 2007 matures in 2012. The rate is based on the three-month London Interbank Offer Rate (LIBOR). At December 31, 2007 (unaudited) and June 30, 2007, the interest rate on this advance was 4.99 percent. The advance is callable on February 17, 2009 if LIBOR reaches 5.75 percent and quarterly thereafter through its maturity date.
	At December 31, 2007 (unaudited), June 30, 2007 and 2006, the Bank also had $661,000 available under a long-term line of credit from the FHLB. There were no amounts drawn under this line at December 31, 2007 (unaudited) and June 30, 2007 and 2006.

F-21

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

The contractual maturities of advances are as follows:

			June 30,
	December 31,
	2007		2007		2006
	(Unaudited)
2007	$	—	$	—	$	5,850,000
2008		2,000,000		1,750,000		1,750,000
2009		5,250,000		3,500,000		1,500,000
2010		3,500,000		5,500,000		4,500,000
2011		1,150,000		650,000		650,000
2012		1,250,000		1,000,000		—
Thereafter		500,000		500,000		500,000
Total	$	13,650,000	$	12,900,000	$	14,750,000

8.	Income Taxes
	Allocation of federal and state income taxes between current and deferred portions is as follows:

	Six Months Ended December 31,						Years Ended June 30,
	2007			2006			2007			2006
	(Unaudited)
Current tax provision (benefit)
Federal	$	91,506		$	(8,550	)	$	(6,993	)	$	(35,407	)
State		5,900			5,650			6,200			6,000
		97,406			(2,900	)		(793	)		(29,407	)
Deferred federal tax provision (benefit)		(61,706	)		32,700			50,748			65,407
	$	35,700		$	29,800		$	49,955		$	36,000

F-22

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

The income tax provision differs from the expense that would result from applying federal statutory rates to income before income taxes, as follows:

	Six Months Ended December 31,						Years Ended June 30,
	2007			2006			2007			2006
	(Unaudited)
Expected income tax expense at federal tax rate (34%)	$	40,628		$	33,759		$	57,779		$	55,148
Increase (reduction) in income taxes resulting from:
Dividends received deduction		(116	)		(3,134	)		(6,268	)		(8,705	)
State tax, net of federal tax benefit		3,894			3,729			4,092			3,960
Other		(8,706	)		(4,554	)		(5,648	)		(14,403	)
	$	35,700		$	29,800		$	49,955		$	36,000

The components of the net deferred tax liability, included in other assets, are as follows:

				June 30,
	December 31,
	2007			2007			2006
	(Unaudited)
Deferred tax assets:
Allowance for loan losses	$	105,133		$	107,977		$	98,760
Expense accruals		5,573			9,548			1,828
Unrealized losses on available for sale securities		6,170			6,384			40,593
Other		7,761			7,276			—
Total deferred tax assets		124,637			131,185			141,181
Deferred tax liabilities:
Difference between tax and book bases of property and equipment		(146,914	)		(214,102	)		(166,261	)
Deferred loan fees		(64,738	)		(65,593	)		(25,350	)
Mortgage servicing rights		(24,225	)		—			—
Other		—			—			(13,122	)
Total deferred tax liabilities		(235,877	)		(279,695	)		(204,733	)
Net deferred tax liability	$	(111,240	)	$	(148,510	)	$	(63,552	)

F-23

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

	The Bank has sufficient refundable taxes paid in available carryback years to fully realize its recorded deferred tax assets.
	The Bank used the percentage of taxable income bad debt deduction to calculate its bad debt expense for tax purposes as was permitted by the Internal Revenue Code. The cumulative effect of this deduction of approximately $421,000 is subject to recapture, if used for purposes other than to absorb loan losses. Deferred taxes of $143,000 have not been provided on this amount because the Bank does not intend to use the tax reserve other than to absorb loan losses.
9.	Financial Instruments with Off-Balance-Sheet Risk
	The Bank is a party to credit related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and lines of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.
	The Bank’s exposure to credit loss is represented by the contractual amount of these commitments. The Bank follows the same credit policies in making commitments as it does for on-balance-sheet instruments.
	At December 31, 2007 (unaudited) and June 30, 2007 and 2006, the following financial instruments were outstanding whose contract amounts represent credit risk:

			June 30,
	December 31,
	2007		2007		2006
	(Unaudited)
Commitments to originate loans	$	2,180,000	$	854,000	$	1,490,000
Unadvanced portions of construction loans		707,000		90,000		695,000
Unadvanced portions of home equity loans		2,664,000		2,682,000		2,820,000
Unadvanced portions of commercial lines of credit		588,000		608,000		410,000

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for equity lines of credit may expire without being drawn upon. Unfunded commitments under commercial lines of credit are commitments for possible future extensions of credit to existing customers. These lines of credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Bank is committed. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank, is based on management’s credit evaluation of the customer.

F-24

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

	The Bank has sold mortgage loans to the FHLB with a total outstanding balance of $9,519,000 and $9,500,000 at December 31, 2007 (unaudited) and June 30, 2007, respectively. Under the terms of the agreement with the FHLB, the Bank has a limited recourse obligation to the FHLB in the event the borrower defaults. At December 31, 2007 (unaudited) and June 30, 2007, the maximum recourse obligation totaled approximately $259,000 and $229,000, respectively.
10.	Legal Contingencies
	Various legal claims arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Bank’s financial statements.
11.	Minimum Regulatory Capital Requirements
	The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
	Quantitative measures established by regulation to ensure capital adequacy requires the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to total assets (as defined). Management believes, as of December 31, 2007 (unaudited) and June 30, 2007 and 2006, that the Bank met all capital adequacy requirements to which they are subject.
	As of December 31, 2007 (unaudited) and June 30, 2007, the most recent notification from the Office of Thrift Supervision categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank’s category. The Bank’s actual capital amounts and ratios as of December 31, 2007 (unaudited) and June 30, 2007 and 2006 are also presented in the table.

F-25

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

	Actual					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2007
(Unaudited)
Total capital to risk weighted assets	$	4,554,000		11.97	%	$	3,044,800		8.00	%	$	3,806,000		10.00	%
Tier 1 capital to risk weighted assets	$	4,504,000		11.15	%	$	1,522,400		4.00	%	$	2,283,600		6.00	%
Tier 1 capital to total assets	$	4,504,000		7.09	%	$	2,540,000		4.00	%	$	3,175,000		5.00	%
June 30, 2007
Total capital to risk weighted assets	$	4,421,000		12.17	%	$	2,872,480		8.00	%	$	3,590,600		10.00	%
Tier 1 capital to risk weighted assets	$	4,360,000		11.29	%	$	1,436,240		4.00	%	$	2,154,360		6.00	%
Tier 1 capital to total assets	$	4,360,000		6.98	%	$	2,497,400		4.00	%	$	3,121,750		5.00	%
June 30, 2006
Total capital to risk weighted assets	$	4,118,000		11.20	%	$	2,952,800		8.00	%	$	3,691,000		10.00	%
Tier 1 capital to risk weighted assets	$	4,205,000		10.40	%	$	1,476,400		4.00	%	$	2,214,600		6.00	%
Tier 1 capital to total assets	$	4,205,000		6.50	%	$	2,571,040		4.00	%	$	3,213,800		5.00	%

F-26

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

12.	Employee Benefit Plans
	The Bank has a 401(k) Plan whereby substantially all employees participate in the Plan. Employees may contribute up to 15 percent of their compensation subject to certain limits based on federal tax laws. The Bank makes matching contributions equal to 50 percent of the employee’s contribution, up to a maximum of 3 percent of an employee’s compensation contributed to the Plan. Matching contributions vest to the employee equally over a five-year period. For the six months ended December 31, 2007 and 2006 (unaudited) and years ended June 30, 2007 and 2006, expense attributable to the Plan amounted to $7,308, $7,927, $15,652, and $15,073, respectively.
13.	Related Party Transactions
	In the ordinary course of business, the Bank has granted loans to principal officers and directors and their affiliates amounting to $626,500 at December 31, 2007 (unaudited), $656,400 at June 30, 2007 and $699,000 at June 30, 2006. During the years ended June 30, 2007 and 2006, total principal additions were $98,400 and $127,500, respectively, and total principal payments and deletions were $141,000 and $158,200, respectively. During the six months ended December 31, 2007, total principal additions were $27,800 and total principal payments were $57,700 (unaudited).
	Deposits from related parties held by the Bank at December 31, 2007 (unaudited), June 30, 2007 and 2006 amounted to $1,351,985, $929,200 and $2,349,000, respectively.
14.	Fair Value of Financial Instruments
	The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Bank’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. SFAS No. 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Bank.
	The following methods and assumptions were used by the Bank in estimating fair value disclosures for financial instruments:
	Cash and cash equivalents and certificates of deposit: The carrying amounts of cash, due from banks, deposits with the FHLB, federal funds sold and certificates of deposit approximate fair values as these financial instruments have short maturities.

F-27

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

Securities: Fair values for securities, excluding Federal Home Loan Bank stock, are based on quoted market prices. The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the FHLB.

Loans receivable: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Deposit liabilities: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, 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 on certificates of similar remaining maturity.

Federal Home Loan Bank advances: The fair values of these borrowings are estimated using discounted cash flow analyses based on the Bank’s current incremental borrowing rates for similar types of borrowing arrangements.

Accrued interest: The carrying amounts of accrued interest approximate fair value.

Derivative financial instruments: The fair value of the interest rate cap and floor is based on quotations from dealers.

Off-balance-sheet instruments: The Bank’s off-balance-sheet instruments consist of loan commitments. Fair values for loan commitments have not been presented as the future revenue derived from such financial instruments is not significant.

F-28

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

The estimated fair values, and related carrying or notional amounts, of the Bank’s financial instruments are as follows:

					June 30
	December 31,
	2007				2007				2006
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Unaudited)
(In thousands)
Financial assets
Cash and cash equivalents	$	1,858	$	1,858	$	3,413	$	3,413	$	2,638	$	2,638
Certificates of deposit		1,965		1,965		594		594		796		796
Securities available-for-sale		1,707		1,707		2,365		2,365		3,455		3,455
Federal Home Loan Bank stock		901		901		901		901		1,017		1,017
Loans and loans held for sale, net		54,475		55,094		52,799		51,992		53,849		53,783
Accrued interest receivable		275		275		278		278		248		248
Interest rate floor and cap		12		12		3		3		15		15
Financial liabilities
Deposits		44,991		43,944		44,879		43,124		45,009		45,092
Federal Home Loan Bank advances		13,650		13,973		12,900		12,951		14,750		14,521

15.	Plan of Reorganization
	On January 11, 2008, the Board of Directors of the Bank adopted a Plan of Reorganization From a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan (the “Plan”) under which the Bank will reorganize into a mutual holding company structure (the “Reorganization”). As part of the Reorganization, the Bank will convert to a federal stock savings bank, the Bank will become a wholly-owned subsidiary of Auburn Bancorp, Inc. (the “Stock Holding Company”), and the Stock Holding Company will become a majority-owned subsidiary of Auburn Mutual Holding Company (the “MHC”). In addition, the Stock Holding Company will conduct a stock offering of up to 49.9% of the aggregate total voting stock of the Stock Holding Company, pursuant to the laws of the United States of America and the rules and regulations of the Office of Thrift Supervision (“OTS”). The Stock Holding Company stock will be offered on a first priority basis in a subscription offering to eligible account holders, tax-qualified employee plans, and other members. Any shares remaining after the conclusion of the subscription offering may be offered for sale in a community offering or syndicated offering. So long as the MHC is in existence, the MHC will be required to own at least a majority of the voting stock of the Stock Holding Company.
	The costs associated with the reorganization are deferred and will be deducted from the proceeds upon the sale and issuance of the stock. In the event the reorganization is not consummated, costs incurred will be charged to expense. As of June 30, 2007, there were no such reorganization costs.

F-29

AUBURN SAVINGS BANK, FSB

Notes to Financial Statements

The Plan is subject to the approval of the OTS and a majority of the total votes eligible to be cast by voting members of the Bank.

After reorganization, the Stock Holding Company will not be able to declare or pay a cash dividend on, or repurchase any of its common stock, if the effect thereof would cause the regulatory capital of the Bank to be reduced below the amount required under OTS rules and regulations.

F-30

You should rely only on the information contained in this prospectus. Neither Auburn Savings Bank nor Auburn Bancorp, Inc. has authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered by this prospectus to any person or in any jurisdiction in which an offer or solicitation is not authorized or in which the person making an offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make an offer or solicitation in those jurisdictions. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock.

(Holding Company for Auburn Savings Bank)

305,325 Shares
(Anticipated Maximum, Subject to Increase)

COMMON STOCK

Prospectus

KEEFE, BRUYETTE & WOODS

[ ], 2008

Until [ ], 2008, or 90 days after commencement of the syndicated community offering, if any, whichever is later, all dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus when acting as underwriters and with respect to their unsold allotments of subscriptions.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

Filing Fees (OTS, SEC and NASD)(1)	$	15,400
Blue Sky Fees and Expenses		15,000
Edgar, printing, postage and mailing		70,000
Legal fees and expenses (including marketing firm’s counsel fees)		290,000
Accounting fees and expenses		30,000
Appraiser’s fees and expenses		25,000
Business Plan fees and expenses		30,000
Marketing firm expenses		120,000
Transfer agent and registrar fees and expenses		2,000
Certificate printing		1,750
Miscellaneous		1,850
TOTAL	$	600,000

(1) Estimated expenses based on the registration of 351,124 shares at $10.00 per share.

Item 14. Indemnification of Directors and Officers.

Article XII of Auburn Bancorp, Inc.’s bylaws provides:

The Holding Company shall indemnify all officers, directors and employees of the Holding Company, and their heirs, executors and administrators, to the fullest extent permitted under federal law, rules, and regulations against all expenses and liabilities reasonably incurred by them in connection with or arising out of any action, suit or proceeding in which they may be involved by reason of their having been a director or officer of the Holding Company, whether or not they continue to be a director or officer at the time of incurring such expenses or liabilities, such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements.

Generally, federal law provides indemnity coverage for:

          (a) Any person against whom any action is brought or threatened because that person is or was a director or officer of the association, for:

              (i)      Any amount for which that person becomes liable under a judgment in such action; and

              (ii)      Reasonable costs and expenses, including reasonable attorneys’ fees, actually paid or incurred by that person in defending or settling such action, or in enforcing his or her rights under this section if he or she attains a favorable judgment in such enforcement action.

          (b) Indemnification shall be made to such person only if:

127

(i)	Final judgment on the merits is in his or her favor; or
(ii)	In case of:
	a.	Settlement;
	b.	Final judgment against him or her; or

                          c.       Final judgment in his or her favor, other than on the merits, if a majority of the disinterested directors of the savings association determine that he or she was acting in good faith within the scope of his or her employment or authority as he or she could reasonably have perceived it under the circumstances and for a purpose he or she could reasonably have believed under the circumstances was in the best interests of the savings association or its members.

          However, no indemnification shall be made unless the association gives the Office of Thrift Supervision at least 60 days’ notice of its intention to make such indemnification. No such indemnification shall be made if the Office of Thrift Supervision advises the association in writing, within such notice period, of its objection thereto.

          (c) As used in this paragraph:

               (i)      “Action” means any judicial or administrative proceeding, or threatened proceeding, whether civil, criminal, or otherwise, including any appeal or other proceeding for review.

               (ii)      “Court” includes, without limitation, any court to which or in which any appeal or any proceeding for review is brought.

               (iii)      “Final judgment” means a judgment, decree or order which is not appealable or as to which the period for appeal has expired with no appeal taken.

               (iv)      “Settlement” includes the entry of a judgment by consent or confession or a plea of guilty or of nolo contendere.

Item 15. Recent Sales of Unregistered Securities.

None.

Item 16. Exhibits and Financial Statement Schedules

(a)      The exhibits filed as a part of this Registration Statement are as follows (filed herewith unless otherwise noted):

1.1	Engagement Letter between Auburn Savings Bank and Keefe Bruyette & Woods, Inc.
1.2	Form of Agency Agreement*
2.0	Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan
3.1	Charter of Auburn Bancorp, Inc.
3.2	Bylaws of Auburn Bancorp, Inc.
4.0	Specimen Stock Certificate of Auburn Bancorp, Inc.
5.0	Opinion of Nutter McClennen & Fish LLP
8.1	Form of Federal Tax Opinion of Nutter McClennen & Fish LLP

128

8.2	Form of State Tax Opinion of Berry, Dunn, McNeil & Parker
10.1	Form of Auburn Savings Bank Employee Stock Ownership Plan and Trust
10.2	Form of ESOP Loan Commitment Letter and ESOP Loan Documents
10.3	Form of Employment Agreement between Auburn Savings Bank and Allen T. Sterling*
16.0	Letter from Baker Newman Noyes LLC
23.1	Consent of Nutter McClennen & Fish LLP (included in Exhibit 5.0)
23.2	Consent of Keller & Company, Inc.
23.3	Consent of Berry, Dunn, McNeil & Parker
23.4	Consent of Baker Newman Noyes LLC
24.0	Powers of Attorney (included in signature page)
99.1	Appraisal Report of Keller & Company, Inc. (P)
99.2	Marketing Materials
99.3	Subscription Order Form and Instructions

*	To be filed by amendment.
(P)	Application has been made to file the supporting financial schedules in paper format pursuant to Rule 202 and Rule 311 of Regulation S-T.
(b)	The Financial Statement schedules have been omitted as not applicable or not required under the rules of Regulation S-X.

Item 17. Undertakings.

               The undersigned registrant hereby undertakes:

               To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

a.	To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
b.	To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
c.	To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

               That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities

129

offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the stock offering.

          That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

          a.       If the registrant is relying on Rule 430B (§230.430B of this chapter):

(i)

Each prospectus filed by the registrant pursuant to Rule 424(b)(3)shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(ii)

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

b. If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement

130

that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

          That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

a.	Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
b.	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
c.	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
d.	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

          The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

          The undersigned registrant hereby undertakes that:

a.

For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

b.

For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

131

          Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

132

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Auburn, State of Maine on March 14, 2008.

AUBURN BANCORP, INC.
By:	/s/ Allen T. Sterling
	Allen T. Sterling, President and
	Chief Executive Officer
	(duly authorized representative)

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates stated. Each person whose signature appears below hereby makes, constitutes and appoints Allen T. Sterling and Michelle L. Basil, and each of them acting individually, his true and lawful attorneys, with full power to sign for such person and in such person’s name and capacity indicated below any and all amendments to this Form S-1, hereby ratifying and confirming such person’s signature as it may be signed by said attorneys to any and all amendments.

Name	Title	Date
/s/ Allen T. Sterling	President and Chief	March 14, 2008
	Executive Officer
Allen T. Sterling
/s/ Rachel A. Haines	Principal Financial Officer	March 14, 2008
Rachel A. Haines
/s/ Claire D. Thompson	Director	March 14, 2008
Claire D. Thompson
/s/ Philip R. St. Pierre	Director	March 14, 2008
Philip R. St. Pierre
/s/ Bonnie G. Adams	Director	March 14, 2008
Bonnie G. Adams
/s/ August M. Berta	Director	March 14, 2008
August M. Berta
/s/ Peter E. Chalke	Director	March 14, 2008
Peter E. Chalke
/s/ M. Kelly Matzen	Director	March 14, 2008
M. Kelly Matzen
/s/ Sharon A. Millett	Director	March 14, 2008
Sharon A. Millett

133

TABLE OF CONTENTS

List of Exhibits (filed herewith unless otherwise noted)

1.1	Engagement Letter between Auburn Savings Bank and Keefe Bruyette & Woods, Inc.
1.2	Form of Agency Agreement*
2.0	Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan
3.1	Charter of Auburn Bancorp, Inc.
3.2	Bylaws of Auburn Bancorp, Inc.
4.0	Specimen Stock Certificate of Auburn Bancorp, Inc.
5.0	Opinion of Nutter McClennen & Fish LLP
8.1	Form of Federal Tax Opinion of Nutter McClennen & Fish LLP
8.2	Form of State Tax Opinion of Berry, Dunn, McNeil & Parker
10.1	Form of Auburn Savings Bank Employee Stock Ownership Plan and Trust
10.2	Form of ESOP Loan Commitment Letter and ESOP Loan Documents
10.3	Form of Employment Agreement between Auburn Savings Bank and Allen T. Sterling*
16.0	Letter from Baker Newman Noyes LLC
23.1	Consent of Nutter McClennen & Fish LLP (included in Exhibit 5.0)
23.2	Consent of Keller & Company, Inc.
23.3	Consent of Berry, Dunn, McNeil & Parker
23.4	Consent of Baker Newman Noyes LLC
24.0	Powers of Attorney (included in signature page)
99.1	Appraisal Report of Keller & Company, Inc. (P)
99.2	Marketing Materials
99.3	Subscription Order Form and Instructions

*	To be filed by amendment.
(P)	Supporting exhibits and financial schedules are filed in paper format pursuant to Rule 202 and Rule 311 of Regulation S-T.

134

EX-2.0

Exhibit 2.0

AUBURN SAVINGS BANK
PLAN OF REORGANIZATION
FROM A MUTUAL SAVINGS BANK
TO A MUTUAL HOLDING COMPANY
AND STOCK ISSUANCE PLAN

1. Introduction – Business Purpose

          The Board of Directors of Auburn Savings Bank (the “Bank”) has adopted this Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan (the “Plan”) pursuant to which the Bank proposes to reorganize from a mutual savings bank into the mutual holding company structure (the “Reorganization”) under federal law and the regulations of the Office of Thrift Supervision (“OTS”), and other applicable federal laws and regulations.

          As part of the Reorganization and the Plan, the Bank will convert to a federal stock savings bank (the “Stock Bank”) and will establish Auburn Bancorp, MHC (the “MHC”) as a federally-chartered mutual holding company and Auburn Bancorp, Inc. (the “Holding Company”) as federally-chartered mid-tier stock holding company. Accordingly, the Bank, the Holding Company and the MHC will be chartered and regulated by the OTS. The Holding Company will be a majority-owned subsidiary of the MHC at all times so long as the MHC remains in existence, and the Stock Bank will become a wholly-owned subsidiary of the Holding Company. Concurrently with the Reorganization, the Holding Company intends to offer for sale up to 49.9% of its Common Stock in the Stock Offering to certain deposit account holders, Tax-Qualified Employee Plans and borrower members of the Bank, with any remaining shares offered to the public in a Community Offering. In the event the Holding Company is not established as part of the Reorganization, the Board of Directors may elect to proceed with the Reorganization by forming the Stock Bank as a direct majority-owned subsidiary of the MHC. In such event, any reference in this Plan to a Stock Offering by the Holding Company shall mean a stock offering by the Stock Bank directly, and the terms and conditions of the Stock Offering described herein shall apply to a stock offering by the Stock Bank unless clearly inapplicable.

          The primary purpose of the Reorganization is to establish a holding company and to convert the Bank to a stock charter, which will enable the Bank to compete and expand more effectively in the financial services marketplace. The Reorganization will permit the Holding Company to issue Capital Stock, which is a source of capital not available to mutual savings banks. Since the Holding Company will not be offering all of its Common Stock for sale in the Stock Offering, the Reorganization will result in less capital raised in comparison to a standard mutual-to-stock conversion. The Reorganization, however, will also permit the Bank to raise additional capital since a majority of the Holding Company’s Common Stock will be available for sale in the future. It will also provide the Bank with greater flexibility to structure and finance the expansion of its operations, including the potential acquisition of other financial institutions. Lastly, the Reorganization will enable the Bank to better manage its capital by providing broader acquisition and investment opportunities through the holding company structure, by enabling the Bank to distribute any excess capital to stockholders of the Holding Company in the form of

dividends, and by enabling the Holding Company to repurchase its common stock as market conditions warrant. Although the Reorganization and Stock Offering will create a stock savings bank and stock holding company, only a minority of the Common Stock will be offered for sale in the Stock Offering. As a result, the Bank’s mutual form of ownership and its ability to remain an independent community savings bank will be preserved through the mutual holding company structure.

          The Reorganization is subject to the approval of the OTS, and must be approved by the affirmative vote of at least a majority of the total votes of the Members eligible to be cast at the Special Meeting.

2. Definitions

          As used in this Plan, the terms set forth below have the following meanings:

          Acting in Concert: The term “acting in concert” means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement or (ii) a combination or pooling of votes or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A Person or company which acts in concert with another Person or company (“other party”) shall also be deemed to be acting in concert with any Person or company who is also acting in concert with the other party, except that any Tax-Qualified Employee Plan will not be deemed to be acting in concert with any other Tax-Qualified Employee Benefit Plan or with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

          Actual Purchase Price: The price per share, determined as provided in this Plan, at which the Common Stock will be sold in the Stock Offering.

          Affiliate: Any Person that directly or indirectly, through on or more intermediaries, controls, is controlled by, or is under common control with another Person.

          Associate: The term “Associate,” when used to indicate a relationship with any Person, means: (i) any corporation or organization (other than the Bank, the Holding Company, the MHC or a majority-owned subsidiary of any thereof) of which such Person is a senior officer or partner or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization; (ii) any trust or other estate, if such Person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate; and (iii) any relative or spouse of such Person or any relative of such spouse, who has the same home as such Person or who is a director or senior officer of the Bank, the MHC, the Stock Holding Company or any subsidiary thereof. For purposes of Sections 563b.370, 563b.380, 563b.385, 563b.390, 563b.395 and 563b.505 of the Regulations, a Person who has a substantial beneficial interest in a Tax Qualified Employee Plan or Non-Tax Qualified Employee Plan is not an Associate of the plan. For purposes of Section 563b.370, a Tax-Qualified Employee Plan is not an Associate of a Person.

2

          Bank: Auburn Savings Bank in its pre-Reorganization mutual form and post-Reorganization stock form, as indicated by the context.

          Capital Stock: Any and all authorized stock of the Bank or the Holding Company.

          Code: The Internal Revenue Code of 1986, as amended.

          Common Stock: Common stock issuable by the Holding Company in connection with the Reorganization, including securities convertible into Common Stock, pursuant to its certificate of incorporation.

          Community: Androscoggin County, Maine.

          Community Offering: The offering to certain members of the general public of any unsubscribed shares in the Subscription Offering. The Community Offering may include a Syndicated Community Offering or public offering.

          Deposit Account(s): Any withdrawable accounts of the Bank as defined in Section 561.42 of the Regulations, including all demand deposit accounts as defined in Section 561.16 of the Regulations and certificates of deposit.

          Effective Date: The date upon which all necessary approvals have been obtained to consummate the Reorganization, and the Reorganization and Stock Offering is completed.

          Eligible Account Holder: Any Person holding a Qualifying Deposit on the Eligibility Record Date for purposes of determining subscription rights.

          Eligibility Record Date: September 30, 2006, the date for determining who qualifies as an Eligible Account Holder.

          ESOP: The employee stock ownership plan established by either the Bank or the Holding Company.

          Estimated Valuation Range: The range of the estimated pro forma market value of the total number of shares of Common Stock to be issued by the Holding Company to the MHC and to Minority Stockholders, as determined by the Independent Appraiser prior to the Subscription Offering and as it may be amended from time to time thereafter.

          Exchange Act: The Securities Exchange Act of 1934, as amended.

          FDIC: The Federal Deposit Insurance Corporation.

          HOLA: The Home Owners’ Loan Act, as amended.

          Holding Company: Auburn Bancorp, Inc., the federal corporation that will be majority-owned by the MHC and that will own 100% of the common stock of the Bank, and any successor to such corporation that may be established in connection with a Conversion Transaction.

3

          Holding Company Application: The Holding Company Application on Form H(e)-1 to be submitted by the Bank to the OTS to have the Holding Company acquire the common stock of the Bank.

          Independent Appraiser: The appraiser retained by the Bank to prepare an appraisal of the pro forma market value of the Bank and the Holding Company.

          Independent Valuation: The estimated pro forma market value of the Holding Company and the Bank as determined by the Independent Appraiser.

          Management Person: Any Officer or director of the Bank or any Affiliate of the Bank, and any person acting in concert with any such Officer or director.

          Market Maker: A dealer (i.e., any person who engages directly or indirectly as agent, broker, or principal in the business of offering, buying, selling or otherwise dealing or trading in securities issued by another person) who, with respect to a particular security, (i) regularly publishes bona fide competitive bid and offer quotations on request, and (ii) is ready, willing and able to effect transactions in reasonable quantities at the dealer’s quoted prices with other brokers or dealers.

          Member: Any Person qualifying as a member of the Bank in accordance with its charter and bylaws and the laws of the United States.

          MHC: Auburn Bancorp, MHC, the mutual holding company resulting from the Reorganization.

          Minority Ownership Interest: The shares of the Holding Company’s Common Stock owned by Persons other than the MHC, expressed as a percentage of the total shares of Holding Company Common Stock outstanding.

          Minority Stockholder: Any owner of the Holding Company’s Common Stock, other than the MHC.

          Minority Stock Offering: One or more offerings of up to 49.9% in the aggregate of the outstanding Common Stock of the Holding Company to Persons other than the MHC.

          MRPs: Any restricted stock plan, such as a management recognition plan established or to be established by the Holding Company or any of its Affiliates.

          Non-Voting Stock: Any Capital Stock other than Voting Stock.

          Notice: The Notice of Mutual Holding Company Reorganization to be submitted by the Bank to the OTS to notify the OTS of the Reorganization and the Stock Offering.

          Offering Range: The aggregate purchase price of the Common Stock to be sold in the Stock Offering based on the Independent Valuation expressed as a range that may vary within 15% above or 15% below the midpoint of such range, with a possible adjustment by up to 15% above the maximum of such range. The Offering Range will be based on the Estimated

4

Valuation Range, but will represent a Minority Ownership Interest equal to up to 49.9% of the Common Stock.

          Officer: An executive officer of the Holding Company or the Bank, including the Chief Executive Officer, President, Executive Vice President, Senior Vice Presidents, Vice Presidents in charge of principal business functions, Secretary, Treasurer and any other employee participating in major policy making functions of the institution.

          Option Plans: Any stock option plans established or to be established by the Holding Company or any of its Affiliates.

          Order Form: Any form (together with any attached cover letter and/or certifications or acknowledgements), sent by the Bank to any Person containing among other things a description of the alternatives available to such Person under the Plan and by which any such Person may make elections regarding purchases of Common Stock in the Subscription and Community Offerings.

          Other Member: Any Person who is a Member of the Bank at the close of business on the Voting Record Date who is not an Eligible Account Holder or Supplemental Eligible Account Holder, or Tax-Qualified Employee Plan.

          OTS: The Office of Thrift Supervision and any successor thereto.

          Person: An individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government entity or political subdivision thereof or any other entity.

          Plan: This Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan.

          Qualifying Deposit: The aggregate balance of each Deposit Account of an Eligible Account Holder as of the close of business on the Eligibility Record Date or of a Supplemental Eligible Account Holder as of the close of business on the Supplemental Eligibility Record Date, as the case may be, provided such aggregate balance is not less than $50.

          Regulations: The regulations of the OTS regarding a mutual holding company reorganization, stock issuance and conversion to stock form.

          Reorganization: The reorganization of the Bank into the mutual holding company structure including the organization of the MHC, the Holding Company and the Stock Bank pursuant to this Plan.

          Resident: The terms “resident,” “residence,” reside” or “residing” as used herein with respect to any person shall mean any person who occupies a dwelling within the Bank’s Community, has an intent to remain with the Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the Community together with an indication that such presence within the Community is something other than merely transitory in nature. To the extent the Person is a corporation or other business entity, the

5

principal place of business or headquarters shall be in the Community. To the extent a person is a personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans, the circumstances of the trustee shall be examined for purposes of this definition. The Bank may utilize deposit or loan records or such other evidence provided to it to make a determination as to whether a person is a resident. In all cases, however, such a determination shall be in the sole discretion of the Bank.

          SEC: The Securities and Exchange Commission.

          Special Meeting: The Special Meeting of Members of the Bank, and any adjournment thereof, called for the purpose of submitting this Plan to the Members for their approval.

          Stock Bank: The federally chartered stock savings bank resulting from the conversion of the Bank to stock form pursuant to this Plan.

          Stock Offering: The offering of Common Stock of the Holding Company to persons other than the MHC, in a Subscription Offering and, to the extent shares remain available, in a Community Offering.

          Subscription Offering: The offering of Common Stock of the Holding Company for subscription and purchase pursuant to Section 10 of this Plan.

          Subsidiary: A company that is controlled by another company, either directly or indirectly through one or more subsidiaries.

          Supplemental Eligible Account Holder: Any Person holding a Qualifying Deposit on the Supplemental Eligibility Record Date, who is not an Eligible Account Holder, a Tax-Qualified Employee Plan or an Officer or director of the Bank.

          Supplemental Eligibility Record Date: The supplemental record date for determining who qualifies as a Supplemental Eligible Account Holder, which shall be the last day of the calendar quarter preceding the OTS’ approval of the Reorganization.

          Syndicated Community Offering: At the discretion of the Bank and the Holding Company, the offering of Common Stock following or contemporaneously with the Community Offering through a syndicate of broker-dealers.

          Tax-Qualified Employee Plan: Any defined benefit plan or defined contribution plan (including any employee stock ownership plan, stock bonus plan, profit-sharing plan, or other plan) of the Bank, the Holding Company, the MHC or any of their affiliates, which, with its related trusts, meets the requirements to be qualified under Section 401 of the Code. The term “Non-Tax-Qualified Employee Plan” means any defined benefit plan or defined contribution plan that is not so qualified.

          Voting Member: Any Person who at the close of business on the Voting Record Date is entitled to vote as a Member of the Bank pursuant to its charter and bylaws.

6

          Voting Record Date: The date established by the Bank for determining which Members are entitled to vote on the Plan.

          Voting Stock:

          (1)          Voting Stock means common stock or preferred stock, or similar interests if the shares by statute, charter or in any manner, entitle the holder:

(i)	To vote for or to select directors of the Bank or the Holding Company; and
(ii)	To vote on or to direct the conduct of the operations or other significant policies of the Bank or the Holding Company.

          (2)          Notwithstanding anything in paragraph (1) above, preferred stock is not “Voting Stock” if:

(i)	Voting rights associated with the preferred stock are limited solely to the type customarily provided by statute with regard to matters that would significantly and adversely affect the rights or preferences of the preferred stock, such as the issuance of additional amounts or classes of senior securities, the modification of the terms of the preferred stock, the dissolution of the Bank or the Holding Company, or the payment of dividends by the Bank or the Holding Company when preferred dividends are in arrears;
(ii)	The preferred stock represents an essentially passive investment or financing device and does not otherwise provide the holder with control over the issuer; and
(iii)	The preferred stock does not at the time entitle the holder, by statute, charter, or otherwise, to select or to vote for the selection of directors of the Bank or the Holding Company.

          (3)          Notwithstanding anything in paragraphs (1) and (2) above, “Voting Stock” shall be deemed to include preferred stock and other securities that, upon transfer or otherwise, are convertible into Voting Stock or exercisable to acquire Voting Stock where the holder of the stock, convertible security or right to acquire Voting Stock has the preponderant economic risk in the underlying Voting Stock. Securities immediately convertible into Voting Stock at the option of the holder without payment of additional consideration shall be deemed to constitute the Voting Stock into which they are convertible; other convertible securities and rights to acquire Voting Stock shall not be deemed to vest the holder with the preponderant economic risk in the underlying Voting Stock if the holder has paid less than 50% of the consideration required to directly acquire the Voting Stock and has no other economic interest in the underlying Voting Stock.

3.	The Reorganization
	A.	Organization of the Holding Companies and the Bank

7

          As part of the Reorganization, the Bank will convert to the stock form of organization and the Holding Company and MHC will be established as federal corporations. The Reorganization will be effected as follows, or in any manner approved by the OTS that is consistent with the purposes of this Plan and applicable laws and regulations: (i) the Bank will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim One”); (ii) Interim One will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim Two”); (iii) Interim One will organize the Holding Company as a wholly-owned subsidiary; (iv) the Bank will exchange its charter for a federal stock savings bank charter to become the Stock Bank and Interim One will exchange its charter for a federal mutual holding company charter to become the MHC; (v) simultaneously with step (iv), Interim Two will merge with and into the Stock Bank with the Stock Bank as the resulting institution; (vi) all of the initially issued stock of the Stock Bank will be transferred to the MHC in exchange for membership interests in the MHC; and (vii) the MHC will contribute the capital stock of the Stock Bank to the Holding Company in, and the Stock Bank will become a wholly-owned subsidiary of the Holding Company. Prior to the Effective Date of the Reorganization, the Board of Directors of the Bank may specify that the structure of the transactions contemplated by the Plan be revised; provided, however, that such revised structure shall not (i) change the intended federal income tax consequences of the transactions contemplated by the Plan or (ii) materially impede or delay the receipt of any regulatory approval.

          Contemporaneously with the Reorganization, the Holding Company will offer for sale in the Stock Offering shares of Common Stock representing up to 49.9% the pro forma market value of the Holding Company and the Bank. Upon consummation of the Reorganization, the legal existence of the Bank will not terminate, but the Stock Bank will be a continuation of the Bank, and all property of the Bank, including its right, title, and interest in and to all property of whatsoever kind and nature, interest and asset of every conceivable value or benefit then existing or pertaining to the Bank, or which would inure to the Bank immediately by operation of law and without the necessity of any conveyance or transfer and without any further act or deed, will vest in the Stock Bank. The Stock Bank will have, hold, and enjoy the same in its right and fully and to the same extent as the same was possessed, held, and enjoyed by the Bank. The Stock Bank will continue to have, succeed to, and be responsible for all the rights, liabilities and obligations of the Bank and will maintain its headquarters and operations at the Bank’s present locations.

          Upon consummation of the Reorganization, substantially all of the assets and liabilities (including the savings accounts, demand accounts, tax and loan accounts, United States Treasury general accounts, or United States Treasury Time Deposit Open Accounts, as defined in the Regulations) of the Bank shall be become the assets and liabilities of the Stock Bank, which will thereupon become an operating savings bank subsidiary of the Holding Company and of the MHC. The Bank will apply to the OTS to have the Holding Company receive or retain (as the case may be) up to 50% of the net proceeds of the Stock Offering, or such other amount as may be determined by the Board of Directors. The Stock Bank may distribute additional capital to the Holding Company following the Reorganization, subject to the Regulations governing capital distributions.

B. Effect on Deposit Accounts and Borrowings

8

          Each deposit account in the Bank on the Effective Date will remain a deposit account in the Stock Bank in the same amount and upon the same terms and conditions, and will continue to be federally insured up to the legal maximum by the FDIC in the same manner as the deposit account existed in the Bank immediately prior to the Reorganization. Upon consummation of the Reorganization, all loans and other borrowings from the Bank shall retain the same status with the Stock Bank after the Reorganization as they had with the Bank immediately prior to the Reorganization.

C. The Bank

          Upon completion of the Reorganization, the Stock Bank will be authorized to exercise any and all powers, rights and privileges of, and will be subject to all limitations applicable to, capital stock savings banks under federal law. A copy of the proposed Charter and Bylaws of the Stock Bank is attached hereto as Exhibit A and made a part of this Plan. The Reorganization will not result in any reduction of the amount of retained earnings (other than the assets of the Bank retained by or distributed to the Holding Company or the MHC), undivided profits, and general loss reserves that the Bank had prior to the Reorganization. Such retained earnings and general loss reserves will be accounted for by the MHC, the Holding Company and the Stock Bank on a consolidated basis in accordance with generally accepted accounting principles.

          The initial members of the Board of Directors of the Stock Bank will be the existing members of the Board of Directors of the Bank and the President of the Bank. The Stock Bank will be wholly owned by the Holding Company. The Holding Company will be wholly owned by its stockholders who will consist of the MHC and, initially, the persons who purchase Common Stock in the Stock Offering. Upon the Effective Date of the Reorganization, the voting and membership rights of the Members will be transferred to the MHC, subject to the conditions specified below.

D. The Holding Company

          The Holding Company will be authorized to exercise any and all powers, rights and privileges, and will be subject to all limitations applicable to savings and loan holding companies and mutual holding companies under federal law and regulations. The initial members of the Board of Directors of the Holding Company will be the existing members of the Board of Directors of the Bank and the President of the Bank. Thereafter, the voting stockholders of the Holding Company will elect approximately one-third of the Holding Company’s directors annually. A copy of the proposed Charter and Bylaws of the Holding Company is attached as Exhibit B and are made part of this Plan.

          The Holding Company will have the power to issue shares of Capital Stock to Persons other than the MHC. However, so long as the MHC is in existence, the MHC will be required to own at least a majority of the Voting Stock of the Holding Company. The Holding Company may issue any amount of Non-Voting Stock to persons other than the MHC. The Holding Company will be authorized to undertake one or more Minority Stock Offerings of less than 50.0% in the aggregate of the total outstanding Common Stock of the Holding Company, and the Holding Company intends to offer for sale up to 49.9% of its Common Stock in the Stock Offering.

9

E. The Mutual Holding Company

          As a mutual corporation, the MHC will have no stockholders. The members of the MHC will have exclusive voting authority as to all matters requiring a vote of members under the charter of the MHC. Persons who have membership rights with respect to the Bank under its existing charter immediately prior to the Reorganization shall continue to have such rights solely with respect to the MHC after the Reorganization, so long as such persons remain depositors or borrowers, as the case may be, of the Stock Bank after the Reorganization. In addition, all persons who become depositors of the Stock Bank following the Reorganization will have membership rights with respect to the MHC. Borrowers will not receive membership rights in connection with any new borrowings made after the Reorganization. The rights and powers of the MHC will be defined by the MHC’s Charter and Bylaws (a copy of which is attached to this Plan as Exhibit C and made a part hereof) and by the statutory and regulatory provisions applicable to savings and loan holding companies and federal mutual holding companies. In particular, the MHC will be subject to the limitations and restrictions imposed on savings and loan holding companies by Section 10(o)(5) of the HOLA.

          The initial members of the Board of Directors of the MHC will be the existing members of the Board of Directors of the Bank and the President of the Bank. Thereafter, approximately one-third of the directors of the MHC will be elected annually by the Members of the MHC who will consist of the former Members of the Bank and all persons who become Members of the MHC after the Reorganization.

F. Rights of Owners of the MHC

          Following the Reorganization, all persons who had membership or liquidation rights with respect to the Bank as of the date of the Reorganization will continue to have such rights solely with respect to the MHC. All existing proxies granted by members of the Bank to the Board of Directors of the Bank shall automatically become proxies granted to the Board of Directors of the MHC; provided, however, such proxies may not be voted by the Board of Directors of the Bank at the Special Meeting. In addition, all persons who become depositors of the Stock Bank subsequent to the Reorganization also will have membership and liquidation rights with respect to the MHC. In each case, no person who ceases to be the holder of a deposit account with the Stock Bank shall have any membership or other rights with respect to the MHC. Borrowers of the Bank who were borrower members of the Bank at the time of the Reorganization will have the same membership rights in the MHC as they had in the Bank immediately prior to the Reorganization for so long as their pre-Reorganization borrowings remain outstanding. Borrowers of the Stock Bank will not receive membership rights in connection with any new borrowings made after the Reorganization.

4.	Conditions to Implementation of the Reorganization
	Consummation of the Reorganization is conditioned upon the following:
	A.	Approval of the Plan by a majority of the Board of Directors of the Bank.
	B.	The filing of a Reorganization Notice, including the Plan, with the OTS and either:

10

(i)	The OTS has given written notice of its intent not to disapprove the Reorganization; or
(ii)	Sixty days have passed since the OTS received the Reorganization Notice and deemed it sufficient under Section 516.210 or 516.220 of the Regulations, and the OTS has not given written notice that the Reorganization is disapproved or extended for an additional 30 days the period during which disapproval may be issued.

          C.          The filing of a Holding Company Application with and approval by the OTS pursuant to the HOLA for the Holding Company and MHC to become savings and loan holding companies by owning or acquiring up to 100% and at least 50.1% of the common stock of the Stock Bank and the Holding Company, respectively, to be issued in connection with the Reorganization.

          D.          Submission of the Plan to the Members for approval pursuant to a Proxy Statement and form of proxy cleared in advance by the OTS and approval of such Plan by a majority of the total votes of the Voting Members eligible to be cast at a meeting held at the call of the Bank’s directors in accordance with the procedures prescribed by the Bank’s charter and bylaws.

          E.          All necessary approvals have been obtained from the OTS in connection with the adoption of the charter and bylaws of the MHC, the Holding Company and the Stock Bank, the conversion of the Bank to a stock charter, and any transfer of assets and liabilities of the Bank to the Stock Bank pursuant to the Plan; and all conditions specified or otherwise imposed by the OTS in connection with the issuance of a notice of intent not to disapprove the Notice have been satisfied.

5. Special Meeting of the Members

          Subsequent to the approval of the Plan by the OTS, the Special Meeting shall be scheduled in accordance with the Bank’s bylaws. Promptly after receipt of approval and at least 20 days but not more than 45 days prior to the Special Meeting, the Bank shall distribute proxy solicitation materials to all Voting Members. The proxy solicitation materials shall include a Proxy Statement and other documents authorized for use by the regulatory authorities. A copy of the Plan will be made available to Voting Members upon request. The affirmative vote of at least a majority of the total votes of the Voting Members eligible to be cast at the Special Meeting is required for approval of the Plan. Voting may be in person or by proxy. The OTS shall be notified promptly of the vote of the Members.

6. Conversion of MHC to Stock Form

          Following the completion of the Reorganization, the MHC may elect to convert to stock form in accordance with applicable law (a “Conversion Transaction”). There can be no assurance when, if ever, a Conversion Transaction will occur.

          In a Conversion Transaction, the MHC would merge with and into the Stock Bank or the Holding Company, with the Stock Bank or the Holding Company as the resulting entity, and the

11

depositors of the Stock Bank would receive the right to subscribe for a number of shares of common stock of the Holding Company or its successor, representing the ownership interest of the MHC in the Holding Company. The additional shares of common stock of the Holding Company issued in the Conversion Transaction would be sold at their aggregate pro forma market value as determined by an Independent Appraisal.

          Any Conversion Transaction shall be fair and equitable to Minority Stockholders. In any Conversion Transaction, Minority Stockholders, if any, will be entitled without additional consideration to maintain the same percentage ownership interest in the Holding Company after the Conversion Transaction as their percentage ownership interest in the Holding Company immediately prior to the Conversion Transaction (i.e., the “Minority Ownership Interest”). The Minority Ownership Interest of Minority Stockholders shall not be reduced in a Conversion Transaction as a result of any waiver of dividends by the MHC.

          At the sole discretion of the Board of Directors of the MHC and the Holding Company, a Conversion Transaction may be effected in any other manner necessary to qualify the Conversion Transaction as a tax-free reorganization under applicable federal and state tax laws, provided such Conversion Transaction does not diminish the rights and ownership interest of Minority Stockholders. If a Conversion Transaction does not occur, the MHC will continue to own a majority of the Voting Stock of the Holding Company. Management of the Bank has no current intention to conduct a Conversion Transaction.

          A Conversion Transaction would require the approval of the OTS and would be presented for approval by the members of the MHC. Federal regulatory policy requires that in any Conversion Transaction the Members of the MHC will be accorded the same stock purchase priorities as if the MHC were a mutual savings bank converting to stock form.

7. Timing of the Reorganization and Sale of Capital Stock

          The Bank intends to consummate the Reorganization as soon as feasible following the receipt of all approvals referred to in Section 4 of the Plan. Subject to the approval of the OTS, the Holding Company intends to commence the Stock Offering concurrently with the proxy solicitation of Members. The Holding Company may close the Stock Offering before the Special Meeting, provided that the offer and sale of the Common Stock shall be conditioned upon approval of the Plan by the Members at the Special Meeting. Subject to OTS approval, the Bank’s proxy solicitation materials may permit certain Members to return to the Bank by a reasonable date a certain postage paid card or other written communication requesting receipt of the prospectus if the prospectus is not mailed concurrently with the proxy solicitation materials. The Stock Offering shall be conducted in compliance with 12 C.F.R. 563g, the securities offering regulations of the SEC and to the extent applicable Form OC promulgated under the Regulations.

8. Number of Shares to be Offered

          The total number of shares (or range thereof) of Common Stock to be issued and offered for sale pursuant to the Plan shall be determined initially by the Board of Directors of the Bank and the Board of Directors of the Holding Company in conjunction with the determination of the Independent Appraiser. The number of shares to be offered may be adjusted prior to completion

12

of the Stock Offering. The total number of shares of Common Stock that may be issued to persons other than the MHC at the close of the Stock Offering must be less than 50.0% of the issued and outstanding shares of Common Stock of the Holding Company.

9. Independent Valuation and Purchase Price of Shares

          All shares of Common Stock sold in the Stock Offering shall be sold at a uniform price per share. The purchase price and number of shares to be outstanding shall be determined by the Board of Directors of the Holding Company on the basis of the estimated pro forma market value of the Holding Company and the Bank. The aggregate purchase price for the Common Stock will not be inconsistent with such market value of the Holding Company and the Bank. The pro forma market value of the Holding Company and the Bank will be determined for such purposes by the Independent Appraiser.

          Prior to the commencement of the Stock Offering, an Estimated Valuation Range will be established, which range may vary within 15% above to 15% below the midpoint of such range, and up to 15% greater than the maximum of such range, as determined by the Board of Directors at the time of the Stock Offering and consistent with OTS regulations. The Holding Company intends to issue up to 49.9% of its Common Stock in the Stock Offering. The number of shares of Common Stock to be issued and the ownership interest of the MHC may be increased or decreased by the Holding Company, taking into consideration any change in the Independent Valuation and other factors, at the discretion of the Board of Directors of the Bank and the Holding Company.

          Based upon the Independent Valuation as updated prior to the commencement of the Stock Offering, the Board of Directors may establish the minimum and maximum percentage of shares of Common Stock that will be offered for sale in the Stock Offering, or it may fix the percentage of shares that will be offered for sale in the Stock Offering. In the event the percentage of the shares offered for sale in the Minority Stock Offering is not fixed in the Stock Offering, the Minority Ownership Interest resulting from the Stock Offering will be determined as follows: (a) the product of (x) the total number of shares of Common Stock sold by the Holding Company and (y) the purchase price per share, divided by (b) the aggregate pro forma market value of the Bank and the Holding Company upon the closing of the Stock Offering and sale of all the Common Stock.

          Notwithstanding the foregoing, no sale of Common Stock may be consummated unless, prior to such consummation, the Independent Appraiser confirms to the Holding Company, the Bank and to the OTS that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the aggregate value of the Common Stock sold in the Stock Offering at the Actual Purchase Price is incompatible with its estimate of the aggregate consolidated pro forma market value of the Holding Company and the Bank. If such confirmation is not received, the Holding Company may cancel the Stock Offering, extend the Stock Offering and establish a new price range and/or estimated price range, extend, reopen or hold a new Stock Offering or take such other action as the OTS may permit.

13

          The estimated market value of the Holding Company and the Bank shall be determined for such purpose by an Independent Appraiser on the basis of such appropriate factors as are not inconsistent with OTS regulations. The Common Stock to be issued in the Stock Offering shall be fully paid and nonassessable.

          If there is a Community Offering or Syndicated Community Offering of shares of Common Stock not subscribed for in the Subscription Offering, the price per share at which the Common Stock is sold in such Community Offering or Syndicated Community Offering shall be the Actual Purchase Price which will be equal to the purchase price per share at which the Common Stock is sold to persons in the Subscription Offering. Shares sold in the Community Offering or Syndicated Community Offering will be subject to the same limitations as shares sold in the Subscription Offering.

10. Method of Offering Shares and Rights to Purchase Stock

          In descending order of priority, the opportunity to purchase Common Stock shall be given in the Subscription Offering to: (1) Eligible Account Holders; (2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account Holders; and (4) Other Members, pursuant to priorities established by the Board of Directors. Any shares of Common Stock that are not subscribed for in the Subscription Offering may, at the discretion of the Bank and the Holding Company, be offered for sale in a Community Offering or a Syndicated Community Offering. The minimum purchase by any Person shall be the lesser of the number of shares obtained by a $500 subscription or 25 shares. The Holding Company may determine in its sole discretion whether each prospective purchaser is a “resident,” “associate,” or “acting in concert” as defined in the Plan, and shall interpret all other provisions of the Plan in its sole discretion. All such determinations are in the sole discretion of the Holding Company, and may be based on whatever evidence the Holding Company chooses to use in making any such determination.

          In addition to the priorities set forth below, the Board of Directors may establish other priorities for the purchase of Common Stock, subject to the approval of the OTS. The priorities for the purchase of shares in the Stock Offering are as follows:

          A.          Subscription Offering

          Priority 1: Eligible Account Holders. Each Eligible Account Holder shall receive non-transferable subscription rights to subscribe for shares of Common Stock offered in the Stock Offering in an amount equal to the greater of $100,000, one-tenth of one percent (0.1%) of the total shares offered in the Stock Offering, or 15 times the product (rounded down to the nearest whole number) obtained by multiplying the total number of shares of Common Stock to be issued in the Stock Offering by a fraction, of which the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders, in each case on the Eligibility Record Date and subject to the provisions of Section 11; provided that the Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering or decrease such maximum purchase limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase limitations set forth in

14

Section 11. If there are insufficient shares available to satisfy all subscriptions of Eligible Account Holders, shares will be allocated to Eligible Account Holders so as to permit each such subscribing Eligible Account Holder to purchase a number of shares sufficient to make his total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated pro rata to remaining subscribing Eligible Account Holders whose subscriptions remain unfilled in the same proportion that each such subscriber’s Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. To ensure proper allocation of stock, each Eligible Account Holder must list on his subscription order form all accounts in which he had an ownership interest as of the Eligibility Record Date. Officers, directors, and their Associates may be Eligible Account Holders. However, if an Officer, director, or his or her Associate receives subscription rights based on increased deposits in the year before the Eligibility Record Date, subscription rights based upon these deposits are subordinate to the subscription rights of other Eligible Account Holders.

          Priority 2: Tax-Qualified Employee Plans. The Tax-Qualified Employee Plans shall be given the opportunity to purchase in the aggregate up to 10% of the shares offered in the Stock Offering, subject to the overall purchase limitations set forth in Section 11. In the event of an oversubscription in the Stock Offering, subscriptions for shares by the Tax-Qualified Employee Plans may be satisfied, in whole or in part, out of authorized but unissued shares of the Holding Company subject to the maximum purchase limitations applicable to such plans as set forth in Section 11, or may be satisfied, in whole or in part, through open market purchases by the Tax-Qualified Employee Plans subsequent to the closing of the Stock Offering. If the final valuation exceeds the maximum of the Offering Range, up to 10% of the Common Stock issued in the Stock Offering may be sold to the Tax-Qualified Employee Plans notwithstanding any oversubscription by Eligible Account Holders, subject to the overall purchase limitations set forth in Section 11.

          Priority 3: Supplemental Eligible Account Holders. To the extent there are sufficient shares remaining after satisfaction of subscriptions by Eligible Account Holders and the Tax-Qualified Employee Plans, each Supplemental Eligible Account Holder shall receive non-transferable subscription rights to subscribe for shares of Common Stock offered in the Stock Offering in an amount equal to the greater of $100,000, one-tenth of one percent (0.1%) of the total shares offered in the Stock Offering, or 15 times the product (rounded down to the nearest whole number) obtained by multiplying the total number of shares of Common Stock to be issued in the Stock Offering by a fraction, of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in each case on the Supplemental Eligibility Record Date and subject to the provisions of Section 11; provided that the Bank may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering or decrease such maximum purchase limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase limitations set forth in Section 11. In the event Supplemental Eligible Account Holders subscribe for a number of shares which, when added to the shares subscribed for by Eligible Account Holders and the Tax-Qualified Employee Plans, is in excess of the total shares offered in the Stock Offering, the subscriptions of Supplemental Eligible Account Holders will be

15

allocated among subscribing Supplemental Eligible Account Holders so as to permit each subscribing Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated to each subscribing Supplemental Eligible Account Holder whose subscription remains unfilled in the same proportion that such subscriber’s Qualifying Deposits on the Supplemental Eligibility Record Date bear to the total amount of Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unfilled.

          Priority 4: Other Members. To the extent that there are sufficient shares remaining after satisfaction of subscriptions by Eligible Account Holders, the Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, each Other Member shall have the opportunity to purchase up to $100,000 of Common Stock offered in the Stock Offering, provided that the Bank may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering, or decrease such maximum purchase limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase limitations set forth in Section 11. In the event Other Members subscribe for a number of shares which, when added to the shares subscribed for by the Eligible Account Holders, Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, is in excess of the total number of shares offered in the Stock Offering, the subscriptions of such Other Members will be allocated among subscribing Other Members on a pro rata basis based on the size of such Other Members’ orders.

          B.           Community Offering

          Any shares of Common Stock not subscribed for in the Subscription Offering may be offered for sale in a Community Offering. This will involve an offering of all unsubscribed shares directly to the general public with a preference to those natural persons residing in the Community. The Community Offering, if any, shall be for a period of not more than 45 days unless extended by the Holding Company and the Bank, and shall commence concurrently with, during or promptly after the Subscription Offering. The Holding Company and the Bank may use one or more investment banking firms on a best efforts basis to sell the unsubscribed shares in the Subscription and Community Offering. The Holding Company and the Bank may pay a commission or other fee to such investment banking firm(s) as to the shares sold by such firm(s) in the Subscription and Community Offering and may also reimburse such firm(s) for expenses incurred in connection with the sale. No Person may purchase more than $100,000 of Common Stock in the Community Offering, subject to the overall purchase limitations set forth in Section 11. In the event orders for Common Stock in the Community Offering exceed the number of shares available for sale, shares will be allocated (to the extent shares remain available) first to cover orders of natural persons residing in the Community, and thereafter to cover orders of other members of the general public, so that each Person in such category of the Community Offering may receive 1,000 shares. In the event orders for Common Stock in any of these categories exceed the number of shares available for sale, shares may be allocated on a pro rata basis within a category based on the amount of the respective orders. In addition, orders received for Common Stock in the Community Offering or any Syndicated Community Offering shall first be filled up to a maximum of two percent (2%) of the shares sold and thereafter,

16

remaining shares will be allocated on an equal number of shares basis per order until all orders are filled.

          The Bank and the Holding Company, in their sole discretion, may reject subscriptions, in whole or in part, received from any Person under this Section 10(B).

          C.           Syndicated Community Offering

          Any shares of Common Stock not sold in the Subscription Offering or in the Community Offering, if any, may be offered for sale to the general public by a selling group of broker-dealers in a Syndicated Community Offering, subject to terms, conditions and procedures, including the timing of the offering, as may be determined by the Bank and the Holding Company subject to the rights of the Holding Company to accept or reject in whole or in part all orders in the Syndicated Community Offering. It is expected that the Syndicated Community Offering would commence as soon as practicable after termination of the Subscription Offering and the Community Offering, if any. The Syndicated Community Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended as provided herein. No Person, Associate of such Person, or group of Persons acting in concert, may purchase more than $100,000 of Common Stock in the Syndicated Community Offering, subject to the overall purchase limitations set forth in Section 11.

          If for any reason a Syndicated Community Offering of unsubscribed shares of Common Stock cannot be effected and any shares remain unsold after the Subscription Offering and the Community Offering, if any, the Boards of Directors of the Holding Company and the Bank will seek to make other arrangements (including an underwritten public offering) for the sale of the remaining shares. Such other arrangements will be subject to the approval of the OTS and to compliance with applicable securities laws.

11. Additional Limitations on Purchases of Common Stock

          Purchases of Common Stock in the Stock Offering will be subject to the following purchase limitations:

          A.          The aggregate amount of outstanding Common Stock of the Holding Company owned or controlled by persons other than MHC at the close of the Stock Offering shall be less than 50% of the Holding Company’s total outstanding Common Stock.

          B.          The maximum purchase of Common Stock in the Subscription Offering by a Person or group of Persons through a single Deposit Account is $100,000. No Person by himself, or with an Associate or group of Persons acting in concert, may purchase more than $150,000, or more than 5%, of the Common Stock offered in the Stock Offering, provided that: (i) the Holding Company may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to 5% of the number of shares offered in the Stock Offering; (ii) the Tax-Qualified Employee Plans may purchase up to 10% of the shares offered in the Stock Offering, subject to the other overall purchase limitations contained in this Section 11; and (iii) for purposes of this Section 11(B)

17

shares to be held by any Tax-Qualified Employee Plan and attributable to a person shall not be aggregated with other shares purchased directly by or otherwise attributable to such person.

          C.          The ESOP and all other Tax-Qualified Employee Plans shall not encompass, in the aggregate, more than 4.9% of the outstanding shares of the Holding Company’s Common Stock or 4.9% of the Holding Company’s stockholders’ equity at the close of the Stock Offering.

          D.          The ESOP, all other Tax-Qualified Employee Plans and all MRPs shall not encompass, in the aggregate, more than either 4.9% of the outstanding shares of the Holding Company’s Common Stock or 4.9% of the Holding Company’s stockholders’ equity at the close of the Stock Offering. However, if the Holding Company’s tangible capital equals at least 10% at the time of implementation of the Plan, subject to the approval of the OTS, such ESOPs and MRPs may encompass, in the aggregate, up to 5.88% of the outstanding common stock or stockholders’ equity at the close of the Stock Offering.

          E.          All MRPs shall not encompass, in the aggregate, more than either 1.47% of the Common Stock of the Holding Company or 1.47% of the Holding Company’s stockholders’ equity at the close of the Stock Offering. However, if the Holding Company’s tangible capital is at least 10% at the time of the implementation of the Plan, subject to the approval of the OTS, the MRPs may encompass, in the aggregate, up to 1.96% of the outstanding shares of the Holding Company’s Common Stock or 1.96% of the Holding Company’s stockholders’ equity at the close of the Stock Offering.

          F.          All Option Plans shall not encompass, in the aggregate, more than either 4.9% of the Holding Company’s outstanding Common Stock at the close of the proposed issuance or 4.9% of the Holding Company’s stockholders’ equity at the close of the Stock Offering.

          G.          An ESOP, other Tax-Qualified Employee Plan, a MRP or an Option Plan modified or adopted no earlier than one year after the close of: the Stock Offering, or any subsequent issuance that is made in substantial conformity with the purchase priorities set fort in 12 C.F.R. 563b, et seq., may exceed the percentage limitations set forth in Sections 11(C) through 11(F) above (“Plan Expansion”), subject to the following two requirements. First, all Common Stock awarded in connection with any Plan Expansion must be acquired for such awards in the secondary market. Second, such acquisitions must begin no earlier than when such Plan Expansion is permitted to be made.

          H.          The aggregate amount of Common Stock that may be encompassed under all Option Plans and MRPs, or acquired by all Management Persons of the Holding Company and Associates of Management Persons of the Holding Company, shall not exceed 34% of Common Stock or stockholders’ equity of the Holding Company held by Persons other than the MHC at the close of the Stock Offering. The percentage limitation in this Section 11(H) may be exceeded provided that all Common Stock acquired by Management Persons and Associates of Management Persons or awarded under all MRPs and Option Plans in excess of such percentage limitation is acquired in the secondary market. If acquired for such awards on the secondary market, such acquisitions must begin no earlier than one year after the close of the Stock Offering or any subsequent issuance that is made in substantial conformity with the purchase

18

priorities of 12 C.F.R. 563b, et seq. In calculating the number of shares held by Management Persons and their Associates under this Section 11(H), shares awarded, but not delivered under an ESOP, MRP, or Option Plan that are attributable to such Persons shall not be counted as being acquired by such persons.

          I.          The amount of Common Stock that may be encompassed under all Option Plans and MRPs must not exceed, in the aggregate, 25% of the outstanding common stock held by Persons other than the MHC at the close of the Stock Offering.

          J.          Notwithstanding any other provision of this Plan, no person shall be entitled to purchase any Common Stock to the extent such purchase would be illegal under any federal law or state law or regulation or would violate regulations or policies of the National Association of Securities Dealers, Inc., particularly those regarding free riding and withholding. The Holding Company and/or its agents may ask for an acceptable legal opinion from any purchaser as to the legality of such purchase and may refuse to honor any purchase order if such opinion is not timely furnished.

          K.          The Board of Directors of the Holding Company has the right in its sole discretion to reject any order submitted by a person whose representations the Board of Directors believes to be false or who it otherwise believes, either alone or acting in concert with others, is violating, circumventing, or intends to violate, evade or circumvent the terms and conditions of this Plan. Any such action shall be final, conclusive and binding on all persons, and the MHC, the Holding Company and the Savings Bank and their respective Boards shall be free from any liability to any Person on account of any such action.

          L.          A minimum of 25 shares of Common Stock must be purchased by each Person purchasing shares in the Stock Offering to the extent those shares are available; provided, however, that in the event the minimum number of shares of Common Stock purchased times the price per share exceeds $500, then such minimum purchase requirement shall be reduced to such number of shares which when multiplied by the price per share shall not exceed $500, as determined by the Board.

       Subscription rights afforded under this Plan and by OTS regulations are non-transferable. No person may transfer, offer to transfer, or enter into any agreement or understanding to transfer, the legal or beneficial ownership of any subscription rights under this Plan. No person may transfer, offer to transfer or enter into an agreement or understanding to transfer legal or beneficial ownership of any shares of Common Stock except pursuant to this Plan.

       EACH PERSON PURCHASING COMMON STOCK IN THE STOCK OFFERING WILL BE DEEMED TO CONFIRM THAT SUCH PURCHASE DOES NOT CONFLICT WITH THE PURCHASE LIMITATIONS IN THIS PLAN. ALL QUESTIONS CONCERNING WHETHER ANY PERSONS ARE ASSOCIATES OR A GROUP ACTING IN CONCERT OR WHETHER ANY PURCHASE CONFLICTS WITH THE PURCHASE LIMITATIONS IN THIS PLAN OR OTHERWISE VIOLATES ANY PROVISION OF THIS PLAN SHALL BE DETERMINED BY THE BANK IN ITS SOLE DISCRETION. SUCH DETERMINATION SHALL BE CONCLUSIVE, FINAL AND BINDING ON ALL PERSONS, AND THE BANK MAY TAKE

19

ANY REMEDIAL ACTION INCLUDING, WITHOUT LIMITATION, REJECTING THE PURCHASE OR REFERRING THE MATTER TO THE OTS FOR ACTION, AS THE BANK MAY IN ITS SOLE DISCRETION DEEM APPROPRIATE.

12. Payment for Stock

          All payments for Common Stock subscribed for or ordered in the Stock Offering must be delivered in full to the Bank, together with a properly completed and executed order form, or purchase order in the case of the Syndicated Community Offering, on or prior to the expiration date specified on the order form or purchase order, as the case may be, unless such date is extended by the Bank; provided, that if the ESOP or any other Tax-Qualified Employee Plan subscribes for shares during the Subscription Offering, such plans will not be required to pay for the shares at the time they subscribe but rather may pay for such shares of Common Stock subscribed for by such plans at the Actual Purchase Price upon consummation of the Stock Offering. The Holding Company or the Bank may make scheduled discretionary contributions to the ESOP or any other Tax-Qualified Employee Plan provided such contributions from the Bank, if any, do not cause the Bank to fail to meet its regulatory capital requirement.

          Payment for Common Stock shall be made either by check or money order, or if a purchaser has a Deposit Account in the Bank, such purchaser may pay for the shares subscribed for by authorizing the Bank to make a withdrawal from the purchaser’s Deposit Account at the Bank in an amount equal to the purchase price of such shares. Such authorized withdrawal, whether from a savings passbook or certificate account, shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the remaining balance does not meet the applicable minimum balance requirements, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will remain in the purchaser’s Deposit Account but may not be used by the purchaser until the Common Stock has been sold or the 45-day period (or such longer period as may be approved by the OTS) following the Stock Offering has expired, whichever occurs first. Thereafter, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Actual Purchase Price per share. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Payment for Common Stock made by check or money order will be paid by the Bank at a rate no less than the Bank’s passbook rate. Such interest will be paid from the date payment is received by the Bank until consummation or termination of the Stock Offering. If for any reason the Stock Offering is not consummated, all payments made by subscribers in the Stock Offering will be refunded to them with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling the authorization for withdrawal.

13. Manner of Exercising Subscription Rights Through Order Forms

          As soon as practicable after the prospectus prepared by the Holding Company and the Bank has been declared effective by the OTS and the SEC, copies of the prospectus and order forms will be distributed to all Eligible Account Holders, Supplemental Eligible Account Holders and the Tax-Qualified Employee Plans at their last known addresses appearing on the

20

records of the Bank for the purpose of subscribing for shares of Common Stock in the Subscription Offering and will be made available to those persons that purchase Common Stock in the Community Offering.

          Each order form will be preceded or accompanied by the prospectus describing the Holding Company, the Bank, the Common Stock and the Subscription and Community Offerings. Each order form will contain, among other things, the following:

          A.          A specified date by which all order forms must be received by the Bank, which date shall be not less than 20, nor more than 45 days, following the date on which the order forms are mailed by the Bank, and which date will constitute the termination of the Subscription Offering;

          B.          The purchase price per share for shares of Common Stock to be sold in the Subscription and Community Offerings;

          C.          A description of the minimum and maximum number of shares of Common Stock that may be subscribed for pursuant to the exercise of Subscription Rights or otherwise purchased in the Community Offering;

          D.          Instructions as to how the recipient of the order form must indicate thereon the number of shares of Common Stock for which such Person elects to subscribe and the available alternative methods of payment therefor;

          E.          An acknowledgment that the recipient of the order form has received a final copy of the prospectus prior to execution of the order form;

          F.          A statement indicating the consequences of failing to properly complete and return the order form, including a statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering to the Bank within the subscription period such properly completed and executed order form, together with a check or money order in the full amount of the purchase price as specified in the order form for the shares of Common Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the order form that the Bank withdraw said amount from the subscriber’s Deposit Account at the Bank); and

          G.          A statement to the effect that the executed order form, once received by the Bank, may not be modified or amended by the subscriber without the consent of the Bank.

          Notwithstanding the above, the Bank and the Holding Company reserve the right in their sole discretion to accept or reject orders received on photocopied or facsimilied order forms.

14.     Undelivered, Defective or Late Order Form; Insufficient Payment

          In the event order forms (a) are not delivered and are returned to the Bank by the United States Postal Service or the Bank is unable to locate the addressee, (b) are not received back by the Bank or are received by the Bank after the expiration date specified thereon, (c) are

21

defectively filled out or executed, (d) are not accompanied by the full required payment for the shares of Common Stock subscribed for (including cases in which Deposit Accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are not mailed pursuant to a “no mail” order placed in effect by the account holder, the subscription rights of the Person to whom such rights have been granted will lapse as though such Person failed to return the order form within the time period specified thereon; provided, that the Bank may, but will not be required to, waive any immaterial irregularity on any order form or require the submission of corrected order forms or the remittance of full payment for subscribed shares by such date as the Bank may specify. The interpretation by the Bank of terms and conditions of this Plan and of the order forms will be final, subject to the authority of the OTS.

15. Completion of the Stock Offering

          The Stock Offering will be terminated if not completed within 90 days from the date of approval by the OTS, unless an extension is approved by the OTS.

16. Market for Common Stock

          If at the close of the Stock Offering the Holding Company has more than 100 stockholders of any class of stock, the Holding Company shall use its best efforts to:

(i)	encourage and assist a Market Maker to establish and maintain a market for that class of stock; and
(ii)	list that class of stock on a national or regional securities exchange, or on the Nasdaq system.

17. Stock Purchases by Management Persons After the Stock Offering

          For a period of three years after the proposed Stock Offering, no Management Person or his or her Associates may purchase, without the prior written approval of the OTS, any Common Stock of the Holding Company, except from a broker-dealer registered with the SEC. The foregoing shall not apply to: (i) negotiated transactions involving more than 1% of the outstanding Common Stock or (ii) purchases of Common Stock made by and held by any Tax-Qualified or Non-Tax Qualified Employee Plan of the Stock Bank or the Holding Company even if such Common Stock is attributable to Management Persons or their Associates. The foregoing restriction on purchases of Common Stock shall be in addition to any restrictions that may be imposed by federal and state securities laws.

18. Resales of Stock by Management Persons

          Common Stock purchased by Management Persons and their Associates in the Stock Offering may not be resold for a period of at least one year following the date of purchase, except in the case of death of the Management Person or Associate.

19. Stock Certificates

22

          Each stock certificate shall bear a legend giving appropriate notice of the restrictions set forth in Section 18 above. Appropriate instructions shall be issued to the Holding Company’s transfer agent with respect to applicable restrictions on transfers of such stock. Any shares of stock issued as a stock dividend, stock split or otherwise with respect to such restricted stock, shall be subject to the same restrictions as apply to the restricted stock.

20. Restriction on Financing Stock Purchases

          The Holding Company and the Bank will not loan funds to any Person to purchase Common Stock in the Stock Offering, and will not knowingly offer or sell any of the Common Stock to any Person whose purchase would be financed by funds loaned to the Person by the Holding Company, the Bank or any Affiliate.

21. Stock Benefit Plans

          The Board of Directors of the Bank and/or the Holding Company intend to adopt one or more stock benefit plans for employees, officers and directors, including an ESOP, MRPs and Option Plans, which will be authorized to purchase Common Stock and grant options for Common Stock. However, only the Tax-Qualified Employee Plans will be permitted to purchase Common Stock in the Stock Offering, subject to the purchase priorities set forth in this Plan. The Board of Directors of the Bank intends to establish an ESOP and authorize the ESOP and any other Tax-Qualified Employee Plans to purchase in the aggregate up to 10% of the shares issued in the Stock Offering, subject to the overall purchase limitations contained in Section 11. The Bank or the Holding Company may make scheduled discretionary contributions to one or more Tax-Qualified Employee Plans to purchase Common Stock issued in the Stock Offering, or to purchase issued and outstanding shares of Common Stock in the open market or from authorized but unissued shares of Common Stock or treasury shares from the Holding Company subsequent to the completion of the Stock Offering; provided such contributions do not cause the Bank to fail to meet any of its regulatory capital requirements. In addition to shares purchased by one or more Tax-Qualified Employee Plans in this Stock Offering, any subsequent stock offering, and/or from authorized but unissued shares or treasury shares of the Holding Company, this Plan also specifically authorizes the Holding Company to grant awards under one or more stock benefit plans, including MRPs and Option Plans, in an amount equal to the maximum amount permissible under the OTS regulations. In no event shall the aggregate amount of the awards under such stock benefit plans exceed 25% of the outstanding shares of Common Stock held by Persons other than the MHC as the close of the Stock Offering.

22. Post-Reorganization Filing and Market Making

          It is likely that there will be a limited market for the Common Stock sold in the Stock Offering, and purchasers must be prepared to hold the Common Stock for an indefinite period of time. If the Holding Company has more than 35 stockholders of any class of stock, the Holding Company shall register its Common Stock with the SEC pursuant to the Exchange Act, and shall undertake not to deregister such Common Stock for a period of three years thereafter.

23. Payment of Dividends and Repurchase of Stock

23

          The Holding Company may not declare or pay a cash dividend on, or repurchase any of, its Common Stock if the effect thereof would cause its regulatory capital or the regulatory capital of the Bank to be reduced below the amount required to meet all regulatory capital requirements. Otherwise, the Holding Company may declare dividends or make other capital distributions in accordance with applicable laws and regulations. Following completion of the Stock Offering, the Holding Company may repurchase its Common Stock consistent with applicable laws and regulations relating to stock repurchases, as long as such repurchases do not cause the regulatory capital of the Bank to be reduced below the amount required under the Regulations. The MHC may from time to time purchase Common Stock of the Holding Company. Subject to any applicable regulatory approvals the MHC may waive its right to receive dividends declared by the Holding Company.

24. Interpretation

          All interpretations of this Plan and application of its provisions to particular circumstances by a majority of the Board of Directors of the Bank shall be final, subject to the authority of the OTS.

25. Reorganization and Stock Offering Expenses

          The Holding Company and the Bank may retain and pay for the services of financial and other advisors and investment bankers to assist in connection with any or all aspects of the Reorganization, including in connection with the Stock Offering, the payment of fees to brokers for assisting Persons in completing and/or submitting Order Forms. The Regulations require that the expenses of any Stock Offering must be reasonable. The Bank will use its best efforts to assure that the expenses incurred by the Bank and the Holding Company in effecting the Reorganization and the Stock Offering will be reasonable.

26. Employment and Severance Arrangements

          Following or contemporaneously with the Reorganization, the Bank and/or the Holding Company may enter into employment and/or severance arrangements with one or more of their Officers.

27. Residents of Foreign Countries and Certain States

          The Holding Company will make reasonable efforts to comply with the securities laws of all States in the United States in which Persons entitled to subscribe for shares of Common Stock pursuant to this Plan reside. However, no such Person will be issued subscription rights or be permitted to purchase shares of Common Stock in the Subscription Offering if such Person resides in a foreign country or resides in a state of the United States with respect to which any of the following apply: (i) a small number of Persons otherwise eligible to subscribe for shares under this Plan reside in such state; (ii) the issuance of subscription rights or the offer or sale of shares of Common Stock to such Persons would require the Holding Company, under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; or (iii) such registration or qualification would be impracticable for reasons of cost or otherwise.

24

28. Amendment or Termination of the Plan

          If necessary or desirable, the terms of the Plan may be substantially amended by a majority vote of the Bank’s Board of Directors, as a result of comments from regulatory authorities or otherwise, at any time prior to the solicitation of proxies and submission of the Plan and proxy materials to a vote of the Members. At any time after the solicitation of proxies and submission of the Plan and proxy materials to a vote of the Members, the terms of the Plan that relate to the Reorganization may be amended by a majority vote of the Board of Directors only with the concurrence of the OTS. Terms of the Plan relating to the Stock Offering including, without limitation, Sections 7 through 19, may be amended by a majority vote of the Bank’s Board of Directors as a result of comments from regulatory authorities or otherwise at any time prior to the approval of the Plan by the OTS and at any time thereafter with the concurrence of the OTS. The Plan may be terminated by a majority vote of the Board of Directors at any time prior to the earlier of approval of the Plan by the OTS and the date of the Special Meeting, and may be terminated by a majority vote of the Board of Directors at any time thereafter with the concurrence of the OTS. In its discretion, the Board of Directors may modify or terminate the Plan upon the order of the regulatory authorities without a resolicitation of proxies or another meeting of the Members; however, any material amendment of the terms of the Plan that relate to the Reorganization which occur after the Special Meeting shall require a resolicitation of Members. Failure of the Members to approve the Plan will result in the termination of the Plan.

          The Plan shall be terminated if the Reorganization is not completed within 24 months from the date upon which the Members of the Bank approve the Plan, and may not be extended by the Bank or the OTS.

Dated: January 11, 2008, as amended March 11, 2008

25

EX-3.1

Exhibit 3.1

FEDERAL MHC SUBSIDIARY HOLDING COMPANY CHARTER
OF
AUBURN BANCORP, INC.

Section 1. Corporate title. The full corporate title of the MHC subsidiary holding company is Auburn Bancorp, Inc. (the “Holding Company”).

Section 2. Domicile. The domicile of the Holding Company shall be in the city of Auburn, in the state of Maine.

Section 3. Duration. The duration of the Holding Company is perpetual.

Section 4. Purpose and powers. The purpose of the Holding Company is to pursue any or all of the lawful objectives of a federal mutual holding company chartered under Section 10(o) of the Home Owners’ Loan Act, 12 U.S.C. 1467a(o), and to exercise all of the express, implied, and incidental powers conferred thereby and by all acts amendatory thereof and supplemental thereto, subject to the Constitution and laws of the United States as they are now in effect, or as they may hereafter be amended, and subject to all lawful and applicable rules, regulations, and orders of the Office of Thrift Supervision (“Office”).

Section 5. Capital stock. The total number of shares of all classes of capital stock that the association has the authority to issue is 11,000,000, of which 10,000,000 shall be common stock of par value of $0.01 per share and of which 1,000,000 shall be serial preferred stock of par value of $0.01 per share. The shares may be issued from time to time as authorized by the board of directors without further approval of shareholders, except as otherwise provided in this Section 5 or to the extent that such approval is required by governing law, rule, or regulation. The consideration for the issuance of the shares shall be paid in full before their issuance and shall not be less than the par value. Neither promissory notes nor future services shall constitute payment or part payment for the issuance of shares of the Holding Company. The consideration for the shares shall be cash, tangible or intangible property (to the extent direct investment in such property would be permitted), labor, or services actually performed for the association, or any combination of the foregoing. In the absence of actual fraud in the transaction, the value of such property, labor, or services, as determined by the Board of Directors of the Holding Company, shall be conclusive. Upon payment of such consideration, such shares shall be deemed to be fully paid and nonassessable. In the case of a stock dividend, that part of the retained earnings of the association that is transferred to common stock or paid-in capital accounts upon the issuance of shares as a stock dividend shall be deemed to be the consideration for their issuance.

Except for the initial offering of the Holding Company, no shares of capital stock (including shares issuable upon conversion, exchange, or exercise of other securities) shall be issued, directly or indirectly, to officers, directors, or controlling persons (except for shares issued to the parent mutual holding company) of the Holding Company other than as part of a general public offering or as qualifying shares to a director, unless their issuance or the plan under which they would be issued has been approved by a majority of the total votes eligible to be cast at a legal meeting.

Nothing contained in this Section 5 (or in any supplementary sections hereto) shall entitle the holders of any class of a series of capital stock to vote as a separate class or series or to more than one vote per share: provided, that this restriction on voting separately by class or series shall not apply:

(i)	To any provision which would authorize the holders of preferred stock, voting as a class or series, to elect some members of the Board of Directors, less than a majority thereof, in the event of default in the payment of dividends on any class or series of preferred stock;
(ii)	To any provision that would require the holders of preferred stock, voting as a class or series, to approve the merger or consolidation of the association with another corporation or the sale, lease, or conveyance (other than by mortgage or pledge) of properties or business in exchange for securities of a corporation other than the Holding Company if the preferred stock is exchanged for securities of such other corporation: provided, that no provision may require such approval for transactions undertaken with the assistance or pursuant to the direction of the Office or the Federal Deposit Insurance Corporation;
(iii)	To any amendment which would adversely change the specific terms of any class or series of capital stock as set forth in this Section 5 (or in any supplementary sections hereto), including any amendment which would create or enlarge any class or series ranking prior thereto in rights and preferences. An amendment which increases the number of authorized shares of any class or series of capital stock, or substitutes the surviving association in a merger or consolidation for the Holding Company, shall not be considered to be such an adverse change.

A description of the different classes and series (if any) of the association’s capital stock and a statement of the designations, and the relative rights, preferences, and limitations of the shares of each class of and series (if any) of capital stock are as follows:

A.          Common Stock. Except as provided in this Section 5 (or in any supplementary sections thereto) the holders of the common stock shall exclusively possess all voting power. Each holder of shares of the common stock shall be entitled to one vote for each share held by each holder and there shall be no cumulative votes in the election of directors.

Whenever there shall have been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class of stock having preference over the common stock as to the payment of dividends, the full amount of dividends and of sinking fund, retirement fund, or other retirement payments, if any, to which such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock and on any class or series of stock entitled to participate therewith as to dividends out of any assets legally available for the payment of dividends.

In the event of any liquidation, dissolution, or winding up of the association, the holders of the common stock (and the holders of any class or series of stock entitled to participate with the common stock in the distribution of assets) shall be entitled to receive, in cash or in kind, the assets of the Holding Company available for distribution remaining after: (i) payment or provision for payment of the association’s debts and liabilities; (ii) distributions or provision for distributions in settlement of its liquidation account; and (iii) distributions or provision for distributions to holders of any class or series of stock having preference over the common stock in the liquidation, dissolution, or winding up of the Holding Company. Each share of common stock shall have the same relative rights as and be identical in all respects with all the other shares of common stock.

B.          Preferred Stock. The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof, including by not limited to the following:

(i)	The dividend rate or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date(s), the payment date(s) for dividends, and the participating or other special rights, if any, with respect to dividends;
(ii)	The voting powers, full or limited, if any, of shares of such series;
(iii)	Whether the shares of such series shall be redeemable and, if so, the price(s) at which, and the terms and conditions on which, such shares may be redeemed;
(iv)	The amount(s) payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution, or winding up of the association;
(v)	Whether the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price(s) at which such shares may be redeemed or purchased through the application of such fund;
(vi)	Whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes of stock of the association and, if so, the conversion price(s) or the rate(s) of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange.
(vii)	The price or other consideration for which the shares of such series shall be issued; and
(viii)	Whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of serial preferred stock and whether such shares may be reissued as shares of the same or any other series of serial preferred stock.

The number of authorized shares of the Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required by law or pursuant to the terms of such Preferred Stock. Each share of each series of serial preferred stock shall have the same relative rights as and be identical in all respects with all the other shares of the same series.

The Board of Directors shall have authority to divide, by the adoption of supplementary charter sections, any authorized class of preferred stock into series, and, within the limitations set forth in this section and the remainder of this charter, fix and determine the relative rights and preferences of the shares of any series so established.

Prior to the issuance of any preferred shares of a series established by a supplementary charter section adopted by the Board of Directors, the Holding Company shall file with the Secretary to the Office a dated copy of that supplementary section of this charter establishing and designating the series and fixing and determining the relative rights and preferences thereof.

Section 6. Preemptive rights. Holders of the capital stock of the Holding Company are not entitled to preemptive rights with respect to any shares of the Holding Company which may be issued.

Section 7. Directors. The Holding Company shall be under the direction of a Board of Directors. The authorized number of directors, as stated in the Holding Company’s bylaws, shall not be fewer than five

nor more than fifteen except when a greater or lesser number is approved by the Director of the Office, or his or her delegate.

Section 8. Certain Provisions Applicable for Five Years. Notwithstanding anything contained in the Holding Company’s charter or bylaws to the contrary, for a period of five years from the date of an initial minority stock offering of shares of common stock of the Holding Company, the following provisions shall apply:

A.          Beneficial Ownership Limitation. No person other than Auburn Bancorp, MHC shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10 percent of any class of an equity security of the Holding Company. This limitation shall not apply to a transaction in which the Holding Company forms a holding company in conjunction with conversion, or thereafter, if such formation is without change in the respective beneficial ownership interests of the Holding Company’s stockholders other than pursuant to the exercise of any dissenter and appraisal rights, the purchase of shares by underwriters in connection with a public offering, or the purchase of shares by a tax-qualified employee stock benefit plan which is exempt from the approval requirements under Section 574.3(c)(1)(vi) of the Office’s regulations.

In the event shares are acquired in violation of this Section 8, all shares beneficially owned by any person in excess of 10 percent shall be considered “excess shares” and shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matters submitted to the stockholders for a vote.

For purposes of this Section 8, the following definitions apply:

(i)	The term “person” includes an individual, a group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of the equity securities of the Holding Company.
(ii)	The term “offer” includes every offer to buy or otherwise acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value.
(iii)	The term “acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.
(iv)	The term “acting in concert” means (a) knowing participation in a joint activity or conscious parallel action towards a common goal whether or not pursuant to an express agreement, or (b) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangements, whether written or otherwise.

B.          Call for Special Meetings. Special meetings of stockholders relating to changes in control of the Holding Company or amendments to its charter shall be called only upon direction of the Board of Directors.

Section 9. Amendment of charter. Except as provided in Section 5, no amendment, addition, alteration, change or repeal of this charter shall be made, unless such is proposed by the Board of Directors of the Holding Company, approved by the shareholders by a majority of the votes eligible to be cast at a legal meeting, unless a higher vote is otherwise required, and approved or preapproved by the Office.

Attest:	By:
Secretary of the Holding Company	Allen T. Sterling, President
Attest:	By:
Secretary of the Office of Thrift Supervision	Director of the Office of Thrift Supervision
Effective Date:

EX-3.2

Exhibit 3.2

BYLAWS
OF
AUBURN BANCORP, INC.

Article I - Home Office

The home office of Auburn Bancorp, Inc. (the “Holding Company”) shall be at 256 Court Street, Auburn in the County of Androscoggin, in the State of Maine.

Article II - Shareholders

Section 1. Place of Meetings. All annual and special meetings of shareholders shall be held at the home office of the Holding Company or at such other convenient place as the Board of Directors may determine.

Section 2. Annual Meeting. A meeting of the shareholders of the Holding Company for the election of directors and for the transaction of any other business of the Holding Company shall be held annually at such date and time within 150 days after the end of the Holding Company’s fiscal year as the Board of Directors may determine.

Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by the regulations of the Office of Thrift Supervision (“Office”), may be called at any time by the chairman of the board, the president, or a majority of the Board of Directors, and shall be called by the chairman of the board, the president, or the secretary upon the written request of the holders of not less than one-tenth of all of the outstanding capital stock of the Holding Company entitled to vote at the meeting. Such written request shall state the purpose or purposes of the meeting and shall be delivered to the home office of the Holding Company addressed to the chairman of the board, the president, or the secretary.

Section 4. Conduct of Meetings. Annual and special meetings shall be conducted by the person designated by the Board of Directors to preside at such meetings in accordance with the written procedures agreed to by the Board of Directors. The Board of Directors shall designate, when present, either the chairman of the board, vice chairman of the board, or president to preside at such meetings.

Section 5. Notice of Meetings. Written notice stating the place, day, and hour of the meeting and the purpose(s) for which the meeting is called shall be delivered not fewer than 20 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, or the secretary, or the directors calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the mail, addressed to the shareholder at the address as it appears on the stock transfer books or records of the Holding Company as of the record date prescribed in Section 6 of this Article II with postage prepaid. When any shareholders’ meeting, either annual or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted at the meeting, other than an announcement at the meeting at which such adjournment is taken.

Section 6. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any

other proper purpose, the Board of Directors shall fix in advance a date as the record date for any such determination of shareholders. Such date in any case shall be not more than 60 days and, in case of a meeting of shareholders, not fewer than 10 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment.

Section 7. Voting Lists. At least 20 days before each meeting of the shareholders, the officer or agent having charge of the stock transfer books for shares of the Holding Company shall make a complete list of the shareholders of record entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each. This list of shareholders shall be kept on file at the home office of the Holding Company and shall be subject to inspection by any shareholder of record or the shareholder’s agent at any time during usual business hours for a period of 20 days prior to such meeting. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder of record or any shareholder’s agent during the entire time of the meeting. The original stock transfer book shall constitute prima facie evidence of the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. In lieu of making the shareholder list available for inspection by shareholders as provided in the preceding paragraph, the Board of Directors may elect to follow the procedures prescribed in Section 552.6(d) of the Office’s regulations as now or hereafter in effect.

Section 8. Quorum. A majority of the outstanding shares of the Holding Company entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to constitute less than a quorum. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number of shareholders voting together or voting by classes is required by law or the charter of the Holding Company. Directors, however, are elected by a plurality of the votes cast at an election of directors.

Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his or her duly authorized attorney in fact. Proxies may be given telephonically or electronically as long as the holder uses a procedure for verifying the identity of the shareholder. Proxies solicited on behalf of the management shall be voted as directed by the shareholder or, in the absence of such direction, as determined by a majority of the Board of Directors. No proxy shall be valid more than eleven months from the date of its execution except for a proxy coupled with an interest.

Section 10. Voting of Shares in the Name of Two or More Persons. When ownership stands in the name of two or more persons, in the absence of written directions to the Holding Company to the contrary, at any meeting of the shareholders of the Holding Company any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are

- 2 -

entitled shall be cast as directed by a majority of those holding such and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree.

Section 11. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent, or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian, or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares held in trust in an IRA or Keogh Account, however, may by voted by the Holding Company if no other instructions are received. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer into his or her name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Neither treasury shares of its own stock held by the Holding Company nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Holding Company, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.

Section 12. Inspectors of Election. In advance of any meeting of shareholders, the Board of Directors may appoint any person other than nominees for office as inspectors of election to act at such meeting or any adjournment. The number of inspectors shall be either one or three. Any such appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may, or on the request of not fewer than 10 percent of the votes represented at the meeting shall, make such appointment at the meeting. If appointed at the meeting, the majority of the votes present shall determine whether one or three inspectors are to be appointed.

In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the Board of Directors in advance of the meeting or at the meeting by the chairman of the board or the president. Unless otherwise prescribed by regulations of the Office, the duties of such inspectors shall include: determining the number of shares and the voting power of each share, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; receiving votes, ballots, or consents; hearing and determining all challenges and questions in any way arising in connection with the rights to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders.

Section 13. Nominating Committee. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least 20 days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Holding Company. No nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by shareholders are made in writing and delivered to the secretary of the Holding Company at least 30 days prior to the date of the annual meeting; provided, however, that in the event that less than 40 days notice or prior public disclosure of the date of the meeting is given or made to shareholders,

- 3 -

notice by the shareholder must be received not later than the close of business on the 10^th day following the day on which notice of the date of the annual meeting was mailed or such public disclosure was made. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Holding Company. Ballots bearing the names of all persons nominated by the nominating committee and by shareholders shall be provided for use at the annual meeting. However, if the nominating committee shall fail or refuse to act at least 20 days prior to the annual meeting, nominations for directors may be made at the annual meeting by any shareholder entitled to vote and shall be voted upon.

Section 14. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the secretary of the Holding Company at least 30 days before the date of the annual meeting; provided, however, that in the event that less than 40 days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder must be received not later than the close of business on the 10^th day following the day on which notice of the date of the annual meeting was mailed or such public disclosure was made, and all business so stated, proposed, and filed shall be considered at the annual meeting; but no other proposal shall be acted upon at the annual meeting. Any shareholder may make any other proposal at the annual meeting and the same may be discussed and considered, but unless stated in writing and filed with the secretary at least 30 days before the meeting, such proposal shall be laid over for action at an adjourned, special, or annual meeting of the shareholders taking place 30 days or more thereafter. A shareholder’s notice to the secretary shall set forth as to each matter the shareholder proposed to bring before the annual meeting (a) a brief description of the proposal desired to be brought before the annual meeting and (b) the name and address of such shareholder and the class and number of shares of the Holding Company which are owned of record or beneficially by such shareholder. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors, and committees; but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided.

Section 15. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of shareholders, may be taken without a meeting if consent in writing, setting forth the action so taken, shall be given by all of the shareholders entitled to vote with respect to the subject matter.

Article III - Board of Directors

Section 1. General Powers. The business and affairs of the Holding Company shall be under the direction of its Board of Directors. The Board of Directors shall annually elect a chairman of the board and a vice chairman of the board from among its members and shall designate, when present, either the chairman of the board or the vice chairman of the board to preside at its meetings.

Section 2. Number and Term. The Board of Directors shall consist of eight members, and shall be divided into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. One class shall be elected by ballot annually.

Section 3. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this bylaw following the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, for the holding of additional regular meetings without other notice than such resolution. Directors may participate in a meeting by means of a conference telephone or similar communications device through which all persons

- 4 -

participating can hear each other at the same time. Participation by such means shall constitute presence in person for all purposes.

Section 4. Qualification. Each director shall at all times be the beneficial owner of not less than 100 shares of capital stock of the Holding Company unless the Holding Company is a wholly owned subsidiary of a holding company.

Section 5. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, the president, or one-third of the directors. The persons authorized to call special meetings of the Board of Directors may fix any place, within the Holding Company’s normal lending territory, as the place for holding any special meeting of the Board of Directors called by such persons. Members of the Board of Directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person for all purposes.

Section 6. Notice. Written notice of any special meeting of the Board of Directors or of any committee thereof shall be given to each director at least 24 hours prior thereto when delivered personally or by telegram, facsimile or electronic mail or at least five days prior thereto when delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage prepaid if mailed, when delivered to the telegraph company if sent by telegram, or when the Holding Company receives notice or confirmation of delivery if electronically transmitted. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice of waiver of notice of such meeting.

Section 7. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the Board of Directors; but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 6 of this Article III.

Section 8. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater number is prescribed by regulation of the Office or by these bylaws.

Section 9. Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors.

Section 10. Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office of the Holding Company addressed to the chairman of the board or the president. Unless otherwise specified, such resignation shall take effect upon receipt by the chairman of the board or the president. More than three consecutive absences from regular meetings of the Board of Directors, unless excused by resolution of the Board of Directors, shall automatically constitute a resignation, effective when such resignation is accepted by the Board of Directors.

- 5 -

Section 11. Vacancies. Any vacancy occurring on the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors although less than a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected to serve only until the next election of directors by the shareholders. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the Board of Directors for a term of office continuing only until the next election of directors by the shareholders.

Section 12. Compensation. Directors, as such, may receive a stated salary for their services. By resolution of the Board of Directors, a reasonable fixed sum, and reasonable expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board of Directors. Members of either standing or special committees may be allowed such compensation for attendance at committee meetings as the Board of Directors may determine.

Section 13. Presumption of Assent. A director of the Holding Company who is present at a meeting of the Board of Directors at which action on any Holding Company matter is taken shall be presumed to have assented to the action taken unless his or her dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Holding Company within five days after the date a copy of the minutes of the meeting is received. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 14. Removal of Directors. At a meeting of shareholders called expressly for that purpose, any director may be removed only for cause by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of the shares of any class are entitled to elect one or more directors by the provisions of the charter or supplemental sections thereto, the provisions of this Section shall apply, in respect to the removal of a director or directors so elected, to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole.

Section 15. Integrity of Directors. A person is not qualified to serve as director if he or she: (1) is under indictment for or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, or (2) is a person against who a bankruptcy agency has, within the past ten years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.

Section 16. Age Limitation for Directors. No person 75 years of age shall be eligible for election, re-election, appointment or re-appointment to the Board of Directors of the Holding Company. No director shall serve as such beyond the annual meeting of the Holding Company immediately following his or her 75^th birthday. This age limit does not apply to any director serving on the date on which these bylaws are adopted.

Section 17. President Prohibited From Service on Board of Directors. Immediately upon a president’s retirement, resignation or other termination of service as president of the Mutual Company, such individual shall no longer be qualified to serve on the board of the Mutual Company.

- 6 -

Article IV - Executive and Other Committees

Section 1. Appointment. The Board of Directors, by resolution adopted by a majority of the full board, may designate the chief executive officer and two or more of the other directors to constitute an executive committee. The designation of any committee pursuant to this Article IV and the delegation of authority shall not operate to relieve the Board of Directors, or any director, of any responsibility imposed by law or regulation.

Section 2. Authority. The executive committee, when the Board of Directors is not in session, shall have and may exercise all of the authority of the Board of Directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee; and except also that the executive committee shall not have the authority of the Board of Directors with reference to: the declaration of dividends; the amendment of the charter or bylaws of the Holding Company, or recommending to the shareholders a plan of merger, consolidation, or conversion; the sale, lease, or other disposition of all or substantially all of the property and assets of the Holding Company otherwise than in the usual and regular course of its business; a voluntary dissolution of the Holding Company; a revocation of any of the foregoing; or the approval of a transaction in which any member of the executive committee, directly or indirectly, has any material beneficial interest.

Section 3. Tenure. Subject to the provisions of Section 8 of this Article IV, each member of the executive committee shall hold office until the next regular annual meeting of the Board of Directors following his or her designation and until a successor is designated as a member of the executive committee.

Section 4. Meetings. Regular meetings of the executive committee may be held without notice at such times and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day’s notice stating the place, date, and hour of the meeting, which notice may be written or oral. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

Section 5. Quorum. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

Section 6. Action Without a Meeting. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the executive committee.

Section 7. Vacancies. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full Board of Directors.

Section 8. Resignations and Removal. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full Bboard of Directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the Holding Company. Unless otherwise specified, such resignation shall take effect upon its receipt; the acceptance of such resignation shall not be necessary to make it effective. No notice of any meeting need be

- 7 -

given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

Section 9. Procedure. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure, which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceedings and report the same to the Board of Directors for its information at the meeting held next after the proceedings shall have occurred.

Section 10. Other Committees. The Board of Directors may by resolution establish an audit, loan, or other committee composed of directors as they may determine to be necessary or appropriate for the conduct of the business of the Holding Company and may prescribe the duties, constitution, and procedures thereof.

Article V - Officers

Section 1. Positions. The officers of the Holding Company shall be a president, one or more vice presidents, a secretary, and a treasurer or comptroller, each of whom shall be elected by the Board of Directors. The Board of Directors may also designate the chairman of the board as an officer. The offices of the secretary and treasurer or comptroller may be held by the same person and a vice president may also be either the secretary or the treasurer or comptroller. The Board of Directors may designate one or more vice presidents as executive vice president or senior vice president. The Board of Directors may also elect or authorize the appointment of such other officers as the business of the Holding Company may require. The officers shall have such authority and perform such duties as the Board of Directors may from time to time authorize or determine. In the absence of action by the Board of Directors, the officers shall have such powers and duties as generally pertain to their respective offices.

Section 2. Election and Term of Office. The officers of the Holding Company shall be elected annually at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until a successor has been duly elected and qualified or until the officer’s death, resignation, or removal in the manner hereinafter provided. Election or appointment of an officer, employee, or agent shall not of itself create contractual rights. The Board of Directors may authorize the Holding Company to enter into an employment contract with any officer in accordance with regulations of the Office; but no such contract shall impair the right of the Board of Directors to remove any officer at any time in accordance with Section 3 of this Article V.

Section 3. Removal. Any officer may be removed by the Board of Directors whenever in its judgment the best interests of the Holding Company will be served thereby, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any, of the person so removed.

Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the Board of Directors for the unexpired portion of the term.

Section 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the Board of Directors.

- 8 -

Section 6. Age Limit for Officers. No person 75 years of age shall be eligible for election, re-election, appointment or re-appointment as an officer of the Holding Company following his or her 75^th birthday unless specifically authorized by specific resolution of the Board of Directors.

Article VI - Contracts, Loans, Checks, and Deposits

Section 1. Contracts. To the extent permitted by regulations of the Office, and except as otherwise prescribed by these bylaws with respect to certificates for shares, the Board of Directors may authorize any officer, employee, or agent of the Holding Company to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Holding Company. Such authority may be general or confined to specific instances.

Section 2. Loans. No loans shall be contracted on behalf of the Holding Company and no evidence of indebtedness shall be issued in its name unless authorized by the Board of Directors. Such authority may be general or confined to specific instances.

Section 3. Checks; Drafts. etc. All checks, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the Holding Company shall be signed by one or more officers, employees or agents of the Holding Company in such manner as shall from time to time be determined by the Board of Directors.

Section 4. Deposits. All funds of the Holding Company not otherwise employed shall be deposited from time to time to the credit of the Holding Company in any duly authorized depositories as the Board of Directors may select.

Article VII - Certificates for Shares and Their Transfer

Section 1. Certificates for Shares. Certificates representing shares of capital stock of the Holding Company shall be in such form as shall be determined by the Board of Directors and approved by the Office. Such certificates shall be signed by the chief executive officer or by any other officer of the Holding Company authorized by the Board of Directors, attested by the secretary or an assistant secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the Holding Company itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Holding Company. All certificates surrendered to the Holding Company for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares has been surrendered and canceled, except that in the case of a lost or destroyed certificate, a new certificate may be issued upon such terms and indemnity to the Holding Company as the Board of Directors may prescribe.

Section 2. Transfer of Shares. Transfer of shares of capital stock of the Holding Company shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record or by his or her legal representative, who shall furnish proper evidence of such authority, or by his or her attorney authorized by a duly executed power of attorney and filed with the Holding Company. Such transfer shall be made only on surrender for cancellation of the certificate for such shares. The person in whose name shares of capital stock stand on the books of the Holding Company shall be deemed by the Holding Company to be the owner for all purposes.

- 9 -

Article VIII - Fiscal Year

The fiscal year of the Holding Company shall end on the 30^th of June of each year. The appointment of accountants shall be subject to annual ratification by the shareholders.

Article IX - Dividends

Subject to the terms of the Holding Company’s charter and the regulations and orders of the Office, the Board of Directors may, from time to time, declare, and the Holding Company may pay, dividends on its outstanding shares of capital stock.

Article X - Corporate Seal

The Board of Directors shall provide an Holding Company seal, which shall be two concentric circles between which shall be the name of the Holding Company. The year of incorporation or an emblem may appear in the center.

Article XI - Amendments

These bylaws may be amended in a manner consistent with regulations of the Office and shall be effective after: (i) approval of the amendment by a majority vote of the authorized Board of Directors, or by a majority vote of the votes cast by the shareholders of the Holding Company at any legal meeting, and (ii) receipt of any applicable regulatory approval. When the Holding Company fails to meet its quorum requirements, solely due to vacancies on the board, then the affirmative vote of a majority of the sitting board will be required to amend the bylaws.

Article XII - Indemnification

The Holding Company shall indemnify all officers, directors and employees of the Holding Company, and their heirs, executors and administrators, to the fullest extent permitted under federal law, rules, and regulations against all expenses and liabilities reasonably incurred by them in connection with or arising out of any action, suit or proceeding in which they may be involved by reason of their having been a director or officer of the Holding Company, whether or not they continue to be a director or officer at the time of incurring such expenses or liabilities, such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements.

- 10 -

EX-4.0

Exhibit 4.0

COMMON STOCK
CERTIFICATE NO	COMMON STOCK
	____________ SHARES
	See reverse side for certain definitions
	CUSIP NO. _________

AUBURN BANCORP, INC.
INCORPORATED UNDER THE LAWS OF THE UNITED STATES

THIS CERTIFIES THAT:

[SPECIMEN]

is the owner of:

FULLY PAID AND NONASSESSABLE SHARE OF COMMON STOCK $0.01 PAR VALUE
PER SHARE OF AUBURN BANCORP, INC.

          The Shares represented by this certificate are transferable only on the stock transfer books of Auburn Bancorp, Inc. (the “Company”) by the holder of record hereof, or by his duly authorized attorney or legal representative, upon the surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the Charter of the Company and any amendments thereto (copies of which are on file with the Corporate Secretary of the Company), to all of which provisions the holder by acceptance hereof, assents. This certificate is not valid until countersigned and registered by the Corporation’s Transfer Agent and Registrar.

          The shares are not a deposit account and are not federally insured or guaranteed by the Federal Deposit Insurance Corporation.

          IN WITNESS WHEREOF, AUBURN BANCORP, INC. has caused this certificate to be executed by the signatures of its duly authorized officers and has caused its corporate seal to be hereunto affixed.

Dated:	[SEAL]
SIGNATURE TO COME	SIGNATURE TO COME
Secretary	President and Chief Executive Officer

          The shares represented by this Certificate are subject to a limitation contained in the Charter generally to the effect that for a period of five years from the date of the initial issuance of securities in no event shall any person, other that Auburn Bancorp, MHC, directly or indirectly, offer to acquire or acquire the beneficial ownership of more than 10% of the outstanding shares of common stock. Shares beneficially owned in excess of this limitation shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares.

          The Board of Directors of the Company is authorized by resolution(s), from time to time adopted, to provide for the issuance of serial preferred stock series and to fix and state the voting powers, designations, preferences and relative, participating, optional, or other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof. The Company will furnish to any shareholder upon request and without charge a full description of each class of stock and any series thereof.

          The shares represented by this Certificate may not be cumulatively voted on any matter.

          The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out on full according to applicable laws or regulations:

TEN COM -	as tenants in common	UNIF GIFTS MIN ACT -	________	custodian   __________________
			(Cust)		(Minor)
TEN ENT -	as tenants in entireties
			under Uniform Gifts to Minors Act
JT TEN -	as joint tenants with right of survivorship and not as tenants in common		________________________________________
			(State)
		UNIF TRF MIN ACT -	________	custodian (until age ______ )
			(Cust)
			under Uniform Transfers to Minors Act
			________________________________________
			(State)

Additional abbreviations may also be used though not in the above list.

For value received _______________________________________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER IF ASSIGNEE

Please print or typewrite name and address including postal zip code of assignee.
___________________________________________________________________________________ shares of the common stock represented by this certificate and do hereby irrevocable constitute and appoint __________________________________________________________________, attorney, to transfer the said stock on the books of the within-named corporation with full power of substitution in the premises.
DATED ______________________
	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration or enlargement or any change whatever.

SIGNATURE GUARANTEED: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAMS), PURSUANT TO S.E.C. RULE 17Ad-15

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE COMPANY WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

EX-5.0

Exhibit 5.0

March 14, 2008

Board of Directors
Auburn Bancorp, Inc.
256 Court Street, P.O. Box 3157
Auburn, Maine 04212

      Re:        Registration Statement on Form S-1

Ladies and Gentlemen:

        We have acted as counsel for Auburn Bancorp, Inc., a federally chartered stock holding company in organization (the “Company”), in connection with the preparation and filing of a Registration Statement on Form S-1 (the “Registration Statement”) initially filed on March 14, 2008 under the Securities Act of 1933, as amended (the “Securities Act”), and the regulations promulgated thereunder.

        The Registration Statement relates to the proposed issuance by the Company of up to 351,124 shares of the Company’s common stock, $0.01 par value per share (“Common Stock”), in a subscription offering, a community offering and a syndicated community offering (the “Offerings”). The issuance is pursuant to the Plan of Reorganization from a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan (the “Plan”) adopted by Auburn Savings Bank, FSB (the “Bank”).

        We have examined such documents and made such other investigation as we have deemed appropriate to render the opinion set forth below. As to matters of fact material to our opinion, we have relied, without independent verification, on certificates and other inquiries of officers of the Bank, as organizer of the Company. We have also relied on certificates of public officials.

        The opinion expressed below is limited to Federal law of the United States of America. Our opinion is expressed as of the date hereof and is based on laws currently in effect. Accordingly, the conclusions set forth in this opinion are subject to change in the event that any laws should change or be enacted in the future. We are under no obligation to update this opinion or to otherwise communicate with you in the event of any such change.

        For purposes of this opinion, we have assumed that, prior to the issuance of any shares of Common Stock, (i) the Registration Statement, as finally amended, will have become effective under the Securities Act and (ii) the reorganization of the Bank from mutual savings bank to mutual holding company form of organization in accordance with the Plan will have become effective and, in connection therewith, the Company will have been duly chartered as a federal stock holding company by the Office of Thrift Supervision.

        Based upon and subject to the foregoing, we are of the opinion that, upon the due adoption by the Board of Directors of the Company, of a resolution fixing the number of shares of Common Stock to be sold in the Offerings, such shares when issued and sold in the manner described in the Registration Statement, will be validly issued, fully paid and nonassessable.

        This opinion letter shall be interpreted in accordance with the Legal Opinion Principles issued by the Committee on Legal Opinions of the American Bar Association’s Business Law Section as published in 53 Bus. Law. 831 (May 1998).

        We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement, and to the reference to our firm under the heading “Legal and Tax Opinions” in the prospectus that is part of the Registration Statement. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required by Section 7 of the Securities Act.

Very truly yours,

/s/ Nutter, McClennen & Fish, LLP

Nutter, McClennen & Fish, LLP

EX-8.1

Exhibit 8.1

FORM OF TAX OPINION

________, 2008

The Board of Directors
Auburn Savings Bank, FSB
256 Court Street
P.O. Box 3157
Auburn ME 04212

      Re:      Federal Income Tax Aspects of Reorganization

Ladies and Gentlemen:

        We have acted as counsel to Auburn Savings Bank, FSB (the “Bank”), a federally chartered mutual savings bank, in connection with the proposed reorganization of the Bank (the “Reorganization”) as set forth in that certain Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan (the “Plan”), pursuant to which the Bank will (i) convert (the “Conversion”) to a federal stock savings bank (the “Stock Bank”), (ii) establish Auburn Bancorp, MHC (the “MHC”) as a federally chartered mutual holding company, and (iii) establish Auburn Bancorp, Inc. (the “Holding Company”) as a federally chartered mid-tier holding company. The MHC will own a majority of the Holding Company at all times, and the Stock Bank will become a wholly-owned subsidiary of the Holding Company. Concurrently with and as an integral part of the Reorganization, the Holding Company intends to offer for sale up to 49.9% of its Common Stock at fair market value, on a priority basis in a Subscription Offering to Eligible Account Holders, the Stock Bank’s Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and Other Members (the “Stock Offering”). Any shares of Common Stock remaining after the conclusion of the Subscription Offering may be offered for sale in a Community Offering or Syndicated Community Offering.

        Proposed Transaction

        The Reorganization will be effected, pursuant to the Plan, as follows:

    (i)        the Bank will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim One”);

    (ii)       Interim One will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim Two”);

    (iii)      Interim One will organize the Holding Company as a wholly-owned subsidiary;

The Board of Directors
Auburn Savings Bank, FSB
____________, 2008
Page 2

    (iv)      the Bank will exchange its charter for a federal stock savings bank charter to become the Stock Bank and Interim One will exchange its charter for a federal mutual holding company charter to become the MHC;

    (v)       simultaneously with step (iv), Interim Two will merge with and into the Stock Bank with the Stock Bank as the resulting institution;

    (vi)      the members of the Bank will become the members of the MHC;

    (vii)     all of the initially issued stock of the Stock Bank will be transferred to the MHC in exchange for membership interests in the MHC (the “Exchange”);

    (viii)    the MHC will contribute the capital stock of the Stock Bank to the Holding Company in exchange for shares of the Holding Company, and the Stock Bank will become a wholly-owned subsidiary of the Holding Company (the “Contribution”); and

    (ix)      simultaneously with the Reorganization, the Holding Company will offer to sell up to 49.9% of its Common Stock in the Stock Offering.

        Upon consummation of the Reorganization, the legal existence of the Bank will not terminate, but the Stock Bank will be a continuation of the Bank, and all property of the Bank, including its right, title, and interest in and to all property of whatsoever kind and nature, interest and asset of every conceivable value or benefit then existing or pertaining to the Bank, or which would inure to the Bank immediately by operation of law and without the necessity of any conveyance or transfer and without any further act or deed, will vest in the Stock Bank. The Stock Bank will have, hold, and enjoy the same in its right and fully and to the same extent as the same was possessed, held, and enjoyed by the Bank. The Stock Bank will continue to have, succeed to, and be responsible for all the rights, liabilities and obligations of the Bank and will maintain its headquarters and operations at the Bank’s present locations.

        Upon consummation of the Reorganization, substantially all of the assets and liabilities (including the savings accounts, demand accounts, tax and loan accounts, United States Treasury general accounts, or United States Treasury Time Deposit Open Accounts, as defined in the Regulations) of the Bank shall be become the assets and liabilities of the Stock Bank, which will thereupon become an operating savings bank subsidiary of the Holding Company and of the MHC. The Bank will apply to the OTS to have the Holding Company receive or retain (as the case may be) up to $600,000 of the net proceeds of the Stock Offering, or such other amount as may be determined by the Board of Directors. The Stock Bank may distribute additional capital to the Holding Company following the Reorganization, subject to the Regulations governing capital distributions.

The Board of Directors
Auburn Savings Bank, FSB
____________, 2008
Page 3

        Assumptions

        We have examined the Plan and certain other documents relating to the Reorganization and Stock Offering and such other documents as we deemed appropriate to render the opinions set forth below. As to matters of fact material to our opinions, we have relied on representations made by the parties in the foregoing documents and upon the representations of the Bank included in a Certificate of Representations. All capitalized terms used by not defined in this letter shall have the meanings assigned to them in the Plan.

        We have assumed for the purposes of this opinion: (i) that the transactions contemplated by the Plan, will be consummated in accordance with the Plan and as described in the Plan (including satisfaction of all covenants and conditions therein without amendment or waiver thereof); (ii) the genuineness of all signatures on documents we have examined; (iii) the authenticity of all documents submitted to us as originals; (iv) the conformity to the original documents of all documents submitted to us as copies; (v) the conformity of final documents to all documents submitted to us as drafts; (vi) the authority and capacity of the individual or individuals who executed any such documents on behalf of any person; (vii) the accuracy and completeness of all records made available to us; (viii) the factual accuracy of all representations, warranties and other statements made by all parties; and (ix) the continued accuracy of all documents, certificates, warranties and covenants on which we have relied in rendering the opinion set forth below and that were given or dated earlier than the date of this letter, insofar as relevant to the opinion set forth herein, from such earlier date through and including the date of this letter.

        We have neither independently investigated nor verified such representations or statements, and, further, we assume that (i) such representations and statements are true, correct and complete, (ii) all representations made “to the best of the knowledge and belief” of any person or party or with similar qualification are and will be true, correct and complete as if made without such qualification, and (iii) no action will occur from the date hereof until the consummation of the transactions described in the Plan that is inconsistent with such representations and statements.

        Conclusion

        Based upon and subject to the foregoing, we are of the opinion that, for federal income tax purposes:

    (i)        The Conversion will constitute or be part of a reorganization within the meaning of Section 368(a)(1)(F) of the Code and neither the Bank nor the Stock Bank will recognize gain or loss as a result of the Conversion;

    (ii)       The Stock Bank’s basis in each of the assets that it receives from the Bank as a result of the Conversion will be the same as the Bank’s basis in each such asset immediately prior to the Conversion;

The Board of Directors
Auburn Savings Bank, FSB
____________, 2008
Page 4

    (iii)      The Stock Bank’s holding period with respect to each of the assets that it receives from the Bank as a result of the Conversion will be the same as the Bank’s basis in each such asset immediately prior to the Conversion;

    (iv)      For purposes of Code Section 381(b), the taxable year of the Stock Bank will include the partial year of the Bank and the tax year of the Bank will not be deemed to have ended as a result of the Conversion, accordingly, and subject to the provisions of Code Sections 381, 382 and 384, the tax attributes of the Bank, including the Bank’s bad debt reserves and earnings and profits, will be taken into account by the Stock Bank as if the Conversion had not occurred;

    (v)       The members of the Bank will not recognize gain or loss upon their constructive receipt of shares in the Stock Bank pursuant to the Conversion, solely in exchange for their mutual ownership interests in the Bank;

    (vi)      The members of the Bank will not recognize gain or loss upon the issuance to them of deposits in the Stock Bank on the same terms and dollar amounts as their deposits in the Bank prior to the Conversion;

    (vii)     The Exchange will qualify as an exchange of property for stock under Section 351 of the Code;

    (viii)    The members of the Bank (the initial stockholders of the Stock Bank) will not recognize gain or loss upon the constructive transfer to the MHC of the shares of the Stock Bank they constructively received in the Conversion;

    (ix)       Neither the Stock Bank nor the MHC will recognize gain or loss as a result of the Exchange;

    (x)        The Contribution will qualify as an exchange of property for stock under Section 351 of the Code;

    (xi)       Neither the MHC nor the Holding Company will recognize gain or loss as a result of the Exchange;

    (xii)      No income or loss will be realized upon the receipt of the non-transferable subscription rights to purchase shares of the Holding Company at fair market value (the “Subscription Rights”) or upon exercise of the Subscription Rights; and

    (xiii)     The tax basis of shares acquired through the exercise of Subscription Rights shall be equal to the amount paid to exercise such Subscription Rights and the holding period for such shares shall begin on the date of the completion of the Stock Offering.

        The opinions set forth in this letter are based on relevant provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations thereunder (including proposed and temporary Treasury Regulations) and interpretations of the foregoing as expressed

The Board of Directors
Auburn Savings Bank, FSB
____________, 2008
Page 5

in court decisions, administrative determinations (including established ruling positions of the Internal Revenue Service), and the legislative history as of the date hereof. There can be no assurance that these authorities will not be subject to future legislative, judicial or administrative changes that could affect the accuracy of the conclusions stated herein. These changes in applicable law could be retroactive in effect. By rendering this opinion, we undertake no responsibility to advise you of any such change or to update the conclusions contained in this opinion.

        The opinions set forth above as (xii) and (xiii) are based on the position that the Subscription Rights have no fair market value. Whether the Subscription Rights have a fair market value is a question of fact determined based upon the applicable facts and circumstances. We are unaware of any ruling by the Internal Revenue Service where the Internal Revenue Service has take the position that non-transferable rights to acquire shares in a financial institution at fair market value have an inherent fair market value. Additionally, the Bank has received an independent valuation report stating that the Subscription Rights have no ascertainable fair market value. While it is possible that the Internal Revenue Service could disagree with this determination we believe that it is more likely than not that the Subscription Rights have no value for U.S. Federal income tax purposes.

        Other than as expressly stated above, we express no opinion on any issue relating to the Plan or any other document related thereto. In particular, our opinion addresses the matters set forth above under U.S. Federal income tax law only, and no opinion is expressed under the provisions of any foreign, another state’s, or local tax law. Further, without our express written consent, the opinion expressed herein may not be relied upon by any persons other than those to whom it is addressed.

        We consent to the filing of this opinion in connection with the Reorganization and Stock Offering as an exhibit to Forms MHC-1, MHC-2 and H-(e)1-S, as filed with the Office of Thrift Supervision, and as an exhibit to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission. We also consent to the references to our firm in the Prospectus contained included in the Registration Statement on Form S-1 under the headings “The Reorganization and Stock Offering – Material Income Tax Consequences” and “Legal and Tax Opinions,” and to the summarization of our opinion in such Prospectus.

The Board of Directors
Auburn Savings Bank, FSB
____________, 2008
Page 6

         Circular 230 Disclosure

        The form and content of this opinion are intended to comply with the provisions of Circular 230 (31 C.F.R. Part 10) with respect to “covered opinions” within the meaning of that authority. Under the provisions of Circular 230, this opinion is considered to be a “marketed opinion.” Accordingly, we are required to make the following disclosure: the opinion was written to support the promotion or marketing of the transaction(s) addressed in the opinion, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Very truly yours,

EX-8.2

Exhibit 8.2

March [ ], 2008

The Board of Directors
Auburn Savings Bank
Auburn Bancorp, Inc.
Auburn Bancorp, MHC
256 Court Street, P.O. Box 3157
Auburn, ME 04212-3157

Ladies and Gentlemen:

You have requested our opinion concerning the Maine income and franchise tax consequences relating to the proposed reorganization (the “Reorganization”), pursuant to which Auburn Savings Bank (the “Bank”) will (i) convert (the “Conversion”) to a federal stock savings bank (the “Stock Bank”), (ii) establish Auburn Bancorp, MHC (the “MHC”) as a federally chartered mutual holding company, and (iii) establish Auburn Bancorp, Inc. (the “Holding Company”) as a federally chartered mid-tier holding company. The MHC will own the majority of the Holding Company at all times and the Stock Bank will be a wholly owned subsidiary of the Holding Company. Concurrently with and as an integral part of the Reorganization, the Holding Company intends to offer for sale up to 49.9% of its Common Stock at fair market value, on a priority basis in a Subscription Offering to Eligible Account Holders, the Stock Bank’s Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and Other Members (the “Stock Offering”). Any shares of Common Stock remaining after the conclusion of the Subscription Offering may be offered for sale in a Community Offering or Syndicated Community Offering.

In order to render our opinion we have examined the Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan (the “Plan”), the Registration Statements filed by Auburn Bancorp, Inc with the Securities and Exchange Commission (the “SEC”), the opinion of Nutter McClennen & Fish LLP (“Nutter McClennen”) regarding the federal income tax consequences of the Reorganization (the “Federal Tax Opinion”), and certain other documents of or relating to the Reorganization that we deemed necessary to examine in order to issue the opinion set forth below.

In our examination, we have assumed the authenticity of original documents, the accuracy of copies and the genuineness of signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined. For the purposes of this opinion, we are relying upon the factual representations made to Nutter McClennen by you which are set forth in the Federal Tax Opinion.

In issuing our opinion, we have assumed the Plan has been duly and validly authorized and has been approved and adopted (or will be approved and adopted before the Plan is

Board of Directors
March [ ], 2008
Page 2 of 7

implemented) by the respective boards of directors of the MHC, Bank and Holding Company and each of the other entities described in the Summary of Transactions, below; that the Plan will be carried out in accordance with its terms; and that nothing has occurred that will alter the opinions of Nutter McClennen stated in the Federal Tax Opinion. Accordingly, we express no opinion concerning the effect, if any, of variations from the foregoing. We specifically express no opinion concerning tax matters relating to the conversion under federal income tax laws or with respect to any tax other than Maine income and franchise tax laws.

Summary of Transactions:

Pursuant to the Plan, the Reorganization will be accomplished in the following steps, each of which will be completed contemporaneously.

1.	The Bank will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim One”);
2.	Interim One will organize the Holding Company as a wholly-owned subsidiary;
3.	Interim One will organize an interim stock savings bank as a wholly-owned subsidiary (“Interim Two”);
4.	The Bank will exchange its charter for a federal stock savings bank charter to become the Stock Bank and Interim One will exchange its charter for a federal mutual holding company charter to become the MHC;
5.	Interim will merge with and into the Stock Bank with the Stock Bank as the resulting institution;
6.	The members of the Bank will become the members of the MHC;
7.	All of the initially issued stock of the Stock Bank will be transferred to the MHC in exchange for membership interests in the MHC (the “Exchange”);
8.	The MHC will contribute the capital stock of the Stock Bank to the Holding Company in exchange for shares of the Holding Company, and the Stock Bank will become a wholly-owned subsidiary of the Holding Company (the “Contribution”); and
9.	Simultaneously with the Reorganization, the Holding Company will offer to sell up to 49.9% of its Common Stock in the Stock Offering.

Summary of Federal Tax Opinion:

Nutter McClennen has opined the following in the Federal Tax Opinion:

1.	The Conversion will constitute or be part of a reorganization within the meaning of Section 368(a)(1)(F) of the Code and neither the Bank nor the Stock Bank will recognize gain or loss as a result of the Conversion;
2.	The Stock Bank’s basis in each of the assets that it receives from the Bank as a result of the Conversion will be the same as the Bank’s basis in each such asset immediately prior to the Conversion;

Board of Directors
March [ ], 2008
Page 3 of 7

3.	The Stock Bank’s holding period with respect to each of the assets that it receives from the Bank as a result of the Conversion will be the same as the Bank’s basis in each such asset immediately prior to the Conversion;
4.	For purposes of Code Section 381(b), the taxable year of the Stock Bank will include the partial year of the Bank and the tax year of the Bank will not be deemed to have ended as a result of the Conversion, accordingly, and subject to the provisions of Code Sections 381, 382 and 384, the tax attributes of the Bank, including the Bank’s bad debt reserves and earnings and profits, will be taken into account by the Stock Bank as if the Conversion had not occurred;
5.	The members of the Bank will not recognize gain or loss upon their constructive receipt of shares in the Stock Bank pursuant to the Conversion, solely in exchange for their mutual ownership interests in the Bank;
6.	The members of the Bank will not recognize gain or loss upon the issuance to them of deposits in the Stock Bank on the same terms and dollar amounts as their deposits in the Bank prior to the Conversion;
7.	The Exchange will qualify as an exchange of property for stock under Section 351 of the Code;
8.	The members of the Bank (the initial stockholders of the Stock Bank) will not recognize gain or loss upon the constructive transfer to the MHC of the shares of the Stock Bank they constructively received in the Conversion.
9.	Neither the Stock Bank nor the MHC will recognize gain or loss as a result of the Exchange;
10.	The Contribution will qualify as an exchange of property for stock under Section 351 of the Code;
11.	Neither the MHC nor the Holding Company will recognize gain or loss as a result of the Exchange;
12.	No income or loss will be realized upon the receipt of the non-transferable subscription rights to purchase shares of the Holding Company at fair market value (the “Subscription Rights”) or upon exercise of the Subscription Rights;
13.	The tax basis of shares acquired through the exercise of Subscription Rights shall be equal to the amount paid to exercise such Subscription Rights and the holding period for such shares shall begin on the date of the completion of the Stock Offering.

Board of Directors
March [ ], 2008
Page 4 of 7

State Income Tax Law:

Maine Franchise Tax on Financial Institutions (“Franchise Tax”)

Maine imposes the Franchise Tax on upon the franchise or privilege of doing business in the state on every financial institution that has Maine Net Income (defined below) and has a substantial physical presence in the state sufficient to satisfy the due process and commerce clause of the United States constitution. The Franchise Tax provides for two alternative methods in computing the tax due: (1) the tax equals the sum of 1.0% of the institution’s Maine Net Income plus 0.008% of the value of its Maine assets, or (2) a tax on assets only equal to 0.039% of the value of the Institution’s Maine assets. Each financial institution subject to the Franchise Tax must elect to calculate their tax, each year, using method 1 or 2. The election cannot be revoked with respect to that year. If no election is made the method established under method 1 must be used. [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5206].

Maine Net Income means a financial institution’s net income or loss per books required to be reported pursuant to the laws of the United States on Form 1120, 1120S or 1065 and apportioned to Maine. [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5208(13)].

A financial institution means a (1) a bank, savings bank, industrial bank, savings and loan association or any other entity, excluding a credit union, authorized to do business in Maine under Title 9-B, section 131, subsection 12-A and accepts deposits that are insured by an agency of the Federal Government, (2) a bank holding company or a savings and loan holding company. [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5208(8)].

The period for computation of the Franchise Tax is the same as the taxpayer’s taxable year for federal income tax purposes. [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5256].

Financial institutions that are subject to the Franchise Tax are exempt from the Maine corporate net income tax. [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5102(6)].

Maine Corporate Net Income Tax (“Corporate Tax”)

Maine imposes the Corporate Tax on domestic and foreign corporations for the privilege of doing business at a maximum rate of 8.93% of taxable income. As stated above entities subject to Franchise Tax are exempt from the Corporate Tax imposed by Maine.

Taxable income for Corporate Tax purposes, where the corporation’s activities are entirely within Maine, is defined as “…for any taxable year for any corporate taxpayer,

Board of Directors
March [ ], 2008
Page 5 of 7

the taxable income of that taxpayer for that taxable year under the laws of the United States...” [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5102(8)].

Maine Individual Income Tax (“Individual Tax”)

Maine imposes the Individual Tax on resident and non resident individuals at a maximum rate of 8.5% of taxable income. [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5111].

Taxable income for a resident individual is defined as “…equal to the individual’s federal adjusted gross income...” [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5121].

Taxable income for a non resident individual is defined as “…The net amount of items of income, gain, loss, and deduction entering into the nonresident individual’s federal adjusted gross income that are derived from or connected with sources in this State… [Maine Revised Statutes, Title 36, Part 8, Chapter 801, Section 5142(1)(A)].

Opinion:

Based upon opinions by Nutter McClennen set forth in the Federal Tax Opinion and the other assumptions set forth above, and subject to limitations and conditions set forth in this letter, it is our opinion that:

1.	The Bank will be subject to the Franchise Tax and will not recognize any Maine Net Income, solely as a result of the Conversion. Additionally, as stated in the Federal Tax Opinion the tax year of the Bank will not be deemed to have ended as a result of the Conversion. Therefore, there should be no additional Maine Franchise Tax liability incurred by the Bank solely as a result of the Conversion. This is provided the Bank does not recognize any net income or net loss under generally accepted accounting principles solely as a result of the Conversion;
2.	The Holding Company will be subject to the Franchise Tax and will not recognize any Maine Net Income, solely as a result of the Conversion and Stock Offering. Therefore, there should be no additional Maine Franchise Tax liability incurred by the Holding Company solely as a result of the Conversion and Stock Offering. This is provided the Holding Company does not recognize any net income or net loss under generally accepted accounting principles solely as a result of the Conversion and Stock Offering;
3.	The MHC will be subject to the Franchise Tax and will not recognize any Maine Net Income, solely as a result of the Exchange and Contribution. Therefore, there should be no additional Maine Franchise Tax liability incurred by the MHC solely as a result of the Exchange and Contribution. This is provided the MHC does not

Board of Directors
March [ ], 2008
Page 6 of 7

	recognize any net income or net loss under generally accepted accounting principles solely as a result of the Exchange and Contribution;
4.	The members of the Bank will not recognize any gain or loss for Maine Individual Tax purposes, solely as a result of the Conversion, Exchange, Stock Offering and Reorganization, provided they do not recognize any gain or loss for federal income tax purposes as is stated in the Federal Tax Opinion.

The state income tax opinions expressed above are limited to those taxes specified in this opinion letter and specifically do not include any opinions with respect to the consequences to the depositors of the Bank under any federal or any state taxes by states other than Maine that may be imposed, local realty or other transfer taxes that may be imposed by Maine, or with respect to tax liabilities under the Franchise Tax or Corporate Tax that may arise from events subsequent to the Reorganization and Stock Offering.

Our opinion is based on the facts and conditions as stated herein, whether directly or by reference to the Federal Tax Opinion. If any facts and conditions are not entirely complete or accurate, please inform us immediately, as the inaccuracy or incompleteness could have a material impact on our opinion. Our opinion relies upon the laws of the State of Maine and federal income tax laws, regulations and rules thereunder and judicial and administrative interpretations which are subject to subsequent change or modification. Any such changes could be retroactive and have a material impact on our opinion. We undertake no responsibility to update or revise our opinion. Our opinion is not binding upon the Internal Revenue Service or the State of Maine.

Use of Opinion:

This opinion is given solely for the benefit of the parties to the Reorganization and other investors who purchase stock pursuant to the Stock Offering and may not be relied on by any other person or entity or referred to in any document without our express written consent.

Board of Directors
March [ ], 2008
Page 7 of 7

Circular 230 Disclosure:

The form and content of this opinion are intended to comply with the provisions of Circular 230 (31 C.F.R. Part 10) with respect to “covered opinions” within the meaning of that authority. Under the provisions of Circular 230, this opinion is considered to be a “marketed opinion.” Accordingly, we are required to make the following disclosure: the opinion was written to support the promotion or marketing of the transaction(s) addressed in the opinion, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Consent:

We consent to the filing of this opinion as an exhibit to the Forms MHC-1, Form MHC-2 and Form H-(e)1-S filed with the Office of Thrift Supervision and as an exhibit to the registration statement on Form S-1 filed with the Securities and Exchange Commission. We also consent to the reference thereto in the prospectus included in the registration statement on Form S-1 under the headings “The Reorganization and Stock Offering — Tax Effects of the Reorganization” and “Legal and Tax Opinions”, and to the summarization of our opinion in such Prospectus.

Sincerely yours,

Berry, Dunn, McNeil & Parker 

EX-10.1

Exhibit 10.1

AUBURN SAVINGS BANK, FSB

EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

Effective: January 1, 2008

AUBURN SAVINGS BANK, FSB
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

		Page
I. INTRODUCTION		1
1.1	PLAN NAME	1
1.2	EFFECTIVE DATE	1
1.3	PURPOSE OF PLAN	1
II. ELIGIBILITY		1
2.1	INITIAL ELIGIBILITY	1
2.2	BREAK IN SERVICE	1
III. CONTRIBUTIONS		2
3.1	CONTRIBUTION AMOUNTS	2
3.2	FORM OF CONTRIBUTIONS	2
3.3	MINIMUM CONTRIBUTIONS	2
IV. INVESTMENT OF TRUST ASSETS		2
4.1	PURCHASE OF EMPLOYER STOCK	2
4.2	PURCHASE PRICE OF EMPLOYER STOCK	3
4.3	DIVERSIFICATION OF INVESTMENTS	3
4.4	BORROWING TO ACQUIRE EMPLOYER STOCK	4
4.5	RELEASE OF SHARES	5
V. ACCOUNTING		5
5.1	ACCOUNTING FOR TRUST ASSETS	5
5.2	TREATMENT OF ENCUMBERED SHARES	6
5.3	SEPARATE RECORDS OF PARTICIPANTS	6
5.4	ALLOCATION AMONG PARTICIPANT ACCOUNTS	6
5.5	ANNUAL REPORT TO PARTICIPANTS	7
5.6	VOTING	7
5.7	LIST OF PARTICIPANTS	8
5.8	MAXIMUM ANNUAL ADDITIONS	8
5.9	ADJUSTMENT FOR EXCESSIVE ADDITIONS	11
VI. VESTING		11
6.1	VESTING	11
6.2	FORFEITURES	12
6.3	NORMAL RETIREMENT AGE, ETC	13
VII. DISTRIBUTIONS		13
7.1	FORM OF DISTRIBUTION	13
7.2	TIMING OF DISTRIBUTION OF BENEFITS	14
7.3	DEATH BENEFITS; DESIGNATION OF BENEFICIARY	15
7.4	BANK CERTIFICATION	16

i

Table of Contents
(continued)

		Page
7.5	MINIMUM DISTRIBUTION REQUIREMENTS	16
7.6	TIME AND MANNER OF MINIMUM REQUIRED DISTRIBUTIONS	16
7.7	REQUIRED MINIMUM DISTRIBUTIONS DURING PARTICIPANT’S LIFETIME	17
7.8	REQUIRED MINIMUM DISTRIBUTIONS AFTER PARTICIPANT’S DEATH	17
7.9	DEFINITIONS	19
7.10	DISTRIBUTION FOR MINOR BENEFICIARY	20
7.11	LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN	20
7.12	LIMITATIONS ON BENEFITS AND DISTRIBUTIONS	20
7.13	DIRECT ROLLOVERS	20
VIII. TRUST AND TRUSTEES		21
8.1	TRUST AND TRUSTEE	21
8.2	GENERAL POWERS	21
8.3	RESPONSIBILITY OF TRUSTEE	24
8.4	COMPENSATION AND EXPENSES	24
8.5	CONTINUATION OF POWERS UPON TRUST TERMINATION	24
8.6	RESIGNATION	24
8.7	REMOVAL OF THE TRUSTEE	24
8.8	DUTIES OF RESIGNING OR REMOVED TRUSTEE AND OF SUCCESSOR TRUSTEE	24
8.9	FILLING TRUSTEE VACANCY	25
8.10	DISAGREEMENT AS TO ACTS	25
8.11	PERSONS DEALING WITH TRUSTEE	25
8.12	MULTIPLE TRUSTEES	25
8.13	DEALINGS WITH THE ADMINISTRATIVE COMMITTEE	25
IX. DIVIDENDS		26
9.1	PAYMENT OF DIVIDENDS	26
9.2	ALLOCATION OF DIVIDENDS	26
X. PUT OPTIONS		26
10.1	APPLICATION	26
10.2	PUT OPTION	26
XI. RIGHT OF FIRST REFUSAL		27
11.1	APPLICATION	27
11.2	RIGHT OF FIRST REFUSAL	28
11.3	ENDORSEMENT OF CERTIFICATES	28
XII. ADMINISTRATIVE COMMITTEE		29
12.1	STATUS	29
12.2	POWERS	29
12.3	DUTIES	30

ii

Table of Contents
(continued)

		Page
12.4	EFFECT OF INTERPRETATION OR DETERMINATION	30
12.5	RELIANCE ON TABLES, ETC	30
12.6	CLAIMS AND REVIEW PROCEDURES	30
12.7	INDEMNIFICATION	31
12.8	ANNUAL REPORT	31
12.9	EXPENSES OF PLAN	32
12.10	LIMITATION OF LIABILITY	32
12.11	ACCOUNTS	32
XIII. AMENDMENTS AND TERMINATION		33
13.1	PLAN AMENDMENTS	33
13.2	TERMINATION OF CONTRIBUTIONS	33
13.3	TERMINATION OF PLAN	33
XIV. TOP HEAVY PROVISIONS		34
14.1	PROVISIONS TO APPLY	34
14.2	MINIMUM CONTRIBUTION	34
14.3	DEFINITIONS	35
XV. DEFINITIONS		37
XVI. MISCELLANEOUS		42
16.1	EXCLUSIVE BENEFIT RULE	42
16.2	NON-TERMINABLE RIGHTS	42
16.3	LIMITATION OF RIGHTS	42
16.4	NON-ALIENABILITY OF BENEFITS	42
16.5	ADEQUACY OF DELIVERY	43
16.6	SERVICE WITH ARMED FORCES	43
16.7	MERGER OR CONSOLIDATION	43
16.8	GOVERNING LAW	43

iii

AUBURN SAVINGS BANK
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

I. INTRODUCTION

	1.1	PLAN NAME
The name of the Plan is the Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust.
	1.2	EFFECTIVE DATE
The Plan is effective as of January 1, 2008.
	1.3	PURPOSE OF PLAN
The Plan is created for the purpose of providing retirement benefits to Participants and their beneficiaries in a manner consistent with the requirements of the Code and Title I of ERISA. The Plan is intended to be, and is hereby designated as, an employee stock ownership plan within the meaning of Code Section 4975(e)(7), which shall invest primarily in Employer Stock.
II. ELIGIBILITY
	2.1	INITIAL ELIGIBILITY
(a)      An Eligible Employee who is an Employee at the closing of the Bank’s reorganization from mutual savings bank to mutual holding company structure (the “Reorganization Date”) and who has earned one Hour of Service in each of the three months immediately preceding the Reorganization Date will be a Participant as of the Reorganization Date. Any other Eligible Employee will become a Participant in the Plan on the Entry Date coincident with or next following the date on which he or she first completes a Year of Service and attains age 21.
(b)      No contributions shall be made or forfeitures allocated with respect to an Employee who is not, or a Participant who ceases to be, an Eligible Employee. If an Employee who is not an Eligible Employee becomes an Eligible Employee, such Employee will become a Participant on the first Entry Date on or after becoming an Eligible Employee, if he or she has otherwise satisfied the requirements of this Article II.
	2.2	BREAK IN SERVICE
Any Participant who terminates employment but is reemployed by a Participating Employer before incurring a One Year Break in Service will continue to participate in the Plan as if such termination had not occurred, effective as of the date of reemployment. Any Participant who terminates employment but is reemployed by a Participating Employer after incurring a One Year Break in Service will be treated as a new hire, and he or she will participate in the Plan only after again satisfying the requirements of this Article II.

III. CONTRIBUTIONS
	3.1	CONTRIBUTION AMOUNTS
Not later than the time prescribed by law for filing its Federal income tax return (including extensions thereof) for its current taxable year and each succeeding taxable year, the Bank will make contributions to the Trust in such amounts as may be determined by the Board of Directors, provided, however, that the aggregate contribution of the Bank for any year shall not exceed the maximum amount which would constitute an allowable deduction to the Bank for such year under Code Section 404(a). A Participant shall neither be required nor permitted to make contributions to the Plan and Trust.
	3.2	FORM OF CONTRIBUTIONS
Bank contributions will be paid in cash or other property, as the Board of Directors may, from time to time, determine; provided however that the Bank may not make contributions of Employer Stock to the extent necessary to satisfy a monetary obligation in violation of U.S. Department of Labor Interpretive Bulletin 94-3, see 29 C.F.R. 2509.94-3, unless the contribution otherwise satisfies the requirements for an exemption from the ERISA prohibited transaction rules.
	3.3	MINIMUM CONTRIBUTIONS
The Bank’s annual contribution must be sufficient to ensure that Trust does not default on the repayment by the Trust of indebtedness in accordance with the terms of such indebtedness which may be incurred from time to time for the purpose of the acquisition of Employer Stock.
IV. INVESTMENT OF TRUST ASSETS
	4.1	PURCHASE OF EMPLOYER STOCK
All cash contributions to the Trust made by the Bank and any other cash received by the Trust (excluding dividends received by the Trust on Employer Stock which are directed by the Bank to be distributed to Plan Participants pursuant to Section 9.1), will first be applied to outstanding current obligations of the Trust, and any excess will be used, at the discretion of the Trustee, to repay obligations of the Trust, to buy Employer Stock from holders of outstanding stock or newly issued or treasury stock from the Bank, or the Trustee may invest such funds of the Trust in savings accounts, certificates of deposit, short-term commercial paper, stocks, bonds, insurance policies, or other investments deemed to be desirable for the Trust, or such funds may be held temporarily in cash.
	4.2	PURCHASE PRICE OF EMPLOYER STOCK
All purchases of Employer Stock by the Trust will be made at a price, or at prices, which, in the judgment of the Trustee, do not exceed the fair market value of such Employer Stock. The fair market value of Employer Stock shall be the price at which such stock trades on an established securities market, or if such stock is not readily tradable on an established securities market, the fair market value of Employer Stock shall be determined by an independent appraiser

2

as defined in Code Section 401(a)(28). In making such determination, the appraiser shall consider the following criteria:
(a)      Any current and historical practices which have been consistently and uniformly utilized to value Employer Stock in sales transactions between the Bank and the stockholders, or among and between stockholders.
(b)      Any restrictions or limitations imposed upon the sale or transfer of Employer Stock which establish or stipulate the price at which the Bank may or must purchase such stock under the provisions of its charter of any or written agreements, provided the same or similar restrictions are applicable to substantially all of the outstanding Employer Stock and are complied with uniformly and consistently.
(c)      Such other information concerning the Bank and its condition and prospects, financial and otherwise, generally used in the determination of the fair market value of corporate stock of comparable public or private companies engaged in the same or similar industries, by independent investment analysts nationally recognized as having expertise in rendering such evaluations.
	4.3	DIVERSIFICATION OF INVESTMENTS
(a)      Each Participant in the Plan who has attained age fifty-five (55) and has completed at least ten (10) years of participation in the Plan shall be permitted to elect, as to not more than twenty-five percent (25%) (reduced by amounts previously diversified) of his or her Employer Stock Account, to have Employer Stock in such amount liquated from his or her Employer Stock Account and transferred to his or her Other Investment Account. This election may be made within the period of ninety (90) days following the end of each Plan Year during the six (6) Plan Year period beginning with the first Plan Year in which the Participant became eligible to make the election. In the case of the last year to which an election applies, fifty percent (50%) shall be substituted for twenty-five percent (25%).
(b)      For the purpose of facilitating elective diversification hereunder, the Trustee may make available under the Participant’s Other Investment Account at least three investment vehicle alternatives to the investment of assets of the Trust in qualified employer securities that comply with the requirements of Code Section 401(a)(28) and any applicable Regulation.
(c)      The Trustee shall comply with any diversification election under this Section 4.3 within ninety (90) days following the ninety (90) day election period by (i) substituting other investment assets for the amount of qualified employer securities as to which the election is made, or (ii) distributing to the Participant an amount equal to the amount for which diversification was elected.
	4.4	BORROWING TO ACQUIRE EMPLOYER STOCK
The Trustee may borrow funds from any lender for the purpose of purchasing Employer Stock, and may enter into contracts for the purchase of Employer Stock pursuant to which the purchase price is paid in installments. Any such loan or contract must be primarily for the benefit of Participants and their Beneficiaries, and shall comply with the following terms and conditions:

3

(a)      The interest rate respecting such loan shall not exceed a reasonable rate of interest. The Trustee shall consider all relevant factors in determining a reasonable rate of interest, including the amount and duration of the loan or contract, the security and guarantee (if any) involved, the credit standing of the Trust and the Bank (if and to the extent that the Bank acts as guarantor), and the interest rate prevailing for comparable loans. Upon due consideration of the foregoing factors, a variable interest rate may be reasonable.
(b)      At the time that such loan is made or contract entered into, the interest rate and the price of securities to be acquired should not be such that Plan assets might be dissipated.
(c)      The terms of such loan or contract, whether or not between independent parties, must be at such time at least as favorable to the Trust as the terms of a comparable loan or contract resulting from arm’s-length negotiations between independent parties.
(d)      The proceeds of such loan must be used within a reasonable time after their receipt by the Trust only to acquire Employer Stock, to repay such loan, or to repay a prior loan to the Trust.
(e)      Such loan must be without recourse against the Trust. The only assets of the Trust that may be given as collateral on such loan are shares of Employer Stock acquired therewith. No person entitled to payment under such loan shall have any right to assets of the Trust other than collateral given for such loan, cash contributions of the Bank made to meet the obligations of the Trust under such loan, and earnings attributable to such collateral and the investment of such contributions. The payments made with respect to such loan by the Trust during a Plan Year must not exceed an amount equal to the sum of such contributions and earnings received during or prior to the year less such payments in prior years. Such contributions and earnings must be accounted for separately on the books of account of the Trust, until the loan is repaid.
(f)      In the event of default on such loan, the value of Plan assets transferred in satisfaction of the loan must not exceed the amount of default.
(g)      Shares of Employer Stock used as collateral for such loan shall be released from the encumbrance-thereof, in accordance with the provisions of Section 4.5.
(h)      Such loan shall be for a specific term, and not payable at the demand of any person (except in the case of default).
(i)      Except as otherwise provided under the terms of this Plan and Trust, or as otherwise required by applicable law, no Employer Stock acquired with the proceeds of such loan shall be subject to a put, call or other option, or buy-sell or similar arrangement while held by and when distributed from the Trust, whether or not the Trust is then an employee stock ownership plan as described in Code Section 4975(e)(7).
	4.5	RELEASE OF SHARES
All shares of Employer Stock acquired by the Trust and pledged as collateral on a loan described in Section 4.4 shall be credited to the Suspense Account and shall be released as follows:

4

(a)      For each Plan Year during the duration of the loan, the number of shares of Employer Stock released shall equal the original number of encumbered shares multiplied by a fraction in which the numerator is the amount of principal paid to the lender by the Trust for the year, and the denominator is the original principal amount outstanding at the commencement of the loan. The foregoing allocation method shall apply only if the loan provides for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for ten (10) years. Further shares released from encumbrance shall be determined solely with reference to principal payments and interest included in any payments shall be disregarded only to the extent that the interest would be determined to be interest under standard loan amortization tables. If at any time, by reason of a renewal, extension, or refinancing, the sum of the expired duration of the exempt loan, the renewal period, the extension period, and the duration of a new exempt loan exceeds ten (10) years, or if, at any time, the other terms and conditions of this Section 4.5(a) are not met, then from such time shares of Employer Stock shall be released pursuant to Section 4.5(b).
(b)      If the allocation method set forth in Section 4.5(a) is not applicable, then shares of Employer Stock shall be released as follows: For each Plan Year during the duration of the loan, the number of shares of Employer Stock released shall equal the number of encumbered shares held immediately before release by a fraction. The numerator of the fraction is the amount of principal and interest paid to the lender by the Trust for the year, and the denominator of the fraction is the sum of the numerator plus the principal and interest to be paid for all future years. For purposes of the foregoing determination, the number of future years under the loan must be definitely ascertainable, and shall be determined without taking into account any possible extensions or renewal periods. If the interest rate under the loan is variable, the interest to be paid in future years shall be computed by using the interest rate applicable as of the end of the Plan Year.
(c)      To the extent of the foregoing release from encumbrance pursuant to Sections 4.5(a) or (b), shares shall be withdrawn from the Suspense Account and shall be allocated for each Plan Year as provided in Section 5.4.
V. ACCOUNTING
	5.1	ACCOUNTING FOR TRUST ASSETS
The Trustee shall keep accurate and detailed accounts of all investments, receipts and disbursements and other transactions under the Trust. As of the last day of each Plan Year, the Trustee shall make a determination of the current fair market value of all Trust assets. In so doing, the Trustee shall:
		(i)	Credit to the Trust all income of the Trust for such year (including dividends on Employer Stock);
		(ii)	Charge to the Trust all losses and expenses of the Trust for such year;
		(iii)	Credit to the Trust all contributions of the Bank (whether in cash or in kind); and

5

(iv) Make a determination as to the current fair market value of all assets of the Trust, including Employer Stock in accordance with Section 4.2.

	5.2	TREATMENT OF ENCUMBERED SHARES
In computing the fair market value of all assets held in the Trust, shares of encumbered Employer Stock (i.e., those shares standing as collateral for a loan or loans described at Section 4.4 above) shall be disregarded.
	5.3	SEPARATE RECORDS OF PARTICIPANTS
The Trustee shall keep accurate accounts of the respective share of each Participant in the Trust assets. Each account shall separately state the number of shares of Employer Stock allocated to the Participants’ accounts each year under Section 5.4. The share of each Participant in the Trust assets as of any date of determination shall be the fair market value of such assets as of the preceding Valuation Date.
	5.4	ALLOCATION AMONG PARTICIPANT ACCOUNTS
As of each Anniversary Date, the Trustee shall allocate the Banks contribution under Section 3.1 to the Account of each Participant who has completed 1,000 Hours of Service during the Plan Year in the same proportion that each such Participant’s Compensation for such year bears to the aggregate of the Compensation of all Participants for such year.

          (a)      The Account of each Participant will be credited as of each Anniversary Date with its allocable share(s) of Employer Stock (including fractional shares rounded to the nearest one-hundredth of a share) purchased and paid for by the Plan or contributed in kind by the Bank and with stock dividends on Employer Stock held in such Participant’s Account. Employer Stock acquired by the Plan with the proceeds of a loan described in Section 4.4 above will only be allocated to each Participant’s Account upon release from encumbrance pursuant to Section 4.5. The Employer Stock received by the Trust during a Plan Year with respect to a contribution by the Bank for the preceding Plan Year shall be allocated to the accounts of Participants as of the Anniversary Date at the end of such preceding Plan Year. Each Participant’s Other Contributions Account will be credited as of each Anniversary Date with his or her allocable share of the Bank’s contribution that does not consist of Employer Stock, and shall be debited with payments made to pay for Employer Stock, or to repay a loan described in Section 4.4.

          (b)      Net income (or loss) of the Trust will be determined annually as of each Anniversary Date. A share thereof will be allocated to each Participant’s Account in the ratio in which the balance of his or her Account on the preceding Anniversary Date bears to the sum of the balances for the Accounts of all Participants on that date. The net income (or loss) includes the increase (or decrease) in the fair market value of assets of the Trust (other than Employer Stock), interest, dividends, other income and expenses attributable to assets in the Accounts (other than Employer Stock) since the preceding Anniversary Date. Net income (or loss) does not include the interest paid under any installment contract for the purchase of Employer Stock by the Trust or on any loan used by the Trust to purchase Employer Stock, nor does it include

6

income received by the Trust with respect to Employer Stock acquired with the proceeds of a loan described in Section 4.4 to the extent such income is used to repay the loan.

          (c)      Shares of Employer Stock released from encumbrance as a result of dividends paid on Employer Stock will be allocated to each Participant’s Account in the ratio of the balance in his or her account on the preceding Anniversary Date to the sum of the balances for the Accounts of all Participants on that date.

          (d)      Despite the foregoing, any diversification of investments made pursuant to Section 4.3 shall be deemed an earmarked investment made for such Participant’s benefit. Accordingly, all interest and other earnings attributable to such earmarked investments shall be allocated and credited exclusively to the Other Investment Account of the Participant who has made such election. At the time of electing such diversification of investments, the electing Participant’s Employer Stock Account shall be reduced by the number of shares of Employer Stock which are equal in value as of the last Valuation Date to the amount of the diversified investments or the amount distributed to the Participant pursuant to Section 4.3.

          (e)      The Bank shall establish accounting procedures for the purpose of making the allocations, valuations and adjustments to Participants’ Accounts provided for in this Section 5.4.

          (f)      In the case of a Participant who is entitled to have credited to his or her Account a portion of the Bank’s contribution for a Plan Year but whose employment is terminated after the close of such year and before actual contributions have been made to the Trust, the allocations with respect to such contributions shall be made as though such Employee’s employment had not terminated.

	5.5	ANNUAL REPORT TO PARTICIPANTS
As soon as practicable after each Anniversary Date, the Trustee shall prepare a written statement for distribution to each Participant reflecting the number of shares of Employer Stock allocated to such Participant’s Account as of the Anniversary Date preceding the most recent Anniversary Date, the additional number of shares of Employer Stock allocated to him or her for the Plan Year ending on the most recent Anniversary Date, and the aggregate number of shares of Employer Stock allocated to date to his or her Account. The written statement shall also indicate the dollar value of the Participant’s shares of Employer Stock, based upon the most recent revaluation of the assets of the Trust.
	5.6	VOTING
The Trustee shall vote all shares of Employer Stock held in the Trust in accordance with the following provisions:

          (a)      Shares of Employer Stock which have been allocated to Participants’ Accounts shall be voted by the Trustee in accordance with the Participants’ written instructions.

          (b)      Shares of Employer Stock which have been allocated to Participants’ Accounts but for which no written instructions have been received by the Trustee regarding voting shall be

7

voted by the Trustee in a manner calculated to most accurately reflect the instructions the Trustee has received from Participants regarding voting shares of allocated Employer Stock. Shares of unallocated Employer Stock shall also be voted by the Trustee in a manner calculated to most accurately reflect the instructions the Trustee has received from Participants regarding voting shares of allocated Employer Stock. Despite the forgoing, all shares of Employer Stock which have been allocated to Participants’ Accounts and for which the Trustee has not timely received written instructions regarding voting and all unallocated shares of Employer Stock must be voted by the Trustee in a manner determined by the Trustee to be solely in the best interests of the Participants and Beneficiaries.

          (c)      In the event no shares of Employer Stock have been allocated to Participants’ Accounts at the time Employer Stock is to be voted, each Participant shall be deemed to have one share of Employer Stock allocated to his Accounts for the sole purpose of providing the Trustee with voting instructions.

          (d)      Whenever voting rights are to be exercised under this Section 5.6, the Bank, the Administrative Committee, and the Trustee shall see that all Participants and Beneficiaries are provided with the same notices and other materials as are provided to other holders of the Employer Stock, and are provided with adequate opportunity to deliver their instructions to the Trustee regarding the voting of Employer Stock allocated to their Accounts or deemed allocated to their Accounts for purposes of voting. The instructions of the Participants with respect to the voting of shares of Employer Stock shall be confidential.

          (e)      In the event of a tender offer, Employer Stock shall be tendered by the Trustee in the same manner set forth in subsection (a) through (d) above regarding the voting of Employer Stock.

	5.7	LIST OF PARTICIPANTS
On or about each Anniversary Date, the Bank shall deliver to the Trustee a list of all Eligible Employees to whom Compensation was paid or payable for such year, together with a statement of the amount of such Compensation.
	5.8	MAXIMUM ANNUAL ADDITIONS
Despite the foregoing, the maximum annual additions credited to a Participant’s accounts for any limitation year shall equal the lesser of (i) $40,000, as adjusted for increases in the cost of living under Code Section 415(c)(3), or (ii) one hundred percent (100%) of the Participant’s 415 Compensation for such limitation year; provided, however, that the 415 Compensation percentage limitation referred to in clause (ii) shall not apply to any contribution for medical benefits (within the meaning of Code Section 419A(f)(2)) after separation from service which is otherwise treated as an annual addition, or any amount otherwise treated as an annual addition under Code Section 415(l)(1).

          (a)      For purposes of applying the limitations of Code Section 415, “annual additions” means the sum credited to a Participant’s accounts for any limitation year of:

(i) Employer contributions,

8

(ii)	Employee contributions,
(iii)	Forfeitures,
(iv)	Amounts allocated to an individual medical account, as defined in Code Section 415(l)(2) which is part of a pension or annuity plan maintained by the Bank or any Affiliated Employer, and
(v)	Amounts derived from contributions paid or accrued, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee (as defined in Code Section 419A(d)(3)) under a welfare benefit plan (as defined in Code Section 419(e)) maintained by the Bank or any Affiliated Employer.

          (b)      For purposes of applying the limitations of Code Section 415, the transfer of funds from one qualified plan to another is not an annual addition. In addition, the following are not employee contributions: (i) rollover contributions (as defined in Code Sections 402(a)(5), 402(c)(1), 403(a)(4), 403(b)(8) and 408(d)(3), (ii) repayments of loans made to a Participant from the Plan, (iii) repayments of distributions received by an Employee pursuant to Code Section 411(a)(7)(B) (cash-outs), (iv) repayments of distributions received by an employee pursuant to Code Section 411(a)(3)(D) (mandatory contributions), and (v) Employee contributions to a simplified employee pension excludable from gross income under Code Section 408(k)(6).

          (c)      For purposes of applying the limitations of Code Section 415, 415 Compensation shall include the Participant’s wages, salaries, fees for professional services and other amounts for personal services actually rendered in the course of employment with an employer maintaining the Plan (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses and in the case of a Participant who is an employee within the meaning of Code Section 401(c)(1) and the accompanying Regulation, the Participant’s earned income (as described in Code Section 401(c)(2) and the accompanying Regulation) paid during the limitation year and including any elective deferrals (as defined in Code Section 402(g)(3)), and any amount which is contributed or deferred by the Bank or any Bank or any Affiliated Employer at the election of the employee and which is not currently includible in the gross income of the Employee by reason of Code Sections 125, 132(f) or 457.

          (d)      “415 Compensation” shall exclude (i) any distributions from a plan of deferred compensation regardless of whether such amounts are includable in the gross income of the Employee when distributed except any amounts received by an Employee pursuant to an unfunded non-qualified plan to the extent such amounts are includable in the gross income of the Employee; (ii) amounts realized from the exercise of a non-qualified stock option or when restricted stock (or property) held by an Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (iii) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (iv) other amounts which receive special tax benefits, such premiums for group term life insurance (but only to the extent that the premiums are not includable in the gross income of the Employee), or contributions made by the Bank any Affiliated Employer (whether or not under a salary reduction agreement)

9

towards the purchase of any annuity contract described in Code Section 403(b) (whether or not the contributions are excludable from the gross income of the Employee).

          (e)      For purposes of applying the limitations of Code Section 415, the limitation year shall be the Calendar Year.

          (f)       The dollar limitation under Code Section 415(b)(1)(A) stated in this Section 5.8 shall be adjusted annually as provided in Code Section 415(d) pursuant to the Regulations. The adjusted limitation is effective as of January 1 of each calendar year and is applicable to limitation years ending with or within those calendar years.

          (g)      For the purpose of this Section 5.8, all qualified defined benefit plans (whether or not terminated) every maintained by the Bank shall be treated as one defined benefit plan, and all qualified defined contribution plans (whether or not terminated) every maintained by the Bank shall be treated as one defined contribution plan.

          (h)      For the purpose of this Section 5.8, if the Bank is a member of a controlled group of corporations, trades or businesses under common control (as defined by Code Section 1563(a) or Code Section 414(b) and Code Section 414(c) as modified by Code Section 415(h)), is a member of an affiliated service group (as defined by Code Section 414(m)), or is a member of a group of entities required to be aggregated pursuant to Regulations under Code Section 414(o), all Employees of such employers shall be considered to be employed by a single employer.

          (i)      If a Participant participates in more than one defined contribution plan maintained by the Bank or any Affiliated Employer which have different Anniversary Dates, the maximum annual additions under the Plan shall equal the maximum annual additions for the limitation year minus any annual additions previously credited to such Participant’s accounts during the limitation year.

          (j)      If a Participant participates in both a defined contribution plan subject to Code Section 412 and a defined contribution plan not subject to Code Section 412 maintained by the Bank or any Affiliated Employer which have the same Anniversary Date, annual additions will be credited to the Participant’s accounts under the defined contribution plan subject to Code Section 412 prior to crediting annual additions to the Participant’s accounts under the defined contribution plan not subject to Code Section 412.

          (k)      If a Participant participates in more than one defined contribution plan not subject to Code Section 412 maintained by the Bank or any Affiliated Employer which have the same Anniversary Date, the maximum annual additions under this Plan shall equal the product of (A) the maximum annual additions for the limitation year minus any annual additions previously credited multiplied by (B) a fraction (i) the numerator of which is the annual additions that would be credited to such Participant’s accounts under this Plan without regard to the limitations of Code Section 415 and (ii) the denominator of which is such annual additions for all plans described in this Section 5.8.

          (l)      Despite any contrary provision of this Section 5.8, the limitations, adjustments and other requirements prescribed in this Section 5.8 shall at all times comply with the provisions of

10

Code Section 415 and the Regulation thereunder, the terms of which are specifically incorporated herein by reference.

5.9 ADJUSTMENT FOR EXCESSIVE ADDITIONS

          If, as a result of the allocation of Forfeitures, a reasonable error in estimating a Participant’s Compensation or other facts and circumstances to which Regulation Section 1.415-6(b)(6) shall be applicable, the annual additions under the Plan would cause the maximum annual additions to be exceeded for any Participant, the Administrative Committee shall (i) return any voluntary Employee contributions credited for the limitation year to the extent that the return would reduce the excess amount in the Participant’s Account, (ii) hold any excess amount remaining after the return of any voluntary Employee contributions in a Code Section 415 suspense account (as defined in Section 5.9(b)), (iii) allocate and reallocate the Code Section 415 suspense account in the next limitation year (and succeeding limitation years if necessary) to all Participants in the Plan before any employer or employee contributions which would constitute annual additions are made to the Plan for such limitation year, and (iv) reduce contributions to the Plan for such limitation year by the amount of the Code Section 415 suspense account allocated and reallocated during such limitation year.

          (a)      The excess amount for any Participant for a limitation year shall mean the excess, if any, of (i) the annual additions that would be credited to his or her account under the terms of the Plan without regard to the limitations of Code Section 415 over (ii) the maximum annual additions determined pursuant to Section 5.8.

          (b)      For purposes of this Section 5.9, “Code Section 415 suspense account” means an unallocated account equal to the sum of excess amounts for all Participants in the Plan during the limitation year. The Code Section 415 suspense account shall not share in any earnings or losses of the Fund.

          (c)      The Plan may not distribute excess amounts, other than voluntary Employee contributions, to Participants or Former Participants.

VI. VESTING

6.1 VESTING

          In the event of termination or severance of a Participant’s employment, the Trustee shall determine the vested portion of the Participant’s Account as of the immediately preceding Valuation Date in accordance with the following schedule:

YEARS OF SERVICE	VESTED PORTION
Less than One Year		0	%
One Year		20	%
Two Years		40	%
Three Years		60	%
Four Years		80	%
Five Years		100	%

11

6.2 FORFEITURES

          Any amount not vested under the foregoing vesting schedule shall become a Forfeiture. As of each Anniversary Date, any amounts which became Forfeitures since the last Anniversary Date shall first be made available to reinstate previously forfeited account balances of Former Participants, if any, in accordance with this Section 6.2. The remaining Forfeitures, if any, shall be added to the Bank’s discretionary contribution pursuant to Section 3.1 and for the Plan Year in which such Forfeitures occur allocated among the Accounts of Participants in the same manner as the Bank’s discretionary contribution for the current year. Despite the forgoing, if the allocation of Forfeitures causes the annual addition (as defined in Section 5.8) to any Participant’s Account to exceed the amount allowable by the Code, the excess shall be reallocated in accordance with Section 5.9, except that Participants who perform less than a Year of Service during any Plan Year or are not employed on the last day of the Plan Year shall not share in Forfeitures for that year.

          (a)      The computation of a Participant’s non-forfeitable percentage of his interest in the Plan shall not be reduced as the result of any direct or indirect amendment to this Plan. A Participant with at least three (3) Years of Service as of the election period may elect to have his or her non-forfeitable percentage computed under the Plan without regard to such new vesting schedule.

          (b)      For purposes of applying this schedule to any Participant who has incurred five (5) consecutive One-Year Breaks in Service, Years of Service after such period shall not be taken into account for determining the non-forfeitable percentage of his or her Account accrued before such period began.

          (c)      If any former Participant shall be reemployed by the Bank before a One-Year Break in Service occurs, he shall continue to participate in the Plan in the same manner as if such termination had not occurred.

          (d)      If any former Participant shall be reemployed by the Bank before five (5) consecutive One-Year Breaks in Service, and such former Participant had received a distribution of his or her entire vested interest prior to his or her reemployment, his or her forfeited Account shall be reinstated only if he or she repays the full amount distributed before the earlier of five (5) years after the first date on which the Participant is subsequently reemployed by the Bank or the close of the first period of five (5) consecutive One-Year Breaks in Service commencing after distribution. If a distribution occurs for any reason other than a separation from service, the time for repayment may not end earlier than five (5) years after the date of separation. If the former Participant does repay the full amount distributed to him or her, the undistributed portion of the Participant’s Account must be restored in full, unadjusted by any gains or losses occurring subsequent to the Anniversary Date or other valuation date first preceding his or her termination.

12

          (e)      If any Former Participant is reemployed after a One-Year Break in Service, Years of Service shall include Years of Service prior to his or her One-Year Break in Service subject to the following rules:

(i)	If a Former Participant has a One- Year Break in Service, his or her pre-Break and post-Break Service shall be used for computing Years of Service for vesting purposes only after he or she has been employed for one (1) Year of Service following the date of his reemployment with the Bank;
(ii)	Any Former Participant who under the Plan does not have a non-forfeitable right to any interest in the Plan resulting from Bank contributions shall lose credits otherwise allowable under clause (i) if his or her consecutive One-Year Breaks in Service equal or exceed the greater of (A) five (5) or (B) the aggregate number of his or her pre-Break Years of Service; and
(iii)	After five (5) consecutive One-Year Breaks in Service, a Former Participant’s vested Account balance attributable to pre-Break Service shall not be increased as a result of post-Break Service.

6.3 NORMAL RETIREMENT AGE, ETC.

          Despite the provisions of this Article VI, if a Participant’s services are terminated (i) upon or after he or she attains age 65, or (ii) on account of disability determined by competent medical authority acceptable to the Administrative Committee, or (iii) by his or her death, then the forfeiture provisions contained in Section 6.2 shall not apply.

VII. DISTRIBUTIONS

7.1 FORM OF DISTRIBUTION

          Distribution of benefits will be made entirely in whole shares of Employer Stock except that the value of any fractional share and any portion of the Participant’s Other Investment Account which has been diversified in accordance with Section 4.3 will be paid in cash. Any non-diversified balance in a Participant’s account not invested in Employer Stock will be used to acquire for distribution to such Participant the maximum number of whole shares of Employer Stock at the then fair market value, and any unexpended balance will be distributed to such Participant in cash. In lieu of distributing Employer Stock to a Participant, at the direction of the Bank, the Trustee may distribute all or a portion of a Participant’s benefit in cash. Prior to commencing such a cash distribution, the Trustee shall notify the Participant, or his Beneficiary, in writing that he has the right to demand in writing that his benefits be distributed in the form of Employer Stock. Such right shall expire thirty (30) days after the receipt of such notice by the Participant or his Beneficiary.

13

7.2 TIMING OF DISTRIBUTION OF BENEFITS

          Distributions of a Participant’s account balance (whether in the form of Employer Stock and/or cash) shall be made as follows:

          (a)      If the Participant’s vested interest in the Plan does not exceed One Thousand Dollars ($1,000), the entire vested benefit shall be distributed to the Participant in a lump sum payment prior to the Second Anniversary Date following his or her termination of employment. The determination of whether the Participant’s vested interest in the Plan exceeds One Thousand Dollars ($1,000) shall be made by including that portion of his or her Account that is attributable to rollover contributions (and earnings allocable thereto) within the meaning of Code Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).

          (b)      If the Participant’s vested interest in the Plan exceeds One Thousand Dollars ($1,000) but is less than Five Thousand Dollars ($5,000), then, with the consent of the Participant, the entire vested benefit shall be distributed to the Participant in a lump sum payment prior to the Second Anniversary Date following his or her termination of employment. If a Participant does not consent to such a distribution, then his or her vested interest shall be distributed to the Participant in a lump sum payment prior to the Anniversary Date ending the Plan Year in which the Participant attains the Normal Retirement Age.

          (c)      If the Participant’s vested interest in the Plan is Five Thousand Dollars ($5,000) or more, then, with the consent of the Participant, the entire vested benefit shall be distributed as follows:

(i)	If the Participant terminates employment after attainment of age 65, or because of Disability or death, payments will commence no later than the Anniversary Date ending the Plan Year which follows the Plan Year in which the Participant’s employment was terminated. Payments will be made in substantially equal annual installments over a five-year period.
(ii)	If the Participant terminates employment for any other reason, payments will commence no later than the Anniversary Date ending the fifth Plan Year following the Plan Year in which the Participant’s employment was terminated. Payments will be made in substantially equal annual installments over a five-year period.

          (d)      If a Participant does not consent to the distributions as provided in Section 7.2(c) above, then the Participant’s vested interest in the Plan shall be distributed in five substantially equal annual installments commencing no later than the Anniversary Date ending the Plan Year following the Plan Year in which the Participant attains the Normal Retirement Age.

          (e)      Despite the foregoing:

(i) If the Participant’s vested interest in the Plan is more than Nine Hundred Thirty Five Thousand Dollars ($935,000) (in 2008), the five-year distribution period referred to in Section 7.2(c) shall be extended one additional year (but not more than five additional years) for each One

14

Hundred Eighty Five Thousand Dollars ($185,000) or fraction thereof by which his or her vested interest exceeds Nine Hundred Thirty Five Thousand Dollars ($935,000). These dollar amounts shall be adjusted at the same time and in the same manner as provided in Code Section 415(d).

(ii)	The Bank may modify distribution options in a nondiscriminatory manner as provided in Code Section 411(d)(6)(C).
(iii)	The distribution of that portion of a Participant’s Account that is attributable to Employer Stock acquired with the proceeds of a loan described in Section 4.4 may be delayed until the close of the Plan Year in which such loan is repaid in full.

7.3 DEATH BENEFITS; DESIGNATION OF BENEFICIARY

          At any time and from time to time, each Participant and each Beneficiary shall have the right to designate the person who shall receive the amount payable under this Plan on his or her death, and to revoke such designation, as limited by this Section 7.3.

          (a)      Each designation shall be evidenced by a written instrument filed with the Trustee, signed by the Participant or Beneficiary. If no such designation is on file with the Trustee at the time of the death of the Participant or Beneficiary, or if the designation is not effective for the any of the reasons stated in this Section or any other reasons, then the person conclusively deemed to be the person so designated as Beneficiary shall be (i) the surviving spouse of the Participant or Beneficiary or (ii) if the Participant or Beneficiary has no surviving spouse, the estate of such Participant or Beneficiary. The Beneficiary of the death benefit payable pursuant to this Section 7.3 shall be the Participant’s spouse. A Participant may designate a Beneficiary other than his spouse if:

(i)	The spouse has waived the right to be the Participant’s Beneficiary,
(ii)	The Participant is legally separated or has been abandoned (within the meaning of local law) and the Participant has a court order to such effect (and there is no “qualified domestic relations order” as defined in Code Section 414(p) (“QDRO”) that provides otherwise),
(iii)	The Participant has no spouse, or
(iv)	The spouse cannot be located.

          (b)      A Participant may at any time revoke his designation of a Beneficiary or change his Beneficiary by filing written notice of such revocation or change with the Committee. However, the Participant’s spouse must again consent in writing to any change in Beneficiary unless the original consent acknowledged that the spouse had the right to limit consent only to specific Beneficiary and that the spouse voluntarily elected to relinquish such right. If no valid designation of Beneficiary exists at the time of the Participant’s death, the death benefit shall be payable to his estate. Any consent by the Participant’s spouse to waive any rights to the death benefit must be in writing, must acknowledge the effect of such waiver, and be witnessed by a

15

Plan representative or a notary public. Further, the spouse’s consent must be irrevocable and must acknowledge the specific non-spouse Beneficiary.

7.4 BANK CERTIFICATION

          The Bank shall certify to the Administrative Committee and the Trustee, in the event of termination of the employment of any Participant, as to the date of such termination.

7.5 MINIMUM DISTRIBUTION REQUIREMENTS

          The requirements of this Section 7.5 and the following Sections 7.6 through 7.9 take precedence over any inconsistent provisions of the Plan. All distributions required under this Sections 7.6 through 7.9 will be determined and made in accordance with the Regulations Section 1.401(a)(9).

7.6 TIME AND MANNER OF MINIMUM REQUIRED DISTRIBUTIONS

          (a)      Required Beginning Date.

          The Participant’s entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant’s required beginning date.

          (b)      Death of Participant Before Distributions Begin.

          If the Participant dies before distributions begin, the Participant’s entire interest will be distributed, or begin to be distributed, no later than as follows:

(i)	If the Participant’s surviving spouse is the Participant’s sole designated beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70½, if later.
(ii)	If the Participant’s surviving spouse is not the Participant’s sole designated beneficiary, then distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died.
(iii)	If there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, the Participant’s entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.
(iv)	If the Participant’s surviving spouse is the Participant’s sole designated beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section 7.6(b), other than Section 7.6(b)(i), will apply as if the surviving spouse were the Participant.

16

For purposes of Sections 7.6(a) and (b), unless Section 7.6(b)(iv) applies, distributions are considered to begin on the Participant’s required beginning date. If Section 7.6(b)(iv) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section 7.6(b)(i). If distributions under an annuity purchased from an insurance company irrevocably commence to the Participant before the Participant’s required beginning date (or to the Participant’s surviving spouse) before the date distributions are required to begin to the surviving spouse under subsection (b)(i), the date distributions are considered to begin is the date distributions actually commence.

          (c)      Forms of Distribution.

          Unless the Participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year, distributions will be made in accordance with Sections 7.7 and 7.8. If the Participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and applicable Regulations.

7.7 REQUIRED MINIMUM DISTRIBUTIONS DURING PARTICIPANT’S LIFETIME

          (a)      During the Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(i)

the quotient obtained by dividing the Participant’s account balance by the distribution period in the Uniform Lifetime Table set forth in Regulation Section 1.401(a)(9)-9, using the Participant’s age as of the Participant’s birthday in the distribution calendar year; or

(ii)

if the Participant’s sole designated beneficiary for the distribution calendar year is the Participant’s spouse, the quotient obtained by dividing the Participant’s account balance by the number in the Joint and Last Survivor Table set forth in Regulation Section 1.401(a)(9)-9, using the Participant’s and spouse’s attained ages as of the Participant’s and spouse’s birthdays in the distribution calendar year.

          (b)      Required minimum distributions will be determined beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant’s date of death.

7.8 REQUIRED MINIMUM DISTRIBUTIONS AFTER PARTICIPANT’S DEATH

          (a)      Death On or After Date Distributions Begin.

(i) Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar

17

	year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s designated beneficiary, determined as follows:
	(A)          The Participant’s remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.
	(B)          If the Participant’s surviving spouse is the Participant’s sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year. For distribution calendar years after the year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.
	(C)          If the Participant’s surviving spouse is not the Participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the Participant’s death, reduced by one for each subsequent year.
(ii)	No Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant’s death, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the Participant’s remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year.

          (b)      Death Before Date Distributions Begin.

(i)

Participant Survived by Designated Beneficiary. If the Participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant’s death is the quotient obtained by dividing the Participant’s account balance by the remaining life expectancy of the Participant’s designated beneficiary, determined as provided in Section 7.8(a).

(ii)

No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the Participant’s death, distribution of

18

the Participant’s entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

(iii)

Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the date distributions begin, the Participant’s surviving spouse is the Participant’s sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section 7.8(a)(i)(B), this Section 7.8(b)(iii) will apply as if the surviving spouse were the Participant.

7.9 DEFINITIONS

          The following definitions shall apply for purposes of Sections 7.6 through 7.8:

          (a)      Designated beneficiary. The individual who is designated as the beneficiary under Section 7.3 of the Plan and is the designated beneficiary under Code Section 401(a)(9) and Regulations Section 1.401(a)(9)-1, Q&A-4, of the Treasury Regulations.

          (b)      Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant’s required beginning date. For distributions beginning after the Participant’s death, the first distribution calendar year is the calendar year in which distributions are required to begin under Section 7.6(b). The required minimum distribution for the Participant’s first distribution calendar year will be made on or before the Participant’s required beginning date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant’s required beginning date occurs, will be made on or before December 31 of that distribution calendar year.

          (c)      Life expectancy. Life expectancy as computed by use of the Single Life Table in Regulation Section 1.401(a)(9)-9.

          (d)      Participant’s account balance. The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.

          (e)      Required beginning date. For a Participant who is not a five percent (5%) owner, the required beginning date is the April 1 of the calendar year following the later of (i) the calendar year in which the Participant attains age 70½, or (ii) the calendar year in which the Participant retires. The required beginning date for a Participant who is a five percent (5%) owner (as defined in Code Section 416(i)) is April 1 of the calendar year following the calendar year in which the Participant attains age 70½.

19

7.10 DISTRIBUTION FOR MINOR BENEFICIARY

          If a distribution is to be made to a minor, then the Administrative Committee may direct that such distribution be paid to the legal guardian, or if none, to a parent of such Beneficiary or a responsible adult with whom the Beneficiary maintains his or her residence, or to the custodian for such Beneficiary under the Uniform Gift To Minors Act, if permitted by the laws of the state in which the Beneficiary resides. A payment to the legal guardian, custodian or parent of a minor Beneficiary under this Section 7.10 shall fully discharge the Trustee, the Bank, and the Plan from further liability on account thereof.

7.11 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN

          If all, or any portion, of the distribution payable to a Participant or Beneficiary under this Plan shall, at the expiration of five (5) years after it shall become payable, remain unpaid solely by reason of the inability of the Administrative Committee, after sending a registered letter, return receipt requested, to the last known address, and after further diligent effort, to ascertain the whereabouts of such Participant or his Beneficiary, the amount so distributable shall be treated as a Forfeiture pursuant to the Plan. If a Participant or Beneficiary is located subsequent to his or her benefit being reallocated under this Section 7.11, the forfeited benefit shall be restored.

7.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS.

          All rights and benefits, including elections, provided to a Participant in this Plan shall be subject to the rights afforded to any alternate payee under a QDRO. Furthermore, a distribution to an alternate payee shall be permitted if such distribution is authorized by a QDRO, even if the affected Participant has not reached the earliest retirement age under the Plan. For the purposes of this Section 7.12, “alternate payee,” “QDRO” and “earliest retirement age” shall have the meaning set forth under Code Section 414(p).

7.13 DIRECT ROLLOVERS

          Despite any provision of the Plan to the contrary that would otherwise limit a distributee’s election under this Article VII, a distributee may elect, at the time and in the manner prescribed by the Administrative Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. For purposes of this Section 7.13, the following definitions shall apply:

          (a)      Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities).

20

          (b)      Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 401(a)(3), an annuity contract described in Code Section 403(b), a qualified trust described in Code Section 401(a), or an eligible plan under Code Section 457(b) which is maintained by state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan.

          (c)      Distributee: A distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse who is the alternate payee under a QDRO are distributees with regard to the interest of the spouse or former spouse.

          (d)      Direct rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee.

VIII. TRUST AND TRUSTEES

8.1 TRUST AND TRUSTEE

          (a)      There is hereby established a trust for sole purpose of holding and investing the Fund in accordance with the requirements of ERISA Section 403(a) and the terms of this instrument. The trust shall consist of contributions under this Plan, as adjusted for interest, gains and losses, less payments to Participants. By executing this instrument, the Trustee hereby accepts appointment as such and agrees to carry out its duties and obligations under this Plan.

          (b)      The Trustee shall discharge its duties hereunder solely in the interest of the Participants and their Beneficiaries, and for the exclusive purpose of providing benefits to Participants and Beneficiaries and Defraying reasonable expenses of administering the Plans, (ii) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, (iii) in accordance with the documents and instruments governing the Plan unless, in the good faith judgment of the Trustee, the documents and instruments are not consistent with the provisions of ERISA, and (iv) in a manner that does not constitute a non-exempt prohibited transaction under Code Section 4975 of the Code or ERISA Sections 406 or 407.

8.2 GENERAL POWERS

          The Trustee shall have the following powers, rights and duties with respect to the Fund in addition to those provided elsewhere in this instrument or by law.

          (a)      To receive and to hold all contributions paid to it under the Plan; provided, however, that the Trustee shall have no duty to require any contributions to be made to it, or to determine that the contributions received by it comply with the provisions of the Plan or with any resolution of the Board of Directors providing for such contribution.

21

          (b)      To retain in cash (pending investment, reinvestment or the distribution of dividends) such reasonable amount as may be required for the proper administration of the Trust and to invest such cash as provided in Article IV.

          (c)      As directed by the Administrative Committee, to make distributions from the Fund to such persons or trusts, in such manner, at such times and in such forms as directed without inquiring as to, whether a payee is entitled to the payment, or as to whether a payment is proper, and without liability for a payment made in good faith without actual notice or knowledge of the changed condition or status of the payee. If any payment of benefits directed to be made from the Fund by the Trustee is not claimed, the Trustee shall notify the Administrative Committee of that fact promptly. The Administrative Committee shall make a diligent effort to ascertain the whereabouts of the payee or distributee of benefits returned unclaimed. The Trustee shall dispose of such payments as the Administrative Committee shall direct. The Trustee shall have no obligation to search for or ascertain the whereabouts of any payee or distributee of benefits from the Fund.

          (d)      To vote or exercise other rights with respect to any Employer Stock in the Fund at its discretion, except to the extent provided in the Plan, and to vote or exercise other rights with regard to any other stocks, bonds or other securities held in the Trust, or otherwise consent to or request any action on the part of the issuer in person, by proxy or power of attorney.

          (e)      To contract or otherwise enter into transactions between the Trust and the Bank or any Bank shareholder or other person, for the purpose of acquiring, selling, or exchanging Employer Stock and, to retain in the Fund any Employer Stock so acquired.

          (f)      To compromise, contest, arbitrate, settle or abandon claims and demands by or against the Fund.

          (g)      To begin, maintain or defend any litigation necessary in connection with the investment, reinvestment and administration of the Trust.

          (h)      To report to the Bank as of the last day of each Plan Year or at such other times as may be required under the Plan, the then current fair market value of all property held in the Fund, reduced by any liabilities other than liabilities to Participants, as determined by the Trustee.

          (i)      To furnish to the Bank such other information as the Trustee may possess, which the Administrative Committee requires in order to comply with the reporting and disclosure requirements of ERISA. The Trustee shall keep accurate accounts of all investments, earnings thereon. All accounts, books and records related to such investments shall be open to inspection by any person designated from time-to-time by the Bank or the Administrative Committee. All accounts of the Trustee shall be kept on an accrual basis. The Bank may approve such accounting by written notice of approval delivered to the Trustee or by failure to express objection to such accounting in writing delivered to the Trustee within one hundred twenty (120) days from the date upon which the accounting was delivered to the Bank. Upon the receipt of a written approval of the accounting, or upon the passage, of the period of time within which objection may be filed without written objections having been delivered to the Trustee, such accounting shall be deemed to be approved, and the Trustee shall be released and discharged as to

22

all items, matters and things set forth in such account as fully as if such accounting had been settled and allowed by decree, of a court of competent jurisdiction in an action or proceeding in which the Trustee, the Bank and all persons having or claiming to have any interest in the Fund or under the Plan were parties.

          (j)      As directed by the Administrative Committee, to pay any estate, inheritance, income or other tax, charge or assessment attributable to any benefit which it shall or may be required to pay out of such benefit; and to require before making any payment such release or other document from any taxing authority and such indemnity from the intended payee as the Trustee shall deem necessary for its protection.

          (k)     To employ and to reasonably rely upon information and advice furnished by agents, attorneys, appraisers, accountants or other persons of its choice for such purposes as the Trustee considers necessary for the proper administration of the Trust.

          (l)      To assume, until advised to the contrary, that the Trust established and maintained under this Article VIII is qualified under Code Section 401(a) and is entitled to tax-exempt status under Code Section 501(a).

          (m)    To invest and reinvest the assets of the Fund in personal property of any kind, including, but not limited to bonds, notes, debentures, mortgages, equipment trust certificates, investment trust certificates, guaranteed investment contracts, preferred or common stock, and registered investment companies.

          (n)     To exercise any options, subscription rights and other privileges with respect to Trust assets.

          (o)     To register ownership of any securities or other property held by it in its own name or in the name of a nominee, with or without the addition of words indicating that such securities are held in a fiduciary capacity, and may hold any securities in bearer form, but the books and records of the Trustee shall at all times reflect that all such investments are part of the Trust.

          (p)     To borrow such sum or sums from time to time as the Trustee considers necessary or desirable and in the best interest of the Fund, and for that purpose to mortgage or pledge any part of the Fund.

          (q)     To deposit securities with a clearing corporation as defined in Article 8 of the Uniform Commercial Code. The certificates representing securities, including those in bearer form, may be held in bulk form with, and may be merged into, certificates of the same class of the same issuer which constitute assets of other accounts or owners, without certification as to the ownership attached. Utilization of a book-entry system may be made for the transfer or pledge of securities held by the Trustee or by a clearing corporation. The Trustee shall at all times, however, maintain a separate and distinct record of the securities owned by the Trust.

          (r)      To participate in and use the Federal Book-Entry Account System, a service provided by the Federal Reserve Bank for its member banks for deposit of Treasury securities.

23

          (s)          To perform any and all other acts which are necessary or appropriate for the proper management, investment and distribution of the Fund.

          8.3          RESPONSIBILITY OF TRUSTEE.

          The Trustee shall not be responsible in any way for the adequacy of the Fund to meet and discharge any or all liabilities under the Plan or for the proper application of distributions made or other action taken upon the direction of the Administrative Committee.

          8.4          COMPENSATION AND EXPENSES.

          The Trustee shall be entitled to reasonable compensation for services, as agreed to between the Bank and the Trustee from time to time in writing and to reimbursement of all reasonable expenses incurred by it in the administration of the Trust. The Trustee is authorized to pay from the Fund all expenses of administering the Plan and Trust, including its compensation, compensation to any agents employed by the Trustee and any accounting, legal and valuation expenses, to the extent they are not paid directly by the Bank or any Affiliated Employers. The Trustee shall be fully protected in making payments of administrative expenses pursuant to the written directions of the Administrative Committee.

          8.5          CONTINUATION OF POWERS UPON TRUST TERMINATION.

          Upon termination of the Trust, the powers, rights and duties of the Trustee hereunder shall continue until all Fund assets have been liquidated.

          8.6          RESIGNATION.

          The Trustee may resign at any time by giving thirty (30) days’ advance written notice to the Bank and the Administrative Committee.

          8.7          REMOVAL OF THE TRUSTEE.

          The Bank may remove the Trustee for any reason or for no reason by giving thirty (30) days advance written notice to the Trustee, subject to providing the removed Trustee with satisfactory written evidence of the appointment of a successor Trustee and of the successor Trustee’s acceptance of the trusteeship.

          8.8          DUTIES OF RESIGNING OR REMOVED TRUSTEE AND OF SUCCESSOR TRUSTEE.

          If the Trustee resigns or is removed, the Trustee shall promptly transfer and deliver the assets of the Fund to the successor Trustee(s). Within 120 days, the resigned or removed Trustee shall furnish to the Bank and the successor Trustees) an account of its administration of the Trust from the date of its last account. Each successor Trustee shall succeed to the title to the Fund vested in its predecessor without the signing or filing of any further instrument, but any resigning or removed Trustee shall execute all documents and do all acts necessary to vest such title or record in any successor Trustee. Each successor shall have all the powers, rights and duties conferred by this Trust as if originally named Trustee. No successor Trustee shall be personally

24

liable for any act or failure to act of a predecessor Trustee. With the approval of the Administrative Committee, a successor Trustee may accept the account rendered and the property delivered to it by its predecessor Trustee as a full and complete discharge to the predecessor Trustee without incurring any liability or responsibility for so doing.

          8.9          FILLING TRUSTEE VACANCY.

          The Bank may fill a vacancy in the office of Trustee as soon as practicable by a writing filed with the person or entity appointed to fill the vacancy.

          8.10          DISAGREEMENT AS TO ACTS.

          If there is a disagreement between the Trustee and anyone as to any act or transaction reported in any accounting, the Trustee shall have the right to have its account settled by a court of competent jurisdiction.

          8.11          PERSONS DEALING WITH TRUSTEE.

          No person dealing with the Trustee shall be required to see to the application of any money paid or property delivered to the Trustee, or to determine whether or not the Trustee is acting pursuant to any authority granted to it under or the Plan.

          8.12          MULTIPLE TRUSTEES.

          In the event that more than one person shall serve as co-trustees hereunder, then the action of a majority of the co-trustees serving at any time shall be deemed to be the action of the Trustee.

          8.13          DEALINGS WITH THE ADMINISTRATIVE COMMITTEE

          The Administrative Committee may authorize one or more individuals to sign all communications between the Administrative Committee and Trustee and shall at all times keep the Trustee advised of the names of the members of the Administrative Committee and the individuals authorized to sign on behalf of the Administrative Committee. With the Trustee’s prior written consent, the Administrative Committee may authorize the Trustee to act, without specific directions or other directions or instructions from the Administrative Committee, on any matter or class of matters with respect to which directions or, instructions from the Administrative Committee may be required. The Trustee shall be fully protected in relying on any communication sent by any authorized person and shall not be required to verify the accuracy or validity of any signature unless the Trustee has reasonable ground to doubt the authenticity of any signature. If the Trustee requests any directions hereunder with respect to a matter that is not within the Trustee’s sole discretion and does not receive them, the Trustee shall act or refrain from acting, as it may determine, with no liability for such action or inaction. If at any time person(s) serving as members of the Administrative Committee and person(s) serving as the Trustee are the same, then there shall be no need for written instructions from the Administrative Committee to the Trustee, and all actions taken by the Trustee shall be deemed to have been properly authorized by the Administrative Committee.

25

IX. DIVIDENDS

          9.1          PAYMENT OF DIVIDENDS.

          All dividends paid with respect to Employer Stock owned by the Trust shall, in the discretion of the Bank:

(i)	Be retained by the Trustee and added to the corpus of the Trust,
(ii)	Be paid in cash directly to the Participants,
(iii)	Be paid to the Trustee and distributed in cash to the Participants not later than ninety (90) days after the close of the Plan Year in which the dividend was paid, or
(iv)	Be used to repay a loan described in Section 4.4, the proceeds of which were used to acquire the Employer Stock with respect to which the dividend was paid.

          9.2          ALLOCATION OF DIVIDENDS.

          In the event of a distribution or payment of dividends to the Participants, each Participant shall receive that portion of dividends paid in the ratio in which the balance of his or her Account on the preceding Anniversary Date bears to the sum of the balances for the Accounts of all Participants on that date. In the event the Trustee uses dividends paid on Employer Stock to repay a loan described in Section 4.4, then for that Plan Year, Employer Stock must be allocated to each Participant’s account that has a fair market value of not less than the amount of such dividend that would otherwise have been allocated to that Participant if the dividend had been distributed to the Participants. If a Participant is prohibited from having certain Employer Stock allocated to his Account because of Code Section 409(n), then the Trustee shall pay directly to such Participant his proportionate share of the dividend in cash rather than applying said dividend to the repayment of a loan described in Section 4.4.

X. PUT OPTIONS

          10.1        APPLICATION

          The provisions of this Article apply only if (i) the Employer Stock is not, or ceases to be, traded on an established securities market or (ii) is subject to a restriction under any Federal or state securities law, or regulation thereunder, which would make the security not as freely tradable as one not subject to such restriction.

          10.2        PUT OPTION

          Upon the distribution of shares of Employer Stock to a Participant, the distributee shall have the right to require the Bank to purchase such shares, at their then fair market value (herein referred to as the “put option”), in accordance with the following terms and conditions:

26

          (a)          The put option must be exercised only by the Participant, or by the Participant’s donees, or by a person (including an estate or its distributee) to whom the shares pass by reason of a Participant’s death. For this purpose, “Participant” shall mean a Participant in the Plan and Trust, and any Beneficiary of such Participant.

          (b)          Although the put option is binding upon the Bank, and not upon the Plan and Trust, the Plan and Trust shall retain the option to assume the rights and obligations of the Bank at the time of exercise of the put option.

          (c)          If it is known at the time that a loan is made to the Trust for the purpose of the acquisition of Employer Stock, that Federal or state law will be violated by the Bank’s honoring of the put option, the Employer Stock involved may be put (in a manner consistent with such law) to a third party (e.g., an affiliate of the Bank or a shareholder other than the Plan and Trust) that has substantial net worth at the time the loan is made, and whose net worth is reasonably expected to remain substantial.

          (d)          The put option is exercisable during the period of fifteen (15) months which begins on the date the Employer Stock is distributed to the Participant by the Plan and Trust, and must be exercised (if at all) by written notification to the Bank.

          (e)          The price to be paid by the Bank upon exercise of the put option shall be the then fair market value of the shares, determined by the Trustee as of the Valuation Date coinciding with or immediately preceding the date of distribution; provided, however, that if the fair market value of shares of Employer Stock is determined after such Valuation Date but prior to the date of distribution of the shares, the fair market value as determined as of the more recent valuation shall control. For this purpose, fair market value shall be determined in accordance with the provisions of Section 4.2, respecting the valuation of shares of Employer Stock held in the Trust.

          (f)          If the balance to the credit of a Participant’s account is distributed within one (1) taxable year, the purchase price for the shares of Employer Stock shall be paid in substantially equal annual, quarterly or monthly payments over a period beginning not later than thirty (30) days after the exercise of the put option and not exceeding five (5) years. Interest on the unpaid balance shall accrue and shall be paid with each payment of principal, at a reasonable rate of interest. Adequate security shall be provided for the obligations. If a Participant’s account balance is distributed to him or her in installments, the purchase price for the shares of Employer Stock shall be paid in cash no later than thirty (30) days after the exercise of the put option.

          (g)          The terms of the put option and the administration of the Employer Stock purchase provisions of this Plan and Trust shall be conducted according to a uniform, nondiscriminatory policy established by the Bank with respect to Participants similarly situated.

XI. RIGHT OF FIRST REFUSAL

          11.1        APPLICATION

          The provision of Sections 11.2 and 11.3 below apply only if the Employer Stock is not, or ceases to be, traded on an established securities market.

27

          11.2          RIGHT OF FIRST REFUSAL

          Any Participant or transferee who desires to transfer (whether by sale, gift or bequest) any shares of Employer Stock shall first offer in writing such shares for sale to the Bank at the same price and upon the same terms offered to such shareholder by a bona fide prospective purchaser of such shares. In the case of gifts or bequests, such shares shall first be offered for sale to the Bank at the fair market value of shares as determined under Section 4.2. Such written offer must be presented to the Bank and the option periods set forth below must have expired prior to the making of any gift or prior to the transfer out of a Participant’s or transferee’s estate. The Bank shall have the option for seven (7) days after the later of (i) the death of the Participant or transferee, or (ii) the Bank’s receipt of such written offer, to accept such offer. If, within such seven-day period, the Bank fails to accept such offer in its entirety, its option hereunder as to such offer shall terminate. Thereupon, immediately following the termination of said offer as to the Bank, the said same offer shall be deemed without further writing to have been renewed and reinstated as to the Trust, and the Trust shall have the option for three (3) days after the termination of the Bank’s option to purchase such part or all of the stock which the offering shareholder desires to transfer. If the option is not exercised within the seven (7) day period, then the shareholder so desiring to transfer part or all of his or her Employer Stock shall have the right for a period ending on the thirtieth (30th) day after the expiration of the aforesaid seven (7) day period, to transfer such stock to, and only to, the donee or beneficiary or in the case of a sale, to the aforesaid bona fide prospective purchaser in the same quantity, at the same price, and upon the same terms as were offered to the Bank and/or the Trust. In the case of gifts or bequests, if the option is not exercised by the Bank or the Trustee then such shares may be transferred to the donees, legatees or heirs of the transferor. In case of any transfer by reason of gift or death under this Section 11.2, the legatees, heirs, next of kin, donees or other transferees shall receive and hold such stock subject to the restrictions on encumbrance and disposition set forth in this Article XI.

          11.3          ENDORSEMENT OF CERTIFICATES

          Prior to the distribution of any shares of Employer Stock to a Participant, the Trustee shall have the Bank endorse such shares as follows:’

“The shares represented by this certificate are subject to a Right of First Refusal as set forth in Section 11.2 of the Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust, as amended from time to time, restricting the free transferability of said shares. The Bank will mail to the holder of this certificate, without charge, a copy of the terms of such Right of First Refusal within five (5) days after receiving a written request therefor.”

28

XII. ADMINISTRATIVE COMMITTEE

          12.1          STATUS

          The Administrative Committee (i) is a “named fiduciary” for purposes of ERISA Section 402(a)(1) with authority to control and manage the operation and administration of the Plan, (ii) is responsible for complying with all of the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA, and (iii) has the power and authority in its sole, absolute and uncontrolled discretion to control or manage the operation and administration of the Plan, including all powers necessary to accomplish these purposes. The Administrative Committee will not, however, have any authority over the investment of assets of the Trust in its capacity as such.

          12.2          POWERS

          The Administrative Committee has full discretionary power to administer the Plan in all of its details in accordance with the requirements of ERISA and other applicable laws. For this purpose the Administrative Committee’s discretionary powers include, but are not be limited to, the following:

(i)	To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan or required to comply with applicable law;
(ii)	To interpret and construe the Plan;
(iii)	To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;
(iv)	To compute the amounts to be distributed under the Plan, and to determine the person or persons to whom such amounts will be distributed;
(v)	To authorize the payment of distributions;
(vi)	To keep such records and submit such filings, elections, applications, returns or other documents or forms as may be required under the Code and applicable regulations, or under other federal, state or local law and regulations;
(vii)	To allocate and delegate its ministerial duties and responsibilities and to appoint such agents, counsel, accountants and consultants as may be required or desired to assist in administering the Plan; and
(viii)	By written instrument, to allocate and delegate its fiduciary responsibilities in accordance with ERISA Section 405.

29

          12.3        DUTIES

          The Administrative Committee shall decide any disputes which may arise relative to the rights of Participants and/or Employees, past and present, and their Beneficiaries, under the terms of this Plan, shall give instructions and directions to the Trustee as necessary and, in general, shall direct the administration of the Plan; provided that the Administrative Committee may not, through interpretation of or action under the Plan (including amendment or termination under Article XIII), increase the burden imposed upon the Trustee without the Trustee’s consent. The Administrative Committee shall keep records containing all relevant data pertaining to any person affected hereby and his rights under the Plan and shall ascertain that such person receives the benefits to which he or she is entitled. No member of the Administrative Committee shall have any right to vote or decide upon any matter relating solely to himself or any of his rights or benefits under this Plan.

          (a)          The Administrative Committee shall establish accounting procedures for the purpose of making the allocations, valuations, and adjustments to both the Account and Employer Stock Account of each Participant and it shall maintain adequate records of the cost basis of Employer Stock allocated to each Participant’s Employer Stock Account.

          (b)          The Administrative Committee shall determine the eligibility of Participants, according to the provision of this Plan, from the information furnished to it by the Bank.

          (c)          Wherever, under the provisions of this Plan, discretion is granted to the Administrative Committee which affects the benefits, rights and privileges of Participants, such discretion shall be exercised uniformly so that all Participants similarly situated shall be similarly treated.

          12.4        EFFECT OF INTERPRETATION OR DETERMINATION

          Any interpretation of the Plan or other determination with respect to the Plan by the Administrative Committee will be final, conclusive and binding on all persons in the absence of clear and convincing evidence that the committee acted arbitrarily and capriciously.

          12.5        RELIANCE ON TABLES, ETC.

          In administering the Plan, the Administrative Committee is entitled, to the extent permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports which are furnished by any accountant, trustee, counsel or other expert who is employed or engaged by the Administrative Committee or by the Bank on the committee’s behalf.

          12.6        CLAIMS AND REVIEW PROCEDURES.

          The following claims procedure is intended to conform with the requirements of ERISA Section 503:

          (a)          If any person believes he or she is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrative Committee. If any such claim is wholly or partially denied, the Administrative Committee will notify such person of its

30

decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Administrative Committee (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90 day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his or her claim.

          (b)          Within 60 days after the date on which a person receives a written notice of a denied claim (or, if applicable, within 60 days after the date on which such denial is considered to have occurred) such person (or his or her duly authorized representative) may (a) file a written request with the Administrative Committee for a review of his or her denied claim by the Administrative Committee, (b) submit written issues and comments to the Administrative Committee and (c) review pertinent documents. The Administrative Committee will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent plan provisions. The decision on review will be made within 60 days after the request for review is received by the Administrative Committee (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrative Committee to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60 day period). If the decision on review is not made within such period, the claim will be considered denied.

          12.7        INDEMNIFICATION

          The Bank agrees to indemnify and defend to the fullest extent of the law any Employee, officer or director of the Bank (i) who serves or has served on the Administrative Committee, (ii) who assists the Administrative Committee in administering the Plan as part of his or her employment duties with the Bank, or (iii) to whom the Administrative Committee has delegated any of its duties or responsibilities, including any former Employee, officer or director described in (i) or (ii) against any liabilities, damages, costs and expenses (including attorneys’ fees and amounts paid in settlement of any claims approved by the Bank occasioned by any act or omission to act in connection with the Plan, if such act or omission to act is in good faith and without gross negligence.

          12.8        ANNUAL REPORT

          The Administrative Committee shall submit annually to the Bank a report showing in reasonable summary form, the financial position of the Trust and giving a brief account of the operations of the Plan for the past year, and such further information as the Bank may reasonably require.

31

12.9 EXPENSES OF PLAN

          The Administrative Committee may direct a Trustee to pay from the Fund any or all expenses of administering the Plan, to the extent such expenses are reasonable. The Administrative Committee will determine what constitutes a reasonable expense of administering the Plan, and whether such expenses shall be paid from the Trust. The Administrative Committee may also allocate administrative charges attributable to specific plan expenses, including but not limited to determinations regarding QDROs and plan loan origination fees, to the affected Participant or Beneficiary’s Account. Any such expense not paid out of the Trust shall be paid by the Bank or the Affiliated Employers; provided, however, that to the extent permitted by ERISA, the Administrative Committee may direct a Trustee to reimburse the Bank or the Affiliated Employers, as the case may be, out of the Trust for a reasonable expense of administering the Plan which is paid prior to a determination with respect to such expense.

12.10 LIMITATION OF LIABILITY

          No bond or other security shall be required of any member of the Administrative Committee, unless the member handles funds or other property of the Plan. A member of the committee shall not be liable or responsible for the acts of commission or omission of another fiduciary unless (i) the member knowingly participates or knowingly attempts to conceal the act or omission of another fiduciary and the member knows the act or omission is a breach of fiduciary responsibility by the other fiduciary, (ii) the member has knowledge of a breach by another fiduciary and shall not make reasonable effort to remedy the breach, (iii) the member’s breach of his or her own fiduciary responsibility permits another fiduciary to commit a breach.

          (a)      Neither the Trustee nor any member of the Administrative Committee shall be liable for any loss or damage or depreciation which may result in connection with the execution of their duties or the exercise of its discretion or from any other act or omission hereunder, except when due to gross negligence or willful misconduct. At the request of the Administrative Committee, the Trustee is authorized to purchase insurance for the Trustee and the members of the Administrative Committee to cover liability or loss resulting from their acts or omissions. To the extent not covered by insurance, the Trust shall pay all cost and expenses (including legal fees) that a member of the Administrative Committee or Trustee may incur as a result of serving as such unless it is determined by a court of competent jurisdiction that such acts or omissions were due to gross negligence or willful misconduct.

          (b)      No fee or compensation shall be paid to any member of the Administrative Committee for his services as a committee member. Any expenses properly incurred by the Administrative Committee shall be reimbursed or paid by the Trust.

12.11 ACCOUNTS

          The Administrative Committee shall establish and maintain separate individual Employer Stock Accounts and Other Investment Accounts for each Participant, as well as for each Former Participant who has an interest in the Plan. Such separate Employer Stock Accounts and Other Investment Accounts shall not require a segregation of the Trust assets and no Participant shall acquire a specific asset of the Trust as a result of the allocations provided for in the Plan.

32

XIII. AMENDMENTS AND TERMINATION

13.1 PLAN AMENDMENTS

          The Bank may amend this Plan in any manner and at any time, provided, however, that no amendment shall prejudice a Participant’s or Beneficiary’s existing rights nor revert any interest in the Trust assets, income or principal, to the Bank. An amendment shall be made by resolution of the Board of Directors and shall be effective upon delivery of a written instrument, executed by order of the Board of Directors to the Trustee. No amendment which affects the rights, responsibilities or duties of the Trustee may be made without the written consent of the Trustee.

13.2 TERMINATION OF CONTRIBUTIONS

          The Bank has established this Plan with the bona fide intention and expectation that from year to year it will be able to and will deem it advisable to make its contributions as herein provided. The Bank, however, realizes that circumstances not now foreseen or circumstances beyond its control may make it either impossible or inadvisable to continue to make its contributions as herein provided. In the event the Board of Directors decides it is impossible or inadvisable for the Bank to continue to make its contributions as herein provided, the Board of Directors shall have the power to terminate the Bank’s contributions by appropriate resolutions. A certified copy of such resolution or resolutions shall be delivered to the Administrative Committee, and as soon as possible thereafter, the Administrative Committee shall send or deliver to each Participant and Beneficiary a copy of the same. After the date specified in such resolution or resolutions, the Bank shall make no further contributions under this Plan. In the event of such termination of contributions by the Bank, the Plan and Trust shall remain in existence, and all of the provisions of the Plan and the Trust shall remain in force which are necessary, in the opinion of the Administrative Committee, other than the provisions for contributions by the Bank, and all of the assets in the Trust on the date specified in such resolution or resolutions shall be held, administered and distributed by the Administrative Committee and the Trustee, in the manner provided herein. Despite any other provisions of the Plan, upon complete discontinuance of contributions to the Plan, Participants will be fully vested in their Account balances.

13.3 TERMINATION OF PLAN

          If the Board of Directors shall terminate the Bank’s contributions, in accordance with Section 13.2, the Board of Directors shall also have the power to terminate the Plan and Trust completely or partially, by appropriate resolution specifying the date of such termination, certified copies of which shall be delivered to the Administrative Committee, provided, however, that upon complete or partial termination of the Plan or complete discontinuance of contributions by the Bank to the Trust, the rights of each Participant to the amounts credited to his or her Account, at such time, are non-forfeitable and fully vested in each such Participant. Upon complete or partial termination of the Plan and Trust, after payment of all expenses and after adjustment of Participants’ and Beneficiaries’ shares for expenses, profits, losses and any other necessary adjustments, there shall be paid to each Participant and each Beneficiary the amount of his or her share in the Trust, in a lump sum.

33

XIV. TOP HEAVY PROVISIONS

14.1 PROVISIONS TO APPLY

          The provisions of this Article XIV shall apply for any top-heavy Plan Year notwithstanding anything to the contrary in the Plan. All determinations under this Article XIV will be made in accordance with the provisions of Code Section 416 and the Regulation promulgated thereunder, which are specifically interpreted herein by reference.

14.2 MINIMUM CONTRIBUTION

          For any Plan Year which is a top-heavy plan year, Participating Employers shall contribute to the Trust a minimum contribution on behalf of each Participant who is not a key employee for such year and who has not experienced a severance from employment with Participating Employers by the end of the Plan Year. The minimum contribution shall, in general, equal 3% of each such Participant’s Compensation, but shall be subject to the following special rules:

          (a)      If the largest contribution on behalf of a key employee for such year is equal to less than 3% of the key employee’s Compensation, such lesser percentage shall be the minimum contribution percentage for Participants who are not key employees. This special rule shall not apply, however, if the Plan is required to be included in an aggregation group and enables a defined benefit plan to meet the requirements of Code Sections 401(a)(4) or 410.

          (b)      No minimum contribution will be required with respect to a Participant who is also covered by another top-heavy defined contribution plan of the Bank or a Participating Employer which meets the vesting requirements of Code Section 416(b) and under which the Participant receives the top-heavy minimum contribution.

          (c)      If a Participant is also covered by a top-heavy defined benefit plan of the Bank or an Participating Employer, “5%” shall be substituted for “3%” above in determining the minimum contribution.

          (d)      The minimum contribution with respect to any Participant who is not a key employee for the particular year will be offset by any Bank contributions under Section 3.1, and qualified non-elective contributions (within the meaning of Code Section 401(m)(4)(c)) and qualified matching contributions (within the meaning of Regulation Section 1.401(k)1(a)(6)) if any, under another plan of Participating Employers. Matching Contributions that are used to satisfy the minimum contribution requirements shall be treated as matching contributions for purposes of the actual contribution percentage test and other requirements of Code Section 401(m).

          (e)      If additional minimum contributions are required under this Section, such contributions shall be credited to the Participant’s Account.

          (f)      A minimum contribution required under this Section shall be made even though, under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation for the year because of the Participant’s failure to complete 1,000 Hours of Service.

34

14.3 DEFINITIONS

          For purposes of this Article XIV, the following terms have the following meanings:

          (a)      “Key employee” means a key employee described in Code Section 416(i)(I) and “non-key employee” means any employee who is not a key employee (including employees who are former key employees);

          (b)      “Top-heavy plan year” means a Plan Year if any of the following conditions exist:

(i)	The top-heavy ratio for the Plan exceeds 60 percent and the Plan is not part of any required aggregation group or permissive aggregation group of plans;
(ii)	This Plan is a part of a required aggregation group of plans but not part of a permissive aggregation group and the top-heavy ratio for the group of plans exceeds 60 percent; or
(iii)	The Plan is part of a required aggregation group and part of a permissive aggregation group of plans and the top-heavy ratio for the permissive aggregation group exceeds 60 percent.

          (c)      “Top-heavy ratio”

(i)

If any Participating Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Participating Employer has not maintained any defined benefit plan which during the 5-year period ending on the determination date(s) has or has had accrued benefits, the top-heavy ratio for the Plan alone or for the required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of the account balances of all key employees on the determination date(s), and the denomination of which is the sum of all account balances, both computed in accordance with Code Section 416. Account balances shall be increased by distributions made during the 1-year period ending on the determination date(s) (including distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i)); provided, however, that with respect to distributions made for a reason other than severance from employment, death or disability, the preceding clause shall be applied by substituting “1-year period” for “1-year period.” Both the numerator and the denominator of the top-heavy ratio are increased to reflect any contribution not actually made as of the determination date, but which is required to be taken into account on that date under Code Section 416.

(ii)

If a Participating Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Participating Employer maintains or has maintained one or more defined

35

	benefit plans which during the 5-year period ending on the determination date(s) has or has had any accrued benefits, the top-heavy ratio for any required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of the account balances under the aggregated defined contribution plan or plans for all key employees, determined in accordance with Section 14.3(c)(1), and the present value of accrued benefits under the aggregated defined benefit plan or plans for all key employees as of the determination date(s), and the denominator of which is the sum of the account balances under the aggregated defined contribution plan or plans for all participants, determined in accordance with Section 14.3(c)(i), and the present value of all accrued benefits under the defined benefit plan or plans for all participants as of the determination date(s), all determined in accordance with Code Section 416. The accrued benefits under a defined benefit plan in both the numerator and denominator of the top-heavy ratio are increased for any distribution of an accrued benefit in the manner described in Section 14.3(c)(i).
(iii)	For purposes of Sections 14.3(c)(1) and (ii), the value of account balances and the present value of accrued benefits will be determined as of the most recent valuation date that falls within or ends with the 12-month period ending on the determination date, except as provided in Code Section 416 for the first and second plan years of a defined benefit plan. The account balances and accrued benefits of a participant (A) who is not a key employee but who was a key employee in a prior year, or (B) who has not been credited with at least one Hour of Service with any employer maintaining the plan at any time during the 1-year period ending on the determination date will be disregarded. The calculation of the top-heavy ratio, and the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Code Section 416. Deductible employee contributions will not be taken into account for purposes of computing the top-heavy ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the determination dates that fall within the same calendar year.
(iv)	The accrued benefit of a Participant other than a key employee shall be determined under (A) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the employer, or (B) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Code Section 411(b)(1)(C).

          (d)      The “permissive aggregation group” is the required aggregation group of plans plus any other plan or plans of the employer which, when considered as a group with the required aggregation group, would continue to satisfy the requirements of Code Sections 401(a)(4) and 410.

36

          (e)      The “required aggregation group” is (i) each qualified plan of the employer in which at least one key employee participates or participated at any time during the determination period (regardless of whether the plan has terminated), and (ii) any other qualified plan of the employer which enables a plan described in clause (i) to meet the requirements of Code Sections 401(a)(4) and 410(b).

          (f)       For purposes of computing the top-heavy ratio, the “valuation date” shall be the last day of the applicable plan year.

          (g)      For purposes of establishing present value to compute the top-heavy ratio, any benefit shall be discounted only for mortality and interest based on the interest and mortality rates specified in the defined benefit plan(s), if applicable.

          (h)      The term “determination date” means, with respect to the initial plan year of a plan, the last day of such plan year and, with respect to any other plan year of a plan, the last day of the preceding plan year of such plan. The term “applicable determination date” means, with respect to the Plan, the determination date for the Plan Year of reference and, with respect to any other plan, the determination date for any plan year of such plan which falls within the same calendar year as the applicable determination date of the Plan.

XV. DEFINITIONS

          As used in this instrument, the following terms shall mean the following:

          (a)      ACCOUNT means, with respect to each Participant, the aggregate value of his or her Employer Stock Account and Other Investment Account.

          (b)      ADMINISTRATIVE COMMITTEE means the person or persons designated by the Board of Directors to act as such under Article XIII, provided, however, that if the Board of Directors fails to appoint the Administrative Committee, the Compensation Committee of the Board of Directors will serve as the Administrative Committee.

          (c)      AFFILIATED EMPLOYER means the Bank and any corporation which is a member of a controlled group of corporations, as defined in Code Section 414(b), which includes the Bank; any trade or business (whether or not incorporated) which is under common control, as defined in Code Section 414(c) with the Bank; any organization (whether or not incorporated) which is a member of an affiliated service group, as defined in Code Section 414(m), which includes the Bank; and any other entity required to be aggregated with the Bank pursuant to Regulations under Code Section 414(o).

          (d)      ANNIVERSARY DATE means the 31st day of December each year.

          (e)      BANK means Auburn Savings Bank, FSB.

          (f)      BENEFICIARY means a person entitled to benefits hereunder as beneficiary of a deceased Participant or as beneficiary of a deceased Beneficiary.

37

          (g)      BOARD OF DIRECTORS means the Board of Directors of the Bank, as from time to time constituted.

          (h)      CODE means the Internal Revenue Code of 1986, as amended or replaced from time to time.

          (i)       COMPENSATION means, with respect to any Participant, total remuneration paid by the Employer for a Plan Year. Compensation in excess of $225,000, as adjusted for increases in the cost of living at the same time and in such manner as permitted under Code Section 401(a)(17)(B), shall be disregarded. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which compensation is determined (determination period) beginning with or within such calendar year. If a determination period consists of fewer than 12 months, the annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. Compensation shall include any amount which is contributed by the Bank pursuant to a salary reduction agreement and which is not includible in the gross income of the Employee under Code Sections 124, 132(f), 401(k), 402(h) and 403(b).

          (j)       EMPLOYER STOCK means shares of the Bank’s voting common stock having a combined voting power and dividend rights equal to or exceeding that class of the Bank’s common stock having the greatest voting power and dividend rights.

          (k)      EMPLOYER STOCK ACCOUNT means the account of a Participant which is credited with the shares of Employer Stock purchased and paid for by the Trust or contributed to the Trust.

          (l)       ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

          (m)     ELIGIBLE EMPLOYEE means any Employee other than (i) an Employee covered by a collective bargaining agreement as to which retirement benefits were the subject of good faith bargaining, (ii) an Employee who is a nonresident alien and who receives no U.S. source income (iii) an individual who is not characterized by or treated by the Bank as a common law employee of the Participating Employer, and (iv) an individual hired on a temporary basis through a staffing or temporary agency. If an individual described in clause (iii) is reclassified or deemed to be reclassified as a common law employee of a Participating Employer and meets the definition of an Eligible Employee, the individual will be eligible to participate in the Plan as of the actual date of such reclassification (to the extent such individual otherwise qualifies as an Eligible Employee). If the effective date of reclassification is prior to the actual date of such reclassification, in no event will the reclassified individual be eligible to participate in the Plan retroactively to the effective date of such reclassification. In no event shall a Leased Employee within the meaning of Code Section 414(n) become an Eligible Employee until he or she is actually employed by a Participating Employer.

          (n)      EMPLOYEE means any individual employed by the Bank, (i) excluding independent contractors and (ii) including a Leased Employee and any other individual required to be treated as an employee pursuant to Code Sections 414(n) and 414(o).

38

          (o)      ENTRY DATE means January 1 and July 1 of each Plan Year.

          (p)      FIDUCIARY means any person who (i) exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets, (ii) renders investment advise for a fee or other compensation, direct or indirect, with respect to any monies or other property of the Plan or has any authority or responsibility to do so, or (iii) has any discretionary authority or discretionary responsibility in the administration of the Plan, including, but not limited to, the Trustee, the Employer and its representative body, and the Committee.

          (q)      FORFEITURE means that portion of a Participant’s Account that is not vested, and occurs on the earlier of (i) the distribution of the entire vested portion of a Participant’s Account, or (ii) the last day of the Plan Year in which the Participant incurs five (5) consecutive One-Year Breaks in Service. In the event of a distribution under clause (i), in the case of a terminated Participant whose vested benefit is zero, such Terminated Participant shall be deemed to have received a distribution of his or her vested benefit upon his termination of employment. In addition, the term Forfeiture shall also include amounts deemed to be Forfeitures pursuant to any other provision of this Plan.

          (r)       FORMER PARTICIPANT means a person who has been a Participant, but who has ceased to be a Participant for any reason.

          (s)       FUND means the assets of the Plan as from time-to-time constituted.

          (t)       HIGHLY COMPENSATED EMPLOYEE means any Employee who (i) was a five percent (5%) owner (as defined in Code Section 416(i)(1)(B)(i)) of the Employer at any time during the current or the preceding Plan Year, or (ii) for the preceding Plan Year, (A) had compensation from the Employer in excess of $105,000 (as adjusted by the Secretary pursuant to Code Section 415(d), and (B) if the Employer elects the application of this clause for such preceding year, was in the top-paid group of Employees for such preceding year. For this purpose, an Employee is in the top-paid group of Employees for any year if such Employee is in the group consisting of the top twenty percent (20%) of the Employees when ranked on the basis of compensation paid during such year. A Former Employee shall be treated as a highly compensated employee if he or she was a highly compensated employee when he or she separated from service, or was a highly compensated employee at any time after attaining age 55.

          (u)      HIGHLY COMPENSATED PARTICIPANT means a Highly Compensated Employee who is eligible to participate in the Plan.

          (v)      HOUR OF SERVICE means:

(i)	each hour for which an Employee is directly or indirectly compensated or entitled to compensation by the Employer for the performance of duties during the applicable computation period;
(ii)	each hour for which an Employee is directly or indirectly compensated or entitled to compensation by the Employer (irrespective of whether the employment relationship has terminated) for reasons other than

39

	performance of duties (such as vacation, holidays, sickness, jury duty, disability, lay-off, military duty or leave of absence) during the applicable computation period;
(iii)	each hour for which back pay is awarded or agreed to by the Employer without regard to mitigation of damages.

The same Hours of Service shall not be credited both under (i) or (ii), as the case may be, and under (iii).

          Despite the forgoing, (x) no more than 501 Hours of Service are required to be credited to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single computation period); (y) an hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed is not required to be credited to the Employee if such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker’s compensation, or unemployment compensation or disability insurance laws; and (z) Hours of Service are not required to be credited for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the Employee.

          An Hour of Service must be counted for purpose of determining a Year of Service, a year of participation for purposes of accrued benefits, a One-Year Break in Service, and employment commencement date (or reemployment commencement date). The provisions of Department of Labor regulations Sections 2530.200b-2(b) and (c) are incorporated herein by reference.

          (w)     NON-HIGHLY COMPENSATED PARTICIPANT means any Participant who is not a Highly Compensated Employee.

          (x)      NORMAL RETIREMENT DATE means the Anniversary Date coinciding with or next following the Participant’s Normal Retirement Age (65th birthday). A Participant shall become fully Vested in his Account upon attaining his Normal Retirement Age.

          (y)      ONE-YEAR BREAK IN SERVICE shall mean the applicable computation period during which an Employee has not completed more than 500 Hours of Service with the Employer. Further, solely for the purpose of determining whether a Participant has incurred a One-Year Break in Service, Hours of Service shall be recognized for “authorized leaves of absence” and “maternity and paternity leaves of absence.” An authorized leave of absence means an unpaid, temporary cessation from active employment with the Employer pursuant to an established nondiscriminatory policy, whether occasioned by illness, military service, or any other reason. A “maternity or paternity leave of absence” shall mean an absence from work for any period by reason of the Employee’s pregnancy, birth of the Employee’s child, placement of a child with the Employee in connection with the adoption of such child, or any absence for the purpose of caring for such child for a period immediately following such birth or placement. For this purpose, Hours of Service shall be credited for the computation period in which the absence from work begins, only if credit therefore is necessary to prevent the Employee from incurring a One-Year Break in Service, or, in any other case, in the immediately following computation period. The Hours of Service credited for a “maternity or paternity leave of absence” shall be those which

40

would normally have been credited but for such absence, or, in any case in which the Committee is unable to determine such hours normally credited, eight (8) Hours of Service per day. The total Hours of Service required to be credited for a “maternity or paternity leave of absence” shall not exceed 501.

          (z)        OTHER INVESTMENT ACCOUNT means the account of a Participant which is credited with his share of the net gain (or loss) of the Plan, Forfeitures, and Employer contributions in other than Employer Stock and which is debited with payments made to pay for Employer Stock.

          (aa)      PARTICIPANT means an Eligible Employee who participates in the Plan as provided in Article II, and has not for any reason become ineligible to participate further in the Plan.

          (bb)      PARTICIPATING EMPLOYER means the Bank and any other Affiliated Employer that adopts this Plan with the consent of the Board of Directors.

          (cc)      PLAN means the Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust as set forth in this instrument and as subsequently amended and/or restated.

          (dd)      PLAN YEAR means the calendar year.

          (ee)      REGULATION means the Income Tax Regulations as promulgated by the Secretary of the Treasury or his or her delegate, and as amended from time to time.

          (ff)       SUSPENSE ACCOUNT means the separate account to which is credited shares of Employer Stock pledged as collateral on a loan described in Section 4.4 prior to their allocation to Participants’ Accounts.

          (gg)      DISABILITY means a physical or mental condition of a Participant resulting from bodily injury, disease, or mental disorder which renders him incapable of continuing his usual and customary employment with the Employer. The disability of a Participant shall be determined by a licensed physician chosen by the Committee. The determination shall be applied uniformly to all Participants.

          (hh)      TRUST means the trust established under Article VIII.

          (ii)        TRUSTEE means the trustee of the Trust.

          (jj)        VESTED means the non-forfeitable portion of a Participant’s Account.

          (kk)      VALUATION DATE means the last day of the Plan Year and each other date as of which the Administrative Committee determines the investment experience of the Trust and adjust Participants’ Accounts accordingly.

          (ll)        YEAR OF SERVICE means the computation period of twelve (12) consecutive months specified below during which an Employee has at least 1,000 Hours of Service with the Bank or any Affiliated Employer.

41

(i)	For purposes of eligibility for participation in the Plan, the computation periods shall be measured from the date on which the Employee first performs an Hour of Service and anniversaries thereof. The participation computation periods beginning after a One-Year Break in Service shall be measured from the date on which an Employee again performs an Hour of Service and anniversaries thereof.
(ii)	For vesting purposes, the computation period shall be the Plan Year including periods prior to the Effective Date of the Plan.
(iii)	For all other purposes, the computation period shall be the Plan Year.

XVI. MISCELLANEOUS

16.1 EXCLUSIVE BENEFIT RULE

          No part of the corpus or income of the Trust allocable to the Plan will be used for or diverted to purposes other than for the exclusive benefit of each Participant and Beneficiary, except as otherwise provided under the provisions of the Plan relating to QDROs, the payment of reasonable expenses of administering the Plan, the return of contributions upon non-deductibility or mistake of fact, the return of certain excess contributions or the failure of the Plan to qualify initially.

16.2 NON-TERMINABLE RIGHTS

          The protections and rights afforded Participants under Section 4.4 pertaining to certain restrictions on Employer Stock acquired with the proceeds of a loan and Section 10.2 pertaining to put options shall be non-terminable. The protections and rights with respect to Employer Stock acquired with the proceeds of an exempt loan shall continue and not be abridged notwithstanding the eventual repayment of the loan or the discontinuance of the Plan as an ESOP.

16.3 LIMITATION OF RIGHTS.

          Neither the establishment of the Plan, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to any Participant or other person any legal or equitable right against the Bank, any Participating Employer, the Administrative Committee or the Trustee, except as provided in this Plan, and in no event will the terms of employment or service of any Participant be modified or in any way be affected by his or her eligibility for or participation in the Plan. It is a condition of the Plan, and each Participant expressly agrees by his or her participation, that each Participant will look solely to the assets held in the Trust for the payment of any benefit to which he or she is entitled under the Plan.

16.4 NON-ALIENABILITY OF BENEFITS

          No benefit provided under this Plan is subject to the voluntary or involuntary alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected will not be recognized, unless (i) required by law, or (ii) the Administrative Committee receives a QDRO that requires the payment of Plan benefits or the

42

segregation of any Account. In the case of a QDRO that is determined to be valid under the Plan’s QDRO processing procedures, the Participant’s Account will be segregated, and benefits will be paid, accord to its terms. Benefits provided to a Participant may be offset pursuant to a judgment, order, decree, or settlement agreement that satisfies the conditions of Code Section 401(a)(13)(C) and any applicable spousal consent requirements under Code Sections 401(a)(13)(C) and (D) are satisfied.

16.5 ADEQUACY OF DELIVERY

          Any payment to be made under the Plan by the Trustee may be made by the Trustee’s check. Mailing to a person or persons entitled to distributions hereunder at the addresses designated by the Participating Employer or Administrative Committee shall be adequate delivery by the Trustee of such distributions for all purposes. If the whereabouts of a person entitled to benefits under the Plan cannot be determined after diligent search by the Administrative Committee, the committee may place the benefits in a federally insured, interest-bearing bank account opened in the name of such person. Such action shall constitute a full distribution of such benefits under the terms of the Plan.

16.6 SERVICE WITH ARMED FORCES

          If any Participant leaves a Participating Employer to enter the Armed Forces of the United States or the Merchant Marines of the United States, and he or she is entitled to reemployment rights under the laws of the United States, his or her departure will not be deemed a termination of his or her employment for the purposes of this Plan, and he or she will be presumed to be on leave of absence, provided he or she returns to work with a Participating Employer within the period of time prescribed by laws after his or her discharge, without other intervening employment. If the Participant fails to return and the Bank terminates his or her employment, the Bank shall notify the Administrative Committee, and the Participant’s employment shall be deemed to have terminated on the date of receipt by the Administrative Committee of such notice. Despite any contrary provision of the Plan, loans, contributions, benefits and service credit with respect to qualified military service will be administered in accordance with Code Section 414(u).

16.7 MERGER OR CONSOLIDATION

          In case of any merger or consolidation of this Plan Trust with, or transfer of the assets or liabilities of this Plan to any other plan and/or trust, the terms of such merger, consolidation or transfer shall be such that each Participant would receive (in the event of termination of this Plan or its successor immediately thereafter) a benefit which is no less than he or she would have received in the event of termination of this Plan immediately before such merger, consolidation or transfer.

16.8 GOVERNING LAW

          The Plan is construed, administered and enforced according to the laws of the State of Maine to the extent not preempted by ERISA.

43

IN WITNESS WHEREOF, the Bank has executed the Plan and the Trustee(s) has or have executed the Trust as of this __________ day of ______________ 2008.

AUBURN SAVINGS BANK, FSB

By:

TRUSTEE(S)

44

EX-10.2

Exhibit 10.2

LOAN AGREEMENT

          THIS LOAN AGREEMENT (“Loan Agreement”) is made and entered into as of the day of ______________, 2008, by and between the Compensation Committee of the Board of Directors of Auburn Savings Bank, as trustee (the “Trustee”), of the trust (“Borrower”) established under Article VIII, and which forms a part, of the Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust (“ESOP”), and Auburn Bancorp, Inc. (“Lender”), a corporation organized and existing under the laws of the United States of America.

WITNESSETH

          WHEREAS, the Borrower is authorized to purchase shares of common stock (“Common Stock”) of Auburn Savings Bank, FSB, either directly from Auburn Savings Bank, FSB or in open market purchases in an amount not to exceed Three and 43/100^th percent (3.43%)of the number of shares of Common Stock issued in the offering (including shares issued to Auburn Bancorp, MHC).

          WHEREAS, the Borrower is authorized to borrow funds from the Lender for the purpose of financing authorized purchases of Common Stock; and

          WHEREAS, the Lender is willing to make a loan to the Borrower for such purpose:

          NOW, THEREFORE, the parties agree hereto as follows:

ARTICLE I

DEFINITIONS

          The following definitions shall apply for purposes of this Loan Agreement, except to the extent that a different meaning is plainly indicated by the context:

          BUSINESS DAY means any day other than a Saturday, Sunday or other day on which banks are authorized or required to close under federal or local law.

          CODE means the Internal Revenue Code of 1986, as amended (including the corresponding provisions of any succeeding law).

          DEFAULT means an event or condition which would constitute an Event of Default. The determination as to whether an event or condition would constitute an Event of Default shall be determined without regard to any applicable requirements of notice or lapse of time.

          ERISA means the Employee Retirement Income Security Act of 1974, as amended (including the corresponding provisions of any succeeding law).

          EVENT OF DEFAULT means an event or condition described in Article V.

          LOAN means the loan described in section 2.1.

          LOAN DOCUMENTS means, collectively, the Loan Agreement, the Promissory Note and the Pledge Agreement and all other documents now or hereafter executed and delivered in connection with such documents, including all amendments, modifications and supplements of or to all such documents.

          PLEDGE AGREEMENT means the agreement described in section 2.8(a).

          PRINCIPAL AMOUNT means the face amount of the Promissory Note, determined as set forth in section 2.1(c).

          PROMISSORY NOTE means the promissory note described in section 2.3.

          REGISTER means the register described in section 2.9.

ARTICLE II

THE LOAN; PRINCIPAL AMOUNT;
INTEREST; SECURITY.

          SECTION 2.1 THE LOAN; PRINCIPAL AMOUNT.

          (a)      The Lender hereby agrees to lend to the Borrower such amount, and at such time, as shall be determined under this Section 2.1; provided, however, that in no event shall the aggregate amount lent under this Loan Agreement from time to time exceed the aggregate amount paid by the Borrower to purchase up to [insert number of shares] shares of Common Stock.

          (b)      Subject to the limitations of Section 2.1(a), the Borrower shall determine the amounts borrowed under this Agreement, and the time at which such borrowings are affected. Each such determination shall be evidenced in a writing which shall set forth the amount to be borrowed and the date on which the Lender shall disburse such amount, and such writing shall be furnished to the Lender by notice from the Borrower. The Lender shall disburse to the Borrower the amount specified in each such notice on the date specified therein or, if later, as promptly as practicable following the Lender’s receipt of such notice; provided, however, that the Lender shall have no obligation to disburse funds pursuant to this Agreement following the occurrence of a Default or an Event of Default until such time as such Default or Event of Default shall have been cured.

          (c)      For all purposes of this Loan Agreement, the Principal Amount on any date shall be equal to the excess, if any, of:

(i)       the aggregate amount disbursed by the Lender pursuant to section 2.1(b) on or before such date; over

(ii)      the aggregate amount of any repayments of such amounts made before such date.

2

The Lender shall maintain on the Register a record of, and shall record in the Promissory Note, the Principal Amount, any changes in the Principal Amount and the effective date of any changes in the Principal Amount.

          SECTION 2.2 INTEREST.

          (a)      The Borrower shall pay to the Lender interest on the Principal Amount, for the period commencing with the first disbursement of funds under this Loan Agreement and continuing until the Principal Amount shall be paid in full, at the rate of [insert prime rate as published in The Wall Street Journal on the date of the offering] percent (___%) per annum. Interest payable under this Agreement shall be computed on the basis of a year of 365 days and actual days elapsed (including the first day but excluding the last) occurring during the period to which the computation relates, unless otherwise specified in the amortization schedule.

          (b)      Accrued interest on the Principal Amount shall be payable by the Borrower on the dates set forth in Schedule A to the Promissory Note. All interest on the Principal Amount shall be paid by the Borrower in immediately available funds.

          (c)      Anything in the Loan Agreement or the Promissory Note to the contrary notwithstanding, the obligation of the Borrower to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the Lender to the extent that the Lender’s receipt thereof would not be permissible under the law or laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender. Any such payment referred to in the preceding sentence shall be made by the Borrower to the Lender on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender. Such deferred interest shall not bear interest.

          SECTION 2.3 PROMISSORY NOTE.

          The Loan shall be evidenced by the Promissory Note of the Borrower attached hereto.

          SECTION 2.4 PAYMENT OF TRUST LOAN.

          The Principal Amount of the Loan shall be repaid in accordance with Schedule A to the Promissory Note on the dates specified therein until fully paid.

          SECTION 2.5 PREPAYMENT.

          The Borrower shall be entitled to prepay the Loan in whole or in part, at any time and from time to time; provided, however, that the Borrower shall give notice to the Lender of any such prepayment; and provided, further, that any partial prepayment of the Loan shall be in an amount not less than $1,000. Any such prepayment shall be: (a) permanent and irrevocable; (b) accompanied by all accrued interest through the date of such prepayment; (c) made without premium or penalty; and (d) applied on the inverse order of the maturity of the installment thereof unless the Lender and the Borrower agree to apply such prepayments in some other order.

3

          SECTION 2.6 METHOD OF PAYMENTS.

          (a)      All payments of principal, interest, other charges (including indemnities) and other amounts payable by the Borrower hereunder shall be made in lawful money of the United States, in immediately available funds, to the Lender at the address specified in or pursuant to this Loan Agreement for notices to the Lender, on the date on which such payment shall become due. Any such payment made on such date but after such time shall, if the amount paid bears interest, and except as expressly provided to the contrary herein, be deemed to have been made on, and interest shall continue to accrue and be payable thereon until, the next succeeding Business Day. If any payment of principal or interest becomes due on a day other than a Business Day, such payment may be made on the next succeeding Business Day, and when paid, such payment shall include interest to the day on which payment is in fact made.

          (b)      Notwithstanding anything to the contrary contained in this Loan Agreement or the Promissory Note, the Borrower shall not be obligated to make any payment, repayment or prepayment on the Promissory Note if doing so would cause the ESOP to cease to be an employee stock ownership plan within the meaning of section 4975(e)(7) of the Code or qualified under section 401(a) of the Code or cause the trust established under Article VIII, and which forms a part, of the ESOP to cease to be a tax exempt trust under section 501(a) of the Code or if such act or failure to act would cause the Borrower to engage in any “prohibited transaction” as such term is defined in the section 4975(c) of the Code and the regulations promulgated thereunder which is not exempted by section 4975(c)(2) or (d) of the Code and the regulations promulgated thereunder or in section 406 of ERISA and the regulations promulgated thereunder which is not exempted by section 408(b) of ERISA and the regulations promulgated thereunder; provided, however, that in each case, the Borrower, may act or refrain from acting pursuant to this section 2.6(b) on the basis of an opinion of counsel, and any opinion of such counsel. The Borrower may consult with counsel, and any opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such opinion of counsel. Nothing contained in this section 2.6(b) shall be construed as imposing a duty on the Borrower to consult with counsel. Any obligation of the Borrower to make any payment, repayment or prepayment on the Promissory Note or refrain from taking any other act hereunder or under the Promissory Note which is excused pursuant to this section 2.6(b) shall be considered a binding obligation of the Borrower for the purposes of determining whether a Default or Event of Default has occurred hereunder or under the Promissory Note and nothing in this section 2.6(b) shall be construed as providing a defense to any remedies otherwise available upon a Default or an Event of Default hereunder (other than the remedy of specific performance).

          SECTION 2.7 USE OF PROCEEDS OF LOAN.

          The entire proceeds of the Loan shall be used solely for acquiring shares of Common Stock, and for no other purpose whatsoever.

4

          SECTION 2.8 SECURITY.

          (a)      In order to secure the due payment and performance by the Borrower of all of its obligations under this Loan Agreement, simultaneously with the execution and delivery of this Loan Agreement by the Borrower, the Borrower shall:

(i)       pledge to the Lender as Collateral (as defined in the Pledge Agreement), and grant to the Lender a first priority lien on and security interest in, the Common Stock purchased with the Principal Amount, by the execution and delivery to the Lender of the Pledge Agreement attached hereto as an exhibit; and

(ii)      execute and deliver, or cause to be executed and delivered, such other agreement, instruments and documents as the Lender may reasonably require in order to effect the purposes of the Pledge Agreement and this Loan Agreement.

          (b)      The Lender shall release from encumbrance under the Pledge Agreement and transfer to the Borrower, as of the date on which any payment or repayment of the Principal Amount is made, a number of shares of Common Stock held as Collateral determined pursuant to the applicable provisions of the ESOP.

          SECTION 2.9 REGISTRATION OF THE PROMISSORY NOTE.

          (a)      The Lender shall maintain a Register providing for the registration of the Principal Amount and any stated interest and of transfer and exchange of the Promissory Note. Transfer of the Promissory Note may be effected only by the surrender of the old instrument and either the reissuance by the Borrower of the old instrument to the new holder or the issuance by the Borrower of a new instrument to the new holder. The old Promissory Note so surrendered shall be canceled by the Lender and returned to the Borrower after such cancellation.

          (b)      Any new Promissory Note issued pursuant to section 2.9(a) shall carry the same rights to interest (unpaid and to accrue) carried by the Promissory Note so transferred or exchanged so that there will not be any loss or gain of interest on the note surrender. Such new Promissory Note shall be subject to all of the provisions and entitled to all of the benefits of this Agreement. Prior to due presentment for registration or transfer, the Borrower may deem and treat the registered holder of any Promissory Note as the holder thereof for purposes of payment and other purposes. A notation shall be made on each new Promissory Note of the amount of all payments of principal and interest theretofore paid.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BORROWER

          The Borrower hereby represents and warrants to the Lender as follows:

5

          SECTION 3.1 POWER, AUTHORITY, CONSENTS.

          The Borrower has the power to execute, deliver and perform this Loan Agreement, the Promissory Note and Pledge Agreement, all of which have been duly authorized by all necessary and proper corporate or other action.

          SECTION 3.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.

          Each of the Loan Documents, including, without limitation, this Loan Agreement, the Promissory Note and the Pledge Agreement, has been duly executed and delivered by the Borrower; and each constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms.

          SECTION 3.3 PROPERTIES, PRIORITY OF LIENS.

          The liens which have been created and granted by the Pledge Agreement constitute valid, first liens on the properties and assets covered by the Pledge Agreement, subject to no prior or equal lien.

          SECTION 3.4 NO DEFAULTS, COMPLIANCE WITH LAWS.

          The Borrower is not in default in any material respect under any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it is bound, or any other agreement or other instrument by which any of the properties or assets owned by it is materially affected.

          SECTION 3.5 PURCHASE OF COMMON STOCK.

          Upon consummation of any purchase of Common Stock by the Borrower with the proceeds of the Loan, the Borrower shall acquire valid, legal and marketable title to all of the Common Stock so purchased, free and clear of any liens, other than a pledge to the Lender of the Common Stock so purchased pursuant to the Pledge Agreement. Neither the execution and delivery of the Loan Documents nor the performance of any obligation thereunder violates any provisions of law or conflicts with or results in a breach of or creates (with or without the giving of notice of lapse of time, or both) a default under any agreement to which the Borrower is a party or by which it is bound or any of its properties is affected. No consent of any federal, state, or local governmental authority, agency, or other regulatory body, the absence of which could have a materially adverse effect on the Borrower is or was required to be obtained in connection with the execution, delivery, or performance of the Loan Documents and the transaction contemplated therein or in connection therewith, including without limitation, with respect to the transfer of the shares of Common Stock purchased with the proceeds of the Loan pursuant thereto.

          SECTION 3.6 ESOP; CONTRIBUTIONS.

          The ESOP has been or will be duly created, organized and maintained in compliance with all applicable laws, regulations and rulings. The ESOP is intended to qualify as an “employee stock ownership plan” as defined in section 4975(e)(7) of the Code. The ESOP provides that the

6

ESOP sponsor may make contributions to the ESOP in an amount necessary to enable the Borrower or the Trustee to amortize the Loan in accordance with the terms of the Promissory Note; provided, however, that no such contributions shall be required if they would adversely affect the qualification of the ESOP under section 401(a) of the Code.

          SECTION 3.7 TRUSTEE.

          The Trustee has been duly appointed in accordance with the terms of the ESOP.

          SECTION 3.8 COMPLIANCE WITH LAWS; ACTIONS.

          Neither the execution and delivery by the Borrower of this Loan Agreement or any instruments required thereby, nor compliance with the terms and provisions of any such documents by the lender, constitutes a violation of any provision of any law or any regulation, order, writ, injunction or decree or any court or governmental instrumentality, or an event of default under any agreement, to which the Borrower is a party of which the Borrower is bound or to which the Borrower is subject, which violation or event of default would have a material adverse effect on the Borrower. There is no action or proceeding pending or threatened against either the ESOP or the Borrower before any court or administrative agency.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE LENDER

          The Lender hereby represents and warrants to the Borrower and Trustee as follows:

          SECTION 4.1 POWER, AUTHORITY, CONSENTS.

          The Lender has the power to execute, deliver and perform this Loan Agreement, the Pledge Agreement and all documents executed by the Lender in connection with the Loan, all of which have been duly authorized by all necessary and proper corporate or other action. No consent, authorization or approval or other action by any governmental authority or regulatory body, and no notice by the Lender to, or filing by the Lender with any governmental authority or regulatory body is required for the due execution, delivery and performance of this Loan Agreement.

          SECTION 4.2 DUE EXECUTION, VALIDITY, ENFORCEABILITY.

          This Loan Agreement and the Pledge Agreement have been duly executed and delivered by the Lender, and each constitutes a valid and legally binding obligation of the Lender, enforceable in accordance with its terms.

7

ARTICLE V

EVENTS OF DEFAULT

          SECTION 5.1 EVENTS OF DEFAULT UNDER LOAN AGREEMENT.

          Each of the following events shall constitute an “Event of Default” hereunder:

          (a)           Failure to make any payment or mandatory prepayment of principal of the Promissory Note when due, or failure to make any payment of interest on the Promissory Note not later than five (5) Business Days after the date when due.

          (b)           Failure by the Borrower to perform or observe any term, condition or covenant of this Loan Agreement or of any of the other Loan Documents, including without limitation, the Promissory Note and the Pledge Agreement.

          (c)           Any representation or warranty made in writing to the Lender in any of the Loan Documents, or any certificate, statement or report made or delivered in compliance with this Loan Agreement, shall have been false or misleading in any material respect when made or delivered.

          SECTION 5.2 LENDER’S RIGHTS UPON EVENT OF DEFAULT.

          If an Event of Default under this Loan Agreement shall occur and be continuing, the Lender shall have no rights to assets of the Borrower or the ESOP (including the trust established under Article VIII, and which forms a part, of the ESOP) other than: (a) contributions (other than contributions of Common Stock) that are made by the ESOP sponsor to enable the Borrower to meet its obligations pursuant to this Loan Agreement and earnings attributable to the investment of such contributions and (b) “Eligible Collateral” (as defined in the Pledge Agreement); provided, however, that: (i) the value of the Borrower’s assets transferred to the Lender following an Event of Default in satisfaction of the due and unpaid amount of the Loan shall not exceed the amount in default (without regard to amounts owing solely as a result of any acceleration of the Loan); (ii) the Borrower’s assets shall be transferred to the Lender following an Event of Default only to the extent of the failure of the Borrower to meet the payment schedule of the Loan; and (iii) all rights of the Lender to the Common Stock purchased with the proceeds of the Loan covered by the Pledge Agreement following an Event of Default shall be governed by the terms of the Pledge Agreement.

ARTICLE VI

MISCELLANEOUS PROVISIONS

          SECTION 6.1 PAYMENTS DUE TO THE LENDER.

          If any amount is payable by the Borrower to the Lender pursuant to any indemnity obligation contained herein, then the Borrower shall pay, at the time or times provided therefor, any such amount and shall indemnify the Lender against and hold it harmless from any loss of damage resulting from or arising out of the nonpayment or delay in payment of any such amount. If any amounts as to which the Borrower has so indemnified the Lender hereunder shall be

8

assessed or levied against the Lender, the Lender may notify the Borrower and make immediate payment thereof, together with interest or penalties in connection therewith, and shall thereupon be entitled to and shall receive immediate reimbursement therefor from the Borrower together with interest on each such amount as provided in section 2.2(c). Notwithstanding any other provision contained in this Loan Agreement, the covenants and agreements of the Borrower contained in this section 6.1 shall survive payment of the Promissory Note and termination of this Loan Agreement.

          SECTION 6.2 PAYMENTS.

          All payments hereunder and under the Promissory Note shall be made without set-off or counterclaim and in such amounts as may be necessary in order that all such payments shall not be less than the amounts otherwise specified to be paid under this Loan Agreement and the Promissory Note, subject to any applicable tax withholding requirements. Upon payment in full of the Promissory Note, the Lender shall mark such Promissory Note “Paid” and return it to the Borrower.

          SECTION 6.3 SURVIVAL.

          All agreements, representations and warranties made herein shall survive the delivery of this Loan Agreement and the Promissory Note.

          SECTION 6.4 MODIFICATIONS, CONSENTS AND WAIVERS; ENTIRE AGREEMENT.

          No modification, amendment or waiver of or with respect to any provision of this Loan Agreement, the Promissory Note, the Pledge Agreement, or any of the other Loan Documents, nor consent to any departure from any of the terms or conditions thereof, shall in any event be effective unless it shall be in writing and signed by the party against whom enforcement thereof is sought. Any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No consent to or demand on a party in any case shall, of itself, entitle it to any other or further notice or demand in similar or other circumstances. This Loan Agreement embodies the entire agreement and understanding between the Lender and the Borrower and supersedes all prior agreements and understandings relating to the subject matter hereof.

          SECTION 6.5 CUMULATIVE.

          Each and every right granted to the Lender hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of the Lender or the holder of the Promissory Note to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or future exercise thereof or the exercise of any other right. The due payment and performance of the obligations under the Loan Documents shall be without regard to any counterclaim, right of offset or any other claim whatsoever which the Borrower or the Trustee may have against the Lender and without regard to any other obligation of any nature whatsoever which the Lender may have to the Borrower or the Trustee, and no such counterclaim or offset shall be asserted by

9

the Borrower or the Trustee in any action, suit or proceeding instituted by the Lender for payment or performance of such obligations.

          SECTION 6.6 FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS.

          At any time and from time to time, upon the request of the Lender, the Borrower shall execute, deliver and acknowledge or cause to be executed, delivered and acknowledged, such further documents and instruments and do such other acts and things as the Lender may reasonably request in order to fully effect the terms of this Loan Agreement, the Promissory Note, the Pledge Agreement, the other Loan Documents and any other agreements, instruments and documents delivered pursuant hereto or in connection with the Loan.

          SECTION 6.7 NOTICES.

          Except as otherwise specifically provided for herein, all notice, requests, reports and other communications pursuant to this Loan Agreement shall be in writing, either by letter (delivered by hand or commercial messenger service or sent by registered or certified mail, return receipt requested, except for routine reports delivered in compliance with Article VI hereof which may be sent by ordinary first-class mail) or fax addressed as follows:

(a)	If to the Borrower:
	Trustee of the Auburn Savings Bank,
	FSB Employee Stock Ownership Plan and Trust c/o Compensation Committee of the Board of Directors of Auburn Savings Bank 256 Court Street, P.O. Box 3157 Auburn, Maine 04210
(b)	If to the Lender:
	Auburn Bancorp, Inc. 256 Court Street, P.O. Box 3157 Auburn, Maine 04210

Any notice, request or communication hereunder shall be deemed to have been given on the day on which it is delivered by hand or by commercial messenger service, or sent by facsimile, to such party at its address specified above, or, if sent by mail, on the third Business Day after the day deposited in the mail, postage prepaid, addressed as aforesaid. Any party may change the person or address to whom or which notices are to be given hereunder, by notice duly given hereunder; provided, however, that any such notice shall be deemed to have been given only when actually received by the party to whom it is addressed.

          SECTION 6.8 COUNTERPARTS.

          This Loan Agreement may be signed in any number of counterparts which, when taken together, shall constitute one and the same document.

10

          SECTION 6.9 CONSTRUCTION; GOVERNING LAW.

          The headings used in the table of contents and in this Loan Agreement are for convenience only and shall not be deemed to constitute a part hereof. All uses herein of any gender or of singular or plural terms shall be deemed to include uses of the other genders or plural or singular terms, as the context may require. All references in this Loan Agreement of an Article or section shall be to an Article or section of this Loan Agreement, unless otherwise specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and the other Loan Documents shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Massachusetts.

          SECTION 6.10 SEVERABILITY.

          Wherever possible, each provision of this Loan Agreement shall be interpreted in such manner as to be effective and valid under applicable law; however, the provisions of this Loan Agreement are severable, and if any clause of provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provisions in this Loan Agreement in any jurisdiction. Each of the covenants, agreements and conditions contained in this Loan Agreement independent, and compliance by a party with any of them shall not excuse non-compliance by such party with any other. The Borrower shall not take any action the effect of which shall constitute a breach or violation of any provision of this Loan Agreement.

          SECTION 6.11 BINDING EFFECT; NO ASSIGNMENT OR DELEGATION.

          This Loan Agreement shall be binding upon and inure to the benefit of the Borrower and its successors and the Lender and its successors and assigns. The rights and obligations of the Borrower under this Agreement shall not be assigned or delegated without the prior written consent of the Lender, and any purported assignment or delegation without such consent shall be void.

          IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be executed as of the date first written above.

Auburn Savings Bank, FSB Bank Employee
Stock Ownership Plan and Trust

By:

Its Trustee

Auburn Bancorp, Inc.

By:

11

FORM OF
PLEDGE AGREEMENT

          THIS PLEDGE AGREEMENT (“Pledge Agreement”) is made as of the ____ day of ______________ 2008, by and between the Compensation Committee of the Board of Directors of Auburn Savings Bank, as trustee (the “Trustee”), of the trust (“Borrower”) established under Article VIII, and which forms a part, of the Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust (“Pledgor”), and Auburn Bancorp, Inc., a corporation organized and existing under the laws of the United States of America (“Pledgee”).

WITNESSETH

          WHEREAS, this Pledge Agreement is being executed and delivered to the Pledgee pursuant to the terms of a Loan Agreement (“Loan Agreement”), by and between the Pledgor and the Pledgee;

          NOW, THEREFORE, in consideration of the mutual agreements contained herein and in the Loan Agreement, the parties hereto do hereby covenant and agree as follows:

SECTION 1.
DEFINITIONS

          The following definitions shall apply for purposes of this Pledge Agreement, except to the extent that a different meaning is plainly indicated by the context; all capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Loan Agreement:

          COLLATERAL shall mean the Pledged Shares and, subject to section 5 hereof, and to the extent permitted by applicable law, all rights with respect thereto, and all proceeds of such Pledged Shares and rights.

          ESOP shall mean the Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust.

          EVENT OF DEFAULT shall mean an event so defined in the Loan Agreement.

          LIABILITIES shall mean all the obligations of the Pledgor to the Pledgee, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under the Loan Agreement and the Promissory Note.

          PLEDGED SHARES shall mean all the Shares of Common Stock of the Pledgee purchased by the Pledgor with the proceeds of the loan made by the Pledgee to the Pledgor pursuant to the Loan Agreement, but excluding any such shares previously released pursuant to section 4.

SECTION 2.
PLEDGE

          To secure the payment of and performance of all the Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to the Pledgee, a security interest in, and lien upon, the Collateral.

SECTION 3.
REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR

          The Pledgor represents, warrants, and covenants to the Pledgee as follows:

          (a)      the execution, delivery and performance of this Pledge Agreement and the pledging of the Collateral hereunder do not and will not conflict with, result in a violation of, or constitute a default under, any agreement binding upon the Pledgor;

          (b)      the Pledged Shares are and will continue to be owned by the Pledgor free and clear of any liens or rights of any other person except the lien hereunder and under the Loan Agreement in favor of the Pledgee, and the security interest of the Pledgee in the Pledged Shares and the proceeds thereof is and will continue to be prior to and senior to the rights of all others;

          (c)      this Pledge Agreement is the legal, valid, binding and enforceable obligation of the Pledgor in accordance with its terms;

          (d)      the Pledgor shall, from time to time, upon request of the Pledgee, promptly deliver to the Pledgee such stock powers, proxies, and similar documents, satisfactory in form and substance to the Pledgee, with respect to the Collateral as the Pledgee may reasonably request; and

          (e)      subject to the first sentence of section 4(b), the Pledgor shall not, so long as any Liabilities are outstanding, sell, assign, exchange, pledge or otherwise transfer or encumber any of its rights in and to any of the Collateral.

SECTION 4.
ELIGIBLE COLLATERAL

          (a)      As used herein the term “Eligible Collateral” shall mean the amount of Collateral which has an aggregate fair market value equal to the amount by which the Pledgor is in default (without regard to any amounts owing solely as the result of an acceleration of the Loan Agreement) or such lesser amount of Collateral as may be permissible under the qualification and exemption requirements referenced in Section 13 of this Pledge Agreement.

          (b)      The Pledged Shares shall be released from this Pledge Agreement in a manner conforming to the requirements of Labor Regulation 2550.408b-3(h) and Treasury Regulation section 54.4975-7(b)(8), as the same may be from time to time amended or supplemented, and the applicable provisions of the ESOP. Subject to the qualification and exemption requirements referenced in Section 13 of this Pledge Agreement, the Pledgee may from time to time, after any Default or Event of Default, and without prior notice to the Pledgor, transfer all or any part of the

- 2 -

Eligible Collateral in the name of the Pledgee or its nominee, without disclosing that such Eligible Collateral is subject to any rights of the Pledgor and may from time to time, whether before or after any of the Liabilities shall become due and payable, without notice to the Pledgor, take all or any of the following actions: (i) notify the parties obligated on any of the Eligible Collateral to make payment to the Pledgee of any amounts due or due to become due thereunder, (ii) release or exchange all or any part of the Eligible Collateral, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, and (iii) take control of any proceeds of the Eligible Collateral.

SECTION 5.
DELIVERY

          (a)      The Pledgor shall deliver to the Pledgee upon execution of this Pledge Agreement (i) either (A) certificates for the Pledged Shares, each certificate duly signed in blank by the Pledgor or accompanied by a stock transfer power duly signed in blank by the Pledgor and each such certificate accompanied by all required documentary or stock transfer tax stamps or (B) if the Trustee does not yet have possession of the Pledged Shares, an assignment by the Pledgor of all the Pledgor’s rights to and interest in the Pledged Shares and (ii) an irrevocable proxy, in form and substance satisfactory to the Pledgee, signed by the Pledgor with respect to the Pledged Shares.

          (b)      So long as no Default or Event of Default shall have occurred and be continuing, (i) the Pledgor shall be entitled to exercise any and all voting and other rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Pledge Agreement, and (ii) the Pledgor shall be entitled to receive any and all cash dividends or other distributions paid in respect of the Collateral.

SECTION 6.
EVENTS OF DEFAULT

          (a)      If a Default or Event Default shall be existing, in addition to the rights it may have under the Loan Agreement, the Promissory Note, and this Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee may exercise, with respect to the Eligible Collateral, from time to time, any rights and remedies available to it under the Uniform Commercial Code as in effect from time to time in the Commonwealth of Massachusetts or otherwise available to it and (ii) the Pledgee shall have the right, for and in the name, place and stead of the Pledgor, to execute endorsement, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Eligible Collateral. Written notification of intended disposition of any of the Eligible Collateral shall be given by the Pledgee to the Pledgor at least three (3) Business Days before such disposition. Subject to section 13 below, any proceeds of any disposition of Eligible Collateral may be applied by the Pledgee to the payment of expenses in connection with the Eligible Collateral, including, without limitation, reasonable attorneys’ fees and legal expenses, and any balance of such proceeds may be applied by the Pledgee toward the payment of such of the Liabilities as are in Default, and in such order of application, as the Pledgee may from time to time elect. No action of the Pledgee permitted hereunder shall impair or affect its rights in and to the Eligible Collateral. All rights and remedies of the Pledgee expressed

- 3 -

hereunder are in addition to all other rights and remedies possessed by it, including, without limitation, those contained in the documents referred to in the definition of Liabilities in section 1 hereof.

          (b)      In any sale of any of the Eligible Collateral after a Default or an Event of Default shall have occurred, the Pledgee is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel if necessary in order to avoid violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers or further restrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Eligible Collateral), or in order to obtain such required approval of the sale or of the purchase by any governmental regulatory authority or official, and the Pledgor further agrees that such compliance shall not result in such sale’s being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Pledgee be liable or accountable to the Pledgor for any discount allowed by reason of the fact that such Eligible Collateral is sold in compliance with any such limitation or restriction.

SECTION 7.
PAYMENT IN FULL

          Upon the payment in full of all outstanding Liabilities, this Pledge Agreement shall terminate and the Pledgee shall forthwith assign, transfer and deliver to the Pledgor, against receipt and without recourse to the Pledgee, all Collateral then held by the Pledgee pursuant to the Pledge Agreement.

SECTION 8.
NO WAIVER

          No failure or delay in the part of the Pledgee in exercising any right or remedy hereunder or under any other document which confers or grants any rights to the Pledgee in respect of the Liabilities shall operate as a waiver thereof nor shall any single or partial exercise of any such rights or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy of the Pledgee.

SECTION 9.
BINDING EFFECT; NO ASSIGNMENT OR DELEGATION

          This Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor, the Pledgee and their respective successors and assigns, except that the Pledgor may not assign or transfer its rights hereunder without the prior written consent of the Pledgee (which consent shall not unreasonably be withheld). Each duty or obligation of the Pledgor to the Pledgee pursuant to the provisions of this Pledge Agreement shall be performed in favor of any person or entity designated by the Pledgee, and any duty or obligation of the Pledgee to the Pledgor may be performed by any other person or entity designated by the Pledgee.

- 4 -

SECTION 10.
GOVERNING LAW

          This Pledge Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements to be performed wholly within the Commonwealth of Massachusetts.

SECTION 11.
NOTICES

          All notices, requests, instructions or documents hereunder shall be in writing and delivered personally or sent by United States mail, registered or certified, return receipt requested, with proper postage prepaid as follows:

(a)	If to the Pledgee:
		Auburn Bancorp, Inc.
		256 Court Street
		Auburn, Maine 04210
(b)	If to the Pledgor:
		Trustee of the Auburn Savings Bank,
		FSB Employee Stock Ownership Plan and Trust
		c/o Compensation Committee of the Board of Directors of
		Auburn Savings Bank
		256 Court Street
		Auburn, Maine 04210

or at such other address as either of the parties may designate by written notice to the other party. If delivered personally, the date on which a notice, request, instruction or document is delivered shall be the date on which such delivery is made, and, if delivered by mail, the date on which such notice, request, instruction, or document is deposited in the mail shall be the date of delivery. Each notice, request, instruction or document shall bear the date on which it is delivered.

SECTION 12.
INTERPRETATION

          Wherever possible each provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision herein shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions hereof.

- 5 -

SECTION 13.
CONSTRUCTION

          All provisions hereof shall be construed so as to maintain (a) the ESOP as a qualified leveraged employee stock ownership plan under section 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986 (the “Code”), (b) the Trust as exempt from taxation under section 501(a) of the Code and (c) the Trust Loan as an exempt loan under section 54.4975-7(b) of the Treasury Regulations and as described in Department of Labor Regulation section 2550.408b-3.

          IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by the parties hereto as of the day and year first above written.

Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust (Pledgor)
By:
	Trustee
Auburn Bancorp, Inc. (Pledgee)
By:

- 6 -

FORM OF
PROMISSORY NOTE

          FOR VALUE RECEIVED, the undersigned, Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust (the “Borrower”), hereby promises to pay to the order of Auburn Savings Bank, FSB (the “Lender”) up to [$__________] payable in accordance with the Loan Agreement made and entered into between the Borrower and the Lender of even date herewith (“Loan Agreement”) pursuant to which this Promissory Note is issued.

          The Principal Amount of this Promissory Note shall be payable in accordance with the attached Schedule A.

          This Promissory Note shall bear interest at the rate per annum established under the Loan Agreement, and shall be payable in fifteen (15) annual installments of principal and interest accordance with Schedule A.

          Anything herein to the contrary notwithstanding, the obligation of the Borrower to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the Lender to the extent that the Lender’s receipt thereof would not be permissible under the law or laws applicable to the Lender limiting rates on interest which may be charged or collected by the Lender. Any such payments on interest which are not made as a result of the limitation referred to in the preceding sentence shall be made by the Borrower to the Lender on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender. Such deferred interest shall not bear interest.

          Payments of both principal and interest on this Promissory Note are to be made at the principal office of the Lender or such other place as the holder hereof shall designate to the Borrower in writing, in lawful money of the United States of America in immediately available funds.

          Failure to make any payments of principal on this Promissory Note when due, or failure to make any payment of interest on this Promissory Note not later than five (5) Business Days after the date when due, shall constitute a default hereunder, whereupon the principal amount of accrued interest on this Promissory Note shall immediately become due and payable in accordance with the terms of the Loan Agreement.

          This Promissory Note is secured by a Pledge Agreement between the Borrower and the Lender of even date herewith and is entitled to the benefits thereof.

Auburn Savings Bank, FSB Employee Stock Ownership Plan and Trust
By:
	Trustee

Schedule A
Installment No.	Date Due	Amount
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

EX-16.0

Exhibit 16.0

Securities and Exchange Commission
Washington, D.C. 20576

Commissioners:

We have read Auburn Savings Bank, F.S.B.’s statements regarding the change in independent accountants included in the section titled, “Experts” in its Registration Statement on Form S-1 and we agree with such statements concerning our firm.

Portland, Maine	/s/ Baker, Newman & Noyes
March 12, 2008	Limited Liability Company

EX-23.2

Exhibit 23.2

KELLER & COMPANY, INC.
Financial Institution Consultants
Investment and Financial Advisors

555 Metro Place North
Suite 524
Dublin, Ohio 43017 614-766-1426
614-766-1459 (fax)

March 12, 2008

Board of Directors
Auburn Savings Bank, FSB
256 Court Street
Auburn, Maine 04212

Members of the Board:

We hereby consent to the use of our firm’s name in (i) the Registration Statement on Form S-1 to be filed by Auburn Bancorp, Inc. with the Securities and Exchange Commission, and (ii) the Forms MHC-1 and MHC-2 to be filed by Auburn Savings Bank with the Office of Thrift Supervision, in each case as amended and supplemented. We also hereby consent to the inclusion of, summary of and references to our appraisal and our statement concerning subscription rights in such filings including the prospectus of Auburn Bancorp, Inc.

Sincerely,

KELLER & COMPANY, INC.

/s/ John A. Shaffer                   
John A. Shaffer
Vice President

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reported dated March 12, 2008, accompanying the consolidated financial statements of Auburn Savings Bank, FSB as contained in the Registration Statement on Form S-1 to be filed with the Securities and Exchange Commission and as contained in Form MHC-1, Form MHC-2 and Form H-(e)1-S to be filed with the Office of Thrift Supervision. We consent to the use of the aforementioned report in the Form S-1, Form MHC-1, Form MHC-2 and Form H-(e)1-S and to the use of our name as it appears under the caption “Experts” in the Form S-1.

/s/ Berry, Dunn, McNeil & Parker

Portland, Maine
March 12, 2008

EX-23.4

Exhibit 23.4

CONSENT OF INDEPENDENT AUDITOR

We consent to the use in this Registration Statement on Form S-1 of Auburn Savings Bank, F.S.B. of our report dated August 10, 2006 relating to our audit of the financial statements of Auburn Savings Bank, F.S.B. as of June 30, 2006 and for the year then ended, appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to our firm under the captions “Experts” in such Prospectus.

Portland, Maine	/s/ Baker, Newman & Noyes
March 12, 2008	Limited Liability Company

EX-99.1

Exhibit 99.1

CONVERSION VALUATION APPRAISAL REPORT

Prepared for:

Auburn Bancorp, Inc.
Auburn, Maine

As Of:
February 15, 2008

Prepared By:

Keller & Company, Inc.
555 Metro Place North
Suite 524
Dublin, Ohio 43017
(614) 766-1426

KELLER & COMPANY

CONVERSION VALUATION APPRAISAL REPORT

Prepared for:

Auburn Bancorp, Inc.
Auburn, Maine

As Of:
February 15, 2008

KELLER & COMPANY, INC.
Financial Institution Consultants
Investment and Financial Advisors

555 Metro Place North	614-766-1426
Suite 524	614-766-1459 (fax)
Dublin, Ohio 43017

March 10, 2008

Board of Directors
Auburn Savings Bank
256 Court Street
Auburn, Maine 04212

To the Board:

We hereby submit an independent appraisal (“Appraisal”) of the pro forma market value of the to-be-issued stock of Auburn Bancorp, Inc. (the “Corporation”), which is the mid-tier holding company of Auburn Savings Bank, FSB, Auburn, Maine, (“Auburn Savings” or the “Bank”). Such stock is to be issued in connection with the application by the Corporation to complete a minority stock offering, with Auburn Bancorp, MHC, a federally chartered mutual holding company, to own approximately 55 percent of the shares of the Corporation and the remaining 45 percent of the shares of the Corporation will be offered to the public. This appraisal was prepared and provided to the Corporation in accordance with the appraisal requirements of the Office of Thrift Supervision of the United States Department of the Treasury.

Keller & Company, Inc. is an independent, financial institution consulting firm that serves both thrift institutions and banks. The firm is a full-service consulting organization, as described in more detail in Exhibit A, specializing in business and strategic plans, stock valuations, conversion and reorganization appraisals, market studies and fairness opinions for thrift institutions and banks. The firm has affirmed its independence in this transaction with the preparation of its Affidavit of Independence, a copy of which is included as Exhibit C.

Our appraisal is based on the assumption that the data and material provided to us by the Corporation, Auburn Savings and the independent auditors, Berry, Dunn, McNeil & Parker, are both accurate and complete. We did not verify the financial statements provided to us, nor did we conduct independent valuations of the Bank’s assets and liabilities. We have also used information from other public sources, but we cannot assure the accuracy of such material.

In the preparation of this appraisal, we held discussions with the management of the Corporation and the Bank, with the law firm of Nutter, McClennen & Fish LLP, the Bank’s conversion counsel, and with Berry, Dunn, McNeil & Parker. Further, we viewed the Corporation’s local economy and primary market area.

Board of Directors
Auburn Bancorp, Inc.
March 10, 2008

Page 2

This valuation must not be considered to be a recommendation as to the purchase of stock in the Corporation, and we can provide no guarantee or assurance that any person who purchases shares of the Corporation’s stock will be able to later sell such shares at a price equivalent to the price designated in this appraisal.

Our valuation will be updated as required and will give consideration to any new developments in the Corporation’s operation that have an impact on operations or financial condition. Further, we will give consideration to any changes in general market conditions and to specific changes in the market for publicly-traded thrift institutions. Based on the material impact of any such changes on the pro forma market value of the Corporation as determined by this firm, we will make necessary adjustments to the Corporation’s appraised value in such appraisal update.

It is our opinion that as of February 15, 2008, the pro forma market value or appraised value of Auburn Bancorp, Inc. was $5,900,000 at the midpoint of the valuation range, with a minority public offering of $2,655,000 or 265,500 shares at $10 per share.

Very truly yours,

KELLER & COMPANY, INC.

TABLE OF CONTENTS

		PAGE
INTRODUCTION		1
I.	Description of Auburn Savings Bank
	General	4
	Performance Overview	8
	Income and Expense	9
	Yields and Costs	13
	Interest Rate Sensitivity	15
	Lending Activities	16
	Nonperforming Assets	20
	Investments	22
	Deposit Activities	23
	Borrowings	24
	Subsidiaries	25
	Office Properties	25
	Management	25
II.	Description of Primary Market Area	26
III.	Comparable Group Selection
	Introduction	33
	Selection Parameters
	Mutual Holding Companies	34
	Trading Exchange	35
	Asset Size	35
	Merger/Acquisition	36
	Second Stage Conversion/Secondary Offering	36
	IPO Date	36
	Geographic Location	37
	Core Return on Average Assets	37
	The Comparable Group	37
IV.	Analysis, Comparison and Validation of the Comparable Group
	Balance Sheet Parameters
	Cash and Investments to Assets	39
	Mortgage-Backed Securities to Assets	40
	Total Net Loans to Assets	40
	Borrowed Funds to Assets	41
	Equity to Assets	41

TABLE OF CONTENTS

		PAGE
	Performance Parameters
	Return on Average Assets	42
	Net Interest Margin	43
	Net Non-Interest Margin	43
	Asset Quality Parameters
	Nonperforming Assets to Total Assets	44
	Repossessed Assets to Total Assets	45
	Allowance for Loan Losses	45
	Conclusion	46
V.	Market Value Adjustments
	Earnings Performance	47
	Market Area	51
	Financial Condition	52
	Balance Sheet and Earnings Growth	55
	Dividend Payments	57
	Subscription Interest	57
	Liquidity of Stock	58
	Management	59
	Marketing of the Issue	60
VI.	Valuation Approach, Methods and Conclusion
	Valuation Approach	62
	Valuation Methods	62
	Valuation Range	63
	Price to Book Value Method	64
	Price to Core Earnings Method	65
	Price to Assets Method	66
	Valuation Analysis and Summary	66
	Valuation Conclusion	67

LIST OF EXHIBITS

NUMERICAL EXHIBITS		PAGE
1	Balance Sheets - At December 31, 2007, and June 30, 2007	69
2	Balance Sheets - At June 30, 2003 through 2006	70
3	Statement of Income for the Six Months Ended December 31, 2007 and 2006, and the Year Ended June 30, 2007	71
4	Statements of Income for the Years Ended June 30 2003 through 2006	72
5	Selected Consolidated Financial Information	73
6	Income and Expense Trends	74
7	Normalized Earnings	75
8	Performance Indicators	76
9	Volume/Rate Analysis	77
10	Yield and Cost Trends	78
11	Net Portfolio Value	79
12	Loan Portfolio Composition	80
13	Loan Maturity Schedule	81
14	Loan Originations and Sales	82
15	Delinquencies Loans	83
16	Nonperforming Assets	84
17	Classified Assets	85
18	Allowance for Loan Losses	86
19	Investment Securities	87
20	Mix of Deposits	88
21	Time Deposits By Maturity	89
22	Deposit Activity	90
23	Borrowed Funds	91
24	Offices of Auburn Savings Bank	92
25	Directors and Management of the Bank	93
26	Key Demographic Data and Trends	94
27	Key Housing Data	95
28	Major Sources of Employment	96
29	Unemployment Rates	97
30	Market Share of Deposits	98
31	National Interest Rates by Quarter	99
32	Thrift Stock Prices and Pricing Ratios	100
33	Key Financial Data and Ratios	107
34	Thrift Stock Prices and Pricing Ratios - Mutual Holding Companies	115
35	Key Financial Data and Ratios - Mutual Holding Companies	118

LIST OF EXHIBITS (cont.)

NUMERICAL EXHIBITS		PAGE
36	Recent First Stage Mutual Holding Company Offerings	121
37	Acquisitions and Pending Acquisitions	122
38	Comparable Group Selection - Mutual Holding Companies	123
39	Balance Sheet Totals - Final Comparable Group	124
40	Balance Sheet - Asset Composition	125
41	Balance Sheet - Liability and Equity	126
42	Income and Expense Comparison	127
43	Income and Expense Comparison as a Percent of Average Assets	128
44	Yields, Costs and Earnings Ratios	129
45	Dividends, Reserves and Supplemental Data	130
46	Comparable Group Financial and Per Share Data
	Current Mutual Holding Company Structure	131
47	Comparable Group Share and Market Data
	Current Mutual Holding Company Structure	132
48	Comparable Group Share and Market Data
	Pro Forma Second Stage Conversion	133
49	Comparable Group Ratios - Full Conversion	134
50	Valuation Analysis and Calculation - Full Conversion	135
51	Projected Effect of Conversion Proceeds - Minimum - Full Conversion	136
52	Projected Effect of Conversion Proceeds - Midpoint - Full Conversion	137
53	Projected Effect of Conversion Proceeds - Maximum - Full Conversion	138
54	Projected Effect of Conversion Proceeds - Maximum, as Adjusted -
	- Full Conversion	139
55	Summary of Valuation Premium or Discount - Full Conversion	140
56	Comparable Group Ratios - Minority Offering	141
57	Valuation Analysis and Calculation - Minority Offering	142
58	Projected Effect of Conversion Proceeds - Minimum -Minority Offering	143
59	Projected Effect of Conversion Proceeds - Midpoint -Minority Offering	144
60	Projected Effect of Conversion Proceeds - Maximum -Minority Offering	145
61	Projected Effect of Conversion Proceeds - Maximum, as Adjusted -
	-Minority Offering	146
62	Summary of Valuation Premium or Discount - Minority Offering	147
ALPHABETICAL EXHIBITS
A	Background and Qualifications	148
B	RB 20 Certification	151
C	Affidavit of Independence	152

INTRODUCTION

          Keller & Company, Inc. is an independent appraisal firm for financial institutions and has prepared this amended Conversion Valuation Appraisal Report (“Report”) to provide the pro forma market value of the to-be-issued common stock of Auburn Bancorp, Inc. (the “Corporation”), formed as a mid-tier holding company to own all of the common stock of Auburn Savings Bank, FSB (“Auburn” or the “Bank”), Auburn, Maine. Under the Plan of Conversion, the Corporation will be majority owned by Auburn Bancorp, MHC, which will own 55.0 percent of the Corporation. The Corporation will sell to the public 45.0 percent of the appraised value of the Corporation as determined in this Report in a minority stock offering.

          The Application for Conversion is being filed with the Office of Thrift Supervision (“OTS”) of the Department of the Treasury and the Securities and Exchange Commission (“SEC”). We have reviewed such Application for Conversion as well as the Prospectus and related documents, and have discussed them with the Bank’s management and the Bank’s conversion counsel, Nutter McClennen & Fish LLP, Boston, Massachusetts.

          This conversion appraisal was prepared based on the guidelines provided by OTS entitled “Guidelines for Appraisal Reports for the Valuation of Savings Institutions Converting from the Mutual to Stock Form of Organization”, in accordance with the OTS application requirements of Regulation §563b and the OTS’s Revised Guidelines for Appraisal Reports, and represents a full appraisal report. The Report provides detailed exhibits based on the Revised Guidelines and a discussion of each of the factors that need to be considered. Our valuation will be updated in accordance with the Revised Guidelines and will consider any changes in market conditions for thrift institutions.

          We define the pro forma market value as the price at which the stock of the Corporation after conversion would change hands between a typical willing buyer and a typical willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, and with both parties having reasonable knowledge of relevant facts in an arm’s-length

1

Introduction (cont.)

transaction. The appraisal assumes the Bank is a going concern and that the shares issued by the Corporation in the conversion are sold in noncontrol blocks.

          As part of our appraisal procedure, we have reviewed the audited financial statements for the five years ended June 30, 2007, and the unaudited financial statements for the six months ended December 31, 2006 and 2007, and discussed them with Auburn’s management and with Auburn’s independent auditors, Berry, Dunn, McNeill & Parker, Portland, Maine. We have also discussed and reviewed with management other financial matters and have reviewed internal projections. We have reviewed the Corporation’s preliminary Form S-1 and the Bank’s preliminary Forms MHC-1 and MHC-2 and discussed them with management and with the Bank’s conversion counsel.

          To gain insight into the Bank’s local market condition, we have visited Auburn’s main office and branch office and have traveled the surrounding area in Androscoggin County. We have studied the economic and demographic characteristics of the primary market area, and analyzed the Bank’s primary market area relative to Maine and the United States. We have also examined the competitive market within which Auburn operates, giving consideration to the area’s numerous financial institution offices, mortgage banking offices, and credit union offices and other key market area characteristics, both positive and negative.

          We have given consideration to the market conditions for securities in general and for publicly-traded thrift stocks in particular. We have examined the performance of selected publicly-traded thrift institutions and compared the performance of Auburn to those selected institutions.

          Our valuation is not intended to represent and must not be interpreted to be a recommendation of any kind as to the desirability of purchasing the to-be-outstanding shares of common stock of the Corporation. Giving consideration to the fact that this appraisal is based

2

Introduction (cont.)

on numerous factors that can change over time, we can provide no assurance that any person who purchases the stock of the Corporation in the minority stock offering in this mutual-to-stock conversion will subsequently be able to sell such shares at prices similar to the pro forma market value of the Corporation as determined in this conversion appraisal.

3

I. DESCRIPTION OF AUBURN SAVINGS BANK, FSB

GENERAL

          Auburn Savings Bank, FSB was organized in 1887 as a state-chartered mutual savings and loan association with the name Auburn Building and Loan Association. In 2006, Auburn converted to a federal mutual savings bank and changed its name to Auburn Savings Bank, FSB. The Bank will file for approval to form a mid-tier stock holding company with the name Auburn Bancorp, Inc., which will own all of the stock of the Bank. The Bank’s planned mutual holding company, Auburn Bancorp, MHC, will own 55.0 percent of Auburn Bancorp, Inc.

          Auburn conducts its business from its main office in Auburn and its branch office in Lewiston, Maine. The Bank’s primary market area is focused on Androscoggin County. The Bank has no additional loan production offices. The Bank also has no active subsidiaries.

          Auburn’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”) in the Deposit Insurance Fund (“DIF”). The Bank is also subject to certain reserve requirements of the Board of Governors of the Federal Reserve Bank (the “FRB”). Auburn is a member of the Federal Home Loan Bank (the “FHLB”) of Boston and is regulated by the OTS and by the FDIC. As of December 31, 2007, Auburn had assets of $63,458,000, deposits of $44,991,000 and equity of $4,481,000.

          Auburn has been principally engaged in the business of serving the financial needs of the public in its local communities and throughout its primary market area as a community-oriented institution. Auburn has been involved in the origination of residential mortgage loans secured by one- to four-family dwellings, which represented 34.2 percent of its loan originations during the year ended June 30, 2007. One- to four-family loan originations represented a lesser 31.1 percent of loan originations during the six months ended December 31, 2007.

          At December 31, 2007, 57.3 percent of its gross loans consisted of residential real estate loans on one- to four-family dwellings, excluding home equity loans, compared to a larger 61.6

4

General (cont.)

percent at June 30, 2006, with the primary sources of funds being retail deposits from residents in its local communities. The Bank is also an originator of multi-family and commercial real estate loans, construction loans, home equity loans, consumer loans, and commercial loans. Consumer loans include automobile loans, loans on deposit accounts and other secured and unsecured personal loans.

          The Bank had cash and investments of $5.5 million, or a moderate 8.7 percent of its assets, excluding FHLB stock of $901,100 or 1.42 percent of assets at December 31, 2007. The Bank had $530,000 of its investments in mortgage-backed and related securities representing 0.8 percent of assets. Deposits, FHLB advances and equity have been the primary sources of funds for the Bank’s lending and investment activities.

          The total amount of stock to be sold by the Corporation in the minority stock offering will be $2,655,000 or 265,500 shares at $10 per share, representing 45 percent of the midpoint fully converted appraised value of $5.9 million. The net conversion proceeds will be $2.1 million, net of conversion expenses of approximately $600,000. The actual cash proceeds to the Bank of $1.5 million will represent 71.4 percent of the net conversion proceeds. The ESOP will represent 7.6 percent of the gross shares issued in the minority offering or 20,237 shares at $10 per share, representing $202,370 or 3.43 percent of the total value. The Bank’s net proceeds will be used to fund new loans and to invest in securities following their initial deployment to short term investments. The Bank may also use the proceeds to expand services, expand operations or acquire other financial service organizations, diversify into other businesses, or for any other purposes authorized by law. The Corporation will use its proceeds to fund the ESOP and to invest in short-term deposits.

          The Bank has experienced a modest deposit increase over the past two fiscal years with deposits increasing 8.2 percent from June 30, 2005, to June 30, 2007, or an average of 4.1 percent per year. From June 30, 2007, to December 31, 2007, deposits then increased by $112,000 or 0.2 percent compared to a decrease of $30,000 or 0.3 percent in fiscal year 2007.

5

General (cont.)

          The Bank has focused on strengthening its loan activity during the past two years, on monitoring its net interest margin and earnings, on controlling its nonperforming assets and on maintaining a reasonable equity to assets ratio. Equity to assets increased from 6.49 percent of assets at June 30, 2006, to 6.97 percent at June 30, 2007, and then increased to 7.06 percent at December 31, 2007. It should be noted that total equity increased in dollars from $4.2 million at June 30, 2006, to $4.5 million at December 31, 2007, and represented a higher ratio to assets due to an increase in equity combined with a decrease in assets during that period.

          The primary lending strategy of Auburn has been to focus on the origination of residential real estate loans and commercial real estate loans, with a recent increase in commercial loan activity.

          The Bank’s share of one- to four-family residential mortgage loans decreased modestly from 61.6 percent of gross loans at June 30, 2006, to 57.3 percent as of December 31, 2007. Multi-family and commercial real estate loans increased from 11.5 percent of loans to 16.2 percent from June 30, 2006, to December 31, 2007. All types of real estate loans as a group experienced a minimal decrease, declining from 96.6 percent of gross loans at June 30, 2006, to 96.4 percent at December 31, 2007. The high share of real estate loans was offset by the Bank’s minimal share of commercial and consumer loans, which exclude home equity loans. The Bank’s share of consumer loans experienced a slight increase in their share of loans from 1.00 percent at June 30, 2006, to 1.01 percent at December 31, 2007, and the dollar balance of consumer loans increased from $542,000 to $552,000. The Bank’s share of commercial loans increased from 2.39 percent at June 30, 2006, to 2.63 percent at December 31, 2007.

          Management’s internal strategy has also included continued emphasis on maintaining an adequate and appropriate allowance for loan losses relative to loans and nonperforming assets in recognition of the more stringent requirements within the industry to establish and maintain higher general valuation allowances, but recognizing the Bank’s lower balance of higher risk loans and lower charge-offs. At June 30, 2006, Auburn had $290,000 in its loan loss allowance

6

General (cont.)

or 0.54 percent of gross loans, and 305.3 percent of nonperforming assets with the allowance increasing to $309,000 and representing a higher 0.56 percent of gross loans and 249.2 percent of nonperforming assets at December 31, 2007.

          The basis of earnings for the Bank has been interest income from loans and investments with the net interest margin being the key determinant of net earnings with less emphasis on noninterest income. With a primary dependence on net interest margin for earnings, current management will focus on striving to strengthen the Bank’s net interest margin without undertaking excessive credit risk combined with controlling the Bank’s interest risk position and striving to continue to increase noninterest income.

7

PERFORMANCE OVERVIEW

          The financial position of Auburn at December 31, 2007, and at year end June 30, 2003 through 2007, is shown in Exhibits 1 and 2, and the earnings performance of Auburn for the six months ended December 31, 2006 and 2007, and for the years ended June 30, 2003 through 2007, is shown in Exhibits 3 and 4. Exhibit 5 provides selected financial data for Auburn at June 30, 2006 and 2007, and at December 31, 2007. It has been Auburn’s objective to increase its loans, deposits, and equity from June 30, 2006, through December 31, 2007. The most recent impact of these trends, recognizing the stable trend in interest rates, was a modest decrease in assets, FHLB advances and investments with deposits remaining stable, partially offset by an increase in loans from June 30, 2006, to December 31, 2007. Auburn also experienced a modest increase in the dollar amount of equity during that period. The Bank’s decrease in assets was $712,000 or 1.1 percent from June 30, 2006, to December 31, 2007.

          During the past two fiscal years, the Bank experienced its larger dollar increase in assets of $5.0 million in fiscal year 2006, which represented a moderate 8.4 percent increase in assets due to a $5.8 million increase in loans, reduced by a $651,000 decrease in cash and investments. Such increase in assets was followed by a $1.8 million or 2.8 percent decrease in fiscal 2007 and then a $1.1 million or 1.7 percent increase in assets in the six months ended December 31, 2007.

          Auburn’s loan portfolio, which includes mortgage loans and nonmortgage loans, decreased from $54.0 million at June 30, 2006, to $53.1 million at June 30, 2007, and represented a total decrease of $870,000 or 1.6 percent. For the six months ended December 31, 2007, loans increased by $1.7 million or 3.2 percent to $54.9 million.

          Auburn has obtained funds through deposits and through the use of FHLB advances. The Bank’s competitive rates for deposits and two offices in its local market in conjunction with its focus on service have been the sources for attracting retail deposits. Deposits decreased a minimal $130,000 or 0.3 percent from June 30, 2006, to June 30, 2007. For the six months ended December 31, 2007, deposits increased by $112,000 or 0.2 percent. The Bank’s largest

8

Performance Overview (cont.)

deposit growth period was in the year ended June 30, 2006, when deposits increased $3.5 million or a moderate 8.4 percent.

          The Bank experienced an increase in the dollar amount of its equity in fiscal years 2006 and 2007, and also experienced a modest increase in equity from June 30, 2007, through December 31, 2007. The dollar amount of equity increased 4.5 percent from June 30, 2006, to June 30, 2007, and then increased 3.0 percent from June 30, 2007, through December 31, 2007. At June 30, 2006, the Bank had equity of $4.2 million, representing a 6.49 percent equity to assets ratio and then increased to $4.3 million at June 30, 2007, representing a higher 6.97 percent equity to assets ratio due to the Bank’s decrease in assets. At December 31, 2007, equity was a higher $4.5 million and a higher 7.06 percent of assets due to the Bank’s increase in equity at December 31, 2007, compared to June 30, 2007.

INCOME AND EXPENSE

          Exhibit 6 presents selected operating data for Auburn, providing selected income and expense data in dollars for the fiscal years of 2006 and 2007 and for the six months ended December 31, 2006 and 2007.

          Auburn experienced a modest increase in its dollar amount of interest income from fiscal 2006 to fiscal 2007. Interest income was $3.46 million in 2006 and a larger $3.91 million in 2007, representing an increase of $443,000 or 12.8 percent.

          The Bank’s interest expense also experienced an increase from fiscal year 2006 to 2007. Interest expense increased from $1.91 million in 2006 to $2.34 million in 2007, representing an increase of $429,000 or 22.5 percent, resulting in an increase in net interest income. Net interest income increased $13,000 from 2006 to 2007. In the six months ended December 31, 2007, compared to the six months ended December 31, 2006, there was a modest increase in interest

9

Income and Expense (cont.)

income of $70,000, notwithstanding the increase in interest expense of $62,000, resulting in a dollar increase in net interest income of $8,000 or 7.8 percent for the six months ended December 31, 2007, and a minimal increase in net interest margin.

          The Bank has made provisions for loan losses in each of the past two fiscal years of 2006 and 2007. The Bank had a credit to provisions in the six months ended December 31, 2007. The provisions were determined in recognition of the Bank’s nonperforming assets, charge-offs, repossessed assets, and industry norms. The Bank had provisions of $61,500 and $34,000 in fiscal years 2006 and 2007, respectively, and a credit of $7,024 in the six months ended December 31, 2007. The Bank had no charge-offs in fiscal 2006, with net charge-offs of $1,000 in the other two periods. The impact of these provisions and net charge-offs has been to provide Auburn with a general valuation allowance of $309,000 at December 31, 2007, or 0.56 percent of gross loans and 249.2 percent of nonperforming assets.

          Total other income or noninterest income indicated an increase from fiscal year 2006 to 2007. In the year ended June 30, 2006, noninterest income was $83,000 or 0.13 percent of assets. In the year ended June 30, 2007, noninterest income was a larger $112,000, representing a higher 0.18 percent of assets with the increase due primarily to a $19,000 gain on the sale of loans. For the six months ended December 31, 2007, noninterest income was $77,000 or 0.12 percent of assets, annualized. Noninterest income consists primarily of service charges, loan servicing fees, other income, and gains on the sale of investments and loans.

          The Bank’s general and administrative expenses or noninterest expenses increased from $1.41 million for the fiscal year of 2006 to $1.48 million for the fiscal year ended June 30, 2007, representing an increase of 4.46 percent. On a percent of average assets basis, operating expenses increased from 2.29 percent of average assets for the fiscal year ended June 30, 2006, to 2.33 percent for the fiscal year ended June 30, 2007, and then increased to 2.43 percent for the six months ended December 31, 2007, annualized.

10

Income and Expense (cont.)

          The net earnings position of Auburn has indicated minimal volatility. The annual net income figures for the fiscal years ended June 30, 2006 and 2007, were $126,000 and $120,000, respectively, representing returns on average assets of 0.19 percent and 0.20 percent for fiscal years 2006 and 2007, respectively. For the six months ended December 31, 2007, Auburn had net income of a lesser $84,000, representing a return on average assets of 0.27 percent, annualized.

          Exhibit 7 provides the Bank’s normalized earnings or core earnings for the twelve months ended December 31, 2007. The Bank’s normalized earnings eliminate any nonrecurring income and expense items. There was one adjustment to earnings, eliminating the Bank’s $7,024 recovery to provision for loan losses and applying a tax rate of 29.88 percent, resulting in a change in Auburn’s net income of $6,000 to a lower $129,000 from $135,000.

          Key performance indicators, including asset quality ratios and capital ratios are shown in Exhibit 8. The Bank’s return on assets decreased slightly from 0.21 percent in 2006, to 0.19 percent in fiscal year 2007 and then increased to 0.27 percent in the six months ended December 31, 2007, annualized.

          The Bank’s lower return on average equity decreased from 2006 to 2007. The return on average equity decreased from 3.01 percent in 2006 to 2.77 percent in fiscal year 2007 and than increased to a higher 3.73 percent for the six months ended December 31, 2007, annualized.

          The Bank’s net interest rate spread decreased from 2.49 percent in 2006 to 2.38 percent in 2007 and then increased to 2.39 percent for the six months ended December 31, 2007, annualized. The Bank’s net interest margin indicated a similar trend, decreasing from 2.70 percent in 2006 to 2.67 percent in 2007, and then increased to 2.68 percent for the six months ended December 31, 2007. Auburn’s net interest rate spread decreased 11 basis points from 2006 to 2007 and then increased 1 basis point in the first six months of fiscal 2008. The Bank’s

11

Income and Expense (cont.)

net interest margin followed a more stable trend, decreasing 3 basis points from 2006 to 2007 and then increased 1 basis point in the first six months of fiscal 2008.

          Auburn’s ratio of interest-earning assets to interest-bearing liabilities increased modestly from 106.50 percent at June 30, 2006, to 107.13 percent at December 31, 2007. The Bank’s increase in its ratio of interest-earning assets to interest-bearing liabilities is primarily the result of the Bank’s increase in its equity ratio.

          As discussed previously, the Bank’s ratio of noninterest expenses to average assets increased from 2.33 percent in fiscal year 2006 to 2.38 percent in fiscal year 2007 and to 2.43 percent for the six months ended December 31, 2007, annualized. Another key noninterest expense ratio reflecting efficiency of operation is the ratio of noninterest expenses to noninterest income plus net interest income, referred to as the “efficiency ratio.” The industry norm is 59.9 percent with a lower ratio indicating greater efficiency. Historically, the Bank has been characterized by lower efficiency, reflected in its higher efficiency ratio, which increased from 86.32 percent in 2006 to 87.86 percent in 2007, decreasing slightly to 87.23 percent for the six months ended December 31, 2007, annualized.

          Earnings performance can be affected by an institution’s asset quality position. The ratio of nonperforming loans to total loans is a fundamental indicator of asset quality. Auburn experienced no change in its ratio of nonperforming assets to both loans and total assets from 2006 to 2007, and then a slight increase in the six months ended December 31, 2007. Nonperforming assets consist of real estate owned, loans delinquent 90 days or more but still accruing, and nonaccruing loans. At December 31, 2007, Auburn’s nonperforming assets consisted of real estate owned. The ratio of nonperforming assets to total assets was 0.20 percent at December 31, 2007, increasing from 0.15 percent at June 30, 2006.

12

Income and Expense (cont.)

          Two other indicators of asset quality are the Bank’s ratios of allowance for loan losses to total loans and also to nonperforming loans. The Bank’s allowance for loan losses was 0.54 percent of loans at June 30, 2006, and a higher 0.56 percent at December 31, 2007. Auburn’s allowance for loan losses to nonperforming loans was not meaningful at June 30, 2006, and also at December 31, 2007, due to the absence of nonperforming loans.

          Exhibit 9 provides the changes in net interest income due to rate and volume changes for the fiscal year of 2007 and the six months ended December 31, 2007. In fiscal year 2007, net interest income increased $31,000, due to an increase in interest income of $444,000, reduced by a $413,000 increase in interest expense. The increase in interest income was due to an increase due to volume of $116,000, accented by an increase due to rate of $328,000. The increase in interest expense was due to a $368,000 increase due to rate, accented by a $45,000 increase due to volume.

          For the six months ended December 31, 2007, net interest income increased $11,000, due to an increase in interest income of $132,000, reduced by a $121,000 increase in interest expense. The increase in interest income was due to an increase due to rate of $180,000, reduced by a decrease due to volume of $48,000. The increase in interest expense was due to a $174,000 increase due to rate, reduced by a $53,000 decrease due to volume.

YIELDS AND COSTS

          The overview of yield and cost trends for the fiscal years ended June 30, 2006 and 2007, the six months ended December 31, 2006 and 2007 and at December 31, 2007, can be seen in Exhibit 10, which offers a summary of yields on interest-earning assets and costs of interest-bearing liabilities.

13

Yields and Costs (cont.)

          Auburn’s weighted average yield on its loan portfolio increased 54 basis points from fiscal year 2006 to 2007, from 6.31 percent to 6.85 percent and then increased 30 basis points to 7.15 percent for the six months ended December 31, 2007. The yield on investment and mortgage-backed securities increased 28 basis points from fiscal year 2006 to 2007, from 4.47 percent to 4.75 percent and then decreased 43 basis points to 4.32 percent for the six months ended December 31, 2007. The yield on other interest-earning deposits increased 206 basis points from fiscal year 2006 to 2007, from 3.16 percent to 5.22 percent and then increased 103 basis points to 6.25 percent for the six months ended December 31, 2007. The combined weighted average yield on all interest-earning assets increased 61 basis points to 6.66 percent from fiscal year 2006 to 2007 and then increased 27 basis points to 6.93 percent for the six months ended December 31, 2007. The yield on all interest-earning assets then decreased 28 basis points from 6.93 percent for the six months ended December 31, 2007, to 6.65 percent at December 31, 2007.

          Auburn’s weighted average cost of interest-bearing liabilities increased 70 basis points to 4.27 percent from fiscal year 2006 to 2007, which was greater than the Bank’s 61 basis point increase in yield, resulting in a decrease in the Bank’s net interest rate spread of 9 basis points from 2.48 percent to 2.39 percent from 2006 to 2007. The Bank’s net interest margin decreased from 2.70 percent in fiscal year 2006 to 2.67 percent in fiscal year 2007, representing a decrease of 3 basis points. In the six months ended December 31, 2007, the Bank’s net interest rate spread increased 3 basis points to 2.42 percent, and the Bank’s net interest margin increased 7 basis points to 2.74 percent. The Bank’s net interest rate spread then decreased 5 basis points to 2.37 percent at December 31, 2007.

14

INTEREST RATE SENSITIVITY

          Auburn monitors its interest rate sensitivity position and has focused on maintaining a moderate level of interest rate risk exposure. Auburn has adjustable-rate loans to reduce its interest rate risk exposure. Auburn recognizes the thrift industry’s historically higher interest rate risk exposure, which caused a negative impact on earnings and net portfolio value of equity in the past as a result of significant fluctuations in interest rates, specifically rising rates in the past. Such exposure was due to the disparate rate of maturity and/or repricing of assets relative to liabilities commonly referred to as an institution’s “gap.” The larger an institution’s gap, the greater the risk (interest rate risk) of earnings loss due to a decrease in net interest margin and a decrease in net portfolio value of equity or portfolio loss. In response to the potential impact of interest rate volatility and negative earnings impact, many institutions have taken steps to minimize their gap position. This frequently results in a decline in the institution’s net interest margin and overall earnings performance.

          The Bank measures its interest rate risk through the use of its net portfolio value (“NPV”) of the expected cash flows from interest-earning assets and interest-bearing liabilities and any off-balance sheets contracts. The NPV for the Bank is calculated on a quarterly basis, by the OTS, showing the Bank’s NPV to asset ratio, the dollar change in NPV, and the change in the NPV ratio for the Bank under rising and falling interest rates. Such changes in NPV ratio under changing rates are reflective of the Bank’s interest rate risk exposure.

          There are numerous factors which have a measurable influence on interest rate sensitivity in addition to changing interest rates. Such key factors to consider when analyzing interest rate sensitivity include the loan payoff schedule, accelerated principal payments, investment maturities, deposit maturities and deposit withdrawals.

          Exhibit 11 provides the Bank’s NPV levels and ratios as of December 31, 2007, based on the OTS’ calculations and the changes in the Bank’s NPV levels under rising and declining interest rates. The focus of this exposure table is a 200 basis point change in interest rates either up or down.

15

Interest Rate Sensitivity (cont.)

          The Bank’s change in its NPV at December 31, 2007, based on a rise in interest rates of 100 basis points was a 12.0 percent decrease, representing a dollar decrease in equity value of $697,000. In contrast, based on a decline in interest rates of 100 basis points, the Bank’s NPV was estimated to increase 8.0 percent or $444,000 at December 31, 2007. The Bank’s exposure widens to a 28.0 percent decrease under a 200 basis point rise in rates, representing a dollar decrease in equity of $1,565,000. The Bank’s exposure is a 13.0 percent increase based on a 200 basis point decrease in interest rates, representing a dollar increase of $708,000.

          The Bank’s post shock NPV ratio based on a 200 basis point rise in interest rates is 6.45 percent and indicates a 218 basis point decrease from its 8.63 percent based on no change in interest rates.

          The Bank is aware of its moderate interest rate risk exposure under rapidly rising rates and minimal exposure under falling rates. Due to Auburn’s recognition of the need to control its interest rates exposure, the Bank has also been a participant in the purchase of adjustable-rate mortgage-backed securities. The Bank plans to increase its balance and share of adjustable-rate commercial real estate loans as well as one-year and three-year ARM loans. The Bank will focus on increasing its post shock NPV ratio, recognizing the planned minority stock offering will immediately strengthen the Bank’s post shock NPV ratio.

LENDING ACTIVITIES

          Auburn has focused its lending activity on the origination of conventional mortgage loans secured by one- to four-family dwellings, commercial real estate loans, multi-family loans, consumer and home equity loans and commercial loans. Exhibit 12 provides a summary of Auburn’s loan portfolio, by loan type, at June 30, 2006 and 2007, and at December 31, 2007.

16

Lending Activities (cont.)

          The primary and predominant loan type for Auburn has been residential loans secured by one- to four-family dwellings, representing a moderate 57.3 percent of the Bank’s gross loans as of December 31, 2007. The share of this loan type has decreased from 61.6 percent at June 30, 2006, and decreased from 59.9 percent at June 30, 2007. The distant second largest real estate loan type as of December 31, 2007, was home equity loans and lines of credit, which constituted a moderate 19.9 percent of gross loans compared to 19.1 percent as of June 30, 2006, and 20.9 percent as of June 30, 2007. The third largest real estate loan category as of December 31, 2007, was commercial real estate and multi-family loans, which represented 16.2 percent of gross loans compared to a lesser 11.5 percent as of June 30, 2006. These three real estate loan categories represented a strong 93.4 percent of gross loans at December 31, 2007, compared to a lesser 92.2 percent of gross loans at June 30, 2006, and a larger 95.0 percent at June 30, 2007.

          Nonmortgage consumer loans, which exclude home equity loans and lines of credit, represented a minimal 1.01 percent of gross loans at December 31, 2007, compared to 1.00 percent at June 30, 2006, and a slightly smaller 0.94 percent at June 30, 2007. The Bank’s consumer loans include automobile loans, savings account loans and secured and unsecured personal loans.

          Commercial loans represented a modest 2.6 percent of gross loans at December 31, 2007, compared to 2.5 percent at June 30, 2006, and 2.4 percent at June 30, 2007. The Bank’s overall mix of loans has changed only slightly from June 30, 2006, to December 31, 2007, with the share of residential loans decreasing slightly, offset by increases in commercial real estate and multi-family loans, commercial business loans and home equity loans and lines of credit.

          The focus of Auburn’s residential mortgage loan activity is on properties located in Auburn’s primary market area focused on Androscoggin County. The Bank offers fixed-rate residential mortgage loans and adjustable-rate residential mortgage loans. Fixed-rate residential mortgage loans have a maximum term of 30 years with most originations today having terms of

17

Lending Activities (cont.)

10, 15 or 30 years. The Bank’s fixed-rate residential mortgage loans conform to FHLMC underwriting standards. The Bank’s ARM residential loans have initial terms of one year or three years.

          The normal loan-to-value ratio for conventional mortgage loans to purchase or refinance one-to four-family dwellings generally does not exceed 80.0 percent at Auburn, even though the Bank is permitted to make loans up to a 95.0 percent loan-to-value ratio for first mortgage loans on owner-occupied one- to four-family dwellings, including construction loans of the same type. While the Bank does make loans up to 95.0 percent of loan-to-value, the Bank may require private mortgage insurance for the amount in excess of the 80.0 percent loan-to-value ratio.

          Mortgage loans originated by the Bank include due-on-sale clauses enabling the Bank to adjust rates on fixed-rate loans in the event the borrower transfers ownership. The Bank also requires an escrow account for insurance and taxes on most loans.

          Auburn has also been an originator of fixed-rate and adjustable-rate commercial real estate loans and multi-family loans in the past and will continue to make multi-family and commercial real estate loans. As previously indicated, the Bank had a combined total of $8.9 million in commercial real estate and multi-family loans at December 31, 2007, representing 16.2 percent of gross loans, compared to a lesser $6.2 million or 11.5 percent of gross loans at June 30, 2006. The major portion of commercial real estate and multi-family loans are secured by apartment buildings, small retail establishments and small office buildings, and other owner-occupied properties used for business. The multi-family and commercial real estate loans are fully amortizing with a term of up to 25 years. The maximum loan-to-value ratio does not exceed 80.0 percent.

          The Bank also originates home equity loans and home equity lines of credit. Home equity loans normally have a term of 5, 10 or 15 years. Home equity lines of credit have an adjustable interest rate equal to one-half of a percentage point above the prime rate published by

18

Lending Activities (cont.)

The Wall Street Journal and a loan-to-value ratio of no more than 90.0 percent of value. Home equity lines of credit have a maturity of 40 years with a five-year draw period.

          Auburn is an originator of other consumer loans, with all consumer loans totaling $552,000 at December 31, 2007, representing 1.0 percent of gross loans. The focus of the Bank’s other consumer loans is automobile loans, savings account loans and secured and unsecured personal loans.

           Exhibit 13 provides a loan maturity schedule and breakdown and summary of Auburn’s loans by fixed or adjustable-rate, indicating a predominance of fixed-rate loans. It should be noted, however, that a significant share of the loans classified as having fixed rates are residential mortgage loans with longer contractual maturities. At December 31, 2007, the Bank had a modest 8.8 percent of its loans due on or before December 31, 2008, or in one year or less, with a modest 12.2 percent due by December 31, 2012, in one to five years.

          As indicated in Exhibit 14, Auburn experienced a moderate decrease in its one-to four-family loan originations and total loan originations from fiscal year 2006 to 2007 with no activity in loans purchased. Total loan originations in fiscal year 2006 were $22.0 million compared to a smaller $15.0 million in fiscal year 2007, reflective of decreases in residential and construction loans originated. Residential loans originated decreased from $9.5 million to $5.1 million. The decrease in residential real estate loan originations from 2006 to 2007 of $4.4 million represented 62.9 percent of the $7.0 million aggregate decrease in total loan originations from 2006 to 2007, with construction loan originations decreasing $2.9 million or 41.4 percent of the decrease in total loan originations from 2006 to 2007. Consumer loan originations increased $90,000 from 2006 to 2007.

19

Lending Activities (cont.)

          Overall, loan originations exceeded principal payments, loan repayments and other reductions in fiscal 2006 fell short in 2007. In fiscal 2006, loan originations exceeded reductions by $5.8 million, and fell short of reductions by $1.1 million in fiscal 2007.

          During the six months ended December 31, 2007, loan originations totaled $7.1 million. Loan originations exceeded principal repayments by $1.7 million for the six months ended December 31, 2007.

NONPERFORMING ASSETS

          Auburn understands asset quality risk and the direct relationship of such risk to delinquent loans and nonperforming assets, including real estate owned. The quality of assets has been a key concern to financial institutions through many regions of the country. A number of financial institutions have been confronted with rapid increases in their nonperforming assets and have been forced to recognize significant losses, setting aside major valuation allowances.

          A sharp increase in nonperforming assets has often been related to specific regions of the country and has frequently been associated with higher risk loans, including purchased commercial real estate loans and multi-family loans. Auburn experienced a minimal increase in nonperforming assets from June 30, 2006, to December 31, 2007.

          It is normal procedure for Auburn’s board to review all delinquent loans on a monthly basis, to assess their collectibility and to initiate any direct contact with borrowers. When a loan is delinquent 5 to 15 days, the Bank sends a notice to the borrower, accompanied by a subsequent phone call by the collections officer between 30 and 45 days after the due date. A second notice is sent up to 90 days after the due date. The Bank initiates both written and oral communication with the borrower if the loan remains delinquent.

20

Nonperforming Assets (cont.)

          When the loan becomes delinquent at least 90 days, the Bank will send a letter to the borrower indicating that the loan will be referred to counsel for collection and foreclosure. Under certain circumstances, the Bank may arrange for an alternative payment structure through a workout agreement. A decision as to whether and when to initiate foreclosure proceedings is based on such factors as the amount of the outstanding loan, the extent of the delinquency and the borrower’s ability and willingness to cooperate in curing the delinquency. The Bank generally initiates foreclosure when a loan has been delinquent 120 days and no workout agreement has been reached. The decision to foreclose is made by the Bank’s senior loan officer.

          Exhibit 15 provides a summary of Auburn’s delinquent loans at June 30, 2006 and 2007, and at December 31, 2007. Delinquent loans include loans 30 to 59 days past due and loans 60 to 89 days past due. The Bank had $453,000 in delinquent loans at December 31, 2007, compared to a similar $429,000 at June 30, 2006. The delinquent loans included 72.4 percent in loans 60 to 89 days past due at December 31, 2007, compared to a lesser zero percent at June 30, 2006. The delinquent loans consisted of $95,000 in residential real estate loans, $316,000 in commercial real estate loans, and $43,000 in commercial loans at December 31, 2007.

          Exhibit 16 provides a summary of Auburn’s nonperforming assets at June 30, 2006 and 2007 and at December 31, 2007. Nonperforming assets are defined as loans 90 days or more past due, nonaccruing loans and real estate owned. The Bank carried a lower balance of nonperforming assets at June 30, 2006 and 2007, and at December 31, 2007. Auburn’s nonperforming assets were $95,000 at June 30, 2006, and a higher $124,000 at December 31, 2007, which represented 0.15 percent of assets at June 30, 2006, and 0.20 percent at December 31, 2007. The Bank’s nonperforming assets included $95,000 in nonaccrual loans with no real estate owned or loans 90 days or more past due at June 30, 2006, and $124,000 in real estate owned with no nonaccrual loans and no loans 90 days or more past due at December 31, 2007.

          Auburn’s nonperforming assets were greater than its classified assets at December 31, 2007, and less than its classified assets at June 30, 2006 and 2007. The classified assets include

21

Nonperforming Assets (cont.)

loans classified as substandard, doubtful and loss and do not include loans classified as special mention. The Bank’s classified assets were 0.17 percent of assets at June 30, 2006, 0.01 percent at June 30, 2007, and 0.01 percent at December 31, 2007, as indicated in Exhibit 17. The Bank’s classified assets consisted entirely of substandard assets, with no assets classified as doubtful or loss at June 30, 2006, June 30, 2007, and at December 31, 2007.

          Exhibit 18 shows Auburn’s allowance for loan losses at June 30, 2006 and 2007, and at December 31, 2007, indicating the activity and the resulting balances. Auburn indicated a modest increase in its balance of allowance for loan losses from $290,000 at June 30, 2006, to $309,000 at December 31, 2007. The Bank had provisions for loan losses of $62,000 in fiscal 2006, $34,000 in fiscal 2007, and a credit of $7,000 in the six months ended December 31, 2007.

          The Bank had net charge-offs of $10,000 in fiscal 2006, $1,000 in fiscal 2007 and $2,000 during the six months ended December 31, 2007. The Bank’s ratio of allowance for loan losses to gross loans was 0.54 percent at June 30, 2006, and a larger 0.56 percent at December 31, 2007. Allowance for loan losses to nonperforming assets was 305.26 percent at June 30, 2006, and a lesser 249.19 percent at December 31, 2007.

INVESTMENTS

          The Bank’s investment and securities portfolio, excluding interest-bearing deposits, has been comprised of U.S. government and federal agency obligations, corporate bonds, equity securities, investment securities and mortgage-backed securities. Exhibit 19 provides a summary of Auburn’s investment portfolio and mortgage-backed securities at June 30, 2006 and 2007, and at December 31, 2007. Investment securities, including mortgage-backed securities, totaled $1.7 million at December 31, 2007, compared to $3.5 million at June 30, 2006, and $2.4 million at June 30, 2007. The Bank had $657,000 in mortgage-backed securities at December 31, 2007, and a larger balance of $734,000 at June 30, 2007, and $1.0 million at June 30, 2006.

22

Investments (cont.)

          The primary component of the Bank’s investments at December 31, 2007, was corporate bonds, representing 57.4 percent of total investments, excluding FHLB stock, compared to a lesser 30.7 percent at June 30, 2007, and 28.3 percent at June 30, 2006. The Bank also had cash and interest-bearing deposits totaling $3.8 million at December 31, 2007, compared to a lesser $3.4 million at June 30, 2006. The Bank had $901,000 in FHLB stock at December 31, 2007. The weighted average yield on investment securities was 5.50 at December 31, 2007, and a lower 4.47 percent yield on investment securities for the year ended June 30, 2006.

DEPOSIT ACTIVITIES

          The mix of deposits by type at June 30, 2006 and 2007, and at December 31, 2007, is provided in Exhibit 20. There has been a moderate change in the Bank’s total deposits and minimal change in the deposit mix during that eighteen month period. Total deposits increased from $42.7 million at June 30, 2006, to $44.4 million at June 30, 2007, followed by an increase to $45.3 million at December 31, 2007, representing a net eighteen month increase of $2.6 million or 6.1 percent and an annualized increase of 4.1 percent. Certificates of deposits increased from $25.1 million at June 30, 2006, to $28.9 million at December 31, 2007, representing an increase of $3.8 million or 15.1 percent, while savings, MMDA, demand and checking accounts decreased $1.2 million or 7.4 percent from $17.6 million at June 30, 2006, to $16.3 million at December 31, 2007.

          The Bank’s share of certificates of deposit to total deposits experienced an increase from 58.9 percent of deposits at June 30, 2006, to a modestly higher 63.9 percent of deposits at December 31, 2007, offset by a decrease in the share of savings, MMDA, demand and checking accounts, which decreased from 41.2 percent at June 30, 2006, to 36.1 percent at December 31, 2007.

23

Deposit Activities (cont.)

          The deposit category experiencing the strongest growth in dollars from June 30, 2006, to December 31, 2007, was certificates of deposits, which increased $3.8 million during that time period; and the category experiencing the largest decrease from June 30, 2006, to December 31, 2007, was MMDA accounts, which declined $1.1 million.

          Exhibit 20 provides a breakdown of certificates of deposit of $100,000 or more by maturity at December 31, 2007, and a breakdown of all certificates of deposit by rate and maturity. The Bank had a moderate $29.7 million in certificates of deposit, representing 63.9 percent of total deposits. The Bank had $25.4 million in certificates of deposit maturing in one year or less, representing 85.7 percent of certificates of deposit or more, with 9.1 percent maturing in one to two years, and 5.2 percent maturing in two years.

          Exhibit 22 shows the Bank’s deposit activity for the two years ended June 30, 2006, and 2007, and for the six months ended December 31, 2007. Including interest credited, Auburn experienced net increases in deposits in fiscal year 2006 and for the six months ended December 31, 2007, and a net decrease in fiscal year 2007. In fiscal year 2006, there was a net increase in deposits of $3,531,000, and then a net decrease of $130,000 in 2007. In the six months ended December 31, 2007, deposits increased $111,000.

BORROWINGS

          As indicated in Exhibit 23, Auburn has made regular use of FHLB advances in the years ended June 30, 2006 and 2007, and during the six months ended December 31, 2007. The Bank had total FHLB advances of $13.7 million at December 31, 2007, with a weighted cost of 5.32 percent with outstanding balances of $14.8 million at June 30, 2006, and $12.9 million at June 30, 2007.

24

SUBSIDIARIES

          Auburn has no active subsidiary corporations.

OFFICE PROPERTIES

          Auburn had two offices at December 31, 2007, both owned by the Bank, with its home office located at 256 Court Street, Auburn, Maine, and its branch in Lewiston, Maine (reference Exhibit 24). At December 31, 2007, the Bank’s investment in these office premises and equipment totaled $2.0 million, net of depreciation, or 3.1 percent of total assets.

MANAGEMENT

          The president and chief executive officer of Auburn is Allen T. Sterling, who is not currently a director. Mr. Sterling became president and chief executive officer in June 1996 and will become a director of the Bank, the Corporation and the mutual holding company following the MHC reorganization. Prior to joining Auburn, Mr. Sterling was the chief financial officer of Skowhegan Savings Bank in Skowhegan, Maine, from 1973 to 1984. Rachel A. Haines is senior vice president and treasurer of the Bank and has served as treasurer since 2005. Ms. Haines joined the Bank in 1986. Bruce M. Ray is one of the Bank’s senior vice presidents and senior loan officer, a position he has held since 1997. Mr. Ray joined the Bank in 1997. Prior to joining Auburn, Mr. Ray was vice president and lender at Mechanics Savings Bank from 1980 to 1996 and from 1972 to 1980 was loan officer at Skowhegan Savings Bank. Martha L. Adams is senior vice president and operations officer and has held these positions since 2005. Ms. Adams has been with the Bank since 2000. Jason M. Longley is vice president and a commercial loan officer, positions he has held since 2007 and 2005, respectively. Mr. Longley has been with Auburn since 2005. Prior to joining Auburn, Mr. Longley was a commercial loan analyst at Mechanics Savings Bank in Lewiston, Maine, from 2003 to 2005.

25

II. DESCRIPTION OF PRIMARY MARKET AREA

          Auburn’s market area encompasses Androscoggin County in Maine. The Bank’s two offices are in Androscoggin County with one in the city of Auburn and one in the city of Lewiston.

          Exhibit 25 provides a summary of key demographic data and trends for the cities of Auburn and Lewiston, Androscoggin County, Maine and the United States. From 1990 to 2000, population decreased in both Auburn and Lewiston as well as in Androscoggin County, while population increased in Maine and the United States. The population decreased by 4.5 percent in Auburn, by 10.2 percent in Lewiston and by 1.4 percent in Androscoggin County, while increasing by 3.8 percent in Maine and by 13.2 percent in the United States. The population reversed to growth in Auburn and Lewiston from 2000 to 2007. Compared to 2000, the population in 2007 indicated increases of 4.1 percent in both Auburn and Lewiston, an increase of 5.9 percent in Androscoggin County, while Maine indicated growth of 6.1 percent and the United States indicated growth of 8.9 percent. Projections indicate that population will continue to increase in all areas through 2012. The population in both Auburn and Lewiston is projected to increase by 3.6 percent and 3.2 percent, respectively, with a projected 4.2 percent increase in population in Androscoggin County. Maine and the United States are projected to have population growth of 3.8 percent and 6.3 percent, respectively.

          Lewiston experienced a decrease in households of 3.4 percent from 1990 to 2000; but during those ten years, the number of households increased in Auburn by 2.3 percent, in Androscoggin County by 5.0 percent, in Maine by 11.4 percent and in the United States by 14.7 percent. The trend in household growth from 2000 to 2007 indicates an increase in Auburn of 6.0 percent and in Lewiston of 1.3 percent, in Androscoggin County by 7.6 percent, in Maine by 8.5 percent, and in the United States by 9.3 percent. From 2007 through the year 2012, households are projected to increase by 4.6 percent, 8.3 percent, 5.3 percent, 5.0 percent and 6.5 percent in Auburn, Lewiston, Androscoggin County, Maine and the United States, respectively.

26

Description of Primary Market Area (cont.)

          In 1990, Auburn had a per capita income of $13,511 with lower per capita income of $12,277 in Lewiston. Androscoggin County, Maine and the United States, had per capita income of $12,397, $12,957 and $14,420, respectively. From 1990 to 2000, per capita income increased in all areas. Auburn’s per capita income increased from 1990 to 2000 by 47.6 percent to $19,942. Per capita income increased by 45.8 percent in Lewiston to $17,905, by 51.1 percent to $18,734 in Androscoggin County, by 50.8 percent to $19,533 in Maine and by 49.7 percent to $21,587 in the United States. From 2000 to 2007, per capita income continued to increase by 27.6 percent, 18.0 percent, 20.5 percent, 26.1 percent and 29.3 percent to $25,452, $21,132, $22,583, $24,625 and $27,916 in Auburn, Lewiston, Androscoggin County, Maine and the United States, respectively.

          The 1990 median household income of $27,493 in Auburn was higher than the median household income in Lewiston and Androscoggin County at $24,051 and $26,979, respectively. Maine’s 1990 median household income was $27,854, slightly higher than Auburn’s and the median household income of $30,056 in the United States was the highest of all areas. From 1990 to 2000, median household income increased in all areas, with Auburn indicating a 29.7 percent increase to $35,652, compared to a 21.4 percent increase to $29,191 in Lewiston, an increase of 32.7 percent to $35,793 in Androscoggin County, a 33.7 percent increase to $37,240 in Maine and a 39.7 percent increase to $41,994 in the United States. From 2000 to 2007, median household income in Auburn was estimated to have increased 22.8 percent to $43,793, while median household income in Lewiston and Androscoggin County increased by 18.8 percent and 19.8 percent to $34,668 and $42,866, respectively. Maine’s median household income grew 22.1 percent to $45,463, and the United States’ increase was 26.6 percent to $53,154 from 2000 to 2007. From 2007 to 2012, median household income is projected to increase by 13.4 percent in Auburn to $49,678, by 12.5 percent to $39,014 in Lewiston, by 14.7 percent to $49,152 in Androscoggin County, by 14.7 percent in Maine to $52,125, and by 17.6 percent in the United States to $62,503.

27

Description of Primary Market Area (cont.)

          Exhibit 26 provides a summary of key housing data for Auburn, Lewiston, Androscoggin County, Maine and the United States. In 1990, Auburn had a rate of owner-occupancy of 57.0 percent, higher than Lewiston at 47.0 percent, with Androscoggin County at a higher 62.2 percent owner-occupancy rate. Maine and the United States had owner-occupancy rates of 70.5 percent and 64.2 percent, respectively. As a result, Auburn supported a higher rate of renter-occupied housing of 43.0 percent, compared to 53.0 percent in Lewiston, a lower 37.8 percent in Androscoggin County, 29.5 percent in Maine and 35.8 percent in the United States. In 2000, owner-occupied housing increased slightly in Auburn to 57.2 percent, and also increased slightly in Lewiston to 47.2 percent. Owner-occupied housing was 63.4 percent in Androscoggin County, 71.6 percent in Maine and 66.2 percent in the United States, respectively. Conversely, the renter-occupied rates decreased in Auburn to 42.8 percent, in Lewiston to 52.8 percent, in Androscoggin County to 36.6 percent and decreased in Maine and the United States to 28.4 percent and 33.8 percent, respectively.

          Auburn’s1990 median housing value was $86,800 with Lewiston having an $87,200 median housing value, and Androscoggin County, Maine and the United States at $86,400, $87,300 and $78,500, respectively. The 1990 median rent in Auburn was $396 compared to Lewiston at $361, Androscoggin County at $374, Maine at $419 and the United States at $374. In 2000, median housing values had decreased slightly in Auburn to $86,700 but had remained the same in Lewiston at $87,200. Androscoggin County, Maine and the United States all had increases in housing values to $89,900, $98,700 and $119,600, respectively. The 2000 median rents were $446 in Auburn, $408 in Lewiston, $433 in Androscoggin County, and $497 and $602 in Maine and the United States, respectively.

          In 1990, the major source of employment in all areas, by industry sector, based on share of employment, was the services sector with 35.3 percent, 33.3 percent, 32.3 percent, 36.8 percent and 34.0 percent of the majority of employment in Auburn, Lewiston, Androscoggin County, Maine and the United States, respectively (reference Exhibit 27). The manufacturing sector was the second major employment source in the Auburn, Lewiston and Androscoggin

28

Description of Primary Market Area (cont.)

County at 22.5 percent, 26.0 percent and 25.4 percent, respectively, but accounted for a lower 19.7 percent in Maine and 19.2 percent in the United States. The wholesale/retail sector was the third largest major employer in Auburn, Lewiston and Androscoggin County at 22.4 percent, 22.9 percent and 22.5 percent, respectively, but second highest in Maine and in the United States at 22.1 percent and 27.5 percent. The construction sector, finance, insurance and real estate sector, transportation/utilities sector, and the agriculture/mining sector combined to provide 19.8 percent of employment in Auburn, 17.8 percent of employment in Lewiston, 19.8 percent of employment in Androscoggin County, 21.4 percent in Maine and 19.3 percent in the United States.

          In 2000, the services industry, wholesale/retail trade and manufacturing industry provided the first, second and third highest sources of employment, respectively, for Auburn, Lewiston, Maine and the United States. The services industry accounted for 45.0 percent, 44.8 percent, 46.4 percent and 46.7 percent in Auburn, Lewiston, Maine and the United States, respectively. Wholesale/retail trade provided for 18.5 percent, 20.1 percent, 16.9 percent and 15.3 percent in Auburn, Lewiston, Maine and the United States, respectively. The manufacturing sector provided 17.5 percent, 17.4 percent, 14.2 percent and 14.1 percent of employment in Auburn, Lewiston, Maine and the United States, respectively. Androscoggin County’s three highest employment sectors were only slightly different in 2000, with services at 42.7 percent, manufacturing at 19.3 percent and wholesale/retail at 18.7 percent providing the largest numbers. The remaining employment sectors of agriculture/mining, construction, transportation/utilities, information, and finance, insurance and real estate provided the remaining 19.0 percent, 17.7 percent, 19.3 percent, 22.5 percent, and 23.9 percent of employment in Auburn, Lewiston, Androscoggin County, Maine and the United States, respectively.

29

Description of Primary Market Area (cont.)

          Some of the largest employers in the area are listed below.

Employer	Business
1,000 to 1,700 employees:
Central Main Medical Center	Health and management services
St. Mary’s Health Systems	Health and management services
500 to 999 employees:
L.L. Bean	Retail, telemarketing
Wal-Mart	General merchandise stores
Banknorth Group-L-A, MSA	Banking
Lewiston School Dept.	Educational services, local gov’t.
Bates College	Educational services, private
Auburn School Dept.	Educational services, local gov’t.
Tambrands, Inc.	Paper manufacturer
Panolam (Pioneer Plastics)	Plastics manufacturer
300 to 499 employees:
City of Lewiston	Local government
LiveBridge	Business services
Formed Tiber Technologies	Textile manufacturer
Tri-County Mental Health	Health services
County Kitchen (LePage Bakery)	Food manufacturer
Liberty Mutual	Insurance
Androscoggin Home Care & Hospice	Health services

          Unemployment rates are another key economic indicator. Exhibit 28 shows the unemployment rates in Androscoggin County, Maine and the United States in 2003 through October of 2007. Androscoggin County has been generally characterized by similar unemployment rates compared to both Maine and the United States with both the county and state having lower rates than the United States. In 2003, Androscoggin County had an unemployment rate of 5.0 percent, compared to rates of 5.0 percent in Maine and 6.0 percent in the United States. Unemployment rates decreased in 2004, to 4.5 percent in Androscoggin County, to 4.6 percent in Maine and to 5.5 percent in the United States. In 2005, the county and state had increases in unemployment rates to 4.9 percent and 4.8 percent, respectively, with the United States having a decrease in its unemployment rate to 5.1 percent. In 2006, unemployment rates decreased to 4.2 percent, 4.6 percent, and 4.6 percent in Androscoggin County, Maine, and

30

Description of Primary Market Area (cont.)

the United States, respectively. Through October of 2007, the unemployment rates in Androscoggin County, Maine and the United States were all at 4.4 percent.

          Exhibit 29 provides deposit data for banks and thrifts in Androscoggin County. At June 30, 2007, Auburn’s deposits represented 8.5 percent of the thrift deposits in Androscoggin County but a smaller 3.9 percent of the total deposits in Androscoggin County. It is evident from the size of the thrift and bank deposits that the market area has a moderate deposit base at $1.14 billion.

          Exhibit 30 provides interest rate data for each quarter for the years 2003 through 2007. The interest rates tracked are the Prime Rate, as well as 90-Day, One-Year and Thirty-Year Treasury Bills. Short term interest rates experienced a declining trend in 2002 and then a basically flat trend in 2003. This trend indicates some increase in One-Year Treasury Bills and 30-Year Treasury Notes. Then rates have indicated constant increases in each quarter in 2005 and continuing at a strong pace in the first quarter of 2006 followed by decreases in longer term Treasury rates in the second quarter of 2006 and then stabilizing for the remainder of 2006. In 2007, rates on thirty-year Treasuries increased, while 90-day and one-year Treasury bills decreased significantly, resulting in a reversal of the inverted yield curve.

SUMMARY

          Auburn and Lewiston experienced decreases in population from 1990 through 2000 as did Androscoggin County. All areas are projected to increase in population from 2007 through 2012. Auburn, Lewiston, Auburn County and Maine indicated lower per capita income and median household income than the United States. In 1990, the median housing values in Auburn, Lewiston and Auburn County were similar to Maine’s but higher than the national average, while the median rent in all areas except Lewiston was higher than the national median.

31

Description of Primary Market Area (cont.)

In 2000, market area, county and state median housing values and median rent were below the national medians.

          Androscoggin County has had similar unemployment rates compared to Maine with both the county and state having lower rates than that of the United States. Finally, the market area is a competitive financial institution market dominated by banks with a total market area deposit base for banks and thrifts of $1.1 billion.

32

III. COMPARABLE GROUP SELECTION

Introduction

          Integral to the valuation of Auburn is the selection of an appropriate group of publicly-traded thrift institutions, hereinafter referred to as the “comparable group”. This section identifies the comparable group and describes various methodologies and parameters used in the selection of the group. The selection of the comparable group was based on the establishment of both general and specific parameters using financial condition, operating and asset quality characteristics of the Bank to indicate the overall appropriateness of each of the comparable group institutions and the full comparable group in aggregate. The parameters established and defined are considered to be both reasonable and reflective of the Bank’s basic operations.

          The various characteristics of the selected comparable group provide the primary basis for applying the necessary adjustments to the Bank’s pro forma value relative to the comparable group. There is also a general recognition and consideration of financial comparisons with all publicly-traded, FDIC-insured thrifts in the United States and all publicly-traded, FDIC-insured thrifts in the New England region.

          Exhibits 32 and 33 present Thrift Stock Prices and Pricing Ratios and Key Financial Data and Ratios, respectively, for the universe of 204 publicly-traded, FDIC-insured, fully converted thrifts in the United States (“all thrifts”), also subclassifying those thrifts by region, including the 19 publicly-traded New England thrifts (“New England thrifts”), and by trading exchange. At February 15, 2008, there were no publicly-traded thrift institutions in Maine. Exhibits 34 and 35 present Thrift Stock Prices and Pricing Ratios and Key Financial Data and Ratios, respectively, for the 74 publicly-traded, FDIC-insured mutual holding companies in the United States.

33

SELECTION PARAMETERS

Mutual Holding Companies

          The percentage of public ownership of individual mutual holding companies indicates a wide range from minimal to just under 50 percent, since public ownership must be in the minority, causing them to demonstrate certain characteristic differences not only from fully converted, publicly-traded companies, but also among themselves. Mutual holding companies typically demonstrate higher pricing ratios that relate to their minority ownership structure and, in most cases, a lower book value per share. Mutual holding company trading volume in the aftermarket is often lower than fully converted companies, with the fewer public shares affording less liquidity to the issue. Additionally, there is a measure of speculation attached to mutual holding company pricing, in that mutual holding companies have more potential for remutualization than fully converted companies; and many mutual holding companies subsequently elect to offer to the public the majority of shares owned by the MHC in what is known as a second stage conversion. In a second stage conversion, the original minority public shareholders receive additional shares, known as exchange shares, in the fully converted company in order to maintain the same collective percentage ownership they held in the MHC. Such additional shares might increase the value of the minority shares, although recent short term price appreciation following second stage conversions has been generally modest.

          The Corporation will be conducting a first stage mutual holding company minority offering and will be majority owned by a federally chartered mutual holding company, Auburn Bancorp, MHC. Inasmuch as, following the completion of its minority offering, the Bank will demonstrate the same structural characteristics and will be subject to similar market influences as other publicly-traded mutual holding companies, it is our opinion that an appropriate comparable group be comprised wholly of mutual holding companies. In order, however, to moderate the differences in ownership, pricing and trading characteristics among the comparable group companies and to recognize their differences from the larger universe of publicly-traded companies, we will derive their pricing ratios on a fully converted basis by applying pro forma

34

Mutual Holding Companies (cont.)

second stage conversion parameters to their current financial structure. This process will discussed in greater detail in Section VI of this Appraisal.

          Exhibit 36 presents prices and price trends for all FDIC-insured first step mutual holding company minority offerings completed since January 1, 2007.

Trading Exchange

          It is necessary that each institution in the comparable group be listed on one of the three major stock exchanges, the New York Stock Exchange, the American Stock Exchange, or the National Association of Securities Dealers Automated Quotation System (NASDAQ). Such a listing indicates that an institution’s stock has demonstrated trading activity and is responsive to normal market conditions, which are requirements for continued listing.

          Of the 74 publicly-traded, FDIC-insured mutual holding companies, savings institutions, none is traded on the New York Stock Exchange, 1 is traded on the American Stock Exchange, 39 are traded on NASDAQ, 31 are traded on the OTC Bulletin Board and 3 are listed in the Pink Sheets. Comparable group institutions will be limited to the 40 companies traded on the American Stock Exchange and NASDAQ.

Asset Size

          Asset size was another parameter used in the selection of the comparable group. The maximum total assets for any potential comparable group institution was $450 million, due to the general similarity of asset mix and operating strategies of institutions within this asset range. Auburn had assets of approximately $63.5 million at December 31, 2007.

35

Asset Size (cont.)

          In connection with asset size, we did not consider the number of offices or branches in selecting or eliminating candidates, since that characteristic is directly related to operating expenses, which are recognized as an operating performance parameter.

Merger/Acquisition

          The comparable group will not include any institution that is in the process of a merger or acquisition due to the price impact of such a pending transaction.

          There are no other pending merger/acquisition transaction involving thrift institutions in the city, county or market area of Auburn, as indicated in Exhibit 37.

Second Stage Conversion/Secondary Offering

          The comparable group will not include any mutual holding company that has announced or is in the process of a second stage conversion, or that has announced or has recently completed a secondary stock offering, due to the price impact of such a transaction.

IPO Date

          Another general parameter for the selection of the comparable group is the initial public offering (“IPO”) date, which must be at least four quarterly periods prior to the trading date of February 15, 2008, used in this Appraisal, in order to insure at least four consecutive quarters of reported data as a publicly-traded institution. The resulting parameter is a required IPO date prior to January 1, 2007.

36

Geographic Location

          The geographic location of an institution is a pertinent parameter due to the impact of various regional economic and thrift industry conditions on the performance and trading prices of thrift institution stocks. The geographic location parameter has, therefore, eliminated regions of the United States distant to or incompatible with the Bank, including the western, northwestern and southwestern states. The geographic location parameter consists of the New England, Midwest and Mid-Atlantic states.

Core Return on Average Assets (Core ROAA)

          The comparable group will not include any institutions with negative core earnings during their most recent four quarters, since negative core earnings result in a negative price to core earnings multiple. Such a negative multiple is infinite and not meaningful and, in our opinion, would unreasonably and unacceptably skew and distort the comparable group’s average and median price to core earnings multiples, which are factors in the determination of value.

THE COMPARABLE GROUP

          The comparable group was selected after the application of the foregoing parameters, as follows, with the outlined rows in Exhibit 38 indicating the institutions ultimately selected for the comparable group using the selection parameters established in this section.

1. Exhibit 38 in its entirety shows the 40 mutual holding companies remaining as comparable group candidates after applying the trading exchange parameter, thereby eliminating the 34 mutual holding companies listed on the OTC bulletin board or in the Pink Sheets.

37

The Comparable Group (cont.)

2.	Of the 40 institutions within the trading exchange parameter, 26 institutions with total assets greater than $450 million were eliminated.
3.	None of the 14 remaining institutions was eliminated due to involvement in a merger/acquisition transaction.
4.	None of the remaining 14 institutions was eliminated due to an announced or ongoing second stage conversion.
5.	None of the remaining 14 institutions was eliminated due to a geographic location out of the New England, Mid-Atlantic and Midwest regions.
6.	Two of the remaining 14 institutions, LaPorte Bancorp, Inc. and MSB Financial Corp. were eliminated due to their IPO dates subsequent to January 1, 2007.
7.	Two of the remaining 12 institutions were eliminated due to negative earnings for the twelve months ended December 31, 2007.

          As outlined in Exhibit 38 and presented in Exhibit 39, the comparable group is comprised of the ten publicly-traded mutual holding companies not eliminated above, with average assets of $323.6 million, from a low of $132.2 million to a high of $424.5 million. The comparable group has an average of 6.7 offices, compared to Auburn with 2 banking offices. Nine of the comparable group companies are traded on NASDAQ and one is traded on the American Stock Exchange. Five of the comparable institutions are in New York, with one each in Illinois, Indiana, Kentucky, Ohio and Pennsylvania. Three of the comparable group institutions completed their MHC reorganizations in 1995, one in 1998, one in 1999, one in 2004, two in 2005 and two in 2006.

38

IV. ANALYSIS, COMPARISON AND VALIDATION OF THE COMPARABLE GROUP

BALANCE SHEET PARAMETERS

          The following five balance sheet characteristics of the comparable group will examined as they relate and compare to Auburn:

1.	Cash and investments to assets
2.	Mortgage-backed securities to assets
3.	Total net loans to assets
4.	Borrowed funds to assets
5.	Equity to assets

          The ratio of deposits to assets was not used as a parameter as it is directly related to and affected by an institution’s equity and borrowed funds ratios, which are separate characteristics. Exhibits 40 and 41 include the above parameters as well as other pertinent comparative metrics.

Cash and Investments to Assets

          Auburn’s ratio of cash and investments to assets, excluding mortgage-backed securities, was 7.88 percent at December 31, 2007, considerably lower than national and regional averages. The comparable group’s ratio of cash and investments to assets was 16.70 percent, higher than the Bank, higher than the national average of 13.85 percent and similar to the regional average of 17.93 percent. At December 31, 2006 and 2005, the comparable group’s ratio of cash and investments to assets was 12.64 percent and 10.03 percent, respectively.

          In our opinion, this characteristic of the comparable group, in the additional context of investment in mortgage-backed securities as discussed in the following section, is compatible with the Bank.

39

Mortgage-Backed Securities to Assets

          At December 31, 2007, Auburn had mortgage-backed securities of representing a modest 0.83 percent of total assets. For the five calendar years ended December 31, 2007, the Bank’s average ratio of mortgage-backed securities to total assets was 2.00 percent. The comparable group had a larger 8.95 percent share of mortgage-backed securities at December 31, 2007. The regional average was 11.82 percent and the national average was 8.53 percent for publicly-traded thrifts at December 31, 2007.

          Many institutions purchase mortgage-backed securities as an alternative to both lending, relative to cyclical loan demand and prevailing interest rates, and other investment vehicles. As indicated above, the Bank’s and the comparable group’s combined shares of cash and investments and mortgage-backed securities have been only modestly disparate with fluctuating and intersecting trends. In our opinion, the Bank and the comparable group indicate general and adequate compatibility as to cash, investments and mortgage-backed securities.

Total Net Loans to Assets

          At December 31, 2007, Auburn Savings had an 85.84 percent ratio of total net loans to assets, which was higher than both the national average of 72.15 percent and the regional average of 66.59 percent for publicly-traded thrifts. During the past five calendar years, the Bank’s ratio of total net loans to assets increased modestly from 79.66 percent in 2003 to 84.32 percent in 2006 to 85.84 percent in 2007, averaging 83.51 percent for those five years. At December 31, 2007, the comparable group had a moderately lower 68.97 percent ratio of loans to assets, which correlates closely to its similar 94.62 percent combined shares of cash and investments and mortgage-backed securities relative to Auburn at 94.55 percent. The comparable group’s five year average ratio was 72.24 percent, indicating a consistent relative trend, indicating no apparent disparate or changing lending strategy compared to the Bank.

40

Borrowed Funds to Assets

          The Bank had borrowed funds equal to 21.51 percent of assets at December 31, 2007, compared to a lower 10.45 percent for the comparable group and a considerably higher 35.26 percent ratio for all thrifts. The three most recent calendar year average is 21.40 percent for the Bank, 9.53 percent for the comparable group and 35.24 percent for all thrifts. It is evident, therefore, that although the comparable group has a lower average ratio than Auburn, the Bank and the comparable group are both below the thrift population with smaller than average shares of borrowed funds. In our opinion, considering liability trends and relative liability mixes in the thrift industry, the Bank and the comparable group are within reasonable limits of compatibility.

Equity to Assets

          Auburn Savings’ total equity to assets ratio was 7.06 percent at December 31, 2007, with the comparable group at a higher 14.86 percent. At December 31, 2007, the Bank had Tier 1 capital equal to 7.09 percent of total assets, compared to the comparable group at a 14.22 percent. All thrifts indicated an average total equity ratio of 11.01 percent and an average Tier 1 equity ratio of 9.94 percent.

          It should be noted that as a result of their capital and share structure, all publicly-traded mutual holding companies had a higher 14.21 percent total equity ratio at December 31, 2007, compared to fully converted companies at 11.01 percent as indicated above.

PERFORMANCE PARAMETERS

Introduction

          Exhibits 42, 43 and 44 present three performance parameters identified as key comparative metrics to determine the comparability of the Bank and the comparable group. The

41

Introduction (cont.)

primary performance indicator is the return on average assets (ROAA). The second performance indicator is net interest margin, which measures an institution’s ability to generate net interest income. An institution’s net noninterest margin comprises noninterest income and operating expenses or noninterest expenses as a combined net ratio to average assets. Net noninterest margin is a factor in distinguishing different types of operations, particularly institutions that are aggressive in secondary market activities, which often results in much higher operating costs and overhead ratios; and also provides for the netting of specific and incremental revenues and expenses associated with an institution’s ancillary services and consolidated subsidiary activities such as insurance and securities.

Return on Average Assets

          The key performance parameter is the ROAA. For the twelve months ended December 31, 2007, Auburn’s core ROAA was 0.20 percent based on core earnings after taxes of $127,000, as detailed in Item I and Exhibit 7 of this Appraisal. Since 2004, the Bank has experienced a very slightly decreasing trend in its core ROAA, which was 0.26 percent in 2004, 0.25 percent in 2005, 0.23 percent in 2006 and 0.20 in 2007, averaging 0.23 for the four years. The comparable group reported a core ROAA of 0.42 percent for the twelve months ended December 31, 2007, ranging from a high of 0.69 percent to a low of 0.42 percent; and indicated core ROAA of 0.69 percent in calendar 2004, 0.66 percent in calendar 2005, 0.58 percent in calendar 2006 and 0.42 in 2007, with a four year average of 0.59 percent. The national average core ROAA for publicly-traded thrifts was a similar 0.35 percent for the twelve months ended December 31, 2007, which was also similar to the regional average of 0.42 percent.

42

Net Interest Margin

          Auburn Savings had a net interest margin of 2.65 percent for the twelve months ended December 31, 2007, representing net interest income as a percentage of average interest-earning assets. The Bank’s interest margin has been generally constant in recent years, indicating 2.32 percent, 2.60 percent, 2.65 percent, 2.69 percent and 2.65 percent in 2003, 2004, 2005, 2006 and 2007, respectively. The comparable group experienced a slightly declining five year trend in net interest margin, which was 3.36 percent in 2003, 3.41 percent in 2004, 3.37 percent in 2005, 3.22 percent in 2006 and 3.01 percent in 2007, with a three year average of 3.27 percent. Like Auburn, the comparable group indicated a moderate decrease for the twelve months ended December 31, 2007, compared to calendar 2006. Industry and regional averages were 2.98 percent and 3.01 percent, respectively, for the twelve months ended December 31, 2007. Compared to the comparable group, the basis for the Bank’s lower net interest margin was its higher yield on interest earning assets, partially offset by its higher cost of interest-bearing liabilities, resulting in a net interest spread very similar to the comparable group, but a moderately lower net interest margin due to Auburn’s smaller asset base and larger share of interest-earning assets.

Net Noninterest Margin

          Net noninterest margin represents the ratio of an institution’s noninterest income less its noninterest expenses, net of provision for loan losses, to average total assets.

          Compared to publicly-traded thrifts, the Bank has historically realized lower than average noninterest income. Auburn had a 0.45 percent ratio of noninterest income to average assets for the twelve months ended December 31, 2007, while the comparable group reported a higher ratio of 0.58 percent for the same period. All thrifts had a significantly higher 1.45 percent ratio of noninterest income to average assets for the twelve months ended December 31, 2007, with New England thrifts at 0.91 percent.

43

Net Noninterest Margin (cont.)

          Compared to the national and regional averages of 2.89 percent and 2.72 percent, respectively, for the twelve months ended December 31, 2007, the Bank had a moderately lower 2.41 percent ratio of operating expense to average assets. The comparable group had a 2.73 percent ratio of noninterest expense to average assets for the twelve months ended December 31, 2007.

          Based on total noninterest income of 0.45 percent of average assets and total noninterest expense of 2.41 percent of average assets, the Bank’s net noninterest margin was (2.19) percent for the twelve months ended December 31, 2007, relative to the comparable group at (2.15) percent. In our opinion, such a variation of 4 basis points is well within a range of compatibility between the Bank and the comparable group, particularly considering the number and diversity of the components of noninterest income and expense.

ASSET QUALITY PARAMETERS

Introduction

          The final set of financial parameters used to confirm the validity of the comparable group are asset quality parameters, presented in Exhibit 39 and 44. The three defined asset quality parameters are the ratios of nonperforming assets to total assets, repossessed assets to total assets and loan loss reserves to total assets at the end of the most recent period.

Nonperforming Assets to Total Assets

          For the purposes of this analysis, nonperforming assets are defined as the sum of repossessed assets, loans delinquent ninety days or more but still accruing, and nonaccruing loans.

44

Nonperforming Assets to Total Assets (cont.)

          Comprised wholly of repossessed assets, Auburn’s ratio of nonperforming assets to assets was 0.20 percent at December 31, 2007, compared to the national average of 1.28 percent for publicly-traded thrifts and the much lower average of 0.37 percent for New England thrifts. The ratio of the comparable group was a higher 0.67 percent at December 31, 2007. The Bank’s ratio of nonperforming assets to total assets was also significantly lower than industry and regional averages during the previous four years, indicating zero at December 31, 2004 and 2006, and 0.12 percent and 0.24 percent at December 31, 2004 and 2006, respectively. Auburn’s five year average ratio of nonperforming assets to total assets is a modest 0.11 percent.

Repossessed Assets to Total Assets

          As stated above, Auburn had repossessed assets equal to 0.20 percent of total assets at December 31, 2007, and was absent repossessed assets at the end of its four previous calendar years. The comparable group had repossessed assets equal to a lower 0.04 percent of total assets at December 31, 2007, and had ratios of 0.03 percent, 0.11 percent, 0.21 percent and 0.17 percent at December 31, 2006, 2005, 2004 and 2003, respectively. Although repossessed assets are a component of nonperforming assets, as evaluated above, the primary perspective of this analysis is to ensure that the interest-earning asset base of the comparable group has not been impaired by a greater presence of repossessed assets, which can affect certain operating ratios including net interest margin. The national and regional ratios of repossessed assets to total assets were 0.20 percent and 0.03 percent, respectively, at December 31, 2007.

Allowance for Loan Losses

          The Bank had an allowance for loan losses of $309,000, representing ratios to total assets and total loans of 0.49 percent and 0.56 percent, respectively at December 31, 2007. The national average ratios were 0.70 percent of assets and 0.97 percent of loans, at December 31,

45

Allowance for Loan Losses (cont.)

2007, and the regional averages were 0.62 percent and 0.94 percent, respectively. The comparable group’s ratio of allowance for loan losses to assets was similar to Auburn at 0.53 percent, but its ratio to loans was a higher 0.76 percent due to the comparable group’s lower ratio of loans to assets.

CONCLUSION

          Although no single institution or group of institutions can be precisely the same as any other, due to the abundance of variables related to the characteristics of an institution’s condition, operations and environment, based on the foregoing parameters, as well as the detailed comparative metrics presented in Exhibits 39 through 44, it is our conclusion that the selected comparable is reasonable and valid, subject to the adjustments applied in the following section.

46

V. MARKET VALUE ADJUSTMENTS

          This is a conclusive section where adjustments are made to determine the pro forma market value or appraised value of the Corporation based on a comparison of Auburn with the comparable group. These adjustments will take into consideration such key items as earnings performance, primary market area, financial condition, asset and deposit growth, dividend payments, subscription interest, liquidity of the stock to be issued, management, and market conditions or marketing of the issue. It must be noted that all of the institutions in the comparable group have their differences among themselves and relative to the Bank, and, as a result, such adjustments become necessary.

EARNINGS PERFORMANCE

          In analyzing earnings performance, consideration was given to net interest income, the amount and volatility of interest income and interest expense relative to changes in market area conditions and to changes in overall interest rates, the quality of assets as it relates to the presence of problem assets which may result in adjustments to earnings, due to charge-offs, the balance of current and historical classified assets and real estate owned, the balance of valuation allowances to support any problem assets or nonperforming assets, the amount and volatility of noninterest income, and the amount and ratio of noninterest expenses.

          As discussed earlier, the Bank’s historical business model has focused on increasing its net interest income and net income; controlling its ratio of nonperforming assets; monitoring and maintaining its ratio of interest sensitive assets relative to interest sensitive liabilities, thereby controlling its sensitivity measure and its overall interest rate risk; and maintaining adequate allowances for loan losses to reduce the impact of any unforeseen charge-offs. The Bank has also closely monitored its overhead expenses. Auburn’s ratio of noninterest expense to average assets has indicated a constant and stable trend during the past five years, and that ratio remains moderately lower than comparable group, regional and industry averages, which is additionally significant considering the Bank’s smaller asset base. In the future, the Bank will focus on

47

Earnings Performance (cont.)

strengthening its net interest spread and net interest margin; increasing its noninterest income; increasing the amount and consistency of its net income; strengthening its recently lower return on assets; maintaining its lower balance of nonperforming assets; closely monitoring its ratio of interest sensitive assets relative to interest sensitive liabilities, and continuing to control its overhead expenses.

          Earnings are often related to an institution’s ability to generate loans. The Bank was an active originator of both mortgage and nonmortgage loans in fiscal years 2006 and 2007 and during the six months ended December 31, 2007. Auburn’s highest volume of originations occurred in fiscal year 2006, when total originations of $22.0 million resulted in a net $4.6 million increase in loans. The Bank’s largest origination category in fiscal year 2006 was $9.5 million of permanent 1-4 family residential mortgage loans, of which 86 percent were fixed-rate and 14 percent were adjustable-rate. The predominant component of those 1-4 family residential mortgage loan originations was the refinancing of existing loans and its balance of such loans indicated an increase of approximately $2.3 million or 6.2 percent in fiscal year 2006. Originations of equity lines of credit and construction loans were $4.9 million and $4.4 million, respectively, in fiscal year 2006. Auburn experienced shrinkage in loans of $1.1 million or 1.9 percent in fiscal year 2007, with total originations of $15.0 million offset by reductions of $16.1 million. Permanent 1-4 family residential mortgage loan originations of $5.1 million decreased by $4.3 million or 45.8 percent compared to fiscal year 2006 and continued to be predominantly refinancing of existing loans. Construction loan originations decreased significantly to $1.4 million in fiscal year 2007, while equity lines of credit decreased only modestly to $4.0 million. During the six months ended December 31, 2007, originations were only modestly lower on an annualized basis than in fiscal year 2007, with permanent 1-4 family residential mortgage loan originations of $2.2 million, construction loan originations of $1.9 million and equity line of credit originations of $1.5 million. Total loan growth during the six months ended December 31, 2007, was $1.7 million or 3.2 percent, annualized at $3.4 million or 6.4 percent.

48

Earnings Performance (cont.)

          Overall, from July 1, 2005, to December 31, 2007, Auburn originated $16.8 million of 1-4 family residential mortgage loans, $6.7 million of commercial mortgage loans, $7.6 million of construction loans, $10.4 million of equity lines of credit, $2.0 million of commercial loans and $1.2 million of consumer loans, for total originations of $44.0 million. Net of reductions, those originations generated an increase in loans of $5.2 million during that period.

          The impact of Auburn’s primary lending efforts has been to generate a yield on average interest-earning assets of 6.70 percent for the twelve months ended December 31, 2007, compared to a lower 6.13 percent for the comparable group, 6.58 percent for all thrifts and 6.08 percent for New England thrifts. The Bank’s ratio of interest income to average assets was 6.34 percent for the twelve months ended December 31, 2007, higher than the comparable group at 5.73 percent, and higher than all thrifts at 6.08 percent and New England thrifts at 5.68 percent, reflecting the Bank’s lower shares of lower yielding cash and investments and mortgage-backed securities.

          Auburn’s 4.14 percent cost of interest-bearing liabilities for the twelve months ended December 31, 2007, was higher than the comparable group at 3.59 percent, all thrifts at 3.94 percent and New England thrifts at 3.56 percent. The Bank’s resulting net interest spread of 2.56 percent for the twelve months ended December 31, 2007, was similar to the comparable group at 2.54 percent and New England thrifts at 2.52 percent, but modestly lower than all thrifts at 2.64 percent. The Bank’s net interest margin of 2.65 percent, based on average interest-earning assets for the twelve months ended December 31, 2007, was lower than the comparable group at 3.01 percent, all thrifts at 2.98 percent and New England thrifts at 3.01 percent.

          The Bank’s ratio of noninterest income to assets was 0.22 percent, including gains, for the twelve months ended December 31, 2007, substantially lower than the comparable group at 0.58 percent, and more notably lower than all thrifts at 1.45 percent and New England thrifts at 0.91 percent. A moderate 10.9 percent of the Bank’s noninterest income was comprised of gains on the sale of loans and other assets.

49

Earnings Performance (cont.)

          The Bank’s operating expenses were modestly lower than the comparable group, all thrifts and New England thrifts. For the twelve months ended December 31, 2007, Auburn had an operating expenses to assets ratio of 2.41 percent compared to 2.73 percent for the comparable group, 2.89 percent for all thrifts and 2.72 percent for New England thrifts. Such lower operating expenses relate to the Bank’s historical trend of closely monitoring operating expenses.

          For the twelve months ended December 31, 2007, Auburn generated a lower ratio of noninterest income, a lower ratio of noninterest expenses and a lower net interest margin relative to its comparable group. The Bank’s provision for loan losses was 0.01 percent of average assets, compared to 0.09 percent for the comparable group, 0.76 percent for all thrifts and 0.09 percent for New England thrifts. The Bank’s lower provision for loan losses during the twelve months ended December 31, 2007, is in line with its historical provisions. As a result, the Bank’s net income and core income were lower than the comparable group for the twelve months ended December 31, 2007. Based on net earnings, the Bank had a return on average assets of 0.33 percent, 0.26 percent, 0.12 percent, 0.23 percent and 0.21 percent in calendar years 2003 through 2007, respectively. For the twelve months ended December 31, 2007, the comparable group had a higher net ROAA of 0.45 percent, while all thrifts indicated an ROAA of 0.35 percent. The Bank’s core or normalized earnings, as shown in Exhibit 7, were modestly lower than its net earnings and resulted in a 0.20 percent core return on assets for the twelve months ended December 31, 2007. That core ROAA was also lower than the comparable group at 0.42 percent, all thrifts at 0.35 percent and New England thrifts at 0.42 percent.

          Auburn’s earnings stream will continue to be dependent on a combination of the overall trends in interest rates, the consistency, reliability and variation of its noninterest income and overhead expenses, its provisions for loan losses and any charge-offs that may be required. The Bank’s noninterest income has remained generally stable from 2003, through 2007, while overhead expenses indicate a modest increase during that period, remaining lower than industry averages. The Bank’s net interest margin, lower than the comparable group, has been the primary

50

Earnings Performance (cont.)

result of its higher cost of interest-bearing liabilities and its larger ratio of interest bearing liabilities to assets, partially offset by its higher yield on interest-earning assets.

          The Bank’s balance of nonperforming assets indicates a low five year 0.11 percent average ratio to assets and net charge-offs (recoveries) of $41,000 in 2003, - -0- in 2003, -0- in 2004, $(10,000) in 2005, and -0- in 2006 and -0- in 2007.

          In recognition of the foregoing earnings related factors, with consideration of Auburn’s current performance measures, a downward adjustment has been made to the Corporation’s pro forma market value for earnings performance.

MARKET AREA

          Auburn’s primary market area for both retail deposits and lending consists of Androscoggin County, Maine, the location of both its offices in the cities of Auburn and Lewiston. As discussed in Section II, from 1990 to 2000, this primary market area experienced a slight decrease in population and a modest increase in households. The market area had a similar per capita income and household income to Maine and the United States. From 2000 to 2007, the population of Androscoggin County increased by 5.9 percent and the county’s households increased by a greater 7.6 percent, both growth rates being similar to Maine but modestly lower than the United States. Between 2007 and 2012, the population and households in Androscoggin County are projected to increase at somewhat slower rates of 4.2 percent and 5.3 percent, respectively. In both 1990 and 2000, the median housing values and median rents in the Bank’s market area were lower than in both Maine and the United States. The average unemployment rate in Androscoggin County was 5.0 percent in 2003, compared to an identical 5.0 percent in Maine and 6.0 percent in the United States. By December of 2007, the county’s unemployment rate decreased to 4.6 percent, which is the same as both Maine and the United States.

51

Market Area (cont.)

          Approximately 82 percent of the Bank’s deposits are in its Auburn office, with the remaining 18 percent in its Lewiston office. Although Lewiston has a larger population and number of households, Auburn indicates a higher per capita income and median household income than Lewiston. In the Bank’s primary market area, the services sector represented the primary source of employment in 2000, followed by the wholesale/retail and manufacturing sectors, consistent with both state and national proportions.

          The financial competition in Androscoggin County, based on total deposits, is fairly strong in the context of the county’s population, demographics and economic base, with thrifts and commercial banks holding similar deposit balances. With deposits of $45.0 million at December 31, 2007, Auburn held modest market shares of thrift and total financial institution deposits.

          In recognition of the foregoing factors, we believe that no adjustment is warranted for the Bank’s primary market area relative to the comparable group.

FINANCIAL CONDITION

          The financial condition of Auburn is discussed in Section I and shown in Exhibits 1, 2, 5, and 12 through 23, and is compared to the comparable group in Exhibits 41, 42 and 43. The Corporation’s ratio of total equity to total assets was 7.06 percent at December 31, 2007, which was significantly lower than the comparable group at 14.88 percent, all thrifts at 11.01 percent and New England thrifts at 15.03 percent. With the minority offering completed at the midpoint of the valuation range, the Corporation’s pro forma equity to assets ratio will increase to approximately 9.5 percent, and the Bank’s pro forma equity to assets ratio will increase to approximately 8.3 percent.

52

Financial Condition (cont.)

          The Bank’s mix of assets and liabilities indicates both similarities to and variations from its comparable group. Auburn had a higher 85.8 percent ratio of net loans to total assets at December 31, 2007, compared to the comparable group at 69.0 percent. All thrifts indicated a lower 72.2 percent, as did New England thrifts at 66.6 percent. The Bank’s 7.9 percent share of cash and investments was lower than the comparable group at 16.7 percent, while all thrifts were at 13.9 percent and New England thrifts were at 17.9 percent. Auburn’s 0.83 percent ratio of mortgage-backed securities to total assets was much lower than the comparable group at 9.0 percent and all thrifts at 8.5 percent. The Bank’s 70.9 percent ratio of deposits to total assets was very modestly lower than the comparable group at 73.1 percent, but higher than all thrifts at 51.5 percent and New England thrifts at 63.0 percent. Auburn’s 21.5 percent ratio of borrowed funds to assets was higher than the comparable group at 10.5 percent, much lower than all thrifts at 35.3 percent and higher than New England thrifts at 13.5 percent.

          Auburn had intangible assets of 0.11 percent of assets, consisting of mortgage servicing rights, and had repossessed real estate equal to 0.20 percent of assets, compared to ratios of 0.78 percent and 0.04 percent of intangible assets and real estate owned, respectively, for the comparable group. All thrifts had intangible assets of 0.73 percent and real estate owned of 0.20 percent. Apart from its 0.20 ratio to assets of repossessed real estate, the Bank had no additional nonperforming assets at December 31, 2007. The comparable group had a higher 0.78 percent ratio of nonperforming assets to total assets, as did all thrifts at 1.28 percent and New England thrifts at 0.37 percent. Historically, the Bank’s ratio of nonperforming assets to total assets has been generally modest and lower than industry averages. The Bank’s ratio of nonperforming assets to total assets was 0.12 percent, zero, 0.24 percent, zero, and 0.20 percent at December 31, 2003, 2004, 2005, 2006, and 2007, respectively, averaging 0.11 percent for the five years.

          The Bank had a modestly higher 14.0 percent share of high risk real estate loans, compared to 12.1 percent for the comparable group and 10.3 percent for all thrifts. The regulatory definition of high risk real estate loans is all mortgage loans other than those secured by one- to four-family residential properties.

53

Financial Condition (cont.)

          At December 31, 2007, Auburn had $309,000 of allowances for loan losses, which represented 0.49 percent of assets and 0.56 percent of total loans. The comparable group indicated allowances equal to a similar 0.53 percent of assets and a larger 0.762 percent of total loans. More significant, however, is an institution’s ratio of allowances for loan losses to nonperforming assets, since a portion of nonperforming assets might eventually be charged off. Auburn’s $309,000 of allowances for loan losses, represented 249.19 percent of nonperforming assets at December 31, 2007, compared to the comparable group’s much lower 83.73 percent, with all thrifts at 146.89 percent and New England thrifts at a much higher 326.24 percent. Auburn’s ratio of net charge-offs to average total loans was less than 0.01 percent, compared to 0.12 percent for the comparable group, 0.15 percent for all thrifts and 0.08 percent for New England thrifts. This ratio reflects the Bank’s maintenance of a modestly lower average ratio of reserves to loans, and a lower ratio of reserves to nonperforming assets, combined with the Bank’s larger share of higher risk loans and lower nonperforming assets.

          Auburn has a moderate level of interest rate risk, evidenced by the decrease in its net portfolio value to assets ratio under conditions of rising interest rates. As discussed previously, the Bank’s post shock NPV ratio based on a 200 basis point rise in interest rates is 6.45 percent and indicates a 218 basis point decrease from its 8.63 percent based on no change in interest rates. In order to moderate its interest rate risk, the Bank’s strategy has been to originate and retain adjustable-rate mortgage loans, mortgage-backed securities and commercial loans. At the close of fiscal year 2007, approximately 25 percent of the Bank’s mortgage loans and 80 percent of its commercial loans carried adjustable rates. The Bank also recognizes that the planned minority stock offering will immediately strengthen the Bank’s post shock NPV ratio.

          Compared to the comparable group, we believe that no adjustment is warranted for Auburn’s current financial condition.

54

BALANCE SHEET AND EARNINGS GROWTH

          During its most recent five calendar years, Auburn has been characterized by lower average rates of growth in assets, loans and deposits relative to its comparable group. The Bank’s average annual asset growth rate from 2003 to 2007 was 2.2 percent, compared to a higher 8.0 percent for the comparable group, 9.2 percent for all thrifts, and 10.9 percent for New England thrifts. The Bank’s lower asset growth rate is reflective primarily of its lower loan and deposit growth and lower than average earnings during that five year period. The Bank’s loan portfolio indicates an average annual increase of 7.3 percent from 2003 to 2007, compared to average growth rates of 14.4 percent for the comparable group, 10.9 percent for all thrifts and 13.2 percent for New England thrifts.

          Auburn’s deposits indicate an average annual increase of 4.6 percent from 2003 to 2007. Annual deposit growth was from negative growth of 0.7 percent in 2007 to a high of 14.6 percent in 2005, compared to average five year growth rates of 5.9 percent for the comparable group, 8.3 percent for all thrifts and 7.7 percent for New England thrifts. In addition to its lower rate of deposit growth, the Bank had a higher 23.4 percent five average ratio of borrowed funds to assets, compared to the comparable group at 8.9 percent.

          The Bank’s ability to maintain its asset base and deposits in the future is, to a great extent, dependent on its being able to competitively price its loan and deposit products, to maintain a high quality of service to its customers, to increase its market share and to continue its loan origination activity. Androscoggin County experienced a small decrease in population and a modest increase in households between 1990 and 2000, followed by modest increases in both population and households from 2000 to 2007. Those modest increases are projected to continue through 2012. The Bank’s primary market area indicates 2000 and 2007 per capita income and median household income modestly lower than Maine and the United States. In 2000, the median housing value and median rent in Androscoggin County were also lower than Maine and the United States.

55

Balance Sheet and Earnings Growth (cont.)

          The Bank’s historical dependence on its current primary market area could result in lower asset growth in the future as a result of its competitive operating environment in a market area with modest growth in population and households, as well as per capita and median household income lower than state and national levels. Auburn’s internal projections indicate modest 2.8 percent deposit growth in 2008, partially reflecting the outflow of deposits to purchase stock, followed by continuing modest growth of 4.3 percent and 4.0 percent in 2009 and 2010, respectively. Total portfolio loans are projected to experience moderate growth in each of the next three years, as conversion proceeds are deployed, with cash and investments also rising modestly. Auburn’s competitive operating environment, together with its projected deposit growth during the next few years, combined with moderate loan growth, should result in the continuation of lower asset, loan and deposit growth for the Bank relative to the comparable group.

          As previously discussed, Auburn’s historical net interest margin and net earnings have been lower than the comparable group, as well as regional and national averages. Based on the deployment of offering proceeds, the Bank’s internal projections indicate that its volume of interest income and its yield on interest-earning assets will increase very modestly in 2008, 2009 and 2010, resulting in a very mildly increasing trend in ROAA and ROAE. It is anticipated, nevertheless, that Auburn’s net interest margin and ROAA will not equal or exceed those of the comparable group within that three year horizon. Additionally, although the Bank’s ratio of equity to assets will increase by between 100 basis points and 200 basis points following the completion of its minority offering, that ratio is projected to decrease modestly from 2008 to 2010 as a result of leveraging strategies and will remain significantly lower that the comparable group average.

          Based on the foregoing factors, we have concluded that a downward adjustment to the pro forma value is warranted for the Bank’s potential for balance sheet and earnings growth relative to the comparable group.

56

DIVIDEND PAYMENTS

          The Corporation has not committed to pay an initial cash dividend on its common stock. The future payment of cash dividends will depend upon such factors as earnings performance, financial condition, capital position, growth, asset quality and regulatory limitations.

          All ten of the comparable group institutions paid cash dividends during the twelve months ended December 31, 2007, for an average dividend yield of 3.08 percent and an average payout ratio of 160.25 percent. The average dividend yield is 1.97 percent for New England thrifts and 2.62 percent for all thrifts and the average payout ratio is 71.91 percent for New England thrifts and 69.84 percent for all thrifts. Such a higher payout ratio for the comparable group relates to the structure of mutual holding companies and the waiver of dividends on the majority shares owned by the mutual holding company.

          In our opinion, no adjustment to the pro forma market value of the Bank is warranted at this time related to the dividend payment.

SUBSCRIPTION INTEREST

          In 2007, investors’ interest in new issues declined significantly compared to 2006 and subscription levels have been consistently lower. Overall, the reaction of IPO investors appears generally to be related to a number of factors, including the financial performance and condition of the converting thrift institution, the strength of the local economy, general market conditions, the anticipation of continuing merger/acquisition activity in the thrift industry, current aftermarket pricing activity and the indirect impact of the subprime market concerns and actual losses by many subprime lenders in bank stock prices. It has also been observed that in general, first and second stage mutual holding company offerings generate lower subscription levels than full conversions.

57

Subscription Interest (cont.)

          Auburn will direct its offering primarily to depositors and residents in its market area. The board of directors and officers anticipate purchasing approximately $150,000 or 5.6 percent of the stock offered to the public based on the appraised midpoint valuation. The Bank will form an ESOP, which plans to purchase 3.43 percent of the total shares issued in the offering, including the shares issued to Auburn Bancorp, MHC, the mutual holding company. Additionally, the Prospectus restricts to 10,000 shares, based on the $10.00 per share purchase price, the total number of shares in the conversion that may be purchased by a single person, and to 15,000 shares by persons and associates acting in concert.

          The Bank has secured the services of Keefe Bruyette & Woods, Inc., to assist in the marketing and sale of the conversion stock.

          Based on the size of the offering, recent market movement and current market conditions, local market interest, price activity in the aftermarket, the terms of the offering and recent subscription levels for initial mutual holding company offerings, we believe that a downward adjustment is warranted for the Corporation’s anticipated subscription interest.

LIQUIDITY OF THE STOCK

          The Corporation will offer its shares through a subscription offering and, if required, a subsequent community offering with the assistance of Keefe Bruyette & Woods, Inc. The stock of the Corporation will be quoted on the OTC Bulletin Board.

          The Bank’s total public offering is modestly smaller in size to the average market value of the comparable group. The comparable group has an average market value of $69.1 million for the stock outstanding compared to a midpoint public offering of $2.7 million for the Corporation, less the ESOP and the estimated 15,000 shares to be purchased by officers and

58

Liquidity of the Stock (cont.)

directors, which will reduce the Corporation’s public market capitalization to approximately $2.3 million. Of the ten institutions in the comparable group, nine trade on NASDAQ and one trades on the American Stock Exchange.

          In further examining and analyzing the market for publicly-traded thrift stocks, we compared various characteristics of the 74 mutual holding companies with the 204 fully converted stock companies. Our findings indicate that the fully converted companies have an average market capitalization of $355.8 million, while the mutual holding companies’ average market capitalization is $242.6 or 32 percent smaller; and that mutual holding companies average 17.0 million shares, with fully converted stock companies averaging 25.4 million shares. We find it significant, therefore, that the average daily trading volume of mutual holding companies was 16,982 shares during the past twelve months, while fully converted stock companies indicated an average daily volume of 433,004 shares, 25.5 times higher than the mutual holding companies. The market capitalization of the mutual holding companies was only 32 percent smaller than the fully converted companies and their average number of shares outstanding was only 33.1 percent smaller than the fully converted companies, while their trading volume was 96.1 percent lower.

          Based on the average market capitalization, shares outstanding and daily trading volume of the comparable group, as well as the relative trading volume of publicly-traded mutual holding companies, we have concluded that a downward adjustment to the Corporation’s pro forma market value is warranted relative to the anticipated liquidity of its stock.

MANAGEMENT

          The president and chief executive officer of Auburn is Allen T. Sterling, who has served the Bank in that capacity since 1996 and will become a director of the Bank, the Corporation and the mutual holding company following the MHC reorganization. Mr. Sterling has been in

59

Management (cont.)

bank management since 1973. Rachel A. Haines is currently senior vice president and treasurer of Auburn and has served as treasurer since 2005, joining the Bank in 1986. Bruce M. Ray has served as senior vice president and senior loan officer of Auburn since 1997 and was a loan officer at two other Maine savings institutions from 1972 to 1997.

          During the past five years, Auburn has been able to increase its deposit base, total assets and total equity, maintain a stable equity to asset ratio, control nonperforming assets, classified loans and charge-offs, maintain a reasonable overhead expense position, particularly for a smaller institution, and slightly increase its market share in spite of strong competition. Although the Bank’s earnings and return on assets are below comparable group and industry averages, its operating expenses have been similar or below to such averages and management is confident that its offices are well positioned for reasonable growth and higher profitability.

          Overall, we believe the Bank to be professionally and knowledgeably managed, as are the comparable group institutions. It is our opinion that no adjustment to the pro forma market value of the Corporation is warranted for management.

MARKETING OF THE ISSUE

          The necessity to build a new issue discount into the stock price of a converting thrift institution continues to be a closely examined issue in recognition of uncertainty among investors as a result of the thrift industry’s dependence on interest rate trends, recent volatility in the stock market and pending federal legislation related to the regulation of financial institutions. Increased merger/acquisition activity, as well as the presence of new competitors in the financial institution industry, such as de novo institutions, investment firms, insurance companies and mortgage companies, have resulted in increased pressure on an individual institution’s ability to

60

Marketing of the Issue (cont.)

attract retail deposits at normal rates rather than premium rates and to deploy new funds in a timely and profitable manner.

          Based on prevailing market conditions, which have pressured the banking industry, particularly considering weaknesses in the aftermarket for initial financial institution offerings, we believe that a new issue discount applied to the price to book valuation approach is appropriate and necessary in current offerings and, in our opinion, applicable to this particular offering. Consequently, at this time we have made a downward adjustment to the Corporation’s pro forma market value related to a new issue discount.

61

VI. VALUATION APPROACH, METHODS AND CONCLUSION

Valuation Approach

          As indicated in Section 3 of this Appraisal, in order to moderate the differences among the twelve comparable group companies, all of which are mutual holding companies, we will derive their pricing ratios on a fully converted basis by applying pro forma second stage conversion assumptions to their current financial structure. Our application to the Corporation of the market value adjustments relative to the comparable group determined in Section 4 will be the basis for the pro forma market value of the Corporation on a fully converted basis, pursuant to regulatory guidelines.

          Exhibit 45 presents the Comparable Group Financial and Per Share Data and Exhibit 46 presents the Comparable Group Share and Market Data reflecting the comparable group’s current mutual holding company structure.

          Exhibit 47 presents the adjusted Comparable Group Share and Market Data subsequent to our application of pro forma second stage conversion assumptions to the comparable group’s current mutual holding company structure. Those assumptions include the sale of all MHC shares at their current trading price on February 15, 2008; the reduction of the gross proceeds to recognize the impact of exemplary and customary offering expenses and benefit plans; and the reinvestment of the net proceeds at reasonable and current market rates, tax effected, to determine the pro forma earnings impact of the net proceeds.

Valuation Methods

          Historically, the method most frequently used by this firm to determine the pro forma market value of common stock for thrift institutions has been the price to book value ratio method, due to the volatility of earnings in the thrift industry in the early to mid-1990s. As earnings in the thrift industry stabilized and improved in the late 1990s, additional attention has

62

Valuation Methods (cont.)

been given to the price to core earnings method, particularly considering increases in stock prices during those years. During the past few years, however, as fluctuating interest rates have had varying effects on the earnings of individual institutions, depending on the nature of their operations, the price to book value method has again become pertinent and meaningful to the objective of discerning commonality and comparability among institutions. In our opinion, the price to book value method is the appropriate method upon which to place primary emphasis in determining the pro forma market value of the Corporation. Additional analytical and correlative attention will be given to the price to core earnings method and the price to assets method.

          In applying each of the valuation methods, consideration was given to the adjustments to the Corporation’s pro forma market value discussed in Section V. Downward adjustments were made for the Bank’s earnings performance, balance sheet and earnings growth, stock liquidity, subscription interest and for the marketing of the issue. No adjustments were made for financial condition, market area, dividend payments and management.

Valuation Range

          In addition to the pro forma market value, we have defined a valuation range recognizing the 45 percent public offering and the 55 percent interest in the Corporation to be retained by Auburn Bancorp, MHC the Maine chartered mutual holding company parent of the Corporation. The pro forma market value or appraised value will also be referred to as the “midpoint value”, with the remaining points in the valuation range based on the number of shares offered to the public. The number of public shares at the minimum will be 15 percent less than at the midpoint; increasing at the maximum to 15 percent over the midpoint; and further increasing at the maximum, as adjusted, commonly referred to as the supermaximum, to 15 percent over the maximum.

63

Price to Book Value Method

          In the valuation of thrift institutions, the price to book value method focuses on an institution’s financial condition. Exhibit 48 shows the fully converted average and median price to book value ratios for the comparable group, which were 79.02 percent and 78.45 percent, respectively. The full comparable group indicated a moderately narrow range, from a low of 68.08 percent to a high of 93.13 percent. The comparable group had slightly higher average and median price to tangible book value ratios of 81.87 percent and 82.10 percent, respectively, with the same range of 68.08 percent to 93.13 percent. Excluding the low and the high in the group, the comparable group’s price to book value range narrowed modestly from a low of 69.51 percent to a high of 85.69; and the comparable group’s price to tangible book value range narrowed modestly from a low of 75.91 percent to a high of 89.49 percent.

          The Corporation’s book value was $4,481,000 and its tangible book value was $4,499,000 at December 31, 2007. Considering the foregoing factors, including the shares to be contributed to the foundation, in conjunction with the adjustments made in Section V, we have determined a fully converted pro forma price to book value ratio of 64.19 percent and a corresponding fully converted price to tangible book value ratio of 64.07 percent at the midpoint. The fully converted price to book value ratio increases from 69.52 percent at the minimum to 81.05 percent at the maximum, as adjusted, while the fully converted price to tangible book value ratio increases from 59.74 percent at the minimum to 71.56 percent at the maximum, as adjusted.

          The Corporation’s fully converted pro forma price to book value ratio of 64.19 percent at the midpoint, as calculated using the prescribed formulary computation indicated in Exhibit 49, is influenced by the Bank’s capitalization and local markets, subscription interest in thrift stocks and overall market and economic conditions. Further, the Corporation’s ratio of equity to assets after the completion of the public offering at the midpoint of the valuation range will be approximately 9.5 percent compared to 14.9 percent for the comparable group.

64

Price to Core Earnings Method

          The foundation of the price to core earnings method is the determination of the core earnings base to be used, followed by the calculation of an appropriate price to core earnings multiple. The Corporation’s after tax core earnings for the twelve months ended December 31, 2007, were $127,000 (reference Exhibit 7) and its net earnings were a higher $132,000 for that period. To opine the pro forma market value of the Corporation using the price to core earnings method, we applied the core earnings base of $127,000.

          In determining the fully converted price to core earnings multiple, we reviewed the ranges of fully converted price to core earnings and price to net earnings multiples for the comparable group and all publicly-traded thrifts. As indicated in Exhibit 48, the average fully converted price to core earnings multiple for the comparable group was 35.51 while the median was a lower 30.74. The average price to net earnings multiple was a similar 33.57 and the median multiple was 29.27. The comparable group’s fully converted price to core earnings multiple was moderately higher than the 30.42 average multiple for all publicly-traded, FDIC-insured thrifts and higher than their median of 19.66. The range of the fully converted price to core earnings multiple for the comparable group was from a low of 16.32 to a high of 68.35. The range in the fully converted price to core earnings multiple for the comparable group, excluding the high and low ranges, was from a low multiple of 22.05 to a high of 51.27 times earnings for eight of the ten institutions in the group, indicating a modest narrowing of the range.

          Consideration was given to the adjustments to the Corporation’s pro forma market value discussed in Section V. In recognition of those adjustments, we have determined a fully converted price to core earnings multiple of 43.89 at the midpoint, based on the Corporation’s core earnings of $127,000 for twelve months ended December 31, 2007. The Corporation’s fully converted core earnings multiple of 43.89 is modestly higher than its net earnings multiple of 42.21 as a result of the earnings adjustments previously noted and detailed in Exhibit 7.

65

Price to Assets Method

          The final valuation method is the price to assets method. This method is not frequently used, since the calculation incorporates neither an institution’s equity position nor its earnings performance. Additionally, the prescribed formulary computation of value using the pro forma price to net assets method does not recognize the runoff of deposits concurrently allocated to the purchase of conversion stock or incorporate any adjustment for intangible assets, returning a pro forma price to assets ratio below its true ratio following conversion.

          Exhibit 48 indicates that the average fully converted price to assets ratio of the comparable group was 18.24 percent and the median was 15.81 percent. The range in the price to assets ratios for the comparable group varied from a low of 7.63 percent to a high of 35.43 percent. The range narrows modestly with the elimination of the two extremes in the group to a low of 8.49 percent and a high of 25.49 percent.

          Consistent with the previously noted adjustments, it is our opinion that an appropriate price to assets ratio for the Corporation is 8.66 percent at the midpoint, which ranges from a low of 7.44 percent at the minimum to 11.17 percent at the maximum, as adjusted.

Valuation Analysis and Summary

          Exhibits 49 through 53 present the pro forma valuation analysis and conclusions, pricing ratios, use of offering proceeds and a summary of the valuation premiums or discounts relative to the three valuation approaches based on the Corporation and the comparable group as fully converted.

          Exhibit 54 presents the discounts or premiums of the Corporation’s fully converted pricing ratios relative to those of the fully converted comparable group. Based on the Corporation’s fully converted price to book value ratio and its equity of $4,481,000 at December 31, 2007, the Bank’s price to book value ratio of 64.19 percent represents a midpoint discount

66

Valuation Analysis and Summary (cont.)

relative to the fully converted comparable group of 18.76 percent. The Corporation’s fully converted price to core earnings multiple of 43.89 and price to net earnings multiple of 42.21 times earnings represent midpoint premiums relative to the fully converted comparable group of 30.71 percent and 25.71 percent, respectively. Recognizing the Corporation’s December 31, 2007, asset base of $63,458,000, the Bank’s fully converted price to assets ratio of 8.66 percent represent a midpoint discount relative to the fully converted comparable group of 52.54 percent.

          Exhibits 55 through 60 present the pro forma valuation analysis and conclusions, pricing ratios, use of offering proceeds and a summary of the valuation premiums or discounts relative to the three valuation approaches based on the Corporation’s minority offering and the reported pricing ratios of the comparable group in their current mutual holding company structure.

          Exhibit 61 presents the discounts or premiums of the Corporation’s minority offering pricing ratios relative to those actually reported by comparable group. At the midpoint, the Corporation’s minority offering price to book value ratio of 94.83 percent represents a discount of 31.74 percent relative to the comparable group and decreases to 19.59 percent at the maximum, as adjusted. The price to core earnings multiple of 46.55 for the Corporation at the midpoint value indicates a discount of 26.37 percent, decreasing to a smaller discount of 4.34 percent at the maximum, as adjusted. The Corporation’s price to assets ratio of 9.05 percent at the midpoint represents a discount of 57.77 percent, decreasing to a discount of 44.79 percent at the maximum, as adjusted.

Valuation Conclusion

          As presented in Exhibit 49, the fully converted pro forma valuation range of the Corporation is from a minimum of $5,015,000 or 501,500 shares at $10.00 per share to a maximum of $6,785,000 or 678,500 shares at $10.00 per share, with a maximum, as adjusted, of $7,802,750 or 780,275 shares at $10.00 per share. Exhibit 49 also presents in detail the total

67

Valuation Conclusion (cont.)

number of shares to be issued at each valuation range and the respective number of shares issued to the mutual holding company, the public and the foundation.

          It is our opinion that, as of February 15, 2008, the pro forma market value of the Corporation was $5,900,000 at the midpoint, representing a total of 590,000 shares at $10.00 per share, including 225,675 shares or 45 percent of the total shares offered to the public and 324,500 shares or 55.00 percent of the total shares issued to Auburn Bancorp, MHC, the mutual holding company.

68

EX-99.2

Exhibit 99.2

[Effective Date]

To Members and Friends of
Auburn Savings Bank, FSB

Keefe, Bruyette & Woods, Inc., a member of the Financial Industry Regulatory Authority, is assisting Auburn Bancorp, Inc., the proposed mid-tier stock holding company for Auburn Savings Bank, FSB, in offering shares of its common stock in a subscription and community offering pursuant to its Stock Issuance Plan.

At the request of Auburn Bancorp, Inc., we are enclosing materials explaining this process and your options, including an opportunity to invest in the shares of Auburn Bancorp, Inc. common stock being offered to customers of Auburn Savings Bank, FSB and various other persons until 12:00 Noon, Eastern Standard Time (EST), on __________ __, 2008. Please read the enclosed offering materials carefully, including the prospectus, for a complete description of the stock offering. Auburn Bancorp, Inc. has asked us to forward these documents to you in view of certain requirements of the securities laws in your state.

If you have any questions regarding the reorganization and offering, please call us at (207) xxx-xxxx, between 9 a.m. to 5 p.m. Monday through Friday, or stop by our Stock Information Center located at 325 Sabattus Street, Lewiston, ME 04240.

Very truly yours,

Keefe, Bruyette & Woods, Inc.

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

[Effective Date]

Dear Friend:

We are pleased to announce that Auburn Savings Bank, FSB is reorganizing into the mutual holding company structure. In connection with the reorganization, Auburn Bancorp, Inc., a newly-formed mid-tier holding company for Auburn Savings Bank Bank, FSB, is offering common stock in a subscription and community offering to certain members of Auburn Savings Bank, FSB and an employee stock ownership plan established by Auburn Savings Bank, FSB pursuant to a Stock Issuance Plan.

Because we believe you may be interested in learning more about the merits of Auburn Bancorp, Inc.’s common stock as an investment, we are sending you the following materials which describe the offering.

PROSPECTUS: This document provides detailed information about Auburn Savings Bank, FSB’s operations and the proposed offering of Auburn Bancorp, Inc.’s common stock.

STOCK ORDER AND CERTIFICATION FORM: This form can be used to purchase stock by returning it with your payment in the enclosed business reply envelope. Your order must be received by 12:00 Noon, Eastern Standard Time (EST), on [_____].

You will have the opportunity to buy common stock directly from Auburn Bancorp, Inc. in the offering without paying a commission or fee. If you have any questions regarding the reorganization and offering, please call us at (207) xxx-xxx, between 9 a.m. to 5 p.m. Monday through Friday, or stop by our Stock Information Center located at 325 Sabattus Street, Lewiston, ME 04240.

We are pleased to offer you this opportunity to become a stockholder of Auburn Bancorp, Inc.

Sincerely,

Allen T. Sterling
President and CEO

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

[Effective Date]

Dear Member:

We are pleased to announce that Auburn Savings Bank, FSB is reorganizing into the mutual holding company structure. In connection with the reorganization, Auburn Bancorp, Inc., a newly-formed mid-tier holding company for Auburn Savings Bank, FSB, is offering common stock in a subscription and community offering to certain members of Auburn Savings Bank, FSB and an employee stock ownership plan established by Auburn Savings Bank, FSB pursuant to a Plan of Reorganization From a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan (the “Plan”).

To accomplish this reorganization, we need your participation in an important vote. Enclosed is a proxy statement describing the Plan, your voting rights and your rights to subscribe for shares of common stock being offered for sale by Auburn Bancorp, Inc. YOUR VOTE IS VERY IMPORTANT.

Enclosed, as part of the proxy material, is your proxy card. This proxy card should be signed and returned to us prior to the special meeting of members on __________, 2008. Please take a moment now to sign the enclosed proxy card and return it to us in the postage-paid envelope provided. FAILURE TO VOTE HAS THE SAME EFFECT AS VOTING AGAINST THE REORGANIZATION.

The Board of Directors believes the reorganization will offer a number of advantages, such as an opportunity for depositors of Auburn Savings Bank to become stockholders of Auburn Bancorp, Inc. Please remember:

Ø	Your deposit accounts will continue to be insured up to the maximum legal limit by the Federal Deposit Insurance Corporation (“FDIC”).
Ø	There will be no change in the balance, interest rate or maturity of any deposit account or loan because of the reorganization.
Ø	Members have a right, but not an obligation, to buy Auburn Bancorp, Inc. common stock and may do so without the payment of a commission or fee before it is offered to the general public.
Ø	Like all stock, shares of Auburn Bancorp, Inc. common stock issued in this offering will not be insured by the FDIC.

In addition to the enclosed proxy statement, also enclosed is a Prospectus containing a complete discussion of the stock offering. We urge you to read this document carefully. If you are interested in purchasing the common stock of Auburn Bancorp, Inc., you must submit your Stock Order and Certification Form and payment prior to 12:00 Noon, Eastern Standard Time (EST), on __________, 2008.

If you have any questions regarding the reorganization, please call us at (207) xxx-xxxx, between 9 a.m. to 5 p.m. Monday through Friday, or stop by our Stock Information Center located at 325 Sabattus Street, Lewiston, ME 04240.

Sincerely,

Allen T. Sterling
President and CEO

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

[Effective Date]

Dear Prospective Investor:

We are pleased to announce that Auburn Savings Bank, FSB is reorganizing into the mutual holding company structure. In connection with the reorganization, Auburn Bancorp, Inc., the newly-formed mid-tier holding company for Auburn Savings Bank, FSB, is offering common stock in a subscription and community offering to certain members of Auburn Savings Bank, FSB, an employee stock ownership plan established by Auburn Savings Bank, FSB, and to certain members of the general public pursuant to a Stock Issuance Plan.

We have enclosed the following materials that will help you learn more about the merits of Auburn Bancorp, Inc. common stock as an investment. Please read and review the materials carefully.

PROSPECTUS: This document provides detailed information about Auburn Savings Bank, FSB’s operations and the proposed offering of Auburn Bancorp, Inc.’s common stock.

STOCK ORDER AND CERTIFICATION FORM: This form can be used to purchase stock by returning it with your payment in the enclosed business reply envelope. Your order must be received by 12:00 Noon, Eastern Standard Time (EST), on [_______], 2008.

We invite you and other community members to become stockholders of Auburn Bancorp, Inc. Through this offering you have the opportunity to buy stock directly from Auburn Bancorp, Inc. without paying a commission or a fee.

If you have any questions regarding the Stock Issuance Plan, please call us at (207) xxx-xxxx, between 9 a.m. and 5 p.m. Monday through Friday, or stop by our Stock Information Center located at 325 Sabattus Street, Lewiston, ME 04240.

Sincerely,

Allen T. Sterling
President and CEO

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

[Effective Date]

Dear Member:

We are pleased to announce that Auburn Savings Bank, FSB is reorganizing into the mutual holding company structure. In connection with the reorganization, Auburn Bancorp, Inc., a newly-formed mid-tier holding company for Auburn Savings Bank, FSB, is offering common stock in a subscription and community offering to certain members of Auburn Savings Bank, FSB and an employee stock ownership plan established by Auburn Savings Bank pursuant to a Plan of Reorganization From a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan (the “Plan”).

Unfortunately, Auburn Bancorp, Inc. is unable to either offer or sell its common stock to you because of the small number of eligible subscribers in your jurisdiction makes registration or qualification of the common stock under the securities laws of your jurisdiction impractical for reasons of cost or otherwise. Accordingly, this letter and the enclosures should not be considered an offer to sell or a solicitation of an offer to buy the common stock of Auburn Bancorp, Inc.

However as a member of Auburn Savings Bank, you have the right to vote on the Plan at the Special Meeting of Members to be held on __________, 2008. Enclosed is a proxy statement describing the Plan, your voting rights and your rights to subscribe for shares of common stock being offered for sale by Auburn Bancorp, Inc. and a proxy card. YOUR VOTE IS VERY IMPORTANT. This proxy card should be signed and returned to us prior to the special meeting of members on __________, 2008. Please take a moment now to sign the enclosed proxy card and return it to us in the postage-paid envelope provided. FAILURE TO VOTE HAS THE SAME EFFECT AS VOTING AGAINST THE REORGANIZATION.

The Board of Directors believes the reorganization will offer a number of advantages. Please remember:

Ø	Your deposit accounts will continue to be insured up to the maximum legal limit by the Federal Deposit Insurance Corporation (“FDIC”).
Ø	There will be no change in the balance, interest rate or maturity of any deposit account or loan because of the reorganization.

I invite you to attend the Special Meeting on __________, 2008. However, whether or not you are able to attend, please complete the enclosed proxy card and return it in the enclosed envelope.

Sincerely,

Allen T. Sterling
President and CEO

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

What Investors Need to Know

          Key concepts for investors to bear in mind when considering whether to participate in a conversion offering, or a stock offering by a subsidiary of a mutual holding company, include the following:

•	Know the Rules By law, accountholders cannot sell or transfer their priority subscription rights, or the stock itself, prior to the completion of a financial institution’s conversion. Moreover, accountholders cannot enter into agreements or arrangements to sell or transfer either their subscription rights or the underlying conversion stock.
•	“Neither a Borrower nor a Lender Be” If someone offers to lend you money so that you can participate or participate more fully in a conversion, be extremely wary. Be even more wary if the source of the money is someone you do not know. The loan agreement may make you unable to certify truthfully that you are the true holder of the subscription rights and the true purchaser of the stock and that you have no agreements regarding the sale or transfer of the stock.
•	Watch Out for Opportunists The opportunist may tell you that he or she is a lawyer or a consultant or a professional investor or some similarly impressive tale who has experience with similar mutual conversion transactions. The opportunist may go to extreme lengths to assure you that the arrangement you are entering into is legitimate. They might tell you that they have done scores of these transactions and that this is simply how they work. Or they might downplay the warnings or restrictions in the prospectus or order form, telling you that “everyone” enters into such agreements or that the deal they are offering is legitimate. They may also tell you that you have no risk in the transaction. The cold, hard truth is that these are lies, and if you participate, you are breaking the law.
•	Get the Facts from the Source If you have any questions about the securities offering, ask the savings bank or savings association for more information. If you have any doubts about a transaction proposed to you by someone else, ask the financial institution whether the proposed arrangement is proper. You may be able to find helpful resources on the institution’s website or by visiting a branch office.
	The bottom line for investors is always to remember that if an opportunity sounds too good to be true, it probably is too good to be true.

Read This First

Office of Thrift Supervision Guidance for Accountholders

          Your financial institution is in the process of selling stock to the public, in either a mutual-to-stock conversion or a stock issuance by a subsidiary of a mutual holding company. As an accountholder and possibly as a borrower at this institution, you have certain priority subscription rights to purchase stock in the offering. These priority subscription rights are non-transferable. If you subscribe for stock, you will be asked to sign a statement that the purchase is for your own account, and that you have no agreement or understanding regarding the subsequent sale or transfer of any shares you receive.

          On occasion, unscrupulous people attempt to persuade accountholders to transfer subscription rights, or to purchase shares in the offering based on the understanding that the shares will subsequently be transferred to others. Such arrangements violate federal regulations. If you participate in these schemes, you are breaking the law and may be subject to prosecution. If someone attempts to persuade you to participate in such a scheme, please contact Office of Thrift Supervision (OTS) at (202) 906-6202. OTS is very interested in ensuring that the prohibitions on transfer of subscription rights are not violated.

          How will you know if you are being approached illegally? Typically, a fraudulent opportunist will approach you and offer to “loan” you money to purchase a significant amount of stock in the offering. In exchange for that “loan” you most likely will be asked either to transfer control of any stock purchased with that money to an account the other person controls, or sell the stock and give the majority of the profits to the other person. You may be told, untruthfully, that there is no risk to you, that the practice is common, and even if you are caught, that your legal expenses will be covered.

          On the back of this page is a list of some key concepts that you should keep in mind when considering whether to participate in a mutual-to-stock conversion or stock issuance by a mutual holding company subsidiary. If you have questions, please contact the stock information center listed elsewhere in the literature you are receiving. Alternatively, you can contact us at: ombudsman@ots.treas.gov.

Initial Auburn Savings Bank, FSB Website Message to Commence xxxxxx xx, 2008

Stock Issuance Plan Information

Auburn Savings Bank, FSB is pleased to announce that materials were mailed on XXXXXX XX, 2008 regarding its Stock Issuance Plan. If you were a depositor with $50 or more on deposit as of September 30, 2006, and/or March 31, 2007, a depositor as of [voting record date], or a borrower as of July 1, 2006 whose loan continues to be outstanding as of [voting record date], you should receive a packet of materials soon. We encourage you to read the information carefully.

Information, including a Prospectus, regarding Auburn Savings Bank, FSB’s plan of reorganization and the minority stock issuance by Auburn Bancorp, Inc., the holding company for Auburn Savings Bank, FSB, is also enclosed in the packet of materials. The Subscription Offering has commenced and continues until 12:00 Noon, Eastern Standard Time (EST), on [Date 1], 2008, at which time all orders must be received if you want to subscribe for stock.

If you have questions regarding the offering, please call our Stock Information Center at (207) xxx-xxxx, Monday through Friday from 9:00 a.m. to 5:00 p.m.

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

End of Offering Auburn Bancorp, Inc. Website Message

Stock Issuance Plan Information

The Auburn Bancorp, Inc. stock offering closed at 12:00 Noon, Eastern Standard Time (EST), on [Date 1], 2008. The results of the offering are as follows:

____________________________________________________.

Interest and refund [if applicable] checks will be mailed out on ________________ by regular mail. No special mailing instructions will be accepted.

Allocations will be made available beginning at ______ on ________________. [If applicable]

Notice to Subscribers not receiving all shares: Please be aware that while we believe this to be a final allocation, we reserve the right to amend this amount up to the time of trading and recommend you verify such on your certificate prior to trading your shares. [if applicable]

The transfer agent for Auburn Bancorp, Inc. will be Registrar and Transfer Company, Cranford, New Jersey and the phone number for their Investor Relations Department is 1-800-368-5948.

We anticipate trading to begin on ____________, 2008 on the OTC Bulletin Board under the symbol “____.”

Best Regards,

Allen T. Sterling
President and CEO

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

FACTS ABOUT THE REORGANIZATION

The Board of Directors of Auburn Savings Bank, FSB unanimously adopted a Plan of Reorganization From a Mutual Savings Bank to a Mutual Holding Company and Stock Issuance Plan to reorganize into a mutual holding company structure. As a result of the reorganization, Auburn Bancorp, Inc. will become the federally chartered mid-tier stock holding company of Auburn Savings Bank, FSB (“Auburn Savings”), and Auburn Bancorp, Inc. will be 55% owned by Auburn Bancorp, MHC. In connection with the reorganization, Auburn Bancorp, Inc. is offering a minority of its common stock in a subscription offering to the public pursuant to the Plan of Reorganization and Stock Issuance. Auburn Bancorp, MHC will be the majority stockholder of the common stock of Auburn Bancorp, Inc. after the reorganization. Auburn Bancorp, MHC will have as its members the depositors and certain borrowers of Auburn Savings.

This brochure answers some of the most frequently asked questions about the stock issuance and about your opportunity to invest in Auburn Bancorp, Inc.

Investment in the stock of Auburn Bancorp, Inc. involves certain risks. For a discussion of these risks and other factors, including a complete description of the offering, investors are urged to read the accompanying Prospectus, especially the discussion under the heading “Risk Factors.”

WHAT IS THE PURPOSE OF THE REORGANIZATION?

The primary reasons for the reorganization and our decision to conduct the offering are to:

- Increase our capital in order to increase our profitability and support asset growth;

- Allow our directors, officers and employees the opportunity to become stockholders, which we see as an effective performance incentive and an effective means of attracting and retaining qualified personnel; and

- Retain the characteristics of a mutual organization. The mutual holding company structure will allow our mutual holding company to retain voting control over most decisions to be made by Auburn Bancorp, Inc. shareholders.

WILL THE REORGANIZATION AFFECT ANY OF MY DEPOSIT ACCOUNTS OR LOANS?

No. The reorganization will not affect the balance or terms of any deposit account or loan. Your deposits will continue to be federally insured by the Federal Deposit Insurance Corporation (“FDIC”) to the maximum legal limit. Your deposit account is not being converted to stock.

SHOULD I VOTE?

Yes. Your “YES” vote is very important! PLEASE SIGN AND RETURN ALL PROXY CARDS AT YOUR EARLIEST CONVENIENCE!

MAY I VOTE IN PERSON AT THE SPECIAL MEETING OF MEMBERS?

Yes, but we would still like you to sign and mail your proxy today. If you decide to revoke your proxy, you may do so by giving notice at the special meeting.

DO DEPOSITORS HAVE TO BUY STOCK?

No. However, the reorganization will allow Auburn Savings’ depositors and certain borrowers an opportunity to buy stock and become stockholders of Auburn Bancorp, Inc.

WHO IS ELIGIBLE TO PURCHASE STOCK IN THE SUBSCRIPTION OFFERING AND COMMUNITY OFFERING?

Certain depositors and borrowers of Auburn Savings as of certain dates and the Auburn Savings employee stock ownership plan can purchase stock in the subscription offering. We may elect to conduct a community offering that could commence at the same time as, during, or after the subscription offering that would allow certain members of the general public to purchase stock and give a preference to residents of Androscoggin County.

HOW MANY SHARES OF STOCK ARE BEING OFFERED AND AT WHAT PRICE?

Auburn Bancorp, Inc. is offering through the Prospectus between 225,675 and 305,325 shares of common stock at a price of $10.00 per share. The maximum number of shares that we may sell in the stock offering may increase by 15% to 351,124 shares as a result of regulatory considerations or changes in financial markets.

HOW MUCH STOCK MAY I BUY?

The minimum order is 25 shares or $250. No person may purchase more than 10,000 shares or $100,000 of common stock in the subscription offering, and no person, together with associates of and persons acting in concert with such persons may purchase more than 15,000 shares (or $150,000) of common stock, or more than 5% of the common stock sold in the stock offering (which in certain circumstances is fewer than 15,000 shares).

HOW DO I ORDER STOCK?

You must complete the enclosed Stock Order and Certification Form. Instructions for completing your Stock Order and Certification Form are contained in this packet. Your order must be received by Auburn Savings prior to 12:00 Noon, Eastern Standard Time (EST), on _____, 2008.

HOW MAY I PAY FOR MY SHARES OF STOCK?

First, you may pay for stock by check or money order. Interest will be paid by Auburn Savings on these funds at our passbook savings rate from the day the funds are received until the reorganization is completed or terminated. Second, you may authorize us to withdraw funds from your Auburn Savings savings account or certificate of deposit for the amount of funds you specify for payment. You will not have access to these funds from the day we receive your order until the reorganization is completed or terminated. Auburn Savings will waive any early withdrawal penalties on certificate of deposit accounts used to purchase stock.

CAN I PURCHASE SHARES USING FUNDS IN MY AUBURN SAVINGS IRA?

Potentially. However, you must establish a self-directed IRA account at a brokerage firm or trust department to which you can transfer a portion or all of your IRA account at Auburn Savings that will enable such purchase. Please contact your broker or self-directed IRA provider as soon as possible if you want to explore this option, as such transactions take time, typically several weeks.

MAY I OBTAIN A LOAN FROM AUBURN SAVINGS TO PAY FOR THE STOCK?

No. Regulations do not allow Auburn Savings to make loans for this purpose, nor may you use an Auburn Savings line of credit to pay for shares. However, you are not precluded from obtaining financing from another financial institution.

DOES PLACING AN ORDER GUARANTEE THAT I WILL RECEIVE ALL, OR A PORTION, OF THE SHARES I ORDERED?

No. It is possible that orders received during the stock offering will exceed the number of shares offered for sale. In this case, referred to as an “oversubscription,” regulations require that orders be filled using a predetermined allocation procedure. Please refer to the section of the Prospectus titled, “The Reorganization and Stock Offering” for a detailed description of allocation procedures.

If we are not able to fill an order (either wholly or in part), excess funds will be refunded by check, including interest earned at Auburn Savings’ passbook savings rate. If payment is to be made by withdrawal from an Auburn Savings deposit account, excess funds will remain in that account.

WILL THE STOCK BE INSURED?

No. Like any other common stock, Auburn Bancorp, Inc.’s stock will not be insured.

WILL DIVIDENDS BE PAID ON THE STOCK?

The board of directors does not currently intend to pay cash dividends. The board may decide to pay cash dividends in the future. For a further discussion, see the section entitled “Dividend Policy” on page __ of the Prospectus.

HOW WILL THE STOCK BE TRADED?

Upon completion of the offering, we anticipate that our common stock will be quoted on the OTC Bulletin Board.

ARE OFFICERS AND DIRECTORS OF AUBURN SAVINGS PLANNING TO PURCHASE STOCK?

Yes! Auburn Savings’ executive officers and directors plan to purchase, in the aggregate, $____ worth of stock or approximately ___% at the maximum of the offering range.

MUST I PAY A COMMISSION?

No. You will not be charged a commission or fee on the purchase of shares in the reorganization.

Stock Information Center

(207) xxx-xxxx

Auburn Bancorp, Inc.
325 Sabattus Street
Lewiston, ME 04240

Hours

Monday - Friday 9:00 a.m. to 5:00 p.m.
Excluding Bank Holidays

The Plan of
Reorganization and
Stock Issuance

QUESTIONS
&
ANSWERS

The proposed mid-tier stock holding company for Auburn Savings Bank, FSB

The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

Auburn Bancorp, Inc.
Community Meeting
_____ __, 2008
The shares of common stock being offered are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. This is not an offer to sell or a solicitation of an offer to buy common stock. The offer is made only by the Prospectus.

FORWARD-LOOKING STATEMENTS
The Prospectus contains a number of forward-looking statements regarding the financial condition, results of operations, earnings outlook, and business prospects of Auburn Bancorp, Inc. You can find may of these statements by looking for words such as “expects,” “projects,” “anticipates,” “believes,” “intends,” “estimates,” “strategy,” “plan,” “potential,” “possible” and other similar expressions. Forward-looking statements include: statements of our goals, intentions, and expectations; statements regarding our business plans, prospectus, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits.
The forward-looking statements involve significant risks and uncertainties. Actual results may differ materially from those expressed in, or implied by, the forward-looking statements due to, among others, the factors discussed under “Risk Factors” in the Prospectus as well as the following: changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; competitive pressures among financial services companies in our market area; general economic conditions, either nationally or in our market area, that are worse than expected; increased lending risks associated with increased commercial and construction lending; legislative or regulatory changes that adversely affect our business; changes in consumer spending, borrowing and savings habits; adverse changes in the securities markets; and changes in accounting policies and practices, as may be adopted by Auburn Savings Bank, regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board.
Any of the forward-looking statements that we make in the Prospectus and in other public statements we make may later prove incorrect because of the inaccurate assumptions, the factors illustrated above or other factors that we cannot foresee. Because of these and other uncertainties, no forward-looking statements can be guaranteed, and you should not rely on such statement. Except to the extent required by applicable law or regulation, Auburn Bancorp, Inc. undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events.

BRANCH LOCATIONS
Auburn Branch
256 Court Street
Auburn, ME 04212
Lewiston Branch
325 Sabattus Street
Lewiston, ME 04240

MANAGEMENT TEAM
Allen T. Sterling, President & Chief Executive Officer
Bruce M. Ray, Senior Vice President & Senior Loan Officer
Rachel A. Haines, Senior Vice President & Treasurer
Martha L. Adams, Senior Vice President & Operations Officer
Jason M. Longley, Vice President & Commercial Loan Officer

TOTAL ASSETS
$64,170
6/30/2006
$62,404
6/30/2007
$63,458
12/31/2007

ASSET MIX
Total Investments 2.7%
Other Assets 8.6%
Cash and Cash Equivalents 2.9%
Loans, Net 85.8%

LOANS, NET
$53,849
6/30/2006 $52,799
6/30/2007 $54,475
12/31/2007

LOAN PORTFOLIO MIX
Construction 3.0%
Commercial Business 2.6%
Consumer 1.0%
Commercial RE 16.2%
Equity Lines of Credit 19.9%
One to Four Family Residential 57.3%

NON PERFORMING LOANS TO LOANS
0.18% 6/30/2006
0.00% 6/30/2007
0.00% 12/31/2007

TOTAL DEPOSITS $45,009 6/30/2006
$44,879 6/30/2007
$44,991 12/31/2007

EQUITY CAPITAL
$4,163 6/30/2006
$4,350 6/30/2007
$4,481 12/31/2007

TIER 1 CAPITAL RATIO
6.54% 6/30/2006
6.98% 6/30/2007
7.09% 12/31/2007

NET INTEREST MARGIN
2.73% 2006FY
2.67% 2007FY
2.68% 12/31/2007 6 Months Ann.

NET INCOME
$126 2006FY
$120 2007FY
$168 12/31/2007 6 Months Ann.

RETURN ON AVERAGE ASSETS
0.21% 2006FY
0.19% 2007FY
0.27% 12/31/2007 6 Months Ann.

RETURN ON AVERAGE EQUITY
3.01% 2006FY
2.77% 2007FY
3.73% 12/31/2007 6 Months Ann.

PRO FORMA DATA

PREFERENCE CATEGORIES
1. Eligible Account Holders
Depositors with $50 or more on deposit as of September 30, 2006.
2. Employee Stock Ownership Plan (ESOP)
3 Supplemental Eligible Account Holders
Depositors with $50 or more on deposit as of March 31, 2008.
4 Other Members
Depositors of Auburn Savings Bank as of [Voting Record Date], 2008, or borrowers as of July 1, 2006 whose loans continue to be outstanding on [Voting Record Date].
5 Local Community
Residents of Androscoggin County, ME.
6. General Community

We thank you for your interest in Auburn Bancorp, Inc.

CORRESP

Michelle L. Basil
Direct Line: 617-439-2477
Fax:  617-310-9477
E-mail: MBasil@nutter.com

March 14, 2008
107782-2

VIA EDGAR

Securities and Exchange Commission
Division of Corporation Finance
100 F Street, NE
Washington, DC 20549

Re: Auburn Bancorp, Inc.— Registration Statement on Form S-1

Ladies and Gentlemen:

        Pursuant to the requirements of the Securities Act of 1933, as amended, we enclose for filing a Registration Statement on Form S-1 (the “Registration Statement”) related to the initial public offering of up to 351,124 shares (the “Shares”) of common stock, $0.01 par value per share, of Auburn Bancorp, Inc, a federally-chartered corporation in organization (the “Registrant”).

        The Registration Statement is being filed in connection with the Auburn Savings Bank Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock Issuance Plan (the “Plan”). Pursuant to the Plan, Auburn Savings Bank, FSB (the “Bank”) proposes to reorganize from a mutual savings and loan association into the mutual holding company structure (the “Reorganization”) under federal law and the regulations of the Office of Thrift Supervision (“OTS”), and other applicable federal laws and regulations. As part of the Reorganization, the Bank will establish Auburn Bancorp, MHC (the “MHC”) as a federally-chartered mutual holding company and the Registrant as federally-chartered mid-tier stock holding company. Following the Reorganization, the Registrant will be a majority-owned subsidiary of the MHC, and the Bank will become a wholly-owned subsidiary of the Registrant.

        If you have any questions or require any further information with respect to the Registration Statement or any matters relating to this filing, please do not hesitate to call the undersigned at (617) 439-2477.

Very truly yours,

/s/ Michelle L. Basil

Michelle L. Basil

Enclosure
cc:      Mr. Allen T. Sterling

Nutter McClennen & Fish LLP • Attorneys at Law

World Trade Center West   •  155 Seaport Blvd.   •  Boston, MA 02210-2604   •  617-439-2000   •  Fax: 617-310-9000   • www.nutter.com