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FAIRMOUNT BANCORP, S-1/A Filing

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					Table of Contents

                                      As filed with the Securities and Exchange Commission on February 8, 2010
                                                                                                                                          Registration No. 333-163797




                                        UNITED STATES
                            SECURITIES AND EXCHANGE COMMISSION
                                                                WASHINGTON, D.C. 20549


                                                                      Amendment No. 1 to
                                                                         FORM S-1
                                                             REGISTRATION STATEMENT
                                                                     UNDER
                                                            THE SECURITIES ACT OF 1933


                                   FAIRMOUNT BANCORP, INC.
                                                    (Exact Name of Registrant as Specified in Its Charter)



                      Maryland                                                      6712                                                   27-1783911
              (State or Other Jurisdiction of                            (Primary Standard Industrial                                      (I.R.S. Employer
             Incorporation or Organization)                               Classification Code Number)                                   Identification Number)
                                                                     8216 Philadelphia Road
                                                                    Baltimore, Maryland 21237
                                                                          (410) 866-4500
                           (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)



                                                                    Mr. Joseph M. Solomon
                                                             President and Chief Executive Officer
                                                                   Fairmount Bancorp, Inc.
                                                                    8216 Philadelphia Road
                                                                  Baltimore, Maryland 21237
                                                                        (410) 866-4500
                                       (Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)



                                                                          Copies to:
                                                                Edward B. Crosland, Jr., Esq.
                                                                  Regina N. Hamilton, Esq.
                                                Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P.
                                                             499 S. Capitol Street, SW, Suite 600
                                                                   Washington, D.C. 20003
                                                                       (202) 203-1000


Approximate date of commencement of proposed sale to the 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: 
If this Form is filed to register additional shares 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: 
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: 
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: 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of ―large accelerated filer,‖ ―accelerated filer‖ and ―smaller reporting company‖ in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated filer                                                                                   Accelerated filer                         
Non-accelerated filer                   (Do not check if a smaller reporting company)                     Smaller reporting company                 
                                                   CALCULATION OF REGISTRATION FEE

                  Title of each class of                    Amount to be          Proposed maximum            Proposed maximum           Amount of
               securities to be registered                   registered         offering price per share    aggregate offering price   registration fee
Common Stock, $0.01 par value per share                   661,250 shares               $10.00                 $6,612,500 (1)             $369 (2)

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

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 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.
Table of Contents

PROSPECTUS

                                                    FAIRMOUNT BANCORP, INC.
                                                          (Proposed Holding Company for Fairmount Bank)
                                                               Up to 575,000 Shares of Common Stock




    Fairmount Bancorp, Inc., a Maryland corporation, is offering shares of its common stock for sale in connection with the conversion of
Fairmount Bank, a federally chartered savings bank, from the mutual to the stock form of organization. All shares of common stock are being
offered for sale at a price of $10.00 per share. We expect that our common stock will be quoted on the Over-the-Counter Electronic Bulletin
Board upon conclusion of the offering.
    We are offering up to 575,000 shares of common stock for sale on a best efforts basis, subject to certain conditions. We may sell up to
661,250 shares of common stock, without giving subscribers the opportunity to change or cancel their orders, because of demand for the shares,
changes in market conditions or regulatory considerations. We must sell a minimum of 425,000 shares in order to complete the offering.
      If you are or were a depositor of Fairmount Bank:
       •      You may have priority rights to purchase shares of common stock.
      If you are or were not a depositor, 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.
    The minimum number of shares of common stock you may order is 25 shares. The offering is expected to expire at 2:00 p.m., Eastern time,
on            , 2010. We may extend this expiration date without notice to you until               , . Once submitted, orders are irrevocable
unless the offering is terminated or is extended beyond              , , or the number of shares of common stock to be sold is increased to more
than 661,250 shares or decreased to fewer than 425,000 shares. If the offering is extended beyond                , , or if the number of shares of
common stock to be sold is increased to more than 661,250 shares or decreased to fewer than 425,000 shares, we will give subscribers an
opportunity to change or cancel their orders. Funds received during the offering will be held in a segregated account at Fairmount Bank, or, in
our discretion, at another insured depository institution, and will earn interest at our passbook savings rate, which is currently 1.00% per
annum.
      Stifel, Nicolaus & Company, Incorporated will assist us in selling our shares of common stock on a best efforts basis. Shares of common
stock not purchased in the subscription offering may be offered for sale to the general public in a ―community offering‖ with a preference given
first to natural persons residing in Baltimore City, Maryland, and the Maryland counties of Baltimore and Harford. The community offering, if
held, may begin concurrently with, during or promptly after the subscription offering, as we may determine at any time. We also may offer for
sale shares of common stock not purchased in the subscription offering or community offering through a ―syndicated community offering‖
managed by Stifel, Nicolaus & Company, Incorporated. Stifel, Nicolaus & Company, Incorporated is not required to purchase any shares of the
common stock that are being offered for sale. Purchasers will not pay a commission to purchase shares of common stock in the offering. Stifel,
Nicolaus & Company, Incorporated has advised us that it intends to make a market in the common stock, but is under no obligation to do so.
                                  This investment involves a degree of risk, including the possible loss of your principal.
                                                   Please read “ Risk Factors ” beginning on page 13.



                                                                          OFFERING SUMMARY
                                                                           Price: $10.00 Per Share
                                                                                                                                                                           Adjusted
                                                                                                                          Minimum           Midpoint       Maximum         Maximum
Number of shares                                                                                                             425,000           500,000        575,000         661,250
Gross offering proceeds                                                                                                 $ 4,250,000     $    5,000,000   $ 5,750,000     $ 6,612,500
Estimated offering expenses (excluding selling agent fees and expenses)                                                 $    485,000    $      485,000   $    485,000    $    485,000
Estimated selling agent fees and expenses (1)                                                                           $    215,000    $      215,000   $    215,000    $    215,000
Estimated net proceeds                                                                                                  $ 3,550,000     $    4,300,000   $ 5,050,000     $ 5,912,500
Estimated net proceeds per share                                                                                        $       8.35    $         8.60   $       8.78    $        8.94


(1)   See ―The Conversion and Offering—Marketing and Distribution; Compensation‖ for a discussion of Stifel, Nicolaus & Company, Incorporated’ compensation for this offering.

    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, toll-free, at (    )        -       .



                                                         Stifel Nicolaus

                                              The date of this prospectus is              , 2010.
Table of Contents
Table of Contents

                                        TABLE OF CONTENTS

                                                                                        Page
SUMMARY                                                                                   1
RISK FACTORS                                                                             13
SELECTED FINANCIAL AND OTHER DATA                                                        23
RECENT DEVELOPMENTS                                                                      25
FORWARD-LOOKING STATEMENTS                                                               29
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING                                      30
OUR POLICY REGARDING DIVIDENDS                                                           31
MARKET FOR THE COMMON STOCK                                                              32
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE                                   33
CAPITALIZATION                                                                           34
PRO FORMA DATA                                                                           36
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    39
BUSINESS OF FAIRMOUNT BANCORP, INC.                                                      49
BUSINESS OF FAIRMOUNT BANK                                                               51
SUPERVISION AND REGULATION                                                               69
TAXATION                                                                                 76
MANAGEMENT                                                                               77
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS                                        86
THE CONVERSION AND OFFERING                                                              86
RESTRICTIONS ON ACQUISITION OF FAIRMOUNT BANCORP, INC.                                  102
DESCRIPTION OF CAPITAL STOCK                                                            104
TRANSFER AGENT                                                                          105
EXPERTS                                                                                 105
LEGAL MATTERS                                                                           106
WHERE YOU CAN FIND ADDITIONAL INFORMATION                                               106
INDEX TO FINANCIAL STATEMENTS OF FAIRMOUNT BANK

                                                i
Table of Contents

                                                                  SUMMARY

       The following summary highlights material information in this prospectus. It may not contain all the information that is important to
  you. For additional information before making an investment decision, you should read this entire prospectus carefully, including the
  financial statements, the notes to the financial statement and the section entitled “Risk Factors.”

        In this prospectus, the terms ―we‖, ―our,‖ and ―us‖ refer to Fairmount Bancorp, Inc., unless the context indicates another meaning.

  Fairmount Bancorp, Inc.
       Fairmount Bancorp, Inc. is a newly formed Maryland corporation that will own all of the outstanding shares of common stock of
  Fairmount Bank upon completion of the mutual-to-stock conversion and the offering. Fairmount Bancorp, Inc. has not engaged in any
  business to date. The principal business activity of Fairmount Bancorp, Inc. will be the ownership of all of the outstanding shares of
  common stock of Fairmount Bank.

       Our executive offices are located at 8216 Philadelphia Road, Baltimore, Maryland 21237. Our telephone number is (410) 866-4500.
  Our website is located at www.fairmountbank.com .

  Fairmount Bank
        Fairmount Bank is a federally chartered savings bank located in the Rosedale area of Baltimore County, Maryland, originally founded
  in 1879. Fairmount Bank has operated as a community-oriented institution by offering a variety of loan and deposit products and serving
  other financial needs of its local community. Fairmount Bank takes its corporate citizenship seriously and is committed to meeting the
  credit needs of the community, consistent with safe and sound operations.

        At September 30, 2009, Fairmount Bank had total assets of $64,041,000, net loans of $50,334,000, total deposits of $45,838,000 and
  total equity of $6,790,000.

        Fairmount Bank’s business consists primarily of attracting and accepting retail deposits from the general public in the areas
  surrounding our office and investing those deposits, together with funds generated from operations, in primarily one-to four-family
  residential mortgage loans. At September 30, 2009, one-to four-family residential mortgage loans totaled $39,646,000, or 78.69% of
  Fairmount Bank’s loan portfolio. Fairmount Bank also invests in various investment securities. Our profitability depends primarily on
  Fairmount Bank’s net interest income, which is the difference between the income Fairmount Bank receives on its loans and other assets
  and its cost of funds, which consists of the interest Fairmount Bank pays on deposits and borrowings.

       Fairmount Bank’s executive offices are located at 8216 Philadelphia Road, Baltimore, Maryland 21237. Its telephone number is
  (410) 866-4500. Fairmount Bank’s website is located at www.fairmountbank.com .

  Our Organizational Structure
       Pursuant to the terms of our plan of conversion, Fairmount Bank will convert from a federal mutual (meaning no stockholders)
  savings bank to a federal stock savings bank and operate as a wholly owned subsidiary of Fairmount Bancorp, Inc. As a part of the
  conversion, we are offering for sale in a subscription offering, and, possibly, a community offering and a syndicated community offering,
  shares of common stock of Fairmount Bancorp, Inc.

       Upon completion of the offering, Fairmount Bancorp, Inc. will own 100% of the outstanding shares of common stock of Fairmount
  Bank, and all of the common stock of Fairmount Bancorp, Inc. will be owned by purchasers in the offering.


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Table of Contents

        The following diagram depicts our corporate structure after the conversion and offering:




  Business Strategy
        Our business goal is to remain a well capitalized, profitable and community-oriented institution and to grow and improve our
  profitability. We seek to accomplish this goal by:
          •    growing and diversifying Fairmount Bank’s loan portfolio;
          •    continuing to emphasize residential real estate lending;
          •    continuing to maintain strong asset quality through conservative underwriting standards;
          •    building lower cost deposits;
          •    maintaining a strong capital position through disciplined growth and earnings;
          •    offering new and better products and services; and
          •    expanding our branch network.

       See ―Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Strategy‖ for a further
  discussion of our business strategy.

  Reasons for the Conversion and the Offering
        Our primary reasons for converting Fairmount Bank to the stock form of organization and raising additional capital through the
  offering are to:
          •    provide a larger capital cushion for asset growth, which will primarily be realized through existing operations;
          •    support growth and diversification of operations, products and services to transition Fairmount Bank into a full-service
               community bank;
          •    improve our overall capital and competitive position;
          •    increase Fairmount Bank’s loans to one borrower limit and allow Fairmount Bank to make larger loans, including larger
               commercial real estate loans;


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          •    provide additional financial resources to pursue branch expansion and possible future acquisition opportunities, although we
               have no current arrangements or agreements with respect to any such branches or acquisitions;
          •    provide better capital management tools, including the ability to pay dividends and to repurchase shares of our common stock,
               subject to market conditions; and
          •    attract and retain qualified directors, officers and other employees by establishing stock-based compensation plans including a
               stock option plan, a stock recognition and retention plan and an employee stock ownership plan.

       The offering is expected to provide local customers and other residents with an opportunity to become equity owners of Fairmount
  Bancorp, Inc., consistent with the objective of being a locally-owned financial institution serving local financial needs. The board and
  management believe that, through local stock ownership, purchasers of our stock will seek to enhance our financial success by
  consolidating their banking business in, and referring prospective customers to, Fairmount Bank.

        In the stock holding company structure, we will have easier access to the capital markets and we will have greater flexibility in
  structuring mergers and acquisitions. Our current mutual structure prevents us from offering shares of our common stock as consideration
  for a merger or acquisition. Potential sellers often want stock for at least part of the acquisition consideration. Our new stock holding
  company structure will enable us to offer stock or cash consideration, or a combination thereof, and will therefore enhance our ability to
  compete with other bidders when acquisition opportunities arise.

  Terms of the Conversion and the Offering
        Pursuant to the plan of conversion, Fairmount Bank will convert from a federal mutual savings bank to a federal stock savings bank.
  In connection with the conversion, we are offering between 425,000 and 575,000 shares of common stock in a subscription offering to
  eligible depositors of Fairmount Bank, to our tax-qualified employee benefit plans and, to the extent shares remain available, to the general
  public in a community and/or syndicated community offering. The number of shares of common stock to be sold may be increased up to
  661,250 as a result of demand for the shares, changes in the market for financial institution stocks or regulatory considerations. Unless the
  number of shares of common stock to be offered is increased to more than 661,250 or decreased to less than 425,000, or the offering is
  extended beyond              , 2010, subscribers will not have the opportunity to change or cancel their stock orders.

        The purchase price of each share of common stock to be issued in the offering is $10.00. All investors will pay the same purchase
  price per share. Investors will not be charged a commission to purchase shares of common stock in the offering. Stifel, Nicolaus &
  Company, Incorporated, our conversion advisory and marketing agent in the offering, will use its best efforts to assist us in selling shares
  of our common stock. Stifel, Nicolaus & Company, Incorporated is not obligated to purchase any shares of common stock in the offering.

  Persons Who May Order Shares of Common Stock in the Offering
        We are offering the shares of common stock in a ―subscription offering‖ in the following order of priority:
          •    First, to depositors of Fairmount Bank with aggregate account balances of at least $50 as of the close of business on
               September 30, 2008.
          •    Second, to Fairmount Bank’s tax-qualified employee benefit plans.
          •    Third, to depositors of Fairmount Bank with aggregate account balances of at least $50 as of the close of business on
               December 31, 2009.
          •    Fourth, to depositors of Fairmount Bank as of            ,   .

        Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a ―community
  offering,‖ with a preference given to natural persons residing in Baltimore City, Maryland, and the


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  Maryland counties of Baltimore and Harford. The community offering, if held, may begin concurrently with, during or promptly after the
  subscription offering as we may determine at any time. If shares remain available for sale following the subscription offering or
  community offering, we also may offer for sale shares of common stock through a ―syndicated community offering‖ managed by Stifel,
  Nicolaus & Company, Incorporated. We have the right to accept or reject, in our sole discretion, orders received in the community offering
  or syndicated community offering. Any determination to accept or reject purchase orders in the community or syndicated community
  offering will be based on the facts and circumstances available to management at the time of the determination.

        To ensure a proper allocation of stock, each subscriber eligible to purchase in the subscription offering must list on the stock order
  form all deposit accounts in which the subscriber had an ownership interest at September 30, 2008, December 31, 2009 or                       , ,
  as applicable. Failure to list all accounts, or providing incorrect information, could result in the loss of all or part of a subscriber’s stock
  allocation. We will strive to identify your ownership in all accounts, but we cannot guarantee that we will identify all accounts in which
  you have an ownership interest. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the
  order forms will be final.

        If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares of common
  stock will be allocated first to categories in the subscription offering. A detailed description of share allocation procedures can be found in
  the section entitled ―The Conversion and Offering—Subscription Offering and Subscription Rights‖ and ―—Community Offering.‖

  How We Intend to Use the Proceeds from the Offering
         We estimate net proceeds from the offering will be between $3,550,000 and $5,050,000, or $5,912,500 if the offering range is
  increased by 15%. Approximately $1,775,000 to $2,525,000 of the net proceeds, or $2,956,250 if the offering range is increased by 15%,
  will be invested in Fairmount Bank. Fairmount Bancorp, Inc. intends to retain between $1,435,000 and $2,065,000 of the net proceeds, or
  $2,427,250 if the offering range is increased by 15%. A portion of the net proceeds retained by Fairmount Bancorp, Inc. will be used for a
  loan to the employee stock ownership plan to fund its purchase of shares of common stock (between $340,000 and $460,000, or $529,000
  if the offering is increased by 15%). Fairmount Bancorp, Inc. may use the remaining funds for investments, to pay cash dividends, to
  repurchase shares of common stock and for other general corporate purposes, subject to any required regulatory approval.

        Funds invested in Fairmount Bank will be used to support increased lending and other products and services. The net proceeds
  retained by Fairmount Bancorp, Inc. and Fairmount Bank also may be used for future branch expansion and possible acquisitions of
  banking or financial services companies, although we have no current arrangements or agreements with respect to any such acquisitions.
  Initially, a substantial portion of the net proceeds will be invested in short-term investments, investment-grade debt obligations and
  mortgage-backed securities.

       Please see the section of this prospectus entitled ―How We Intend to Use the Proceeds from the Offering‖ for more information on the
  proposed use of the proceeds from the offering.

  How We Determined the Offering Range and Price Per Share
        The amount of common stock that we are offering is based on an independent appraisal of the estimated market value of Fairmount
  Bancorp, Inc., assuming the conversion and the offering are completed. Feldman Financial Advisors, Inc., our independent appraiser, has
  estimated that, as of November 30, 2009, this market value ranged from $4,250,000 to $5,750,000, with a midpoint of $5,000,000. The
  estimated market value range is derived from the midpoint valuation in accordance with requirements of the Office of Thrift Supervision.
  Based on this valuation and a $10.00 per share purchase price, the number of shares of common stock being offered for sale by us will
  range from 425,000 shares to 575,000 shares. The $10.00 per share purchase price was selected primarily because it is the price most
  commonly used in mutual-to-stock conversions of financial institutions. The appraisal of Feldman Financial Advisors, Inc. is based in part
  on our financial condition and results of operations, the pro forma effect of the additional capital raised by the sale of shares of common
  stock in the offering, and an analysis of a peer group of 10 thrift holding companies with assets between $160,200,000 and $569,400,000
  which were compared by Feldman Financial Advisors, Inc. to us.


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        Feldman Financial Advisors, Inc. prepared the appraisal taking into account the pro forma impact of the offering. For its analysis,
  Feldman Financial Advisors, Inc. undertook substantial investigations to learn about Fairmount Bank’s business and operations. Fairmount
  Bank supplied financial information, including annual financial statements, information on the composition of assets and liabilities, and
  other financial schedules. In addition to this information, Feldman Financial Advisors, Inc. reviewed a draft of Fairmount Bank’s
  application for conversion to be filed with the Office of Thrift Supervision, or the OTS, and a draft of our registration statement to be filed
  with the Securities and Exchange Commission, or the SEC. Furthermore, Feldman Financial Advisors, Inc. visited our facilities and had
  discussions with management. Feldman Financial Advisors, Inc. did not perform a detailed analysis of the separate components of
  Fairmount Bank’s assets and liabilities. Fairmount Bank did not impose any limitations on Feldman Financial Advisors, Inc. in connection
  with its appraisal.

        Feldman Financial Advisors, Inc. relied primarily on a comparative market value methodology in determining the pro forma market
  value of our common stock. In applying this methodology, Feldman Financial Advisors, Inc. analyzed financial and operational
  comparisons of Fairmount Bank with a selected peer group of publicly traded savings institutions. The pro forma market value of our
  common stock was determined by Feldman Financial Advisors, Inc. based on the market pricing ratios of the peer group, subject to certain
  valuation adjustments based on fundamental differences between Fairmount Bank and the institutions comprising the peer group.
  Specifically, Feldman Financial Advisors, Inc. took into account that, on a pro forma basis compared solely to the peer group, Fairmount
  Bank had more favorable credit quality, a higher capital level, higher earnings and comparable growth potential. Additionally, Feldman
  Financial Advisors, Inc. took into account the significant volatility in the broader stock market and the after market pricing characteristics
  of recently converted savings institutions. Feldman Financial Advisors, Inc. utilized the results of this overall analysis to establish pricing
  ratios that resulted in the determination of the pro forma market value. As a result of this analysis, Feldman Financial Advisors, Inc.
  determined that the pro forma price-to-book ratios were lower than the peer group companies. Feldman Financial Advisors, Inc. also took
  into account the price-to-earnings ratios of the peer group companies relative to our pro forma price-to-earnings ratios.

        The peer group consists of 10 thrift holding companies with assets between $160,200,000 and $569,400,000. The selection criteria
  for the peer group included consideration of stock exchange listing, earnings, capital, asset size, loan concentration, and geographic market
  area. Because of the limited number of relatively small companies meeting the selection criteria, most of the companies included in the
  peer group have significantly larger asset sizes than Fairmount Bank. The peer group companies are:

                                                                                                                                       Total Assets
                                                                                                                                    at September 30,
                                                                                                                                          2009
   Institution                                                                  Ticker     Exchange         Headquarters
                                                                                                                                      (In millions)
   BCSB Bancorp, Inc.                                                           BCS         NASD
                                                                                 B            AQ          Baltimore, MD         $               569.4
   Community Financial Corp.                                                                NASD
                                                                               CFFC           AQ           Staunton, VA                         541.2
   FFD Financial Corporation                                                                NASD
                                                                                FFDF          AQ            Dover, OH                           192.4
   First Advantage Bancorp                                                      FAB         NASD
                                                                                 K            AQ          Clarksville, TN                       352.7
   GS Financial Corp.                                                           GSL         NASD
                                                                                 A            AQ           Metairie, LA                         270.9
   LSB Financial Corp.                                                                      NASD
                                                                                LSBI          AQ           Lafayette, IN                        363.6
   Mayflower Bancorp, Inc. (1)                                                  MFL         NASD
                                                                                 R            AQ         Middleboro, MA                         249.0
   Osage Bancshares, Inc.                                                       OSB         NASD
                                                                                 K            AQ          Pawhuska, OK                          160.2
   Rome Bancorp, Inc.                                                           ROM         NASD
                                                                                 E            AQ            Rome, NY                            338.0
   Wayne Savings Bancshares, Inc.                                               WAY         NASD
                                                                                 N            AQ           Wooster, OH                          400.3

  (1)    Assets are as of October 31, 2009.

       Feldman Financial Advisors, Inc. advised the board of directors that the appraisal was prepared in conformance with the regulatory
  appraisal methodology. That methodology requires a valuation based on an analysis of the trading prices of at least 10 comparable public
  companies whose stocks have traded for at least one year prior to the valuation date. Feldman Financial Advisors, Inc. also advised the
  board of directors that the after-market trading experience of standard thrift conversion offerings completed between January 1, 2008 and
November 30, 2009 was considered in the appraisal as a general indicator of current market conditions, but was not relied upon as a
primary valuation methodology. There were seven standard mutual-to-stock conversion offerings completed between January 1, 2008 and
November 30, 2009.


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         Consistent with Office of Thrift Supervision appraisal guidelines, the analysis of Feldman Financial Advisors, Inc. utilized three
  selected valuation procedures, the price/book method, the price/earnings method, and the price/assets method, all of which are described in
  its report. Feldman Financial Advisors, Inc. placed the greatest emphasis on the price/earnings and price/book methods in estimating pro
  forma market value. Feldman Financial Advisors, Inc. compared the pro forma price/book and price earnings ratios for Fairmount Bancorp,
  Inc. to the same ratios for a peer group of comparable companies.

        Book value is the same as total equity and represents the difference between the issuer’s assets and liabilities. The calculation of the
  pro forma price-to-book value ratio takes into account the amount of net proceeds raised in the offering as an incremental addition to
  existing total equity or book value. Therefore, our appraised value does not necessarily equal the amount of its current total equity. Based
  on the appraiser’s valuation analysis in comparison to the peer group, the pro forma price-to-book value ratios indicate that the estimated
  pro forma market value of Fairmount Bank is less than its pro forma total equity and may also be less than its current equity at different
  levels of the valuation range. Furthermore, as indicated by the pricing ratios of the peer group, many financial institutions trade at market
  price levels below their stated book values in the current stock market environment.

        The following table presents a summary of selected pricing ratios for Fairmount Bancorp, Inc. (on a pro forma basis) and the peer
  group companies identified by Feldman Financial Advisors, Inc. Our ratios are based on earnings for the 12 months ended September 30,
  2009 and book value as of September 30, 2009. The peer group ratios are based on book value as of and earnings for the most recent
  12-month period. Compared to the average pricing of the peer group, our pro forma pricing ratios at the maximum of the offering range
  indicated a discount of 23.1% on a price-to-book value basis, and a discount of 23.9% on a price-to-tangible book value basis, and a
  discount of 24.9% on a price-to-earnings basis. Our board of directors, in reviewing and approving the valuation, considered our pro forma
  earnings and the range of price-to-earnings multiples, price-to-book value ratios and price-to-tangible book value ratios at the minimum,
  midpoint, maximum and maximum, as adjusted, of the offering range. The pricing ratios also reflect recent volatile conditions, particularly
  for stocks of financial institutions and the impact of such conditions on the trading market of recent bank conversions. The appraisal did
  not consider one valuation approach to be more important than the others. Instead, the appraisal concluded that these ranges represented the
  appropriate balance of the three approaches to valuing Fairmount Bancorp, Inc., and the number of shares to be sold, in comparison to the
  identified peer group institutions. The estimated appraised value and the resulting premium/discount took into consideration the potential
  financial impact of the conversion and offering.

                                                                                                                                     Pro forma
                                                                                           Pro forma            Pro forma             price-to-
                                                                                            price-to-            price-to-            tangible
                                                                                            earnings               book              book value
                                                                                            multiple            value ratio             ratio
   Fairmount Bancorp, Inc. (1)
   Minimum                                                                                       9.9 x                 43.2 %              43.2 %
   Midpoint                                                                                     11.9                   47.7                47.7
   Maximum                                                                                      13.9                   51.6                51.6
   Maximum, as adjusted                                                                         16.4                   55.5                55.5
   Valuation of peer group companies using stock prices as of November 30,
     2009 (2)
   Averages                                                                                     18.5 x                 67.1 %              67.8 %
   Medians                                                                                      16.7                   66.7                66.8

  (1)    Based on Fairmount Bank’s financial data as of and for the 12 months ended September 30, 2009.
  (2)    Reflects earnings for the most recent twelve month periods for which data was publicly available.

        Our board of directors reviewed the appraisal report of Feldman Financial Advisors, Inc., including the methodology and the
  assumptions used, and determined that the valuation range was reasonable and adequate. Given that the shares are to be sold at $10.00 per
  share in the offering, the estimated number of shares would be between 425,000 at the minimum of the valuation range and 575,000 at the
  maximum of the valuation range, with a midpoint of 500,000. The purchase price of $10.00 per share was determined by us, taking into
  account, among other factors, the requirement under Office of Thrift Supervision regulations that the common stock be offered in a manner
  that will achieve the widest distribution of the stock.


                                                                         6
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        The independent appraisal does not indicate market value. Do not assume or expect that our valuation as indicated in the
  appraisal means that, after the conversion and offering, the shares of common stock will trade at or above the $10.00 offering
  price. Furthermore, the pricing ratios presented above were utilized by Feldman Financial Advisors, Inc. to estimate our market
  value and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group.
  The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset
  size and market location.

       The independent appraisal will be updated prior to the completion of the conversion. If the appraised value decreases below
  $4,250,000 or increases above $6,612,500, and the number of shares to be sold is correspondingly adjusted, subscribers will be given the
  opportunity to maintain, change or cancel their orders with the approval of the Office of Thrift Supervision for a specified period of time. If
  you do not respond, we will cancel your stock order and return your subscription funds, with interest, and cancel any authorization to
  withdraw funds from your deposit accounts for the purchase of shares of common stock. See ―The Conversion and
  Offering—Determination of Share Price and Number of Shares to be Issued.‖

  After-Market Performance Information
       The following table presents stock price information for all standard mutual-to-stock conversions completed between January 1, 2008
  and November 30, 2009. The companies for which the stock price performance is presented completed their conversions in different
  markets than Fairmount Bancorp, Inc. In addition, the companies may have no similarities to Fairmount Bancorp, Inc. with regard to the
  market in which Fairmount Bank competes, earnings or growth potential, among other factors. These companies did not constitute the
  same group of 10 comparable public companies utilized in Feldman Financial Advisors, Inc.’s valuation analysis.

                                                                                                                                                % Change from Initial
                                                                                                     Closing Market Price                          Offering Price
                                                                                 Initial                                        As of
                                       Conversion                  Gross        Offering   After 1    After 1      After 1    November    After 1       After 1         After 1
   Company                               Date       Exchange     Proceeds         Price     day        week        month       30, 2009    day           week           month
                                                               (In Millions)
   Territorial Bancorp, Inc.                         NASD
      (TBNK)                            07/13/09       AQ $            122.3 $ 10.00 $ 14.49 $ 14.72 $ 14.80 $ 16.98                        49.9 %        47.2 %          48.0 %
   St. Joseph Bancorp, Inc.
      (SJBA) (1)                        02/02/09       OTC                3.8     10.00      10.00      10.00        10.00       10.00       0.0            0.0            0.0
   Hibernia Homestead
   Bancorp, Inc. (HIBE)                 01/28/09      OTC               11.1      10.00      10.00      10.50        10.50       13.75       0.0            5.0            5.0
   First Savings Financial                           NASD
      Group, Inc. (FSFG)                10/07/08       AQ               24.3      10.00       9.90        9.60         9.20      10.35      (1.0 )         (4.0 )         (8.0 )
   Home Bancorp, Inc.                                NASD
      (HBCP)                            10/03/08       AQ               89.3      10.00      11.49      10.35        10.31       12.33      14.9            3.5            3.1
   Cape Bancorp, Inc.                                NASD
      (CBNJ) (2)                        02/01/08       AQ               78.2      10.00      10.05      10.01          9.80       7.08       0.5            0.1           (2.0 )
   Danvers Bancorp, Inc.                             NASD
      (DNBK)                            01/10/08       AQ              171.9      10.00       9.74        9.78       10.26       13.51      (2.6 )         (2.2 )          2.6
   Average                                                              71.6                                                                 8.8            7.1            7.0
   Median                                                               78.2                                                                 0.0            0.1            2.6


  (1)    There were no reported trades in St. Joseph Bancorp, Inc. common stock through November 30, 2009.
  (2)    Simultaneous conversion and acquisition of Boardwalk Bancorp.

        The table above presents only short-term historical information on stock price performance, which may not be indicative of the
  longer-term performance of such stock prices. The historical stock price information is not intended to predict how our shares of common
  stock may perform following the offering. The historical information in the tables may not be meaningful to you because the data were
  calculated using a small sample. Stock price performance 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


                                                                                 7
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  company, including the experience and ability of management, historical and anticipated operating results, the nature and quality of the
  company’s assets, and the company’s market area. Because the market for stocks of financial institutions was very volatile over the past
  two years, a relatively small number of thrift stock conversion offerings were completed during this period as compared to prior periods.

        You should bear in mind that stock price appreciation or depreciation is affected by many factors . There can be no assurance
  that our stock price will not trade below $10.00 per share. Before you make an investment decision, we urge you to read this entire
  prospectus carefully, including, but not limited to, the section entitled “Risk Factors” beginning on page 13.

  Benefits to Management and Potential Dilution to Stockholders Following the Conversion and Offering
         We expect our tax-qualified employee stock ownership plan, or ESOP, to purchase 8% of the total number of shares of common
  stock that we sell in the offering, or 46,000 shares of common stock, assuming we sell the maximum of the shares proposed to be sold. If
  we receive orders for more shares of common stock than the maximum of the offering range, the employee stock ownership plan will have
  first priority to purchase shares over this maximum, up to a total of 8% of the total number of shares of common stock sold in the offering.
  We also reserve the right to purchase shares of common stock in the open market following the offering in order to fund the employee
  stock ownership plan, subject to regulatory approval. This plan is a tax-qualified retirement plan for the benefit of all our employees.
  Assuming the employee stock ownership plan purchases 46,000 shares in the offering, we will recognize additional pre-tax compensation
  expense of approximately $460,000 over a 10-year period, also assuming the loan that will be made by Fairmount Bancorp, Inc. to fund the
  employee stock ownership plan will have a 10-year term and the shares of common stock have a fair market value of $10.00 per share for
  the full 10-year period. If, in the future, the shares of common stock have a fair market value greater or less than $10.00, the compensation
  expense will increase or decrease accordingly.

        We also intend to implement a stock-based recognition and retention plan and a stock option plan no earlier than six months after
  completion of the conversion. Stockholder approval of these plans will be required. If adopted within 12 months following the completion
  of the conversion, the stock recognition and retention plan will reserve a number of shares equal to not more than 4% of the shares sold in
  the offering, or up to 23,000 shares of common stock at the maximum of the offering range, for awards to key employees and directors, at
  no cost to the recipients. If adopted within 12 months following the completion of the conversion, the stock option plan will reserve a
  number of shares equal to not more than 10% of the shares of common stock sold in the offering, or up to 57,500 shares of common stock
  at the maximum of the offering range, for issuance to key employees and directors upon their exercise of stock options granted under the
  plan. Both plans would impose a five-year vesting schedule. If the stock recognition and retention plan and the stock option plan are
  adopted after one year from the date of the completion of the conversion, awards and grants under these plans may exceed these levels and
  may vest over a period of less than five years. We have not yet determined whether we will present these plans for stockholder approval
  within or after 12 months following the completion of the conversion.

        If 4% of the shares of common stock sold in the offering are awarded under the stock recognition and retention plan and come from
  authorized but unissued shares of common stock, stockholders would experience dilution of up to approximately 3.85% in their ownership
  interest in Fairmount Bancorp, Inc. If the 10% of the shares of common stock sold in the offering that are issued upon the exercise of
  options granted under the stock option plan come from authorized but unissued shares of common stock, stockholders would experience
  dilution of approximately 9.09% in their ownership interest in Fairmount Bancorp, Inc.

        Fairmount Bancorp, Inc. and Fairmount Bank intend to enter into new employment agreements with our president and chief executive
  officer and change in control severance agreements with two senior officers. See ―Management—Benefit Plans—New Employment
  Agreements‖ and ―—Change in Control Severance Agreements‖ for a further discussion of these agreements, including their terms and
  potential costs, as well as a description of other benefits arrangements.


                                                                       8
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  Limits on How Much Common Stock You May Purchase
        The minimum number of shares of common stock that may be purchased is 25. No individual may purchase more than 15,000 shares
  ($150,000) of common stock. If any of the following persons purchases shares of common stock, their purchases, in all categories of the
  offering, when combined with your purchases, cannot exceed 15,000 shares ($150,000):
          •    your spouse or relatives of you or your spouse living in your house;
          •    most companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior
               management position; or
          •    other persons who may be your associates or persons acting in concert with you.

        Subject to Office of Thrift Supervision approval, we may increase or decrease the purchase limits.

       See the detailed descriptions of ―acting in concert‖ and ―associate‖ in ―The Conversion and Offering—Limitations on Common Stock
  Purchases.‖

  How You May Purchase Shares of Common Stock
       You can subscribe for shares of common stock in the subscription offering and the community offering by delivering a signed and
  completed original stock order form, together with full payment or authorization to withdraw from one or more of your Fairmount Bank
  deposit accounts; provided, however, that it is received (not postmarked) before 2:00 p.m., Eastern time, on        , 2010, which is the
  end of the offering period, unless extended.

        In the subscription offering and community offering, you may pay for your shares only by:
          •    personal check, bank check or money order, made payable to Fairmount Bancorp, Inc.; or
          •    authorizing us to withdraw funds from the types of Fairmount Bank deposit accounts designated on the stock order form.

        Fairmount Bank is not permitted to knowingly lend funds to anyone for the purpose of purchasing shares of common stock in the
  offering. Additionally, you may not submit cash or wire transfers, or use a check drawn on a Fairmount Bank line of credit, or use a
  third-party check to pay for shares of common stock. You may not designate on your stock order form a direct withdrawal from a
  Fairmount Bank individual retirement account or from a Fairmount Bank account with check writing privileges. See the following section
  for information regarding individual retirement accounts.

        For orders paid for by check or money order, the funds will be immediately deposited and held in a segregated account at Fairmount
  Bank, or in our discretion at another insured depository institution. We will pay interest on those funds calculated at Fairmount Bank’s
  passbook savings rate from the date funds are processed until completion or termination of the conversion, at which time each subscriber
  will receive an interest check. All funds authorized for withdrawal from deposit accounts with Fairmount Bank must be in the accounts at
  the time the stock order is received. However, funds will not be withdrawn from an account until the completion of the conversion and
  offering and will earn interest within the account at the applicable deposit account rate until that time. A hold will be placed on those funds
  when your stock order is received, making the designated funds unavailable to you. You may not designate a withdrawal from accounts at
  Fairmount Bank with check-writing privileges. Please provide a check instead. If you request that we do so, we reserve the right to
  interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately
  withdraw the amount from your checking account(s).

        Withdrawals from certificates of deposit to purchase shares of common stock in the offering may be made without incurring an early
  withdrawal penalty. If a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement,
  the certificate will be canceled at the time of withdrawal without penalty, and the remaining balance will earn interest at the current
  passbook savings rate subsequent to the withdrawal.


                                                                          9
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        After we receive your order, your order cannot be changed or canceled unless the number of shares of common stock to be offered is
  increased to more than 661,250 or decreased to fewer than 425,000, or the offering is extended beyond          , 2010.

        We are not required to accept copies or facsimiles of stock order forms. By signing the stock order form, you are acknowledging
  receipt of this prospectus and that the shares of common stock are not deposits or savings accounts that are federally insured or otherwise
  guaranteed by Fairmount Bank, the Federal Deposit Insurance Corporation or any other government agency.

  Using Individual Retirement Account Funds
        You may be able to subscribe for shares of common stock using funds in your individual retirement account, or IRA. However,
  shares of common stock must be purchased through and held in a self-directed retirement account, such as those offered by a brokerage
  firm. By regulation, Fairmount Bank’s individual retirement accounts are not self-directed, so they cannot be used to purchase or hold
  shares of our common stock. If you wish to use some or all of the funds in your Fairmount Bank individual retirement account to purchase
  our common stock, the applicable funds must be transferred to a self-directed account maintained by an independent trustee, or custodian,
  such as a brokerage firm, and the purchase must be made through that account. If you do not have such an account, you will need to
  establish one before placing your stock order. An annual administrative fee may be payable to the independent trustee. Because individual
  circumstances differ and the processing of retirement fund orders takes additional time, we recommend that you contact our Stock
  Information Center promptly for guidance, preferably at least two weeks before the offering deadline, for assistance with purchases using
  your Fairmount Bank individual retirement account or any other retirement account that you may have at Fairmount Bank or elsewhere.
  Whether you may use such funds for the purchase of shares in the stock offering may depend on time constraints and, possibly, limitations
  imposed by the brokerage firm or institution where the funds are held.

  Delivery of Stock Certificates
        Certificates representing shares of common stock sold in the subscription and community offerings will be mailed by regular mail to
  the persons entitled thereto at the certificate registration address noted by them on the stock order form, as soon as practicable following
  consummation of the offering. It is possible that, until certificates for the common stock are delivered, purchasers might not be able
  to sell the shares of common stock that they ordered, even though the common stock will have begun trading. Your ability to sell
  the shares of common stock prior to your receipt of the stock certificate will depend on arrangements you may make with a
  brokerage firm.

  You May Not Sell or Transfer Your Subscription Rights
        Office of Thrift Supervision regulations prohibit you from transferring your subscription rights. If you order shares of common stock
  in the subscription offering, you will be required to state that you are purchasing the shares of common stock for yourself and that you have
  no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to
  federal or state regulatory agencies, against anyone who we believe has sold or given away his or her subscription rights. We will not
  accept your order if we have reason to believe that you have sold or transferred your subscription rights. On the stock order form, you
  should not add the name(s) of persons who do not have subscription rights or who qualify in a lower subscription priority than you do. In
  addition, the stock order form requires that you list all deposit accounts, giving all names on each account and the account number at the
  applicable eligibility record date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss
  of part or all of your share allocation, if there is an oversubscription.

  Deadline for Orders of Common Stock
        If you wish to purchase shares of common stock in the subscription and community offerings, a properly completed original stock
  order form, together with full payment for the shares of common stock, must be received (not postmarked) by the Stock Information Center
  no later than 2:00 p.m., Eastern time, on           , 2010. You may submit your stock order form by mail, using the stock order reply
  envelope provided, by overnight courier to the indicated address on the order form, or by hand-delivery to Fairmount Bank, located at 8216
  Philadelphia Road, Baltimore, Maryland. Once submitted, your order will be irrevocable unless the offering is terminated or


                                                                        10
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  extended beyond              , 2010 or the number of shares of common stock to be sold is decreased to less than 425,000 shares or
  increased to more than 661,250 shares. If the subscription offering and/or community offering is extended beyond                 , 2010, or if
  the number of shares of common stock to be sold is decreased to less than 425,000 shares or is increased to more than 661,250 shares, we
  will, with the approval of the Office of Thrift Supervision, be required to resolicit subscribers before proceeding with the offering.
  Subscribers will be given the opportunity to maintain, change or cancel their stock orders during a specified resolicitation period. If a
  written indication of your intent is not received, your order will be cancelled, funds will be returned with interest and deposit account
  withdrawal authorizations will be cancelled.

        No extension of the offering period may last longer than 90 days. All extensions may not last beyond               , 2010.

        Although 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 2:00 p.m., Eastern time, on       , 2010, whether or not we have been
  able to locate each person entitled to subscription rights.

  Steps We May Take If We Do Not Receive Orders for the Minimum Number of Shares
      If we do not receive orders for at least 425,000 shares of common stock, we may take several steps in order to issue the minimum
  number of shares of common stock in the offering range. Specifically, we may:
          •    increase the purchase limitations; and/or
          •    seek the approval of the Office of Thrift Supervision to extend the offering beyond             , 2010, provided that an
               extension beyond          will require us to resolicit subscriptions in the offering.

        Alternatively, we may terminate the offering, return funds with interest and cancel deposit account withdrawal authorizations.

  Purchases by Officers and Directors
        We currently expect our directors and executive officers, together with their associates, to subscribe for approximately 65,000 shares
  of common stock in the offering, which equals 15.29% of the shares to be sold at the minimum of the offering range and 11.31% of the
  shares to be sold at the maximum of the offering range. However, there can be no assurance that any individual director or executive
  officer, or the directors and executive officers as a group, will purchase any specific number of shares of our common stock. The purchase
  price to be paid by them for their subscribed shares will be the same $10.00 per share price to be paid by all other persons who purchase
  shares of common stock in the offering. Purchases by directors, executive officers and their associates will be included in determining
  whether the required minimum number of shares has been subscribed for in the offering.

  Market for Common Stock
       We expect the common stock of Fairmount Bancorp, Inc. to be quoted on the Over-the-Counter Electronic Bulletin Board. See
  ―Market for the Common Stock.‖ Stifel, Nicolaus & Company, Incorporated currently intends to make a market in the shares of our
  common stock, but is under no obligation to do so. We cannot predict whether a liquid trading market in shares of our common stock will
  develop.

  Our Policy Regarding Dividends
        Following the completion of the stock offering, our board of directors will have the authority to declare dividends on our common
  stock, subject to statutory and regulatory requirements. However, no decision has been made with respect to the amount, if any, and timing
  of any dividend payments. The payment and amount of any dividend payments will depend upon a number of factors, including the
  following:
          •    regulatory capital requirements;
          •    our financial condition and results of operations;


                                                                         11
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          •    tax considerations;
          •    statutory and regulatory limitations; and
          •    general economic conditions.

        Our board has no plans or understandings with respect to the payment of dividends. We cannot assure you that we will pay dividends
  in the forseeable future, or that, if paid, we will not reduce or eliminate dividends in the future.

  Tax Consequences
       As a general matter, the conversion will not be a taxable transaction for federal or state income tax purposes to Fairmount Bank,
  Fairmount Bancorp, Inc., or persons eligible to subscribe in the subscription offering. See the section of this prospectus under the heading
  ―The Conversion and Offering—Material Income Tax Consequences‖ on page               for additional information.

  Conditions to Completion of the Conversion and Offering
        Fairmount Bank and Fairmount Bancorp, Inc. cannot complete the conversion and the offering unless:
          •    the plan of conversion is approved by at least a majority of votes eligible to be cast by members (depositors) of Fairmount
               Bank. A special meeting of members to consider and vote upon the plan of conversion has been set for                , 2010;
          •    we have received orders to purchase at least the minimum number of shares of common stock offered; and
          •    Fairmount Bank and Fairmount Bancorp, Inc. receive final approval of the Office of Thrift Supervision to complete the
               conversion and the offering.

  Stock Information Center
        Our office personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding
  the conversion or the offering, please call our Stock Information Center (toll-free) at - -       , Monday through Friday between
  10:00 a.m. and 4:00 p.m., Eastern time. The Stock Information Center will be closed on weekends and bank holidays.

  TO ENSURE THAT EACH PERSON IN THE SUBSCRIPTION AND COMMUNITY OFFERING RECEIVES A PROSPECTUS
  AT LEAST 48 HOURS PRIOR TO THE EXPIRATION DATE OF     , 2010, IN ACCORDANCE WITH FEDERAL LAW,
  NO PROSPECTUS WILL BE MAILED OR HAND-DELIVERED ANY LATER THAN FIVE DAYS OR TWO DAYS,
  RESPECTIVELY, PRIOR TO         , 2010.


                                                                        12
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                                                                 RISK FACTORS

                    You should consider carefully the following risk factors in evaluating an investment in our common stock.

                                                         Risks Related to Our Business

Changes in interest rates could have a material adverse effect on our operations.
       Our results of operations and financial condition are significantly affected by changes in interest rates. Our results of operations are
affected substantially by Fairmount Bank’s net interest income, which is the difference between the interest income Fairmount Bank earns on
its interest-earning assets and the interest expense Fairmount Bank pays on its interest-bearing liabilities. Changes in interest rates could have
an adverse affect on Fairmount Bank’s net interest income because, as a general matter, interest-bearing liabilities reprice or mature more
quickly than interest-earning assets. An increase in interest rates generally would result in a decrease in Fairmount Bank’s average interest rate
spread and net interest income, which would have a negative effect on our profitability.

     Fairmount Bank’s policy is to originate fixed-rate mortgage loans with maturities of up to 30 years. This investment in fixed-rate
mortgage loans exposes Fairmount Bank to increased levels of interest rate risk, and could result in decreased net interest income during
periods of rising interest rates.

      In addition, changes in interest rates can affect the average life of loans and mortgage-backed securities. A reduction in interest rates
results in increased prepayments of loans and mortgage-backed securities as borrowers refinance their loans in order to reduce their borrowing
costs. This creates reinvestment risk, which is the risk that Fairmount Bank may not be able to reinvest prepayments at rates that are
comparable to the rates it earned on the prepaid loans or securities. Alternatively, increases in interest rates may decrease loan demand.

      Changes in interest rates also affect the current market value of Fairmount Bank’s investment securities portfolio. Generally, the value of
interest-earning investment securities moves inversely with changes in interest rates.

     Fairmount Bank evaluates interest rate sensitivity by estimating the change in its net portfolio value over a range of interest rate
scenarios. Net portfolio value is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts. At
September 30, 2009, in the event of an immediate 200 basis point increase in interest rates, the Office of Thrift Supervision model projects that
Fairmount Bank would experience a $1,798,000, or 17.55%, decrease in net portfolio value. See ―Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Management of Market Risk.‖

We may not be able to generate significant profits in the future.
      Fairmount Bank’s net income for the fiscal years ended September 20, 2009 and 2008 was approximately $445,000 and $246,000,
respectively. A significant portion of our revenues has been derived from Fairmount Bank’s origination of one-to four-family non-owner
occupied loans secured primarily by investor-owned properties. In the past year, Fairmount Bank has sought participants to invest in these
loans, as these loans constituted 34.70% of Fairmount Bank’s total loans at September 30, 2009. With these participants, we continue to
generate origination fees, servicing fees and fees from community bank participants. However, the number of community banks willing and
able to participate in these loans has declined. If we are unable to continue to participate these loans, we will no longer generate the related
fees, which will adversely affect our results of operations.

                                                                        13
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      In addition, Fairmount Bank’s efficiency ratio (non-interest expense divided by net interest income plus non-interest income) was 59.30%
and 70.00%, respectively, for the years ended September 30, 2009 and 2008. Fairmount Bank’s efficiency ratio reflects the high fixed costs of
operating a single branch and its relatively small asset size, together with higher compensation and benefits expense. We believe that our
existing systems will be better utilized as we use the capital raised in the stock offering to support Fairmount Bank’s efforts to make more
loans, attract new customers and increase business with existing customers. However, our costs will increase in the future due to the additional
expenses of operating as a public company and due to the stock-based incentive plans that we will adopt, as well as the recent increased
operating expenses of our new headquarters facility.

Our growth strategy will increase our expenses and may not be successful.
      Following the completion of the stock offering, we plan to increase the size of our franchise by establishing one or more new branch
offices, although we have no current specific commitments to do so. As contemplated by our business plan, Fairmount Bank intends to hire a
senior lender and limited support staff as part of the planned expansion of its lending activities. Building branch offices and hiring new
employees to staff these offices would significantly increase Fairmount Bank’s non-interest expense. Moreover, new branch offices are
generally unprofitable for a number of years until they generate sufficient levels of deposits and loans to offset their cost of operations. For
these reasons, our growth strategy may have an adverse effect on our earnings.

Our plan to diversify and expand Fairmount Bank’s loan portfolio to increase commercial real estate, construction lending and
consumer lending activities will expose Fairmount Bank to increased lending risks.
      Our business plan adopted in connection with the conversion transaction contemplates an expansion of Fairmount Bank’s lending
activities to include commercial real estate, construction and, to a lesser extent, commercial and consumer lending. We anticipate that a
majority of the growth in Fairmount Bank’s loan portfolio during the period covered by the business plan will be attributable to these new
lending activities. Accordingly, we estimate that a majority of the net proceeds of the offering will ultimately be used for the expansion of
Fairmount Bank’s commercial real estate, construction and consumer lending activities.

       Commercial real estate loans are considered to have greater credit risk than one-to four-family residential loans because the repayment of
such loans typically depends on the successful operations and income stream of the borrower’s business and the real estate securing the loan as
collateral, which can be significantly affected by economic conditions. In addition, these loans generally carry larger balances to single
borrowers or related groups of borrowers than one-to four-family owner occupied residential mortgage loans. Accordingly, an adverse
development with respect to one loan or one credit relationship can expose Fairmount Bank to greater risk of loss compared to an adverse
development with respect to a single one-to four-family residential mortgage loan. Construction financing generally involves greater 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 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, Fairmount Bank may be required to advance additional funds
beyond the amount originally committed in order to protect the value of the property. Moreover, if the estimated value of the completed project
proves to be inaccurate, the borrower may hold a property with a value that is insufficient to assure full repayment. Construction loans also
expose Fairmount Bank to the risk that improvements will not be completed on time in accordance with specifications and projected costs.
Home equity loans and consumer loans generally have greater risk than one- to four-family residential mortgage loans. In these cases,
Fairmount Bank faces the risk that collateral for a defaulted loan may not provide an adequate source of repayment of the outstanding loan
balance. Particularly with respect to home equity loans secured by second mortgages, decreases in real estate values could adversely affect the
value of the property serving as collateral for our loans. Thus, the recovery of such property could be insufficient to compensate Fairmount
Bank for the value of these loans.

One-to four-family non-owner occupied loans involve additional risks.
      A portion of Fairmount Bank’s lending activity consists of the origination of first mortgage loans secured by one-to four-family
non-owner occupied residential properties in its market area. A majority of these loan originations are sold on a participation basis to other
community banks. Such lending involves additional risks, since the properties are not owner occupied, and borrowers who are not currently
delinquent may become delinquent at a later date. Renters of these properties are less likely to be concerned with property upkeep. In addition,
Fairmount Bank would reduce or eliminate this lending activity if the community banks are unwilling or unable to continue to purchase
participations in these loans.

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The loss of our President and Chief Executive Officer would hurt our operations.
      We rely heavily on Joseph M. Solomon, President and Chief Executive Officer of each of Fairmount Bancorp, Inc. and Fairmount Bank.
The loss of Mr. Solomon would have an adverse effect on us, as he is central to virtually all aspects of our business operations and
management. In addition, Fairmount Bank is a small community bank which currently does not have any management level employees who are
in a position to succeed and assume the full responsibilities of Mr. Solomon. In connection with the conversion, Fairmount Bancorp, Inc. and
Fairmount Bank intend to enter into new employment agreements with Mr. Solomon. For further information, see ―Management—Benefit
Plans—New Employment Agreements.‖

Strong competition within our market area may limit our growth and profitability.
      Competition in the banking and financial services industry is intense. In its market area, Fairmount Bank competes with commercial
banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and
investment banking firms operating locally and elsewhere. Some of Fairmount Bank’s competitors have greater name recognition and market
presence that benefit them in attracting business, and offer certain services that Fairmount Bank does not or cannot provide. In addition, larger
competitors may be able to price loans and deposits more aggressively than Fairmount Bank does, which could affect its ability to grow and
remain profitable on a long-term basis. Our profitability depends upon Fairmount Bank’s continued ability to successfully compete in its
market area. If Fairmount Bank must raise interest rates paid on deposits or lower interest rates charged on its loans, Fairmount Bank’s net
interest margin and our profitability could be adversely affected. For additional information see ―Business of Fairmount Bank—Competition.‖

If Fairmount Bank’s allowance for loan losses is not sufficient to cover actual loan losses, our earnings could decrease.
      Fairmount Bank makes various assumptions and judgments about the collectibility of its loan portfolio, including the creditworthiness of
borrowers and the value of real estate and other assets serving as collateral for the repayment of many loans. In determining the amount of the
allowance for loan losses, Fairmount Bank reviews its loans and its loss and delinquency experience, and evaluates economic conditions. If its
assumptions are incorrect, Fairmount Bank’s allowance for loan losses may not be sufficient to cover probable incurred losses in its loan
portfolio, resulting in additions to the allowance. Fairmount Bank’s allowance for loan losses was $220,000, or 0.44% of total loans at
September 30, 2009, and $103,000, or 0.23% of total loans at September 30, 2008. Fairmount Bank’s non-performing assets at September 30,
2009, were $509,000, or 0.79% of total assets. There were no non-performing assets at September 30, 2008. Material additions to the allowance
could materially decrease our net income. As we expand and diversify Fairmount Bank’s lending activities into commercial real estate and
other areas considered to have greater credit risk than one-to four-family lending, we expect that the allowance for loan losses will need to
increase. In addition, bank regulators periodically review Fairmount Bank’s allowance for loan losses and may require an increase in the
provision for loan losses or further loan charge-offs. Any increase in the 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.

The United States economy is in a deep recession. A prolonged economic downturn, especially one affecting our geographic market
area, would likely adversely affect our business and financial results.
       Negative developments in the global credit and securitization markets have resulted in uncertainty in the financial markets during the
latter half of 2007 and during 2008 and 2009, with the expectation of the general economic downturn continuing through the remainder of 2009
and into 2010. Loan portfolio quality has deteriorated at many institutions, reflecting, in part, the deteriorating U.S. economy and rising
unemployment. In addition, the values of real estate collateral supporting many commercial loans and home mortgages have declined and may
continue to decline. The continuing real estate slump also has resulted in reduced demand for the construction of new housing and increased
delinquencies in construction, residential and commercial mortgage loans. Financial institution stock prices have declined substantially, and it
is significantly more difficult for financial institutions and their holding companies to raise capital or borrow in the debt markets.
      Our business activities and earnings are affected by general business conditions in the United States and in our primary market area.
Fairmount Bank’s primary market area has experienced a softening of the local real estate market, including reductions in local property values,
and a decline in the local manufacturing industry, which employs many of Fairmount Bank’s borrowers. A prolonged or more severe economic
downturn, continued elevated levels of unemployment, further declines in the values of real estate, or other events that affect household and/or
corporate incomes could impair the ability of

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Fairmount Bank’s borrowers to repay their loans in accordance with their terms. Nearly all of Fairmount Bank’s loans are secured by the real
estate or made to businesses in Fairmount Bank’s primary market area. As a result of this concentration, a prolonged or more severe downturn
in the local economy could result in significant increases in non-performing loans, which would negatively impact our interest income and
result in higher provisions for loan losses, which would decrease our earnings. The economic downturn could also result in reduced demand for
credit or fee-based products and services, which also would decrease our revenues.

Increases in FDIC insurance premiums may have a material adverse affect on our earnings.
      During 2008 and continuing in 2009, higher levels of bank failures have dramatically increased resolution costs of the Federal Deposit
Insurance Corporation, or the FDIC, and depleted the Deposit Insurance Fund. In addition, the FDIC instituted two temporary programs in
2008 to further insure customer deposits at FDIC-member banks thorough December 31, 2009: Deposit accounts are now insured up to
$250,000 per customer (up from $100,000) and non-interest bearing transactional accounts are fully insured (unlimited coverage). These
programs have placed additional stress on the Deposit Insurance Fund. On May 20, 2009, the FDIC extended the $250,000 per customer
insurance limit through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all
accounts, except for certain retirement accounts which will remain insured up to $250,000 per depositor.

       In order to maintain a strong funding position and restore reserve ratios of the Deposit Insurance Fund, the FDIC increased assessment
rates of insured institutions uniformly by 7 cents for every $100 of deposits beginning with the first quarter of 2009, with additional changes
beginning April 1, 2009, which require riskier institutions to pay a larger share of premiums by factoring in rate adjustments based on secured
liabilities and unsecured debt levels.

      On May 22, 2009, the FDIC adopted a final rule that imposed a special assessment on all insured depository institutions, which was
collected on September 30, 2009. The final rule also permits the FDIC to impose additional special assessments after June 20, 2009, if
necessary to maintain public confidence in federal deposit insurance. The latest possible date for imposing additional special assessments under
the final rule would be December 31, 2009, with collection on March 30, 2010.

      On September 29, 2009, the FDIC adopted a proposed rule that would require depository institutions to prepay their quarterly risk-based
assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012 on December 29, 2009. This action was taken in connection with
the adoption of an Amended Restoration Plan to meet immediate liquidity needs and return the Deposit Insurance Fund to its federally
mandated level, without imposing additional special assessments. However, the prepayment of assessments does not prevent the FDIC from
changing assessment rates or revising the risk-based assessment system in future periods.

      Fairmount Bank paid FDIC insurance premiums of $46,000 and $4,000 for the fiscal years ended September 30, 2009 and 2008,
respectively. Fairmount Bank is generally unable to control the amount of premiums that it is required to pay for FDIC insurance. If there are
additional bank or financial institution failures, Fairmount Bank may be required to pay even higher FDIC premiums than the recently
increased levels. Additionally, the FDIC may make material changes to the calculation of the prepaid assessment from the current proposal.
Any future changes in the calculation or assessment of FDIC insurance premiums may have a material adverse effect on our results of
operations, financial condition and ability to pay dividends on our common shares.

We operate in a highly regulated environment, and we may be adversely affected by changes in laws and regulations.
       Fairmount Bank is subject to extensive regulation, supervision and examination by the Office of Thrift Supervision, its chartering
authority, and by the Federal Deposit Insurance Corporation, as insurer of Fairmount Bank’s deposits. Fairmount Bancorp, Inc. also will be
subject to regulation and supervision by the Office of Thrift Supervision. 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 Fairmount Bank rather than for holders of Fairmount Bancorp, Inc.’s common stock. Regulatory authorities have extensive
discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, classification of Fairmount
Bank’s assets and determination of the level of Fairmount Bank’s allowance for loan losses. If regulators require Fairmount Bank to charge-off
loans or increase its allowance for loan losses, our earnings would suffer. Any change in such regulation and oversight, whether in the form of
regulatory policy, regulation, legislation or supervisory action, may have a material impact on our operations. For a further discussion, see
―Supervision and Regulation.‖

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      The current administration has proposed comprehensive legislation intended to modernize regulation of the United States financial
system. The proposed legislation contains several provisions that would have a direct impact on Fairmount Bancorp, Inc. and Fairmount Bank.
Under the proposed legislation, the federal savings association charter would be eliminated and the Office of Thrift Supervision would be
consolidated with the Comptroller of the Currency into a new regulator, the National Bank Supervisor. The proposed legislation would also
require Fairmount Bank to become a national bank or convert to a state-chartered institution. In addition, it would eliminate the status of
―savings and loan holding company‖ and mandate that all companies that control an insured depository institution register as a bank holding
company. Registration as a bank holding company would represent a significant change, as material differences currently exist between savings
and loan holding company and bank holding company supervision and regulation. For example, bank holding companies above a specified
asset size are subject to consolidated leverage and risk-based capital requirements, whereas savings and loan holding companies are not subject
to such requirements. The proposed legislation would also create a new federal agency, the Consumer Financial Protection Agency, that would
be dedicated to administering and enforcing fair lending and consumer compliance laws with respect to financial products and services, which
could result in new regulatory requirements and increased regulatory costs for us. If enacted, the legislation may have a substantial impact on
our operations. However, because any final legislation may differ significantly from current proposals, the specific effects of the legislation
cannot be evaluated at this time.

If Fairmount Bank’s investment in the common stock of the Federal Home Loan Bank of Atlanta is classified as
other-than-temporarily impaired or as permanently impaired, our earnings and stockholders’ equity could decrease.
     Fairmount Bank owns common stock of the Federal Home Loan Bank of Atlanta. Fairmount Bank holds this stock to qualify for
membership in the Federal Home Loan Bank System and to be eligible to borrow funds under the Federal Home Loan Bank of Atlanta’s
advance program. The aggregate cost and fair value of Fairmount Bank’s Federal Home Loan Bank of Atlanta common stock as of
September 30, 2009 was $601,000. There is no market for Federal Home Loan Bank of Atlanta common stock.

      Recent published reports indicate that certain member banks of the Federal Home Loan Bank System may be subject to accounting rules
and asset quality risks that could result in materially lower regulatory capital levels. In an extreme situation, it is possible that the capital of a
Federal Home Loan Bank, including the Federal Home Loan Bank of Atlanta, could be substantially diminished or reduced to zero.
Consequently, we believe that there is a risk that Fairmount Bank’s investment in Federal Home Loan Bank of Atlanta common stock could be
impaired at some time in the future, and if this occurs, it would cause our earnings and stockholders’ equity to decrease by the after-tax amount
of the impairment charge.

Fairmount Bank’s real estate construction and land acquisition and development loans are based upon estimates of costs and the value
of the completed project, and may expose us to increased lending risk.
      Fairmount Bank makes real estate construction loans to individuals and builders, primarily for the construction of residential properties.
Fairmount Bank originates these loans whether or not the collateral property underlying the loan is under contract for sale. At September 30,
2009, construction loans totaled $1,531,000, or 3.04% of Fairmount Bank’s total loan portfolio, of which $1,315,000 were for residential real
estate projects. Approximately $699,000 of Fairmount Bank’s residential construction loans were made to finance the construction of
owner-occupied homes and are structured to be converted to permanent loans at the end of the construction phase. Land loans, which are loans
made with land as security, totaled $1,216,000, or 2.41%, of Fairmount Bank’s total loan portfolio at September 30, 2009. Land loans include
raw land, residential lot financing primarily for individuals, land acquisition and development loans, and loans secured by land used for
business purposes. In general, construction and land lending involve additional risks because of the inherent difficulty in estimating a
property’s value both before and at completion of the project as well as the estimated cost of the project. Construction costs may exceed
original estimates as a result of increased materials, labor or other costs. In addition, because of current uncertainties in the residential real
estate market, property values have become more difficult to determine than they have historically been. Construction loans and land
acquisition and development loans often involve the disbursement of funds with repayment dependent, in part, on the success of the ultimate
project and the ability of the borrower to sell or lease the property or refinance the indebtedness , rather than the ability of the borrower or
guarantor to repay principal and interest. These loans are also generally more difficult to monitor. In addition, speculative construction loans to
a builder are often associated with homes that are not pre-sold, and thus pose a greater potential risk than construction loans to individuals on
their personal residences. Fairmount Bank had speculative residential construction loans of $396,000 at September 30, 2009. Fairmount Bank
did not have any non-performing construction and land development loans at September 30, 2009.

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Fairmount Bank’s mobile home loans may expose Fairmount Bank to increased lending risk.
      As of September 30, 2009, mobile home loans totaled $3,073,000, or 6.10% of Fairmount Bank’s total portfolio. For Fairmount Bank to
have financed a mobile home loan, the mobile home must be based on a permanent foundation. Fairmount Bank ceased originating mobile
home loans in June 2007, and no future originations of these types of loans are planned. Fairmount Bank’s mobile home loans were purchased
from a third-party originator and funded by Fairmount Bank at settlement. Fairmount Bank paid a premium/loan origination fee to the third
party originator, of which one-half was wired upon settlement and the remainder was retained by Fairmount Bank in a depository account as a
reserve for any losses or prepayments. At September 30, 2009, Fairmount Bank had prepaid loan origination fees related to this program of
$531,000, and the balance in the reserve account available to Fairmount Bank was $233,000.

      Mobile home lending involves additional risks as a result of higher loan-to-value ratios usually associated with these types of loans.
Mobile home lending may also involve higher loan amounts than other types of loans. The most frequent purchasers of mobile homes are
retirees and younger, first-time buyers. These borrowers may be deemed to be relatively high credit risks due to various factors, including,
among other things, the manner in which they have handled previous credit, the absence or limited extent of their prior credit history or limited
financial resources. Mobile home loan customers have historically been more adversely impacted by weak economic conditions, loss of
employment and increases in other household costs. Consequently, mobile home loans bear a higher rate of interest, have a higher probability
of default and may involve higher delinquency rates and greater servicing costs relative to loans to more creditworthy borrowers. In addition,
the values of mobile homes decline over time, and higher levels of inventories of repossessed and used mobile homes may affect the values of
collateral and result in higher charge-offs and provisions for loan losses.

As a result of completing and occupying our new headquarters office facility in mid-September 2009, our operating expenses and
investment in fixed assets will increase and impact our operating costs.
      In mid-September 2009, Fairmount Bank completed construction of, and occupied, our current headquarters office facility. We expect
that annual operating expenses will increase approximately $140,000 due to costs associated with this new and larger facility. The relocation
was necessary to support Fairmount Bank’s expanded operations.

                                                        Risks Related to this Offering

We will need to implement additional finance and accounting systems, procedures and controls in order to satisfy our new public
company reporting requirements.
      Upon completion of the stock offering, we will become a public reporting company. The federal securities laws and regulations of the
Securities and Exchange Commission require that we file annual, quarterly and current reports, that we maintain effective disclosure controls
and procedures and internal controls over financial reporting and that we certify as to the adequacy and effectiveness of these controls and
procedures and the accuracy and completeness of the information contained in the public documents that we produce. We expect that the
obligations of being a public company, including the 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 may also require us to improve our internal controls and procedures and upgrade our accounting systems,
which will increase our operating costs.

Expected voting control by directors, officers and other employees could enable insiders to prevent a merger that may provide that
stockholders receive a premium for their shares.
      The shares of common stock that our directors and officers intend to purchase in the conversion, when combined with the shares that may
be awarded to participants under our employee stock ownership plan and other stock benefit plans, could result in directors, officers and other
employees controlling a significant percentage of our common stock. If these individuals were to act together, they could have significant
influence over the outcome of any stockholder vote. This voting power may discourage takeover attempts that could result in significant
premiums paid to stockholders. In addition, the total voting power of directors, officers and other employees could reach in excess of 20% of
our outstanding stock. That level would enable directors, officers and other employees as a group to defeat any stockholder matter that requires
an 80% vote, such as the removal of directors and certain amendments to our articles of incorporation.

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There will be an extremely limited trading market in our common stock, which will hinder your ability to sell our common stock and
may lower the market price of the stock.
      Fairmount Bancorp, Inc. has never issued stock and, therefore, there is no current trading market for the shares of common stock.
Moreover, our public ―float,‖ which is the total number of our outstanding shares less the shares held by our employee stock ownership plan
and our directors and senior officers and is used as a measurement of shares available for trading, is likely to be quite limited. The limited
trading market could also result in a wider spread between the ―bid‖ and ―ask‖ prices for the stock, which could make it more difficult to sell a
large number of shares at one time and could mean a sale of a large number of shares at one time could depress the market price.

      Due to the relatively small size of our initial public stock offering, we anticipate that our stock will be quoted on the OTC Bulletin Board.
The OTC Bulletin Board is a market with less liquidity and fewer buyers and sellers than the NASDAQ Stock Market. Even if a liquid market
develops for our stock, the market liquidity may not be maintained and the trading price may be above or below the $10.00 offering price. An
active, orderly trading market depends on the presence and participation of willing buyers and sellers which neither Fairmount Bancorp, Inc.
nor the stock’s market makers can control. This may affect your ability to sell your shares on short notice and the price at which they can be
sold, and the sale of a large number of shares at one time could temporarily depress the market price. For these reasons, our stock should not be
viewed as a short-term investment. See ―Market for the Common Stock.‖

The market for stock of financial institutions has been unusually volatile recently, and our stock price may decline when trading
commences.
       If you purchase shares in the stock offering, you may not 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 not only
by our operating results but 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,
have recently experienced substantial market price volatility. We might experience fluctuations in our stock price that are not directly related to
our operating performance or asset quality but are influenced by the current market conditions for financial institutions generally, the market’s
perception of the health of the financial industry, and the market’s assessment of credit quality conditions, including default and foreclosure
rates.

Our return on equity may be low compared to other financial institutions. This could negatively affect the trading price of our shares
of common stock.
       Net income divided by average equity, known as ―return on equity,‖ is a ratio many investors use to compare the performance of a
financial institution to its peers. For the fiscal year ended September 30, 2009, our return on average equity was 6.77% compared to the median
return on average equity of 3.87% for the most recent 12 month period for which data was publicly available for all publicly traded savings
institutions. Following the stock offering, we expect our equity to increase from $6,790,000 to between $9,830,000 at the minimum of the
offering range and $11,909,000 at the adjusted maximum of the offering range. See ―Capitalization.‖ Our return on equity will be reduced by
the capital raised in the stock offering, higher expenses from the costs of operating as a public company, higher expenses associated with our
planned expansion, and added expenses associated with our employee stock ownership plan and the stock-based incentive plans we intend to
adopt. Until we can increase our net interest income and non-interest income, we expect our return on equity to be below the industry average,
which may reduce the value of our shares of common stock.

Our stock-based benefit plans will increase our costs, which will reduce our income.
      We anticipate that the employee stock ownership plan will purchase 8% of the total shares of common stock outstanding following the
stock offering, with funds borrowed from Fairmount Bancorp, Inc. The cost of acquiring shares of common stock for the employee stock
ownership plan will be between $340,000 at the minimum of the offering range and $529,000 at the adjusted maximum of the offering range.
We will record annual employee stock ownership plan expense in an amount equal to the fair value of shares of common stock committed to be
released to employees. If shares of common stock appreciate in value over time, compensation expense relating to the employee stock
ownership plan will increase.

    We also intend to adopt stock-based incentive plans after the stock offering under which plan participants would be awarded shares of our
common stock (at no cost to them) and/or options to purchase shares of our common stock. The

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number of shares of restricted stock or stock options reserved for issuance under any initial stock-based incentive plan may not exceed 4.0%
and 10.0%, respectively, of our total outstanding shares, if these plans are adopted within twelve months after the completion of the conversion.
Following the conversion, we will recognize additional annual employee compensation expenses stemming from options and shares granted
under the 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 after-tax benefit
expenses for the year ended September 30, 2009 have been estimated to be approximately $102,000 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 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.‖

      As discussed in ―Pro Forma Data,‖ and based on the assumptions set forth in that section, the implementation of these plans will reduce
our pro forma net income from $474,000 at the minimum of the offering range to $399,000, and from $487,000 to $385,000 at the maximum of
the offering range. In addition, pro forma stockholders’ equity would be reduced from $10,340,000 at the minimum of the offering range to
$9,830,000, and from $11,840,000 to $11,150,000 at the maximum of the offering range. See ―Management—Benefits to be Considered
Following Completion of the Conversion.‖

The implementation of stock-based incentive plans will dilute your ownership interest. Historically, stockholders have approved these
plans.
      We intend to adopt stock-based incentive plans, which will allow participants to be awarded shares of common stock (at no cost to them)
or options to purchase shares of our common stock, following the stock offering. These stock-based incentive plans will be funded through
either open market purchases of shares of common stock, if permitted, or from the issuance of authorized but unissued shares of common stock.
Stockholders would experience a reduction in ownership interest totaling 12.28% in the event newly issued shares are used to fund stock
options or awards of shares of common stock under these plans in an amount equal to 10% and 4%, respectively, of the shares issued in the
stock offering.

      Although the implementation of stock-based incentive plans will be subject to stockholder approval, historically, the overwhelming
majority of these plans adopted by savings institutions and their holding companies following mutual-to-stock conversions have been approved
by stockholders.

We have not determined whether we will adopt stock-based incentive plans more than one year following the stock offering.
Stock-based incentive plans adopted more than one year following the stock offering may exceed regulatory restrictions on the size of
stock-based benefit plans adopted within one year, which would further increase our costs and dilute your ownership interest.
      If we adopt stock-based incentive plans within one year following the completion of the stock offering , then we may grant shares of
common stock or stock options under our stock-based incentive plans for up to 4% and 10%, respectively, of our total outstanding shares.
However, the amount of stock awards and stock options available for grant under the stock-based incentive plans may exceed these amounts if
the stock-based incentive plans are adopted more than one year following the stock offering. Although the implementation of the stock-based
incentive plans will be subject to stockholder approval, the determination as to the timing of the implementation of such plans will be at the
discretion of our board of directors. Stock-based incentive plans that provide for awards in excess of these amounts would increase our costs
beyond the amounts estimated in this prospectus. Stock-based incentive plans that provide for awards in excess of these amounts could also
result in dilution to stockholders in excess of that described in this prospectus.

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Various factors may make takeover attempts more difficult to achieve.
      Our board of directors has no current intention to sell control of Fairmount Bancorp, Inc. Provisions of our articles of incorporation and
bylaws, Maryland law and various other factors may make it more difficult for companies or persons to acquire control of Fairmount Bancorp,
Inc. without the consent of our board of directors. You may want a takeover attempt to succeed because, for example, a potential acquiror could
offer a premium over the then prevailing price of our common stock. The factors that may discourage takeover attempts or make them more
difficult include:
        •    Office of Thrift Supervision Regulations . Office of Thrift Supervision regulations prohibit, for three years following the
             completion of a conversion, the direct or indirect acquisition of more than 10% of any class of equity security of a converted
             savings institution without the prior approval of the Office of Thrift Supervision.
        •    Articles of incorporation and statutory provisions. Provisions of the articles of incorporation and bylaws of Fairmount Bancorp,
             Inc. and Maryland law may make it more difficult and expensive to pursue a takeover attempt that management opposes, even if
             the takeover is favored by a majority of our stockholders. These provisions also would make it more difficult to remove our current
             board of directors or management, or to elect new directors. Specifically, our articles of incorporation include limitations on voting
             rights of beneficial owners of more than 10% of our common stock, the election of directors to staggered terms of three years and
             not permitting cumulative voting in the election of directors. Our bylaws also contain provisions regarding the timing and content
             of stockholder proposals and nominations and qualification for service on the board of directors.
        •    Required change-in-control payments . We intend to enter into an employment agreements with our president and chief executive
             officer and change-in-control agreements with two executive officers of Fairmount Bancorp, Inc. and Fairmount Bank, which
             would provide cash payments to these officers in the event of a termination of employment following a change in control of
             Fairmount Bancorp, Inc. or Fairmount Bank. In the event of a change in control, these cash severance payments would amount to
             approximately $600,000 in the aggregate, subject to reduction with respect to an officer in order to avoid an ―excess parachute
             payment‖ under Section 280G of the Internal Revenue Code. These payments may have the effect of increasing the costs of
             acquiring Fairmount Bancorp, Inc., thereby discouraging future takeover attempts.

We have broad discretion in using the proceeds of the offering. Our failure to effectively use such proceeds could reduce our profits.
      We will use a portion of the net proceeds to finance the purchase of shares of common stock in the stock offering by the employee stock
ownership plan and may use the remaining net proceeds to pay dividends to stockholders, repurchase shares of common stock, purchase
investment securities, deposit funds in Fairmount Bank, acquire additional branch offices or other financial services companies or for other
general corporate purposes. Fairmount Bank may use the proceeds it receives to fund new loans, establish or acquire new branches, purchase
investment securities or for general corporate purposes. We have not identified specific amounts of proceeds for any of these purposes, and we
will have significant flexibility in determining the amount of net proceeds we apply to different uses and the timing of such applications. Our
failure to utilize these funds effectively could reduce our profitability. We have not established a timetable for the effective deployment of the
proceeds, and we cannot predict how long we will require to effectively deploy the proceeds.

Our stock value may be negatively affected by federal regulations that restrict takeovers.
       For three years following the stock offering, Office of Thrift Supervision regulations prohibit any person from acquiring or offering to
acquire more than 10% of our common stock without the prior written approval of the Office of Thrift Supervision. See ―Restrictions on
Acquisition of Fairmount Bancorp, Inc.‖ for a discussion of applicable Office of Thrift Supervision regulations regarding acquisitions. These
restrictions may make it more difficult for stockholders to acquire a significant amount of our stock, which may adversely affect our stock
price.

The corporate governance provisions in our articles of incorporation and bylaws, and the corporate governance provisions under
Maryland law, may prevent or impede the holders of our common stock from obtaining representation on our board of directors and
may impede takeovers of Fairmount Bancorp, Inc. that our board might conclude are not in the best interest of Fairmount Bancorp,
Inc. or its stockholders.
      Provisions in our articles of incorporation and bylaws may prevent or impede holders of our common stock from obtaining representation
on our board of directors and may make takeovers of Fairmount Bancorp, Inc. more difficult. For example, our board of directors is divided
into three staggered classes. A classified board makes it more difficult for

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stockholders to change a majority of the directors because it generally takes at least two annual elections of directors for this to occur. Our
articles of incorporation include a provision that no person will be entitled to vote any shares of our common stock in excess of 10% of our
outstanding shares of common stock. This limitation does not apply to the purchase of shares by a tax-qualified employee stock benefit plan
established by us. In addition, our articles of incorporation and bylaws restrict who may call special meetings of stockholders and how directors
may be removed from office. Additionally, in certain instances, the Maryland General Corporation Law requires a supermajority vote of our
stockholders to approve a merger or other business combination with a large stockholder, if the proposed transaction is not approved by a
majority of our directors. See ―Restrictions on Acquisition of Fairmount Bancorp, Inc.‖ on page . These provisions may make it more
difficult to pursue a change in control or attempt a takeover of Fairmount Bancorp, Inc. As a result, you may not have an opportunity to
participate in such a transaction, and the trading price of our common stock may be adversely affected.

Our stock value may be negatively affected by federal regulations that restrict stock repurchases.
      Office of Thrift Supervision regulations restrict us from repurchasing our shares of common stock during the first year following the
conversion unless extraordinary circumstances exist. Stock repurchases are a capital management tool that can enhance the value of a
company’s stock, and our inability to repurchase our shares of common stock during the first year following the conversion may negatively
affect our stock price.

                                                                       22
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                                                SELECTED FINANCIAL AND OTHER DATA

      The following tables set forth selected historical financial and other data of Fairmount Bank for the periods and at the dates indicated. The
information at September 30, 2009 and 2008 and for the years ended September 30, 2009 and 2008 is derived in part from, and should be read
together with, the audited financial statements and notes thereto of Fairmount Bank beginning at page F-1 of this prospectus.

                                                                                                                        At September 30,
                                                                                                                     2009               2008
                                                                                                                         (In thousands)
      Selected Financial Conditional Data:
      Total assets                                                                                                $ 64,041         $ 55,512
      Cash and cash equivalents                                                                                        328              367
      Federal funds sold and interest-bearing deposits in other banks                                                4,305            1,045
      Investment securities                                                                                          5,094            7,019
      Federal Home Loan Bank stock                                                                                     601              539
      Loans receivable, net                                                                                         50,334           45,155
      Deposits                                                                                                      45,838           38,891
      Borrowed funds                                                                                                11,000           10,000
      Equity                                                                                                         6,790            6,192

                                                                                                                       For the Years Ended
                                                                                                                          September 30,


                                                                                                                       2009             2008
                                                                                                                          (In thousands)
      Selected Operating Data:
      Interest and dividend income                                                                                  $ 3,437          $ 2,950
      Interest expense (1)                                                                                            1,502            1,619
      Net interest income (1)                                                                                         1,935            1,331
      Provision for loan losses                                                                                         182               50
      Net interest income after provision for loan losses (1)                                                         1,753            1,281
      Capitalized interest                                                                                               45              —
      Non-interest income                                                                                               157              151
      Non-interest expense                                                                                            1,241            1,037
      Income before income taxes                                                                                        714              395
      Provision for income taxes                                                                                        269              149
      Net income                                                                                                        445              246

(1)   Excludes capitalized interest.

                                                                        23
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                                                                                                                At or for the Years
                                                                                                                      Ended
                                                                                                                   September 30,
                                                                                                              2009                2008
      Selected Financial Ratios and Other Data:
      Performance Ratios:
      Return on assets (ratio of net income to average total assets)                                           0.74 %              0.48 %
      Return on equity (ratio of net income to average equity)                                                 6.77 %              4.03 %
      Interest rate spread (1)                                                                                 3.09 %              2.31 %
      Net interest margin (2)                                                                                  3.34 %              2.71 %
      Efficiency ratio (3)                                                                                    59.30 %             70.00 %
      Non-interest expense to average total assets                                                             2.06 %              2.03 %
      Average interest-earning assets to average interest-bearing liabilities                                109.83 %            112.12 %
      Loans to deposits                                                                                      109.81 %            116.11 %
      Asset Quality Ratios:
      Non-performing assets to total assets (4)                                                                 0.79 %              — %
      Non-performing loans to total loans                                                                       0.82 %              — %
      Allowance for loan losses to non-performing loans                                                        53.11 %                *
      Allowance for loan losses to total loans                                                                  0.44 %             0.23 %
      Net charge- offs as a percentage of average loans outstanding                                             0.14 %             0.07 %
      Capital Ratios:
      Average equity to average assets                                                                         10.87 %            12.08 %
      Equity to total assets at end of period                                                                  10.60 %            11.16 %
      Total capital to risk-weighted assets                                                                    19.27 %            21.47 %
      Tier 1 capital to risk-weighted assets                                                                   18.80 %            21.13 %
      Tier 1 capital to average assets                                                                         10.52 %            11.29 %
      Other Data:
      Number of full service offices                                                                               1                  1
      Number of employees                                                                                         12                 10

*     Not meaningful.
(1)   Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of
      interest-bearing liabilities for the period.
(2)   The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3)   The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(4)   Non-performing assets consist of non-performing loans and real estate owned.

                                                                         24
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                                                            RECENT DEVELOPMENTS

       The following tables set forth certain financial and other information at the dates and for the periods indicated. The financial data at
September 30, 2009 has been derived in part from the audited financial statements of Fairmount Bank and notes thereto presented elsewhere in
this prospectus. The financial data at and for the periods ended December 31, 2009 and 2008 have been derived in part from unaudited
financial statements which, in the opinion of management, include all adjustments (consisting of normal recurring accruals) necessary for the
fair presentation of such information. The results of operations for the three months ended December 31, 2009 are not necessarily indicative of
the results of operations that may be expected for the fiscal year ending September 30, 2010.

                                                                                                           At                              At
                                                                                                      December 30,                    September 30,
                                                                                                          2009                            2009
                                                                                                       Unaudited
                                                                                                                     (In thousands)
      Selected Financial Condition Data:
      Total assets                                                                                   $     65,252                $          64,041
      Cash and cash equivalents                                                                               280                              328
      Federal funds sold and interest-bearing deposits in other banks                                       1,752                            4,305
      Investment securities                                                                                 7,386                            5,094
      Federal Home Loan Bank stock                                                                            601                              601
      Loans receivable, net                                                                                51,432                           50,334
      Deposits                                                                                             47,149                           45,838
      Borrowed funds                                                                                       11,000                           11,000
      Equity                                                                                                6,897                            6,790

                                                                                                                Three Months Ended
                                                                                                                   December 31,
                                                                                                         2009                             2008
                                                                                                                       Unaudited
                                                                                                                     (In thousands)
      Selected Operating Data:
      Interest and dividend income                                                                   $          913              $               831
      Interest expense                                                                                          361                              384
      Net interest income                                                                                       552                              447
      Provision for loan losses                                                                                  30                                6
      Net interest income after provision for loan losses                                                       522                              441
      Non-interest income                                                                                        50                               22
      Non-interest expense                                                                                      384                              264
      Income before income taxes                                                                                188                              199
      Provision for income taxes                                                                                 73                               71
      Net income                                                                                                115                              128

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                                                                                                             At or For the Three
                                                                                                          Months Ended December 31,
                                                                                                        2009                     2008
                                                                                                                  Unaudited
      Selected Financial Ratios and Other Data:
      Performance Ratios:
      Return on assets (ratio of net income to average total assets)                                        0.71 %                  0.90 %
      Return on equity (ratio of net income to average equity)                                              6.69 %                  8.13 %
      Interest rate spread (1)                                                                              3.45 %                  2.95 %
      Interest rate margin (2)                                                                              3.61 %                  3.27 %
      Efficiency ratio (3)                                                                                 63.79 %                 56.42 %
      Non-interest expense to average total assets                                                          2.36 %                  1.87 %
      Average interest earning assets to interest-bearing liabilities                                     106.81 %                111.34 %
      Loans to deposits                                                                                   109.08 %                113.27 %
      Asset Quality Ratios:
      Non-performing assets to total assets (4)                                                             0.40 %                  0.11 %
      Non-performing loans to total loans                                                                   0.32 %                  0.14 %
      Allowance for loan losses to non-performing loans                                                   151.50 %                162.69 %
      Allowance for loan losses to total loans                                                              0.49 %                  0.23 %
      Net chargeoffs as a percentage of average loans outstanding                                              *                       *
      Capital Ratios:
      Average equity to average assets                                                                     10.45 %                 11.27 %
      Equity to total assets at end of period                                                              10.57 %                 10.97 %
      Total capital to risk-weighted assets                                                                      %
                                                                                                           18.98                   21.54 %
      Tier 1 capital to risk-weighted assets                                                                     %
                                                                                                           18.44                   21.05 %
      Tier 1 capital to average assets                                                                           %
                                                                                                           10.50                   10.92 %
      Other Data:
      Number of full service offices                                                                           1                         1
      Number of employees                                                                                     12                        10

*     Not meaningful.
(1)   Represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of
      interest-bearing liabilities for the period.
(2)   The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3)   The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(4)   Non-performing assets consist of non-performing loans and real estate owned.

Comparison of Financial Condition at December 31, 2009 and September 30, 2009
      Total assets increased by $1,211,000 or 1.89% to $65,252,000 at December 31, 2009 from $64,041,000 at September 30, 2009. The
increase was a result of an increase of $1,098,000 in net loans and a $2,292,000 increase in investment securities, funded by a decrease of
$2,553,000 in federal funds sold and interest-bearing deposits in other banks and an increase in deposits of $1,311,000.

     Cash and due from banks decreased to $280,000 at December 31, 2009 from $328,000 at September 30, 2009. This represented a
decrease of $48,000 or 14.63% due to normal cash flows.

     Federal funds sold and interest-bearing deposits in other banks decreased by $2,553,000 or 59.30% to $1,752,000 at December 31, 2009
from $4,305,000 at September 30, 2009. The outflow was invested in Fairmount Bank’s investment securities portfolio.

      Investment securities increased by $2,292,000 or 44.99% from $5,094,000 at September 30, 2009 to $7,386,000 at December 31, 2009.
The increase was funded by proceeds from federal funds sold and interest-bearing deposits in other banks. Fairmount Bank’s held to maturity
portion of the portfolio, at amortized cost, was $2,266,000, and its available-for-sale portion of the portfolio, at fair value, was $5,120,000.

                                                                        26
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      Total net loans increased from $50,334,000 at September 30, 2009 to $51,432,000 at December 31, 2009. This represented an increase of
$1,098,000 or 2.18%. The increase in the loan portfolio was primarily attributable to an increase of $940,000 or 4.24%, in the one-to
four-family owner occupied real estate loans. At December 31, 2009, one-to four-family owner occupied real estate loans were $23,119,000,
compared to $22,162,000 at September 30, 2009.

     Total liabilities at December 31, 2009 were $58,355,000, an increase of $1,104,000, or 1.93%, from $57,251,000 at September 30, 2009.
The increase was due primarily to an increase in deposits of $1,311,000, or 2.86% from September 30, 2009 to December 31, 2009.

       Deposits increased from $45,838,000 at September 30, 2009 to $47,149,000 at December 31, 2009. The increase of $1,311,000, or 2.86%
in total deposits was primarily the result of an increase in certificates of deposit. Certificates of deposit increased from $32,850,000 at
September 30, 2009 to $33,821,000 at December 31, 2009. This represented an increase of $971,000 or 2.96% from September 30, 2009 to
December 31, 2009.

      Total equity was $6,897,000 or 10.57% of total assets, at December 31, 2009, compared to $6,790,000, or 10.60% of total assets, at
September 30, 2009. The primary reason for the $107,000 increase in equity was $115,000 in net income reported during the three months
ended December 31, 2009. Accumulated other comprehensive income decreased by $8,000, from a gain of $63,000 at September 30, 2009 to a
gain of $55,000 at December 31, 2009. The change in accumulated other comprehensive income was primarily due to the effects of interest rate
fluctuations on Fairmount Bank’s available-for-sale portfolio.

     As of December 31, 2009, total non-accrual loans totaled $167,000, compared to $414,000 as of September 30, 2009. Of the $414,000 in
non-accrual loans, $362,000 were four loans made to one borrower. Three of the loans totaling $247,000 were subsequently taken off
non-accrual status.

Comparison of Operating Results for the Three Months Ended December 31, 2009 and December 31, 2008
      Net Income . Net income decreased by $13,000, or 10.16%, to $115,000 for the three months ended December 31, 2009, from net
income of $128,000 for the three months ended December 31, 2008. The decrease reflected higher non-interest expense of $120,000, offset in
part by an increase of $105,000 in net interest income.

      Net Interest Income . Net interest income increased by $105,000, or 23.49%, to $552,000 for the three months ended December 31,
2009, from $447,000 for the three months ended December 31, 2008. The increase primarily resulted from the combined effects of an increase
of $82,000 in interest and dividend income to $913,000 for the three months ended December 31, 2009, from $831,000 for the three months
ended December 31, 2008, and a decrease of $23,000 in interest expense to $361,000 for the three months ended December 31, 2009, from
$384,000, for the three months ended December 31, 2008. The increase in interest and dividend income was mainly the result of a $4,176,000
increase in average balance of loans due to growth in the loan portfolio and an increase of $2,467,000 in the average balance of federal funds
sold and interest-bearing deposits in other banks. Interest expense decreased primarily as a result of the decrease in average rates paid on
deposits and borrowings. The average rate paid decreased to 2.52% at December 31, 2009, from 3.12% at December 31, 2008. Fairmount
Bank’s interest rate spread increased to 3.45% for the quarter ended December 31, 2009, from 2.95% for the quarter ended December 31, 2008.
Fairmount Bank’s net interest margin increased to 3.61% for the quarter ended December 31, 2009, from 3.17% for the quarter ended
December 31, 2008.

      Provision for Loan Losses . The provision for loan losses increased $24,000, to $30,000 for the three months ended December 31, 2009,
from $6,000 for the three months ended December 31, 2008, due to increased loan volume and uncertainty regarding the housing market.
Fairmount Bank recorded a recovery of $2,000 for the three months ended December 31, 2009. There were no charge-offs recorded for the
three months ended December 31, 2009 and December 31, 2008.

     Non-Interest Income . Non-interest income was $50,000 for the three months ended December 31, 2009, which was an increase of
$28,000 or 127.27% from $22,000 for the three months ended December 31, 2008. The increase was the result of Fairmount Bank’s service
charges and fees which increased due to loan settlements during the comparable three month periods.

     Non-Interest Expense . Non-interest expense increased by $120,000 or 45.45% to $384,000 for the three months ended December 31,
2009, from $264,000 for the three months ended December 31, 2008. The increase was due to increases in

                                                                     27
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salaries, fees, and employment expenses, premises and equipment expenses, and Federal Deposit Insurance Corporation insurance premiums.
Salaries, fees and employment expenses increased by $64,000 or 38.79% from $165,000 for the three months ended December 31, 2008 to
$229,000 for the three months ended December 31, 2009 primarily as a result of our hiring a Chief Financial Officer and an assistant branch
manager. Premises and equipment increased by $24,000 or 133.33% from $18,000 for the three months ended December 31, 2008 to $42,000
for the three months ended December 31, 2009. This increase was primarily the result of the new headquarter facility that was opened in
September 2009. FDIC insurance premiums increased by $23,000 from $4,000 for the three months ended December 31, 2008 to $27,000 for
the three months December 31, 2009. Several factors attributed to the increase in FDIC insurance premiums including, an increase in the FDIC
quarterly multiplier, which is used to compute the payment amount, and the depletion of the one-time assessment credit.

     Income Taxes . The provision for income taxes increased $2,000 or 2.82% to $73,000 for the three months ended December 31, 2009,
from $71,000 for the three months ended December 31, 2008.

      Total Comprehensive Income. Total comprehensive income for the three months ended December 31, 2009 and December 31, 2008
consisted of net income and the change in unrealized gains on investment securities available-for-sale, net of tax. Total comprehensive income
was $170,000 and $168,000 for the three months ended December 31, 2009 and 2008, respectively. The increase in total comprehensive
income resulted from a decrease in net income of $13,000 and an increase in adjustments to other comprehensive income of $15,000 from a
change in unrealized gains on investment securities available-for-sale.

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                                                     FORWARD-LOOKING STATEMENTS

      This prospectus contains forward-looking statements, which can be identified by the use of words such as ―estimate,‖ ―project,‖
―believe,‖ ―intend,‖ ―anticipate,‖ ―plan,‖ ―seek,‖ ―expect,‖ ―will,‖ ―may‖ and words of similar meaning. These forward-looking statements
include, but are not limited to:
        •    statements of our goals, intentions and expectations;
        •    statements regarding our business plans, prospects, growth and operating strategies;
        •    statements regarding the asset quality of Fairmount Bank’s loan and investment portfolios; and
        •    estimates of our risks and future costs and benefits.

      These forward-looking statements are based on our current beliefs and expectations and are subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject
to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any
obligation to update any forward-looking statements after the date of this prospectus.

     The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations
expressed in the forward-looking statements:
        •    general economic conditions, either nationally or in our market area, that are worse than expected;
        •    competition among depository and other financial institutions;
        •    inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;
        •    adverse changes in the securities markets;
        •    changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and
             capital requirements;
        •    our ability to enter new markets successfully and capitalize on growth opportunities;
        •    our ability to successfully integrate acquired entities;
        •    changes in consumer spending, borrowing and savings habits;
        •    changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting
             Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;
        •    changes in our organization, compensation and benefit plans;
        •    changes in our financial condition or results of operations that reduce capital available to pay dividends;
        •    regulatory changes or actions; and
        •    changes in the financial condition or future prospects of issuers of securities that we own.

      Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated
by these forward-looking statements. Please see ―Risk Factors‖ beginning on page .

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Table of Contents

                                   HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

      Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the
offering is completed, we anticipate that the net proceeds will be between $3,550,000 and $5,050,000, or $5,912,500 if the offering range is
increased by 15%. We estimate that we will contribute half of these proceeds to Fairmount Bank. We intend to retain the other half of the net
proceeds at Fairmount Bancorp, Inc., to be used for the purposes described below.

      A summary of the anticipated net proceeds at the minimum, midpoint, maximum and adjusted maximum of the offering range and the use
of the net proceeds is as follows:

                                                                      Based Upon the Sale at $10.00 Per Share of
                                           425,000 Shares             500,000 Shares                   575,000 Shares             661,250 Shares (1)
                                                    Percent of                 Percent of                        Percent of                  Percent of
                                                       Net                        Net                               Net                         Net
                                        Amount       Proceeds      Amount       Proceeds           Amount        Proceeds       Amount       Proceeds
                                                                                (Dollars in thousands)
Offering proceeds                       $ 4,250                    $ 5,000                        $ 5,750                       $ 6,613
Less offering expenses                      700                        700                            700                           700
Net offering proceeds                   $ 3,550          100.0 %   $ 4,300           100.0 %      $ 5,050            100.0 %    $ 5,913          100.0 %
Use of net proceeds:
To Fairmount Bank                       $ 1,775           50.0 %   $ 2,150            50.0 %      $ 2,525              50.0 %   $ 2,956            50.0 %
To fund loan to employee stock
  ownership plan                            340            9.6 %       400              9.3 %           460             9.1 %       529             8.9 %
Retained by Fairmount Bancorp,
  Inc.                                  $ 1,435           40.4 %   $ 1,750            40.7 %      $ 2,065              40.9 %   $ 2,427            41.1 %



(1)   As adjusted to give effect to an increase in the number of shares, which could occur due to a 15% increase in the offering range to reflect
      demand for the shares, changes in market or general financial conditions, or regulatory considerations following commencement of the
      offering.

      Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new
funds for investment but will result in a reduction of Fairmount Bank’s deposits. The net proceeds may vary because the total expenses relating
to the offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering were
used to sell shares of common stock not purchased in the subscription and community offerings.

Fairmount Bancorp, Inc. May Use the Proceeds it Retains from the Offering:
        •    to fund a loan to the employee stock ownership plan to purchase shares of common stock in the offering (between $340,000 and
             $460,000, or $529,000 if the offering is increased by 15%);
        •    to invest in securities,
        •    to finance branch expansion and the possible acquisition of banking or financial service companies, including additional bank
             branches, although we currently have no undertakings or agreements to acquire another branch office or another bank, thrift, credit
             union or financial services company;
        •    to pay cash dividends to stockholders;
        •    to repurchase shares of our common stock; and
        •    for other general corporate purposes.

     Initially, we intend to invest a substantial portion of the net proceeds in short-term investments, investment-grade debt obligations and
mortgage-backed securities.

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

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Fairmount Bank May Use the Net Proceeds it Receives from the Offering:
        •    to fund new loans, including one-to four-family residential mortgage loans, commercial real estate loans, construction loans, home
             equity lines of credit and, to a lesser extent, commercial and consumer loans;
        •    to enhance existing products and services and to support new products and services;
        •    to invest in securities;
        •    to expand its banking franchise by acquiring or establishing new branches, or by acquiring other banking or financial services
             companies, including additional bank branches, although we currently have no understandings or agreements to acquire another
             branch office or another bank, thrift, credit union or financial services company; and
        •    for other general corporate purposes.

      Initially, the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities.

      We expect our return on equity to decrease as compared to our performance in recent years until we are able to utilize effectively the
additional capital raised in the offering. Until we can increase our net interest income and noninterest income, we expect our return on equity to
be below the industry average, which may negatively affect the value of our common stock. See ―Risk Factors.‖


                                                     OUR POLICY REGARDING DIVIDENDS

      Following the completion of the stock offering, our board of directors will have the authority to declare dividends on our shares of
common stock, subject to statutory and regulatory requirements. However, our board has no plans or understandings with respect to the
payment of dividends. In determining whether to pay a cash dividend and the amount of such cash dividend, the board is expected to take into
account a number of factors, including capital requirements, our financial condition and results of operations, tax considerations, statutory and
regulatory limitations and general economic conditions. We cannot assure you that we will pay dividends in the foreseeable future, or that if
paid, we will not reduce or eliminate dividends in the future. Special cash dividends, stock dividends or returns of capital, to the extent
permitted by Office of Thrift Supervision policy and regulations, may be paid in addition to, or in lieu of, regular cash dividends. We will file a
consolidated tax return with Fairmount Bank. Accordingly, it is anticipated that any cash distributions made by us to our stockholders would be
treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes.

       We will be subject to Maryland law relating to its ability to pay dividends to its stockholders. We will not be subject to the Office of
Thrift Supervision on the payment of dividends. However, our ability to pay dividends may depend, in part, upon dividends we receive from
Fairmount Bank because we initially will have no source of income other than dividends from Fairmount Bank, earnings from the investment
of the net proceeds from the offering that we retain, and interest payments received on our loan to the employee stock ownership plan. We
expect that we will retain approximately $2,065,000 from the net proceeds raised in the offering at the maximum of the offering range based
upon our estimate of offering-related expenses and other assumptions described in ―Pro Forma Data.‖ Federal banking law limits dividends and
other distributions from Fairmount Bank to us. In addition, we may not make a distribution that would constitute a return of capital during the
12 months following the completion of the conversion. No insured depository institution may make a capital distribution if, after making the
distribution, the institution would be undercapitalized. See ―Supervision and Regulation—Capital Distributions.‖

      Additionally, pursuant to Office of Thrift Supervision regulations, during the three-year period following the stock offering, we will not
take any action to declare an extraordinary dividend to stockholders that would be treated by recipients as a tax-free return of capital for federal
income tax purposes.

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                                                 MARKET FOR THE COMMON STOCK

      We have never issued capital stock, and so there is no established market for our common stock. Upon completion of the offering, we
expect that our common stock will be quoted on the Over-the-Counter Electronic Bulletin Board, subject to completion of the offering. Stifel,
Nicolaus & Company, Incorporated has advised us that it intends to make a market in shares of our common stock following the offering, but it
is under no obligation to do so, or to continue to do so once it begins.

       The development and maintenance 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 shares of our common stock at any particular time may be limited, which may have an adverse effect on the price at which
shares of our common stock can be sold. There can be no assurance that persons purchasing the shares of common stock will be able to sell
their shares at or above the $10.00 offering purchase price per share. You should have a long-term investment intent if you purchase shares of
our common stock and you should recognize that there may be a limited trading market in the shares of common stock.

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                              HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

      At September 30, 2009, Fairmount Bank exceeded all of the applicable regulatory capital requirements. The table below sets forth the
historical equity capital and regulatory capital of Fairmount Bank at September 30, 2009, and the pro forma regulatory capital of Fairmount
Bank at September 30, 2009, after giving effect to the sale of shares of common stock at a $10.00 per share purchase price. The table assumes
the receipt by Fairmount Bank of between $1,775,000 and $2,525,000, or $2,956,250 if the offering range is increased by 15%.

                            Fairmount Bank
                              Historical at
                           September 30, 2009                       Pro Forma at September 30, 2009, Based Upon the Sale in the Offering of

                                                    425,000 Shares                500,000 Shares                 575,000 Shares                661,250 Shares (1)
                                     Percent of              Percent of                    Percent of                     Percent of                     Percent of
                         Amount      Assets (2)   Amount     Assets (2)         Amount     Assets (2)          Amount     Assets (2)          Amount      Assets (2)

                                                                            (Dollars in thousands)
GAAP capital             $ 6,790          10.60 % $ 8,225         12.50 % $ 8,540                12.90 % $ 8,855                13.30 % $ 9,217               13.76 %

Tangible capital (3)     $ 6,727          10.52 % $ 8,162         12.42 % $ 8,477                12.83 % $ 8,792                13.23 % $ 9,154               13.68 %
Tangible requirement         959           1.50       986          1.50       991                 1.50       997                 1.50     1,003                1.50

Excess                   $ 5,768           9.02 % $ 7,176         10.92 % $ 7,486                11.33 % $ 7,795                11.73 % $ 8,151               12.18 %

Core capital (3)         $ 6,727          10.52 % $ 8,162         12.42 % $ 8,477                12.83 % $ 8,792                13.23 % $ 9,154               13.68 %
Core requirement (4)       2,558           4.00     2,629          4.00     2,644                 4.00     2,659                 4.00     2,676                4.00

Excess                   $ 4,169           6.52 % $ 5,533          8.42 % $ 5,833                    8.83 % $ 6,133               9.23 % $ 6,478                9.68 %

Total risk-based
  capital (5)(6)       $ 6,896            19.27 % $ 8,331         23.06 % $ 8,646                23.88 % $ 8,961                24.70 % $ 9,323               25.63 %
Risk-based requirement   2,862             8.00     2,891          8.00     2,897                 8.00     2,903                 8.00     2,910                8.00

Excess                   $ 4,034          11.27 % $ 5,440         15.06 % $ 5,749                15.88 % $ 6,058                16.70 % $ 6,413               17.63 %

Reconciliation of
  capital infused into
  Fairmount Bank:
Net proceeds                                      $ 1,775                     $ 2,150                        $ 2,525                          $ 2,956
Less: Common stock
  acquired by ESOP                                    340                           400                             460                           529

Pro Forma Increase                                $ 1,435                     $ 1,750                        $ 2,065                          $ 2,427



(1)   As adjusted to give effect to an increase in the number of shares which could occur due to a 15% increase in the offering range to reflect
      demand for the shares, changes in market or general financial conditions following the commencement of the offering or regulatory
      considerations.
(2)   Tangible and core capital levels are shown as a percentage of total adjusted assets. Risk-based capital levels are shown as a percentage of
      risk-weighted assets.
(3)   The difference between U.S. GAAP capital and regulatory tangible capital and core capital is attributable to the addition of $63,000 of
      unrealized gain on available for sale securities, net of taxes.
(4)   The current Office of Thrift Supervision core capital requirement for financial institutions is 3% of total adjusted assets for financial
      institutions that receive the highest supervisory rating for safety and soundness and a 4% to 5% core capital ratio requirement for all
      other financial institutions.
(5)   Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.
(6)   The difference between core capital and total risk-based capital is attributable to the addition of general loan loss allowance of $169,000.

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                                                                      CAPITALIZATION

      The following table presents the historical capitalization of Fairmount Bank at September 30, 2009 and the pro forma consolidated
capitalization of Fairmount Bancorp, Inc., after giving effect to the conversion and the offering, based upon the assumptions set forth in the
―Pro Forma Data‖ section.

                              Fairmount Bank
                                Historical at
                             September 30, 2009                                        Pro Forma, Based Upon the Sale in the Offering of
                                                                                                                                                          661,250 Shares
                                                          425,000 Shares                 500,000 Shares                    575,000 Shares               at $10.00 per Share
                                                        at $10.00 per Share           at $10.00 per Share                at $10.00 per Share                 (Adjusted
                                                           (Minimum of                    (Midpoint of                      (Maximum of                     Maximum of
                                                         Offering Range)                Offering Range)                   Offering Range)               Offering Range) (1)
                                                                                   (Dollars in thousands)
Deposits (2)             $               45,838     $                45,838        $                 45,838          $                45,838        $                45,838
Borrowings                               11,000                      11,000                          11,000                           11,000                         11,000

Total deposits and
  borrowed funds                         56,838                      56,838                          56,838                           56,838                         56,838

Stockholders’ equity:
Preferred stock $0.01
  par value; 1,000,000
  shares authorized,
  none issued or
  outstanding                                                            —                               —                                 —                             —
Common stock $0.01
  par value, 4,000,000
  shares authorized;
  assuming shares
  outstanding as
  shown (3)                                         $                         4    $                        5        $                         6    $                         7
Additional paid-in
  capital                                                              3,546                           4,295                            5,044                          5,906
Retained earnings (4)                     6,727                        6,727                           6,727                            6,727                          6,727
Accumulated other
  comprehensive
  income                                      63                              63                            63                                 63                         63
Less:
Common stock to be
  acquired by
  employee stock
  ownership plan (5)                                                    (340 )                          (400 )                             (460 )                       (529 )
Common stock to be
  acquired by stock
  recognition and
  retention plan (6)                                                    (170 )                          (200 )                             (230 )                       (265 )

Total stockholders’
  equity                 $                6,790     $                  9,830       $                 10,490          $                11,150        $                11,909

Total stockholders’
  equity as a
  percentage of total
  assets (2)                              10.60 %                      14.65 %                         15.49 %                          16.30 %                        17.22 %

(1)   As adjusted to give effect to an increase in the number of shares of common stock that could occur due to a 15% increase in the offering
      range to reflect demand for shares, changes in market or general financial conditions following the commencement of the subscription
      and community offerings or regulatory considerations.
(2)   Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the conversion and offering. These
      withdrawals would reduce pro forma deposits by the amount of the withdrawals.
(3)   No effect has been given to the issuance of additional shares of Fairmount Bancorp, Inc. common stock pursuant to a stock option plan.
      If this plan is implemented, an amount up to 10% of the shares of Fairmount Bancorp, Inc. common stock sold in the offering will be
      reserved for issuance upon the exercise of options under the stock option plan. See ―Management—Benefit Plans.‖
(4)   The retained earnings of Fairmount Bank will be substantially restricted after the conversion. See ―Our Policy Regarding Dividends,‖
      ―The Conversion and Offering—Liquidation Rights‖ and ―Supervision and Regulation.‖
(5)   Assumes that 8% of the shares sold in the offering will be acquired by the employee stock ownership plan financed by a loan from
      Fairmount Bancorp, Inc. The loan will be repaid principally from Fairmount Bank’s contributions to the employee stock ownership plan.
      Since Fairmount Bancorp, Inc. will finance the employee stock ownership plan debt, this debt will be eliminated through consolidation
      and no asset or liability will be reflected on the consolidated financial statements of Fairmount Bancorp, Inc. Accordingly, the amount of
      shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction of total stockholders’
      equity.

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(6)   Assumes a number of shares of common stock equal to 4% of the shares of common stock to be sold in the offering will be purchased by
      the stock recognition and retention plan in open market purchases. The dollar amount of common stock to be purchased is based on the
      $10.00 per share purchase price in the offering and represents unearned compensation. This amount does not reflect possible increases or
      decreases in the value of common stock relative to the subscription price in the offering. As Fairmount Bancorp, Inc. accrues
      compensation expense to reflect the vesting of shares pursuant to the stock recognition and retention plan, the credit to equity will be
      offset by a charge to noninterest expense. Implementation of the stock recognition and retention plan will require stockholder approval.
      The funds to be used by the stock recognition and retention plan to purchase the shares will be provided by Fairmount Bancorp, Inc.

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                                                              PRO FORMA DATA

      The following table summarizes historical data of Fairmount Bank and pro forma data of Fairmount Bancorp, Inc. at and for the year
ended September 30, 2009. This information is based on assumptions set forth below and in the table, and should not be used as a basis for
projections of market value of the shares of common stock following the conversion and offering. Moreover, pro forma stockholders’ equity
per share does not give effect to the liquidation account to be established in the conversion or, in the unlikely event of a liquidation of
Fairmount Bank, to the tax effect of the recapture of the bad debt reserve.

      The net proceeds in the tables are based upon the following assumptions:
        •    all shares of common stock will be sold in the subscription and community offerings;
        •    our employee stock ownership plan will purchase 8% of the shares of common stock sold in the offering with a loan from
             Fairmount Bancorp, Inc. The loan will be repaid in substantially equal payments of principal and interest over a period of 10 years;
             and
        •    total expenses of the stock offering, including the marketing fees to be paid to Stifel, Nicolaus & Company, Incorporated, will be
             approximately $700,000.

       We calculated pro forma consolidated net income for the year ended September 30, 2009 as if the estimated net proceeds we received had
been invested at an assumed interest rate of 1.45% (0.96% on an after-tax basis). This represents the three-year U.S. Treasury Note yield as of
September 30, 2009, which, in light of current market interest rates, we consider to more accurately reflect the pro forma reinvestment rate than
the arithmetic average of the weighted average yield earned on Fairmount Bank’s interest-earning assets and the weighted average rate paid on
its deposits, which is the reinvestment rate generally required by Office of Thrift Supervision regulations. The effect of withdrawals from
deposit accounts for the purchase of shares of common stock has not been reflected. Historical and pro forma per share amounts have been
calculated by dividing historical and pro forma amounts by the indicated number of shares of common stock. No effect has been given in the
pro forma stockholders’ equity calculations for the assumed earnings on the net proceeds. It is assumed that Fairmount Bancorp, Inc. will loan
funds to the employee stock ownership plan, between $340,000 and $460,000 of the estimated net proceeds in the offering, or $529,000 if the
offering range is increased by 15%. The actual net proceeds from the sale of shares of common stock will not be determined until the offering
is completed. However, we currently estimate the net proceeds to be between $3,550,000 and $5,050,000, and $5,912,500 if the offering range
is increased by 15%.

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      The following pro forma information may not be representative of the financial effects of the offering at the date on which the offering
actually occurs, and should not be taken as indicative of future results of operations. Pro forma consolidated stockholders’ equity represents the
difference between the stated amounts of our assets and liabilities. The pro forma stockholders’ equity is not intended to represent the fair
market value of the shares of common stock.

                                                                                          At or For the Year Ended September 30, 2009
                                                                                           Based Upon the Sale at $10.00 Per Share of
                                                                                                                                             661,250
                                                                       425,000                   500,000                   575,000          Shares at
                                                                      Shares at                 Shares at                 Shares at         Adjusted
                                                                     Minimum of               Midpoint of               Maximum of         Maximum of
                                                                      Offering                   Offering                 Offering          Offering
                                                                        Range                     Range                     Range           Range (1)
                                                                                       (Dollars in thousands, except per share amounts)
Gross proceeds of offering                                          $     4,250               $       5,000           $         5,750      $     6,613
Less expenses                                                              (700 )                      (700 )                    (700 )           (700 )
Estimated net proceeds                                              $     3,550               $       4,300           $         5,050      $     5,913
Less: Common stock purchased by ESOP (2)                                   (340 )                      (400 )                    (460 )           (529 )
Less: Common stock purchased by stock award plan (3)                       (170 )                      (200 )                    (230 )           (265 )
Estimated net proceeds, as adjusted                                 $     3,040               $       3,700           $         4,360      $     5,119


For the Year Ended September 30, 2009
Consolidated net income:
Historical                                                          $         445             $         445           $          445       $      445
Pro forma income on net proceeds                                               29                        36                       42               49
Pro forma ESOP adjustment (2)                                                 (22 )                     (26 )                    (30 )            (35 )
Pro forma stock award adjustment (3)                                          (22 )                     (26 )                    (30 )            (35 )
Pro forma stock option adjustment (4)                                         (31 )                     (37 )                    (42 )            (49 )
Pro forma net income                                                $         399             $         392           $          385       $      375

Per share net income
Historical                                                          $         1.14            $        0.96           $          0.84      $      0.73
Pro forma income on net proceeds, as adjusted                                 0.07                     0.08                      0.08             0.08
Pro forma ESOP adjustment (2)                                                (0.06 )                  (0.06 )                   (0.06 )          (0.06 )
Pro forma stock award adjustment (3)                                         (0.06 )                  (0.06 )                   (0.06 )          (0.06 )
Pro forma stock option adjustment (4)                                        (0.08 )                  (0.08 )                   (0.08 )          (0.08 )
Pro forma net income per share (5)                                  $        1.01             $        0.84           $          0.72      $      0.61

Offering price as a multiple of pro forma net income per
  share                                                                        9.9 x                   11.9 x                    13.9 x           16.4 x
Number of shares outstanding for pro forma net income per
  share calculations                                                    394,400                   464,000                     533,600          613,640

At September 30, 2009
Stockholders’ equity:
Historical                                                               $        6,790           $      6,790            $      6,790     $     6,790
Estimated net proceeds                                                            3,550                  4,300                   5,050           5,913
Less: Common stock acquired by ESOP (2)                                            (340 )                 (400 )                  (460 )          (529 )
     Less: Common stock acquired by stock award plan (3)(4)                        (170 )                 (200 )                  (230 )          (265 )
Pro forma stockholders’ equity                                           $        9,830           $    10,490             $     11,150     $    11,909

Stockholders’ equity per share:
Historical                                                               $        15.98           $      13.58            $      11.81     $     10.27
Estimated net proceeds                                                             8.35                   8.60                    8.78            8.94
Less: Common stock acquired by ESOP (2)                                           (0.80 )                (0.80 )                 (0.80 )         (0.80 )
Less: Common stock acquired by stock award plan (3)(4)                            (0.40 )                (0.40 )                 (0.40 )         (0.40 )
Pro forma stockholders’ equity per share (6)                          $     23.13     $     20.98     $     19.39     $     18.01

Offering price as percentage of pro forma stockholders’ equity per
  share                                                                     43.23 %         47.66 %         51.57 %         55.52 %
Number of shares outstanding for pro forma book value per share
  calculations                                                            425,000         500,000         575,000         661,250

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(1)   As adjusted to give effect to an increase in the number of shares which could occur due to a 15% increase in the offering range to reflect
      demand for the shares, changes in market and financial conditions following the commencement of the offering or regulatory
      considerations.
(2)   Assumes that 8% of shares of common stock sold in the offering will be purchased by the employee stock ownership plan. For purposes
      of this table, the funds used to acquire these shares are assumed to have been borrowed by the employee stock ownership plan from
      Fairmount Bancorp, Inc. Fairmount Bank intends to make annual contributions to the employee stock ownership plan in an amount at
      least equal to the required principal and interest payments on the debt. Fairmount Bank’ total annual payments on the employee stock
      ownership plan debt are based upon 10 equal annual installments of principal and interest. SOP 93-6 requires that an employer record
      compensation expense in an amount equal to the fair value of the shares committed to be released to employees. The pro forma
      adjustments assume that the employee stock ownership plan shares are allocated in equal annual installments based on the number of
      loan repayment installments assumed to be paid by Fairmount Bank, the fair value of the common stock remains equal to the subscription
      price and the employee stock ownership plan expense reflects an effective federal tax rate of 34%. The unallocated employee stock
      ownership plan shares are reflected as a reduction of stockholders’ equity. No reinvestment is assumed on proceeds contributed to fund
      the employee stock ownership plan. The pro forma net income further assumes that 34,000, 40,000, 46,000 and 52,900 shares were
      committed to be released during the period at the minimum, midpoint, maximum, and adjusted maximum of the offering range,
      respectively, and in accordance with SOP 93-6, only the employee stock ownership plan shares committed to be released during the
      period were considered outstanding for purposes of income per share calculations.
(3)   The stock recognition and retention plan may purchase an aggregate number of shares of common stock equal to 4% of the shares to be
      sold in the offering (or possibly a greater number of shares if the plan is implemented more than one year after completion of the
      conversion). Stockholder approval of the stock recognition and retention plan, and purchases by the plan may not occur earlier than six
      months after the completion of the conversion. The shares may be acquired directly from Fairmount Bancorp, Inc. or through open
      market purchases. The funds to be used by the stock recognition and retention plan to purchase the shares will be provided by Fairmount
      Bancorp, Inc. The table assumes that (i) the stock recognition and retention plan acquires the shares through open market purchases at
      $10.00 per share, (ii) 20% of the amount contributed to the stock recognition and retention plan is amortized as an expense during the
      year ended September 30, 2009 and (iii) the stock recognition and retention plan expense reflects an effective federal tax rate of 34%.
      Assuming stockholder approval of the stock recognition and retention plan and that shares of common stock (equal to 4% of the shares
      sold in the offering) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their
      ownership and voting interests diluted by approximately 3.85%.
(4)   The stock option plan may grant options to acquire an aggregate number of shares of common stock equal to 10% of the shares to be sold
      in the offering (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion).
      Stockholder approval of the stock option plan may not occur earlier than six months after the completion of the conversion. In calculating
      the pro forma effect of the stock option plan, it is assumed that the exercise price of the stock options and the trading price of the
      common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes option
      pricing model was $4.02 for each option, the aggregate grant-date fair value of the stock options was amortized to expense on a
      straight-line basis over a five-year vesting period of the options, and that 25% of the amortization expense (or the assumed portion
      relating to options granted to directors) resulted in a tax benefit using an assumed tax rate of 34.0%. The actual expense of the stock
      option plan will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the
      valuation assumptions used in the option pricing model ultimately adopted. Under the above assumptions, the adoption of the stock
      option plan will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can
      be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares to
      satisfy the exercise of options under the stock option plan is obtained from the issuance of authorized but unissued shares, our net income
      per share and stockholders’ equity per share would decrease. The issuance of authorized but previously unissued shares of common stock
      pursuant to the exercise of options under such plan would dilute existing stockholders’ ownership and voting interests by approximately
      9.09%.
(5)   Income per share computations are determined by taking the number of shares assumed to be sold in the offering and, in accordance with
      SOP 93-6, subtracting the employee stock ownership plan shares that have not been committed for release during the period and
      subtracting non-vested stock recognition and retention plan shares. See note 2, above.
(6)   The retained earnings of Fairmount Bank will be substantially restricted after the conversion. See ―Our Policy Regarding Dividends,‖
      ―The Conversion and Offering—Liquidation Rights‖ and ―Supervision and Regulation.‖

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

     This discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance
your understanding of our financial condition and results of operations. The information in this section has been derived from the audited
consolidated financial statements, which appear beginning on page F-1 of this prospectus.

Overview
      Fairmount Bank’s results of operations depend mainly on its net interest income, which is the difference between the interest income it
earns on its loan and investment portfolios and the interest expense it pays on its deposits and borrowings. Results of operations are also
affected by provisions for loan losses and noninterest income. Fairmount Bank’s noninterest expense consists primarily of compensation and
employee benefits, office occupancy and general administrative and data processing expenses.

     Fairmount Bank’s results of operations are significantly affected by general economic and competitive conditions, particularly with
respect to changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or
government policies may materially affect its financial condition and results of operations. See ―Risk Factors‖ beginning on page .

       Historically, Fairmount Bank’s business has consisted primarily of originating one-to four-family real estate loans secured by property in
its market area and investing in mortgage-backed and investment securities. Typically, one-to four-family loans involve a lower degree of risk
and carry a lower yield than commercial real estate, construction and consumer loans. Fairmount Bank’s loans are primarily funded by
certificates of deposit and, to a lesser extent, savings accounts and Federal Home Loan Bank of Atlanta advances. Certificates of deposit
typically have a higher interest rate than savings accounts. The combination of these factors, along with our capital level, has resulted in low
interest rate spreads and returns on equity.

Critical Accounting Policies
     In reviewing and understanding financial information for Fairmount Bank, you are encouraged to read and understand the significant
accounting policies used in preparing our financial statements. These policies are described in Note 1 of the Notes to the Financial Statements.
The accounting and financial reporting policies of Fairmount Bank conform to accounting principles generally accepted in the United States of
America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and
assumptions, which are believed to be reasonable, based upon the information available. These estimates and assumptions affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods
presented. Management believes that evaluation of the allowance for loan losses is the most critical accounting policy to aid in fully
understanding and evaluating our reported financial results. This policy requires numerous estimates or economic assumptions that may prove
inaccurate or may be subject to variations which may significantly affect Fairmount Bank’s reported results and financial condition for the
period or in future periods.

      The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that the collectability of the principal is unlikely. Subsequent recoveries are added to the
allowance. The allowance is an amount that represents the amount of probable and reasonably estimable known and inherent losses in the loan
portfolio, based on evaluations of the collectability of loans. The evaluations take into consideration such factors as changes in the types and
amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, estimated
value of any underlying collateral, estimated losses relating to specifically identified loans, and current economic conditions. This evaluation is
inherently subjective as it requires material estimates including, among others, exposure at default, the amount and timing of expected future
cash flows on impacted loans, value of collateral, estimated losses on our loan portfolios as well as consideration of general loss experience.
All of these estimates may be susceptible to significant change.

      While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be
necessary based on changes in economic and other conditions or changes in accounting guidance. Historically, Fairmount Bank’s estimates of
the allowance for loan loss have not required significant adjustments from

                                                                        39
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management’s initial estimates. In addition, the Office of Thrift Supervision, as an integral part of its examination processes, periodically
reviews Fairmount Bank’s allowance for loan losses. The Office of Thrift Supervision may require the recognition of adjustments to the
allowance for loan losses based on its judgment of information available to it at the time of its examinations. To the extent that actual outcomes
differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely impact
earnings in future periods.

Business Strategy
      Highlights of our business strategy are as follows:
        •    Growing and Diversifying our Loan Portfolio . We will pursue loan portfolio diversification with an emphasis on credit risk
             management to increase Fairmount Bank’s origination of loans that provide higher returns. We anticipate increased origination of
             commercial real estate loans. These loans provide higher returns than loans secured by one-to four-family residential real estate.
             These loans are generally originated with rates that are fixed for seven years or less or adjust periodically, which assists Fairmount
             Bank in managing its interest rate risk. Fairmount Bank intends to hire a senior lender with experience in commercial real estate
             lending. Fairmount Bank also intends to increase its originations of construction loans, and, to a lesser extent, commercial and
             consumer loans.
        •    Continuing to Emphasize Residential Real Estate Lending. Historically, Fairmount Bank has emphasized one-to four-family,
             fixed-rate residential lending within its market area. As of September 30, 2009, $39,646,000, or 78.69%, of Fairmount Bank’s total
             loan portfolio consisted of one-to four-family residential mortgage loans. During the year ended September 30, 2009, Fairmount
             Bank originated $15,926,000 of one-to four-family residential mortgage loans, a significant portion of which were secured by
             one-to four-family non-owner occupied investor loans. In addition, to a lesser extent, Fairmount Bank originates
             construction/permanent loans and second mortgage loans.
        •    Continuing to Maintain Strong Asset Quality Through Conservative Underwriting Standards . We believe that maintaining high
             asset quality is a key to long-term financial success. Fairmount Bank has sought to maintain favorable asset quality reflected
             primarily by a low level of nonperforming assets, low charge-offs and adequacy of loan loss reserves. Fairmount Bank uses
             underwriting standards that it believes are conservative, and it diligently monitors collection efforts. At September 30, 2009,
             $414,000, or 0.82% of Fairmount Bank’s total loan portfolio, was nonperforming, primarily comprised of one loan relationship
             totaling $362,000. Although Fairmount Bank intends to diversify its lending activities by emphasizing commercial real estate
             loans, construction loans and consumer loans after the stock offering, it intends to maintain its conservative approach to
             underwriting loans. Fairmount Bank does not offer, and does not intend to offer, ―interest only,‖ ―Option ARM,‖ ―sub-prime‖ or
             Alt-A‖ loans, nor does it hold any securities backed by these mortgages. Total charge-offs for the year ended September 30, 2009,
             were $67,000, or 0.14% of average loans.
        •    Building Lower Cost Deposits. Fairmount Bank currently offers NOW accounts, savings accounts and certificates of deposit. At
             September 30, 2009, certificates of deposit represented 71.67% of its total deposits. Fairmount Bank intends to introduce new
             commercial checking accounts and focus on growing transaction deposit accounts after the conversion. Checking accounts, NOW
             accounts and savings accounts are generally lower-cost sources of funds than certificate of deposits and are less sensitive to
             withdrawal when interest rates fluctuate. As Fairmount Bank grows its commercial loan portfolio, it expects to attract core deposits
             from its new commercial loan customers. Fairmount Bank also expects additional core deposits from its new automated teller
             machine, or ATM, its new drive-through facility and internet banking, which is expected to be available to its customers in
             mid-2010.
        •    Maintaining a Strong Capital Position Through Disciplined Growth and Earnings. Fairmount Bank’s policy has always been to
             protect the safety and soundness of the institution through conservative risk management, sound operations and a strong capital
             position. Fairmount Bank has consistently maintained capital in excess of regulatory requirements. Its equity to total assets ratio
             was 10.60% at September 30, 2009.
        •    Offering New and Better Products and Services. We intend to utilize technology to increase productivity and provide new and
             better products and services. We expect to begin offering debit cards in early 2010. We anticipate implementing internet banking
             services by mid-2010. We expect that these new products and services will help to maintain and increase our deposit base, will
             attract business and retail customers and will increase productivity. We will analyze the profitability of products and services and
             allocate our resources to those areas we believe offer the greatest future potential.

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        •    Expanding Our Branch Network. We intend to evaluate and pursue opportunities to expand our franchise in our market area
             through the enhanced presence in the community provided by Fairmount Bank’s new office facility and by opening additional
             banking offices and, possibly, through acquisitions of other financial institutions and banking related businesses. We intend to
             open an additional branch in 2012. We have no current plans, understandings or agreements with respect to any new branch
             openings or acquisitions.

Comparison of Financial Condition at September 30, 2009 and September 30, 2008
      Total assets increased by $8,529,000, or 15.36%, to $64,041,000 at September 30, 2009 from $55,512,000 at September 30, 2008. The
increase was the result of a $5,179,000 increase in net loans and a $3,260,000 increase in federal funds sold and interest-bearing deposits in
other banks, funded by an increase of $6,947,000 in deposits and a $1,000,000 increase in borrowed funds. Investment securities decreased
$1,925,000, or 27.43%, to $5,094,000 at September 30, 2009, as proceeds from maturities, calls and principal repayments were reinvested in
federal funds sold and interest-bearing deposits in other banks.

      Cash and due from banks decreased by $39,000 or 10.63% to $328,000 at September 30, 2009, from $367,000 at September 30, 2008,
due to normal cash flows.

     Federal funds sold and interest-bearing deposits in other banks increased $3,260,000, from $1,045,000 at September 30, 2008 to
$4,305,000 at September 30, 2009, due primarily to an increase of $6,947,000 in Fairmount Bank’s overall deposits, offset by a decrease of
$1,925,000 in its investment portfolio.

      Investment securities decreased $1,925,000, or 27.43%, to $5,094,000 at September 30, 2009, from $7,019,000 at September 30, 2008.
The decrease reflected the reinvestment of proceeds from maturities, calls and principal repayments into federal funds sold and interest-bearing
deposits in other banks. Fairmount Bank’s held to maturity portion of the portfolio, at amortized cost, was $1,766,000. This was comprised of
$993,000 in Freddie Mac agency securities and $773,000 in state and municipal general obligation securities. Fairmount Bank’s
available-for-sale portion of the portfolio, at fair value, was $3,328,000. The available-for-sale securities portfolio at September 30, 2009, was
comprised entirely of mortgage-backed securities. A total of $1,055,000 was invested in Ginnie Mae securities, $959,000 in Freddie Mac
securities and $1,314,000 in Fannie Mae securities.

      Federal Home Loan Bank stock increased $62,000, or 11.50%, from $539,000 at September 30, 2008 to $601,000 at September 30, 2009.
As a condition for obtaining credit availability, Fairmount Bank is required to purchase additional shares of stock when it experiences an
increase in its total assets and /or an increase in its outstanding borrowings with the Federal Home Loan Bank of Atlanta. Fairmount Bank
experienced an increase in its total assets and its outstanding borrowings with the Federal Home Loan Bank from September 30, 2008 to
September 30, 2009.

      Total net loans increased from $45,154,000 at September 30, 2008 to $50,334,000 at September 30, 2009. This represented an increase of
$5,179,000, or 11.47%. The increase in the loan portfolio was primarily attributable to an increase of $5,521,000, or 46.15%, in the
one-to-four-family non-owner occupied real estate loans. At September 30, 2009, one-to-four-family non-owner occupied real estate loans
were $17,484,000, compared to $11,963,000 at September 30, 2008. The increase in one-to-four family non-owner occupied real estate loans
reflected the demand for this type of product in Fairmount Bank’s lending markets and Fairmount Bank’s addition of a loan officer.

      Fairmount Bank’s investment in bank buildings, equipment and furniture and fixtures increased from $1,048,000 at September 30, 2008,
to $2,889,000 at September 30, 2009. This increase was due to the completion of the new bank headquarters in September 2009.

     Total liabilities at September 30, 2009 were $57,251,000, an increase of $7,932,000, or 16.08%, from $49,319,000 at September 30,
2008. The increase was due primarily to an increase in deposits of $6,947,000, or 17.86%, from September 30, 2008, to September 30, 2009.

     Deposits increased from $38,891,000 at September 30, 2008, to $45,838,000 at September 30, 2009. The increase of $6,947,000, or
17.86%, in total deposits was the result of an increase in interest-bearing demand deposits and certificates of deposit. Interest-bearing demand
deposits increased from $2,626,000 at September 30, 2008, to $3,376,000 at September 30, 2009. This represented an increase of $750,000, or
28.56%. Certificates of deposit increased $6,264,000, or 23.56%, from

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$26,586,000 at September 30, 2008, to $32,850,000 at September 30, 2009. Fairmount Bank’s recent hiring of sales oriented branch personnel,
competitive product pricing, in addition to consumers’ recent preference for safe and highly capitalized community banks versus large
commercial institutions, was reflected in the overall increases in interest-bearing demand accounts and certificates of deposit.

     Borrowed funds, which were exclusively Federal Home Loan Bank advances, increased $1,000,000, or 10.00%, to $11,000,000 at
September 30, 2009 from $10,000,000 at September 30, 2008. At September 30, 2009, the weighted average rate of the advances was 2.50%.
The balance of borrowed funds fluctuates depending on, among other things, Fairmount Bank’s ability to attract deposits, the relative pricing of
advances compared to deposits, and its liquidity needs.

     Total equity was $6,790,000, or 10.60% of total assets, at September 30, 2009, compared to $6,192,000, or 11.16% of total assets, at
September 30, 2008. The primary reason for the $598,000 increase in equity was $445,000 in net income during the year ended September 30,
2009. Accumulated other comprehensive income increased by $153,000 from a loss of ($90,000) at September 30, 2008, to a gain of $63,000 at
September 30, 2009. The change in accumulated other comprehensive income was primarily due to the effects of interest rate fluctuations on
Fairmount Bank’s available-for-sale portfolio.

Comparison of Operating Results for the Years Ended September 30, 2009 and 2008
      Net Income . Net income increased by $199,000, or 80.89%, to $445,000 for the year ended September 30, 2009, from $246,000 for the
year ended September 30, 2008. Net interest income, excluding capitalized interest, increased $604,000, or 45.38%, to $1,935,000 for the year
ended September 30, 2009, from $1,331,000 for the year ended September 30, 2008. Non-interest expense increased $204,000, to $1,241,000
for the year ended September 30, 2009, from $1,037,000 for the year ended September 30, 2008. The provision for loan losses increased by
$132,000, or 264.00%, to $182,000 for the year ended September 30, 2009, from $50,000 for the year ended September 30, 2008.

      Net Interest Income . Net interest income, excluding capitalized interest, increased by $604,000, or 45.38%, to $1,935,000 for the year
ended September 30, 2009, from $1,331,000 for the year ended September 30, 2008. The increase primarily resulted from the combined effects
of an increase of $487,000 in interest and dividend income to $3,437,000 in the year ended September 30, 2009, from $2,950,000 in the year
ended September 30, 2008, and a decrease of $117,000 in interest expense to $1,502,000 for the year ended September 30, 2009, from
$1,619,000 for the year ended September 30, 2008. The increase in interest and dividend income was mainly the result of a $10,517,000
increase in the average balance of loans due to growth in the loan portfolio, offset by a decrease in the average balance of investment securities
of $2,480,000. Interest expense decreased primarily as a result of the decrease in average rates paid on deposits and borrowings. The average
rate paid decreased to 2.85% at September 30, 2009, from 3.70% at September 30, 2008.

      For the year ended September 30, 2009, the average yield on interest-earning assets was 5.94%, compared to 6.01% for the year ended
September 30, 2008. The average cost of interest-bearing liabilities was 2.85% for the year ended September 30, 2009, compared to 3.70% for
the year ended September 30, 2008. The average balance of interest-earnings assets increased by $8,777,000 to $57,880,000 for the year ended
September 30, 2009, compared to $49,103,000 for the year ended September 30, 2009. The average balance of interest-bearing liabilities
increased by $8,900,000 to $52,697,000 for the year ended September 30, 2009, from $43,797,000 for the year ended September 30, 2008.

      Due to lower funding costs, the average interest rate spread was 3.09% for the year ended September 30, 2009, compared to 2.31% for
the year ended September 30, 2008. The average net interest margin was 3.34% for the year ended September 30, 2009, compared to 2.71% for
the year ended September 30, 2008.

      Provision for Loan Losses. Fairmount Bank establishes a provision for loan losses, which is charged to operations, in order to maintain
the allowance for loan losses at a level Fairmount Bank considers necessary to absorb credit losses incurred in the loan portfolio that are both
probable and reasonably estimable at the balance sheet date. In determining the level of the allowance for loan losses, Fairmount Bank
considers past and current loss experience, evaluations of real estate collateral, current economic conditions, volume and type of lending,
adverse situations that may affect a borrower’s ability to repay a loan and the levels of nonperforming loans. The amount of the allowance is
based on estimates and actual losses may vary from such estimates as more information becomes available or economic conditions change.
This evaluation is inherently

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subjective as it requires estimates that are susceptible to significant revision as circumstances change as more information becomes available.
The allowance for loan losses is assessed on a quarterly basis and provisions are made for loan losses as required in order to maintain the
allowance.

      Based on management’s evaluation of the above factors, Fairmount Bank recorded a provision for loan losses of $182,000 for the year
ended September 30, 2009, compared to a provision of $50,000 for the year ended September 30, 2008, which represented an increase of
$132,000 of 264%. The provision for loan losses increased due to an increase in loan volume, a specific allowance for loan loss of $51,000
established against a $116,000 land development loan, and uncertainty regarding the economy and the housing market.

      Non-Interest Income . Non-interest income was $157,000 for the year ended September 30, 2009, which was an increase of $6,000 or
3.97% from $151,000 for the year ended September 30, 2008. Fairmount Bank’s service charges and fees increased by $25,000 or 20.49%
from $122,000 at September 30, 2008 to $147,000 at September 30, 2009. This increase in service fees and charges was primarily due to an
increase in loan settlements during the fiscal year. This increase was offset by a decrease of $21,000 or 95.45% in income from the gain on sale
of securities from $22,000 at the year ended September 30, 2008 to $1,000 at the year ended September 30, 2009. The decrease was due to
fewer security sales and fluctuations in the market during the fiscal year.

      Non-Interest Expense . Non-interest expense increased by $204,000 or 19.67% to $1,241,000 for the year ended September 30, 2009,
from $1,037,000 for the year ended September 30, 2008. The increase was primarily due to salaries, fees and employment expenses and an
increase in Federal Deposit Insurance Corporation insurance premiums. Salaries, fees and employment expenses increased by $89,000 or
13.69% from $650,000 at year ended September 30, 2008 to $739,000 at year ended September 30, 2009. FDIC insurance premiums increased
by $42,000, from $4,000 at year ended September 30, 2008 to $46,000 at year ended September 30, 2009. Several factors attributed to the
increase in FDIC insurance premiums including, an increase in the FDIC quarterly multiplier, which is used to compute the payment amount,
the depletion of the one-time assessment credit both occurring in the second quarter of 2009 and the payment of a $28,000 special assessment
occurring in the third quarter of 2009. Fairmount Bank did incur additional advertising, stationery, printing and supplies expenses when
Fairmount Bank’s name was changed in May 2009 and when it opened its new headquarter facility in September 2009. Advertising increased
from $10,000 at year end September 30, 2008 to $23,000 at September 30, 2009 and stationery, printing and supplies increased from $17,000 at
year end September 30, 2008 to $37,000 at September 30, 2009.

     Income Taxes . The provision for income taxes increased $120,000 or 80.54%, to $269,000 for the year ended September 30, 2009, from
$149,000 for the year ended September 30, 2008. This increase in provision for income taxes was due to an increase in net income before taxes
of $319,000 or 80.76% from $395,000 at September 30, 2008 to $714,000 at September 30, 2009.

      Total Comprehensive Income. Total comprehensive income for the periods presented consisted of net income and the change in
unrealized gains (losses) on investment securities available for sale, net of tax. Total comprehensive income was $597,000 and $238,000 for the
years ended September 30, 2009 and 2008, respectively. The increase in total comprehensive income resulted from an increase in net income of
$199,000 and an increase in adjustments to other comprehensive income of $160,000 from a change in unrealized gains (losses) on investment
securities available for sale.

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Average Balances and Yields
      The following table sets forth average balance sheets, average yields and costs, and certain other information at the date and for the
periods indicated. All average balances are based on daily averages, unless otherwise noted. The yields set forth below include the effect of
deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

                                                At September 30, 2009                                        Years Ended,
                                                                                    September 30, 2009                             September 30, 2008
                                                                             Average       Interest                         Average       Interest
                                             Outstanding         Yield/     Outstanding    Income          Yield/          Outstanding    Income        Yield/
                                              Balance            Rate        Balance       Expense         Rate              Balance      Expense       Rate
                                                                                                         (Dollars in thousands)
Interest earning assets
      Loans                                 $       50,334         6.54 %   $    48,090 $ 3,134              6.52 %     $     37,573 $ 2,423              6.45 %
      Federal funds sold and
        interest-bearing deposits in
        other banks                                  4,305         0.25           3,266           8          0.26               2,751           94        3.43
      Investment securities                          5,094         4.82           5,943         294          4.95               8,424          415        4.92
      Federal Home Loan Bank stock                     601         0.41             581           1          0.22                 356           18        5.13
      Total interest earning assets                 60,334         5.88 %   $    57,880 $ 3,437              5.94 %           49,104 $ 2,950              6.01 %
      Non interest earning assets                    3,707                        2,397                                         1,830
      Total assets                          $       64,041                  $    60,277                                 $     50,934

Interest bearing liabilities
      Interest bearing demand deposits      $        3,376         1.14     $     2,789 $    40              1.45 %     $      2,058 $    51              2.46 %
      Savings deposits                               9,165         1.12           9,211     108              1.17              9,412     118              1.25
      Certificates of deposit                       32,850         3.21          29,946   1,069              3.57             26,379   1,226              4.65
      Borrowed funds                                11,000         2.50          10,751     285              2.66              5,948     224              3.77
      Total interest bearing liabilities            56,391         2.61 %   $    52,697 $ 1,502              2.85 %     $     43,797 $ 1,619              3.70 %
      Non-interest bearing liabilities                 860                        1,004                                         1,018
      Total liabilities                     $       57,251                  $    53,701                                 $     44,815
      Retained earnings                              6,790                        6,576                                        6,119
      Total liabilities and retained
        earnings                            $       64,041                  $    60,277                                 $     50,934

      Net interest income (3)                                                             $ 1,935                                        $ 1,331

      Net interest rate spread                                     3.27 %                                    3.09 %                                       2.31 %
      Net interest earning assets           $        3,943                  $     5,183                                 $       5,307

      Net interest margin (4)                                                                                3.34 %                                       2.71 %
      Average of interest earning assets
        to interest bearing liabilities                                                                   109.83 %                                      112.12 %

(1)    Average loan balances include nonaccrual loans. Calculated net of deferred fees and discounts, loans in process and allowance for loan
       losses.
(2)    Yields are based on historical costs. Yields on tax exempt obligations have not been computed on a tax equivalent basis.
(3)    Yields are based on the historical cost balances of the related assets and do not give effect to changes in fair value that are included as a
       component of equity. Yields on tax exempt obligations have not been computed on a tax equivalent basis.
(4)    Equals net interest income divided by average earning assets.

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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 (1) changes in volume, which is the change in volume multiplied by prior year rate, and (2) changes in rate, which is
the change in rate multiplied by prior year volume. The combined effect of changes in both rate and volume has been allocated proportionately
to the change due to volume and the change due to rate.

                                                         Years Ended September 30,                                        Years Ended September 30,
                                                            2009 (1) vs. 2008 (1)                                            2008 (1) vs. 2007 (2)
                                                                                          Total                                                            Total
                                                   Increase (Decrease)                   Increase                    Increase (Decrease)                  Increase
                                                         Due to                         (Decrease)                         Due to                        (Decrease)
                                               Volume                    Rate                                    Volume                    Rate
                                                                                            (In thousands)
Interest-earning assets:
     Loans                                 $       682            $             29      $      711           $        601            $            90     $      691
     Federal funds sold and
       interest-bearing deposits in
       other banks                                   9                          (95 )          (86 )                  (13 )                   (51 )             (64 )
     Investment securities                        (122 )                          2           (120 )                 (142 )                    34              (108 )
     Federal Home Loan Bank stock                    6                           23            (17 )                   14                      (1 )              13
Total interest-earning assets              $       575            $             (87 )   $      488           $        460            $            72     $      532

Interest-bearing liabilities:
     Interest-bearing demand
        deposits                           $        14            $          (25 )      $      (11 )         $         14            $            (9 )   $        5
     Saving deposits                                (2 )                      (8 )             (10 )                   (7 )                        0             (7 )
     Certificates of deposit                       146                      (303 )            (157 )                   61                         (7 )           54
     Borrowed funds                                154                       (93 )              61                    182                         29            211
      Total interest bearing liabilities   $       312            $         (429 )      $     (117 )         $        250            $            13     $      263
      Change in net interest income        $       263            $         342         $      605           $        210            $            59     $      269



(1)    Total average balances for the years ended September 30, 2009 and 2008, were computed using daily averages.
(2)    Total average balances for the year ended September 30, 2007, were computed using month-end balances.

Management of Market Risk
       General . Because the net present value of the majority of our assets and liabilities are sensitive to changes in interest rates, our most
significant form of market risk is interest rate risk. Fairmount Bank is vulnerable to an increase in interest rates to the extent that its
interest-bearing liabilities mature or reprice more quickly than its interest-earning assets. As a result, a principal part of Fairmount Bank’s
business strategy is to manage interest rate risk and limit the exposure of its net interest income to changes in market interest rates. The board
of directors is responsible for evaluating the interest rate risk inherent in Fairmount Bqank’s assets and liabilities, for determining the level of
risk that is appropriate, given its business strategy, operating environment, capital, liquidity and performance objectives, and for managing this
risk consistent with the guidelines approved by the board of directors.

      Fairmount Bank has emphasized the origination of fixed-rate mortgage loans in its portfolio in order to maximize its net interest income
and control credit risk. Fairmount Bank accepts increased exposure to interest rate fluctuations as a result of its investment in such loans. In a
period of rising interest rates, its net interest rate spread and net interest income may be negatively affected. However, this negative impact is
expected to be mitigated somewhat by the net proceeds from the offering which will support the future growth of interest-earning assets. In
addition, Fairmount Bank has sought to manage and mitigate its exposure to interest rate risks in the following ways:
        •    Fairmount Bank maintains relatively high levels of short-term liquid assets. At September 30, 2009, its short-term liquid assets
             totaled $4,383,000;
        •    Fairmount Bank lengthens the weighted average maturity of its liabilities through retail deposit pricing strategies and the use of
             Federal Home Loan Bank advances;

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        •      Fairmount Bank invests in shorter-to medium-term securities and in securities with step-up rate features providing for increased
               interest rates prior to maturity according to a predetermined schedule; and
        •      Fairmount Bank maintains high levels of capital.

      In the future, Fairmount Bank intends to take additional steps to reduce interest rate risk, including originating construction loans and
lines of credit and selling a portion of the one-to four-family non-owner occupied investor loans we originate.

       Net Portfolio Value . The Office of Thrift Supervision requires the computation of amounts 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‖) would change in the
event of a range of assumed changes in market interest rates. The Office of Thrift Supervision provides all institutions that file a Maturity/Rate
Schedule as a part of their quarterly Thrift Financial Report with an interest rate sensitivity report of net portfolio value. The Office of Thrift
Supervision simulation model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity
of net portfolio value. Historically, the Office of Thrift Supervision model estimated the economic value of each type of asset, liability and
off-balance sheet contract under the assumption that the United States Treasury yield curve increases or decreases instantaneously by 100 to
300 basis points in 100 basis point increments. A basis point equals one-hundredth of one percent, and 100 basis points equals 1%. An increase
in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the ―Change in Interest Rates‖ column below. The
Office of Thrift Supervision provides Fairmount Bank the results of the interest rate sensitivity model, which is based on information
Fairmount Bank provides to the Office of Thrift Supervision to estimate the sensitivity of its net portfolio value.

      Quantitative Analysis. The table below sets forth, as of September 30, 2009, the estimated changes in Fairmount Bank’s NPV that would
result from the designated instantaneous changes in the U.S. Treasury yield curve. Computations of prospective effects of hypothetical interest
rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay, and
should not be relied upon as indicative of actual results.

         Change in
       Interest Rates                 Estimated              Estimated Increase (Decrease) in                        NPV as a Percentage of
      (basis points) (1)               NPV (2)                            NPV                                      Present Value of Assets (3)
                                                                                                                                              Change in
                                                            Amount                      Percent              NPV Ratio (4)                   Basis Points
                                                                                    (Dollars in thousands)
         +300 bp                     $    7,336            $ (2,910 )                     (28.4 )%                   11.39 %                       (371 )
         +200 bp                          8,448              (1,798 )                     (17.6 )                    12.85                         (225 )
         +100 bp                          9,471                (776 )                      (7.6 )                    14.15                          (95 )
          +50 bp                          9,979                (268 )                      (2.6 )                    14.80                          (30 )
            0 bp                         10,247                 —                           —                        15.10                          —
          -50 bp                         10,373                 127                         1.2                      15.22                           12
         -100 bp                         10,498                 252                         2.4                      15.36                           26

(1)   Assumes an instantaneous uniform change in interest rates at all maturities.
(2)   NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3)   Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4)   NPV Ratio represents NPV divided by the present value of assets.

       The table above indicates that at September 30, 2009, in the event of a 200 basis point increase in interest rates, Fairmount Bank would
experience an 17.6% decrease in net portfolio value. In the event of a 100 basis point decrease in interest rates, Fairmount Bank would
experience a 2.4% increase in net portfolio value. The net portfolio value is calculated pursuant to a model determined by the Office of Thrift
Supervision by using information provided by Fairmount Bank. Based on the information provided by Fairmount Bank, the net portfolio value
of Fairmount Bank was $10,247,000 , which was $3,457,000, or 50.91%, above Fairmount Bank’s equity of $6,790,000 at September 30, 2009.
The current net portfolio value of Fairmount Bank’s assets and deposit intangibles was $67,852,000, compared to total assets of $64,041,000 at
September 30, 2009. This was a difference of $3,811,000, or 5.96%, between the net portfolio value of assets and total assets as of September
30, 2009. The current net portfolio value of Fairmount Bank’s liabilities and off-balance sheet contracts was $57,605,000, compared to total
liabilities of $57,251,000 at September 30, 2009. This was a difference of $354,000, or 0.61%, in the net portfolio value of liabilities and total
liabilities as of September 30, 2009.

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       Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in net portfolio value.
Modeling changes in net portfolio value require 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 tables presented assume 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 assume 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 tables provide an indication of Fairmount Bank’s interest rate risk exposure 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 Fairmount Bank’s net interest income and will differ from actual results.

Liquidity and Capital Resources
      Liquidity is the ability to meet current and future financial obligations of a short-term nature. Fairmount Bank’s primary sources of funds
consist of deposit inflows, loan repayments and maturities of securities. In addition, Fairmount Bank has the ability to borrow funds from the
Federal Home Loan Bank of Atlanta, and it has a credit availability with a correspondent bank. While maturities and scheduled amortization of
loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates,
economic conditions and competition.

      The board of directors is responsible for establishing and monitoring Fairmount Bank’s liquidity targets and strategies in order to ensure
that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of its customers as well as unanticipated contingencies.
Fairmount Bank believes that it has enough sources of liquidity to satisfy its short and long-term liquidity needs as of September 30, 2009.

      Fairmount Bank regularly monitors and adjusts its investments in liquid assets based upon its assessment of: (1) expected loan demand;
(2) expected deposit flows; (3) yields available on interest-earning deposits and securities; and (4) the objectives of its asset/liability
management program. Excess liquid assets are invested generally in interest-earning deposits and short-and intermediate-term securities.

      Fairmount Bank’s most liquid assets are cash and cash equivalents, federal funds sold and interest-bearing deposits in other banks. The
levels of these assets are dependent on its operating, financing, lending and investing activities during any given period. At September 30,
2009, cash and cash equivalents totaled $328,000 and federal funds sold and interest-bearing deposits in other banks totaled $4,305,000.
Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $3,328,000 at September 30, 2009.

      At September 30, 2009, Fairmount Bank had $588,000 in loan commitments outstanding, of which it currently intends to sell on a
participation basis $559,000 in one-to four-family non-owner occupied loans after origination. In addition, at that date, Fairmount Bank had
$3,012,000 in unused lines of credit to borrowers. Certificates of deposit due within one year of September 30, 2009 totaled $20,658,000, or
45.07% of total deposits. If these deposits do not remain with Fairmount Bank, it will be required to seek other sources of funds, including
other deposits and Federal Home Loan Bank advances. Depending on market conditions, Fairmount Bank may be required to pay higher rates
on such deposits or borrowings than it currently pays on the certificates of deposit due on or before September 30, 2010. Fairmount Bank
believes, however, based on past experience that a significant portion of such deposits will remain with it. Fairmount Bank has the ability to
attract and retain deposits by adjusting the interest rates offered.

      Fairmount Bank’s primary investing activities are originating loans and purchasing interest-earning deposits and investment securities.
During the years ended September 30, 2009 and 2008, Fairmount Bank originated $19,454,000 and $19,652,000, respectively, of loans. During
the years ended September 30, 2009 and 2008, Fairmount Bank had net increases (decreases) in interest-bearing deposits of $3,260,000 and
($430,000), respectively. During those periods, Fairmount Bank had net decreases in securities of $1,295,000 and $3,986,000, respectively.

     Financing activities consist primarily of activity in deposit accounts. Fairmount Bank experienced a net increase in total deposits of
$6,947,000 for the year ended September 30, 2009. Deposit flows are affected by the overall level of interest rates, the interest rates and
products offered by Fairmount Bank and its local competitors, and by other factors.

     Fairmount Bank is 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

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balance sheet assets and off-balance sheet items to broad risk categories. At September 30, 2009, Fairmount Bank exceeded all regulatory
capital requirements and was considered ―well capitalized‖ under regulatory guidelines. See ―Supervision and Regulation—Federal Banking
Regulation—Capital Requirements‖ and Note 12 of the Notes to the Financial Statements.

      Fairmount Bank has the capacity to borrow up to $19,200,000 with the Federal Home Loan Bank of Atlanta. Its outstanding borrowings
with the Federal Home Loan Bank of Atlanta at September 30, 2009 were $11,000,000. It also has a credit availability of $1,500,000 with a
correspondent bank. There were no borrowings outstanding at September 30, 2009, under this facility.

      The net proceeds from the stock offering will significantly 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 Fairmount Bank’s funding
of loans. Our financial condition and results of operations will be enhanced by the net proceeds from the stock offering, resulting in increased
net interest-earning assets and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the stock
offering, our return on equity will be adversely affected following the stock offering.

Off-Balance Sheet Arrangements
      As a financial services provider, Fairmount Bank routinely is a party to various financial instruments with off-balance-sheet risks, such as
commitments to extend credit and unused lines of credit. While these contractual obligations represent future cash requirements, a significant
portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and
approval process accorded to loans Fairmount Bank makes. For additional information, see Note 5 of the Notes to the Financial Statements.

Recent Accounting Pronouncements
       In April 2009, a new accounting pronouncement was issued regarding determining fair value when the volume and level of activity for
the asset or liability have significantly decreased and identifying transactions that are not orderly (ASC 820 Fair Value Measurements and
Disclosures). The pronouncement provides additional guidance for estimating fair value when the volume and level of activity for the asset or
liability have significantly decreased. The pronouncement also includes guidance on identifying circumstances that indicate a transaction is not
orderly. The pronouncement is effective for interim and annual periods ending after June 15, 2009, and shall be applied prospectively. Earlier
adoption is permitted for periods ending after March 15, 2009. Fairmount Bank does not expect the adoption of the pronouncement to have a
material impact on its financial statements.

      In April 2009, a new accounting pronouncement regarding interim disclosures about fair value of financial instruments (ASC 825
Financial Instruments and ASC 270 Interim Reporting) was issued. The announcement amends prior guidance to require disclosures about fair
value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements for interim
reporting periods of publicly traded companies as well as in annual financial statements. In addition, the pronouncement also amends guidance
regarding interim financial reporting to require those disclosures in summarized financial information at interim reporting periods. The
pronouncement is effective for interim periods ending after June 15, 2009, with earlier adoption permitted for periods ending after March 15,
2009. Fairmount Bank does not expect the adoption to have a material impact on its financial statements.

      In April 2009, a new accounting pronouncement was issued regarding recognition and presentation of other-than-temporary impairments‖
(ASC 320 Investments—Debt and Equity Securities). The pronouncement amends other-than-temporary impairment guidance for debt
securities to make guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and
equity securities. The pronouncement does not amend existing recognition and measurement guidance related to other-than-temporary
impairments of equity securities. The pronouncement is effective for interim and annual periods ending after June 15, 2009, with earlier
adoption permitted for periods ending after March 15, 2009. Fairmount Bank does not expect the adoption to have a material impact on its
financial statements.

      In April 2009, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 111 (SAB 111). SAB 111 amends and
replace SAB Topic 5.M. in the SAB Series entitled ―Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities.‖
SAB 111 maintains the SEC Staff’s previous views related to equity securities and amends Topic 5.M. to exclude debt securities from its
scope. Fairmount Bank does not expect the implementation of SAB 111 to have a material impact on its financial statements.

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      In May 2009, a new accounting pronouncement was issued dealing with subsequent events (ASC 855 Subsequent Events). The
pronouncement establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. The pronouncement is effective for interim and annual periods ending after
June 15, 2009. Fairmount Bank does not expect the adoption to have a material impact on its financial statements.

      In June 2009, a new accounting pronouncement was issued regarding accounting for transfers of financial assets (ASC 860 Transfers and
Servicing). The pronouncement provides guidance to improve the relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position,
financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The pronouncement is
effective for interim and annual periods beginning after November 15, 2009. Fairmount Bank does not expect the adoption to have a material
impact on its financial statements.

      In June 2009, a new accounting pronouncement was issued regarding the FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting (ASC 105 Generally Accepted Accounting Principles). The pronouncement establishes the FASB Accounting
Standards Codification which will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the
FASB to be applied by nongovernmental entities. The pronouncement is effective immediately. Fairmount Bank does not expect the adoption
to have a material impact on its financial statements .

      In June 2009, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 112 (SAB 112). SAB 112 revises or
rescinds portions of the interpretative guidance included in the codification of SABs in order to make the interpretive guidance consistent with
current U.S. GAAP. Fairmount Bank does not expect the adoption of SAB 112 to have a material impact on its financial statements.

     In August 2009, the FASB issued Accounting Standards Update No. 2009-05 (ASU 2009-05), ―Fair Value Measurements and
Disclosures (Topic 820)—Measuring Liabilities at Fair Value.‖ ASU 2009-05 amends Subtopic 820-10, ―Fair Value Measurements and
Disclosures—Overall,‖ and provides clarification for the fair value measurement of liabilities. ASU 2009-05 is effective for the first reporting
period including interim period beginning after issuance. Fairmount Bank does not expect the adoption of ASU 2009-05 to have a material
impact on its financial statements.

     In September 2009, the FASB issued Accounting Standards Update No. 2009-12 (ASU 2009-12), ―Fair Value Measurements and
Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).‖ ASU 2009-12 provides
guidance on estimating the fair value of alternative investments. ASU 2009-12 is effective for interim and annual periods ending after
December 15, 2009. Fairmount Bank does not expect the adoption of ASU 2009-12 to have a material impact on its financial statements.

      In October 2009, the Securities and Exchange Commission issued Release No. 33-99072, ―Internal Control over Financial Reporting in
Exchange Act Periodic Reports of Non-Accelerated Filers.‖ Release No. 33-99072 delays the requirement for non-accelerated filers to include
an attestation report of their independent auditor on internal control over financial reporting with their annual report until the fiscal year ending
on or after June 15, 2010.

Impact of Inflation and Changing Prices
       Fairmount Bank’s financial statements and related notes have been prepared in accordance with accounting principles generally accepted
in the United States of America (―GAAP‖). U.S. GAAP generally requires the measurement of financial position and operating results in terms
of historical dollars without consideration of 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. Unlike industrial companies, our assets and liabilities are primarily monetary in
nature. As a result, changes in market interest rates have a greater impact on performance than the effects of inflation.


                                                BUSINESS OF FAIRMOUNT BANCORP, INC.

     Fairmount Bancorp, Inc. was incorporated under the laws of the State of Maryland in November 2009. We have not engaged in any
business to date. Upon completion of the conversion, we will own all of the issued and outstanding stock of

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Fairmount Bank. We will retain up to 50% of the net proceeds from the offering and invest 50% of the remaining net proceeds in Fairmount
Bank as additional capital in exchange for 100% of the outstanding shares of common stock of Fairmount Bank. Fairmount Bancorp, Inc. will
use a portion of the net proceeds to make a loan to the employee stock ownership plan. At a later date, we may use the net proceeds to pay
dividends to stockholders and may repurchase shares of common stock, subject to regulatory limitations. We will invest our initial capital as
discussed in ―How We Intend to Use the Proceeds from the Offering.‖

     In the future, Fairmount Bancorp, Inc., as the holding company of Fairmount Bank, will be authorized to pursue other business activities
permitted by applicable laws and regulations, which may include the acquisition of other banking and financial services companies. See
―Supervision and Regulation—Holding Company Regulation‖ for a discussion of the activities that are permitted for savings and loan holding
companies. We currently have no understandings or agreements to acquire other financial institutions.

      Following the offering, our cash flows will depend on earnings from the investment of the net proceeds from the offering that we retain,
and any dividends we receive from Fairmount Bank. Initially, Fairmount Bancorp, Inc. will neither own nor lease any property, but will instead
use the premises, equipment and furniture of Fairmount Bank. At the present time, we intend to employ only persons who are officers of
Fairmount Bank to serve as officers of Fairmount Bancorp, Inc. We will, however, use the support staff of Fairmount Bank from time to time.
We will pay a fee to Fairmount Bank for the time devoted to Fairmount Bancorp, Inc. by employees of Fairmount Bank. However, these
persons will not be separately compensated by Fairmount Bancorp, Inc. Fairmount Bancorp, Inc. may hire additional employees, as
appropriate, to the extent it expands its business in the future.

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                                                      BUSINESS OF FAIRMOUNT BANK

General
      Fairmount Bank was founded in 1879 as a state-chartered mutual savings and loan association with the name ―The Fairmount and Chapel
Streets Permanent Building, Savings and Loan Assn. No. 1 Inc.‖ In 1960, the name of the association was changed to ―The Fairmount Savings
and Loan Association, Inc.‖ and the association became insured by the Maryland Savings Share Insurance Corporation. In 1985, the association
converted to a mutual savings bank, changed its name to ―Fairmount Federal Savings Bank‖ and became federally insured. In May 2009, in
conjunction with its 130 th anniversary, the savings bank changed the name to ―Fairmount Bank‖ under its federal charter. The change in
corporate title signified Fairmount Bank’s desire to broaden and expand its services and strengthen its community presence.

      Fairmount Bank has one office located in Baltimore County, Maryland. Fairmount Bank is regulated by the Office of Thrift Supervision,
and its deposits are insured up to applicable legal limits by the Federal Deposit Insurance Corporation under the Deposit Insurance Fund.
Fairmount Bank is a member of the Federal Home Loan Bank System.

      Fairmount Bank has been, and continues to be, a community-oriented savings institution offering a variety of financial products and
services to meet the needs of the communities we serve. Fairmount Bank delivers personalized service and respond promptly to customer needs
and inquiries. Fairmount Bank believes that its community orientation is attractive to its customers and distinguishes it from larger banks that
operate in its market area.

      Fairmount Bank’s principal business consists of attracting retail deposits from the general public in the areas surrounding its main office
and investing those deposits, together with funds generated from operations, primarily in one-to four-family residential mortgage loans.
Fairmount Bank holds its loans for long-term investment purposes. Fairmount Bank also invests in various investment securities. Its revenues
are derived principally from interest on loans and investments. Its primary sources of funds are deposits, and principal and interest payments on
loans and securities.

      Fairmount Bank takes its corporate citizenship seriously and is committed to meeting the credit needs of the community, consistent with
safe and sound operations. Following the conversion, Fairmount Bank intends to continue to serve the financial needs of the local community.
Fairmount Bank believes that the new capital to be raised in the offering will assist its efforts in this regard, as the proceeds will better position
Fairmount Bank to serve the community as an independent, locally-based institution.

Market Area and Competition
       Fairmount Bank primarily serves communities located in Baltimore City and in Baltimore and Harford counties in Maryland from its
office in the Rosedale area of Baltimore County, which is contiguous to Baltimore City, the largest city in Maryland, and located approximately
45 miles from Washington, D.C. Baltimore City and Baltimore and Harford counties have an estimated combined total population of
approximately 1.7 million. The Baltimore City population has decreased 3.6% since 2000, while the population in Baltimore and Harford
counties has increased 5.8% and 13.3%, respectively since 2000. The economy of the greater Baltimore metropolitan area constitutes a diverse
cross section of employment sectors, with a mix of services, wholesale/retail trade, federal and local government, manufacturing health care
facilities and finance related employment. The largest employers in the Baltimore metropolitan area include the John Hopkins University, John
Hopkins Hospital and Health System, University System of Maryland, U.S. Social Security Administration, Fort Meade, and Aberdeen Proving
Ground.

     Estimated per capita annual income in 2009 was $20,456 for Baltimore City, $31,637 for Baltimore County, and $31,980 for Harford
County, as compared to the Maryland state average of $32,538 and the United States average of $27,277. Median household income levels
showed similar patterns, as the Baltimore City median was $36,540 and Baltimore and Harford counties reported median income of $63,608
and $74,142, respectively, compared to $67,267 for Maryland and $54,719 for the United States. The October 2009 unemployment rate was
10.8% in Baltimore City and 7.8% and 7.2%, respectively, in Baltimore and Harford counties, compared to 7.2% in the State of Maryland and
10.2% in the United States.

      Fairmount Bank faces significant competition in both originating loans and attracting deposits. Its market area has a large number of
financial institutions, most of which are significantly larger institutions with greater financial resources than Fairmount Bank, and all of which
are competitors to varying degrees. Competition for loans comes principally from commercial banks, savings banks, mortgage banking
companies, credit unions, insurance companies and other financial service companies. Fairmount Bank’s most direct competition for deposits
has historically come from commercial banks,

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savings banks and credit unions. Fairmount Bank faces additional competition for deposits from non-depository competitors such as mutual
funds, securities and brokerage firms and insurance companies.

Lending Activities
      General . Fairmount Bank’s principal lending activity is the origination of fixed-rate, one-to four-family owner occupied residential
mortgage loans with terms of up to 30 years and one-to four-family non-owner occupied investor mortgage loans with terms of up to 25 years,
subject to a balloon payment at 7 or 10 years. At September 30, 2009, one-to four-family loans totaled $39,646,000, or 78.69% of the total loan
portfolio. Of the one-to four-family loans at September 30, 2009, $22,162,000, or 55.90%, were owner occupied. The remaining one-to
four-family loans of $17,484,000, or 44.10% as of September 30, 2009, were non-owner occupied. While Fairmount Bank plans to continue
originating non-owner occupied loans, its planned growth is limited, since it expects to sell 90% to 95% participation in a majority of these
loans.

       To a lesser extent, Fairmount Bank also originates home equity and second mortgage loans, loans secured by other properties,
construction and land development loans, secured commercial loans and savings loans. At September 30, 2009: home equity and second
mortgage loans totaled $1,845,000, or 3.66% of the total loan portfolio; loans secured by other properties totaled $2,032,000, or 4.03% of the
total loan portfolio; construction and land development loans totaled $2,747,000, or 5.45% of the total loan portfolio; secured commercial loans
totaled $848,000, or 1.69% of the total loan portfolio; and savings loans totaled $60,000, or 0.12% of the total loan portfolio.

      Fairmount Bank does not offer ―interest only‖ loans, where the borrower pays interest for an initial period after which the loan converts to
a fully amortizing loan, nor do we offer ―Option ARM‖ or negative amortization loans, where the borrower can pay less than the interest owed
on the loan, resulting in an increased principal balance during the life of the loan. Fairmount Bank also does not make loans that are known as
―sub-prime‖ or ―Alt-A‖ loans.

      Fairmount Bank’s lending activities have increased significantly in recent years since the hiring of a new president and chief executive
officer and a new loan officer. As a result, Fairmount Bank has grown its loan portfolio from $32,240,000 at September 30, 2007, to
$50,334,000 at September 30, 2009.

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

                                                                                                         At September 30,
                                                                                                2009                                 2008
                                                                                     Amount            Percent            Amount            Percent
                                                                                                       (Dollars in thousands)
Real estate loans:
     One-to four-family owner occupied                                              $ 22,162            43.99 %       $ 21,922               48.89 %
     One-to four-family non-owner occupied                                            17,484            34.70           11,963               26.68
     Home equity (1)                                                                   1,845             3.66            1,933                4.31
     Mobile home                                                                       3,073             6.10            3,360                7.49
     Secured by other properties                                                       2,032             4.03            1,362                3.04
     Construction and land development                                                 2,747             5.45            3,264                7.28
           Total real estate loans                                                     49,343           97.93               43,804           97.69
Commercial and consumer loans:
   Secured commercial                                                                     848             1.69                667              1.49
   Commercial leases                                                                      133             0.26                311              0.69
   Savings account                                                                         60             0.12                 57              0.13
           Total commercial and consumer loans                                          1,041             2.07               1,035             2.31
Total loans                                                                            50,384          100.00 %             44,839          100.00 %

Unamortized premiums and loan fees                                                        548                                 643
Unearned income on loans                                                                 (378 )                              (224 )
Allowance for loan losses                                                                (220 )                              (103 )
           Total loans, net                                                         $ 50,334                          $ 45,155



(1)   Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.
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Loan Portfolio Maturities
      The following table sets forth maturity information at September 30, 2009, regarding the dollar amount of loan principal repayments
becoming due during the periods indicated. The table does not reflect scheduled principal payments, unscheduled prepayments, or the ability of
certain loans to reprice prior to maturity dates. Demand loans and loans having no stated repayment schedule are reported as being due in one
year or less.

                                                            One-to four     One-to four
                                                              Family          Family                                               Secured by          Construction
                                                              Owner         Non-Owner              Home            Mobile            Other              and Land
                                                             Occupied        Occupied             Equity (1)        Home           Properties          Development
                                                                                                     (In thousands)
Amounts due after September 30, 2009 in:
   One year or less                                        $       312             —          $         216      $     —          $            770     $        1,170
   After one year through two years                                283             —                    —              —                       —                  922
   After two years through three years                              55             397                  —              —                       —                  —
   After three years through five years                            311             944                   80            —                       —                  200
   After five years through ten years                            2,003           8,352                  234            123                     704                130
   After ten years through fifteen years                         5,208           7,363                  354            253                     383                —
   After fifteen years                                          13,990             428                  961          2,697                     175                325
           Total                                           $    22,162     $ 17,484           $       1,845      $ 3,073          $           2,032    $        2,747


                                                                                           Secured              Commercial
                                                                                          Commercial              Leases           Savings                     Total
                                                                                                                    (In thousands)
Amounts due after September 30, 2009 in:
   One year or less                                                                                 —           $        26               $       2        $    2,496
   After one year through two years                                                                 —                    65                      22             1,292
   After two years through three years                                                              —                    42                     —                 494
   After three years through five years                                                             552                 —                       —               2,087
   After five years through ten years                                                               —                   —                        36            11,582
   After ten years through fifteen years                                                            296                 —                       —              13,857
   After fifteen years                                                                              —                   —                       —              18,576
           Total                                                                          $         848         $       133               $      60        $ 50,384



(1)   Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.

      The following table sets forth the dollar amount of all fixed-and adjustable-rate loans at September 30, 2009, that are contractually due
after September 30, 2010.

                                                                                                                             Due after September 30, 2010
                                                                                                                     Fixed             Adjustable
                                                                                                                     Rate                 Rate            Total
                                                                                                                                    (In thousands)
One-to four-family owner occupied                                                                                $ 21,567             $          283       $ 21,850
One-to four-family non-owner occupied                                                                              17,484                        —           17,484
Home equity (1)                                                                                                     1,165                        465          1,630
Mobile home                                                                                                         3,072                        —            3,072
Secured by other properties                                                                                         1,262                        —            1,262
Construction and land development                                                                                     566                      1,011          1,577
Secured commercial                                                                                                    848                        —              848
Commercial leases                                                                                                     107                        —              107
Savings                                                                                                                58                        —               58
                                                                                                                 $ 46,129             $        1,759       $ 47,888



(1)   Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.
      One-to Four-Family Owner Occupied Loans . A significant portion of Fairmount Bank’s primary lending activity consists of the
origination of first mortgage loans secured by one-to four-family owner occupied residential properties located in its market area. Loans are
generated through Fairmount Bank’s existing customers and referrals, real estate brokers and other marketing efforts. Fairmount Bank
generally has limited its real estate loan originations to the financing of

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properties located within its market area and has not made out-of-state loans. At September 30, 2009, $22,162,000, or 43.99% of the loan
portfolio, consisted of one-to four-family owner occupied residential mortgage loans.

      Fairmount Bank’s residential mortgage loans generally have terms of 15, 20 or 30 years. Fairmount Bank offers only fixed-rate
residential loans, and does not currently originate adjustable-rate mortgages. However, following the conversion, Fairmount Bank may consider
implementing a program to originate adjustable-rate residential mortgage loans. All of the owner occupied loans Fairmount Bank originates are
retained in its portfolio for long-term investment. Generally, Fairmount Bank has not sold these loans in the secondary mortgage market.
However, its loans are underwritten to secondary mortgage market standards. Fixed-rate mortgage loans amortize monthly with principal and
interest due each month. Residential real estate loans often remain outstanding for significantly shorter periods than their contractual terms
because borrowers may refinance or prepay loans at their option.

      Under Fairmount Bank’s real estate lending policy, a title insurance policy must be obtained for each real estate loan. Fairmount Bank
also requires fire and extended coverage casualty insurance, in order to protect the properties securing its real estate loans. Borrowers must also
obtain flood insurance policies when the property is in a flood hazard area. Fairmount Bank requires borrowers either to advance funds to an
escrow account for the payment of real estate taxes and hazard insurance premiums or alternatively to provide it with other proof of the
payment of taxes and an effective hazard insurance policy. Fairmount Bank does not conduct environmental testing on residential mortgage
loans unless specific concerns for hazards are identified by the appraiser used in connection with the origination of the loan.

      Fairmount Bank’s residential mortgage loans customarily include due-on-sale clauses, which are provisions giving it the right to declare a
loan immediately due and payable in the event, among other things, that the borrower sells or otherwise disposes of the underlying real
property serving as security for the loan.

      Fairmount Bank generally limits the maximum loan to value ratio to 80% of the lesser of the appraised value or the purchase price of the
property securing the loan, although it will occasionally originate loans with a loan to value ratio up to 90% of the appraised value or purchase
price of the property. Any loan in excess of an 80% loan-to-value requires adequate private mortgage insurance.

      When underwriting residential real estate loans, Fairmount Bank reviews and verifies each loan applicant’s employment, income and
credit history and, if applicable, its experience with the borrower. Fairmount Bank’s policy is to obtain credit reports and financial statements
on all borrowers and guarantors, and to verify references. Properties securing real estate loans are appraised by board-approved independent
appraisers, although Fairmount Bank may rely on county tax records on smaller loans. Appraisals are subsequently reviewed by the loan
underwriting committee.

      In the recent economic climate, many areas of the United States have experienced an increase in foreclosures. Management believes that
foreclosures in Fairmount Bank’s market area have also increased, but not to the same extent as in more severely impacted areas of the United
States. Fairmount Bank has experienced no foreclosures on its owner occupied loan portfolio during recent periods. Management believes this
is due mainly to Fairmount Bank’s conservative lending strategies, including its non-participation in ―interest only,‖ ―Option ARM,‖
―sub-prime‖ or ―Alt-A‖ loans.

     One-to Four-Family Non-Owner Occupied Loans . A portion of Fairmount Bank’s lending activity consists of the origination of first
mortgage loans secured by one-to four-family non-owner occupied residential properties in its market area. These loans are generated through
Fairmount Bank’s existing customer base and referrals, real estate brokers, real estate investors and other marketing efforts. As September 30,
2009, $17,484,000, or 34.70% of the total loan portfolio, consisted of this type of mortgage loan.

      Most loans originated in this program have payment periods of 25 years, subject to a balloon payment at 7 or 10 years. Fairmount Bank
requires that the properties be occupied at the time the loan is made and requires a minimum debt coverage ratio of 1.25 times. The maximum
loan-to-value generally is 75%, and a majority of current loan originations are sold on a participation basis to other community banks. A
majority of the properties are occupied by tenants receiving government vouchers that subsidize the rent payments. The subsidy represents a
majority of the rent payment and is paid to the owner of the property who is responsible for the mortgage payment. While we plan to continue
originating these loans, our planned growth is limited, since we expect to sell 90% to 95% participation in a majority of these loans. Fairmount
Bank receives loan fees as well as a servicing fee on these loans.

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     A title insurance policy must be obtained for each loan, and Fairmount Bank requires fire and extended coverage casualty insurance.
Fairmount Bank does not require environment testing unless specific concerns for hazards are identified by the appraiser.

      Home Equity Second Mortgage Loans . Fairmount Bank’s home equity loans and its home equity lines of credit are secured by second
mortgages on owner occupied one-to four-family residences. The maximum loan-to-value of these loans generally is 85%. At September 30,
2009, home equity loans and home equity lines of credit secured by second mortgages totaled $1,845,000, or 3.66% of total loans. Home equity
loans consist of fixed-rate loans with terms up to a maximum of 20 years. At September 30, 2009, home equity loans totaled $1,164,000. Home
equity lines of credit are adjustable monthly and tied to the prime rate. At September 30, 2009, home equity lines of credit totaled $681,000.

     A home equity loan and a home equity line of credit can be used for a variety of purposes. The underwriting standards for the second
mortgage include a title review, the recordation of a junior lien, a determination of the applicant’s ability to satisfy existing debt obligations and
payments on the proposed loan, and the value of the collateral securing the loan.

     Loans secured by second mortgages have greater risk than owner-occupied residential loans secured by first mortgages. When customers
default on their loans, Fairmount Bank attempts to foreclose on the property. However, the value of the collateral may not be sufficient to
compensate for the amount of the unpaid loan, and Fairmount Bank may be unsuccessful in recovering the remaining balance from these
customers. In addition, decreases in property values could adversely affect the value of properties used as collateral for the loans.

      Mobile Home Loans As of September 30, 2009, mobile home loans totaled $3,073,000, or 6.10% of the total loan portfolio. Fairmount
Bank ceased originating mobile home loans in June 2007, and no future originations of these types of loans are planned. Fairmount Bank’s
mobile home loans were purchased from a third-party originator and funded by it at settlement. Fairmount Bank paid a premium/loan
origination fee to the third party originator, of which one-half was wired upon settlement and the remainder was retained by it in a depository
account as a reserve for any losses or prepayments. At September 30, 2009, Fairmount Bank had prepaid loan origination fees related to this
program of $531,000, and the balance in the reserve account available to it was $233,000.

      For Fairmount Bank to have financed a mobile home loan, the mobile home must have been based on a permanent foundation. Mobile
home lending involves additional risks as a result of higher loan-to-value ratios usually associated with these types of loans. Mobile home
lending may also involve higher loan amounts than other types of loans. The most frequent purchasers of mobile homes are retirees and
younger, first-time buyers. These borrowers may be deemed to be relatively high credit risks due to various factors, including, among other
things, the manner in which they have handled previous credit, the absence or limited extent of their prior credit history or limited financial
resources. Mobile home loan customers have historically been more adversely impacted by weak economic conditions, loss of employment and
increases in other household costs. Consequently, mobile home loans bear a higher rate of interest, have a higher probability of default and may
involve higher delinquency rates and greater servicing costs relative to loans to more creditworthy borrowers. In addition, the values of mobile
homes decline over time and higher levels of inventories of repossessed and used mobile homes may affect the values of collateral and result in
higher charge-offs and provisions for loan losses.

      Construction and Land Development Loans . On a limited basis, Fairmount Bank originates residential construction loans to individuals
for the construction and permanent financing of their personal residences. Fairmount Bank’s business plan adopted in connection with the
conversion contemplates an expansion of its construction loan activity. See ―Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Business Strategy.‖

      Construction loans to individuals are made on the same general terms as Fairmount Bank’s one-to four-family mortgage loans, but
provide for the payment of interest only during the construction phase, which is usually six months. At the end of the construction phase, the
loan converts to a permanent mortgage loan. Prior to making a commitment to fund a construction loan, Fairmount Bank requires an appraisal
of the property by an independent appraiser. Fairmount Bank also reviews and inspects each project prior to disbursement of funds during the
term of the construction loan. Loan proceeds are disbursed after inspection of the project based on percentage of completion.

      At September 30, 2009, the balance of these loans was $2,747,000, 5.45% of our total loans. When market conditions improve,
Fairmount Bank anticipates an expansion of its construction and land development loan activity. Fairmount Bank limits speculative
construction activity, as well as the speculative purchase of building lots. The maximum loan-to-value of

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these originations generally is 75%, and all these loans include personal guarantees. Fairmount Bank currently is not experiencing any
delinquencies in this portfolio. However, Fairmount Bank has a specific allowance for loan loss of $51,000 established against a land
development loan on which it purchased a participation interest from another bank. Funds are advanced as construction progresses, subject to
inspection of work performed.

      Construction financing generally involves greater 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 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, Fairmount Bank may be required to advance additional funds beyond the amount originally committed in order to protect the value
of the property. Moreover, if the estimated value of the completed project proves to be inaccurate, the borrower may hold a property with a
value that is insufficient to assure full repayment. Construction loans also expose Fairmount Bank to the risks that improvements will not be
completed on time in accordance with specifications and projected costs and that repayment will depend on the successful operation or sale of
the properties In additional, many of these borrowers have more than one outstanding loan, so an adverse development with respect to one loan
or credit relationship can expose Fairmount Bank to significantly greater risk of non-payment and loss.

      Commercial Real Estate Lending Secured by Other Properties . Although Fairmount Bank’s loan policies permit the origination of
loans secured by commercial real estate, including multi-family dwellings, during recent years its loan portfolio has not included a significant
amount of these loans. The current portfolio of these loans at September 30, 2009, totaled $2,032,000, or 4.03% of total loans. The current
loan-to-value of these loans generally does not exceed 80%, and Fairmount Bank had no delinquent loans in this portfolio at that date.
Fairmount Bank intends to implement a program emphasizing the origination of commercial real estate loans following the conversion, and
expects that such loans will represent a more significant portion of our loan portfolio in the future. See ―Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Business Strategy.‖

      Loans secured by commercial real estate generally have larger loan balances and more credit risk than one- to four-family mortgage
loans. The increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and
borrowers, the impact of local and general economic conditions on the borrower’s ability to repay the loan, and the increased difficulty of
evaluating and monitoring these types of loans. If the cash flows from the property are reduced, the borrower’s ability to repay the loan may be
impaired. However, commercial real estate loans generally have higher interest rates than loans secured by one-to four-family real estate.

      Commercial Business and Consumer Loans. Commercial business loans are made to borrowers that demonstrate the ability to repay the
debt through corporate cash flows. The majority of Fairmount Bank’s commercial business loans is secured by assignments of corporate assets
and include personal guarantees of the business owners. At September 30, 2009, commercial business loans totaled $981,000, or 1.95% of total
loans.

      Underwriting standards for commercial business loans include a review of the applicant’s tax returns, financial statements, credit history
and an assessment of the applicant’s ability to meet existing obligations and payments on the proposed loan based on cash flows generated by
the applicant’s business.

     Commercial business loans generally have higher interest rates and shorter terms than one-to four-family residential loans, but they also
may involve higher average balances, increased difficulty of loan monitoring and a higher risk of default since their repayment generally
depends on the successful operation of the borrower’s business. Fairmount Bank typically requires a principal of the company obtaining a
commercial business loan to personally sign the note as a co-borrower or guarantor.

     Currently, the only consumer loans we offer consist of deposit account loans. At September 30, 2009, these loans totaled $60,000, or
0.12% of total loans. Generally, these loans are made at an interest rate that is 2.00% above the account rate for up to 80% of the account
balance and for a term through the next maturity date.

      Loan Originations, Purchases and Sales. Loan originations are obtained through a variety of sources, including referrals from existing
customers and real estate brokers. Fairmount Bank holds the majority of its loan originations other than one-to four-family non-owner occupied
loans for long term investment. Currently, the majority of one-to four-family non-owner occupied originations are sold on a 90%-95%
participation basis to other community banks. However, there can

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be no assurance that these community banks will continue to participate in the originations of Fairmount Bank’s non-owner occupied loans.
During the most recent fiscal year Fairmount Bank purchased six owner-occupied loans from a local community bank. Fairmount Bank may
determine to purchase additional loans in the future.

      The following table shows our loan origination, sale and principal repayment activity during the periods indicated.

                                                                                                                        Years Ended September 30,
                                                                                                                        2009                 2008
                                                                                                                              (In thousands)
Total loans at beginning of period                                                                                 $      44,839       $      31,598
Loans originated:
Real estate:
     One-to four-family owner occupied                                                                                     1,932               4,375
     One-to four-family non-owner occupied                                                                                13,994              11,410
     Home equity (1)                                                                                                         318                 313
     Secured by other properties                                                                                             550                 560
     Construction and land development                                                                                     1,560               2,992
Commercial and consumer loans:
     Secured commercial                                                                                                      995                    —
     Savings                                                                                                                 105                        2
Total loans originated                                                                                                    19,454              19,652
Loans purchased                                                                                                            1,110                    —
Deduct:
    Participation of originated loans                                                                                      7,023               3,156
    Principal repayments                                                                                                   7,996               3,255
Total deductions                                                                                                          15,019               6,411
Net loan activity                                                                                                          5,545              13,241
Total loans at end of period                                                                                       $      50,384       $      44,839



(1)   Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.

      Loan Approval Procedures and Authority . Fairmount Bank’s lending activities are subject to written, non-discriminatory underwriting
standards and loan origination procedures established by its board of directors. The loan approval process is intended to assess the borrower’s
ability to repay the loan and value of the property that will secure the loan. To assess the borrower’s ability to repay, Fairmount Bank reviews
the borrower’s employment and credit history and information on the historical and projected income and expenses of the borrower.

      Fairmount Bank’s policies and loan approval limits are established by the board of directors. Upon receipt of a loan application from a
prospective borrower, a credit report, tax returns and verifications are ordered or requested to confirm specific information relating to the loan
applicant’s employment, income and credit standing. Fairmount Bank requires appraisals by independent, licensed, third-party appraisers of all
real property secured loans, except where it relies on county tax records on smaller loans. All appraisers are approved by the board of directors
annually. All loans are processed at Fairmount Bank’s main office. The loan underwriting committee, comprised of Messrs. Solomon
(Chairman), Yanke and Elliott, approves all loans originated in amounts between $200,000 and $750,000. All loans in excess of $750,000
require board approval. Mr. Solomon’s lending authority is up to $200,000.

      Loans to One Borrower. The maximum amount that Fairmount Bank may lend to one borrower and the borrower’s related entities is
limited by regulation generally, with certain exceptions, to 15% of Fairmount Bank’s unimpaired capital and reserves. At September 30, 2009,
Fairmount Bank’s regulatory limit on loans to one borrower was $1,034,000. At that date, its largest lending relationship was $1,000,000 and
consisted of a construction revolving line of credit secured by residential real estate properties located in our primary market area. As a result of
the conversion, Fairmount Bank expects its regulatory loans to one borrower limit will increase. At the midpoint of the offering range, its pro
forma lending limit on loans to one borrower will be increased to approximately $1,297,000.

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Non-performing and Problem Assets
       When a loan is 15 days past due, Fairmount Bank sends the borrower a late notice. Fairmount Bank generally also contacts the borrower
by phone if the delinquency is not corrected promptly after the notice has been sent. When the loan is 30 days past due, Fairmount Bank mails
the borrower a letter reminding the borrower of the delinquency, and attempts to contact the borrower personally to determine the reason for
the delinquency in order to ensure that the borrower understands the terms of the loan and the importance of making payments on or before the
due date. If necessary, subsequent delinquency notices are issued and the account will be monitored on a regular basis thereafter. By the 90 th
day of delinquency, Fairmount Bank will send the borrower a final demand for payment and may recommend foreclosure. A summary report of
all loans 30 days or more past due is provided to the board of directors of Fairmount Bank each month.

      Loans are automatically placed on non-accrual status when payment of principal or interest is more than 90 days delinquent. Loans are
also placed on non-accrual status if collection of principal or interest in full is in doubt or if the loan has been restructured. When loans are
placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received. The loan
may be returned to accrual status if unpaid principal and interest are repaid so that the loan is less than 90 days delinquent. Once a loan is
placed on non-accrual status, Fairmount Bank will further evaluate the risk associated with the credit by obtaining an independent appraisal
and/or performing a fair value calculation.

       Fairmount Bank accounts for impaired loans under generally accepted accounting principles. An impaired loan generally is one for which
it is probable, based on current information, that the lender will not collect all the amounts due under the contractual terms of the loan. Loans
are individually evaluated for impairment. As of September 30, 2009 Fairmount Bank had an impaired loan of $116,000 with a related
allowance for loan losses of $51,000.

      Classification of Assets. Fairmount Bank’s policies, consistent with regulatory guidelines, provide for the classification of loans and
other assets that are considered to be of lesser quality as substandard, doubtful, or loss assets. An asset is considered substandard if it is
inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets
include those assets characterized by the distinct possibility that Fairmount Bank will sustain some loss if the deficiencies are not corrected.
Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the
weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable
and improbable. Assets (or portions of assets) classified as loss are those considered uncollectible and of such little value that their continuance
as assets is not warranted. Assets that do not expose Fairmount Bank to risk sufficient to warrant classification in one of the aforementioned
categories, but which possess potential weaknesses that deserve close attention, are required to be designated as special mention. As of
September 30, 2009, Fairmount Bank had no assets designated as special mention.

      When assets are classified as either substandard or doubtful, Fairmount Bank allocates a portion of the related general loss allowances to
such assets as it deems prudent. The allowance for loan losses is the amount estimated by management as necessary to absorb credit losses
incurred in the loan portfolio that are both probable and reasonably estimable at the balance sheet date. When Fairmount Bank classifies a
problem asset as loss, it provides a specific reserve for that portion of the asset that is uncollectible. Determinations as to the classification of
assets and the amount of loss allowances are subject to review by Fairmount Bank’s principal federal regulator, the Office of Thrift
Supervision, which can require that it establish additional loss allowances. Fairmount Bank regularly reviews its asset portfolio to determine
whether any assets require classification in accordance with applicable regulations. On the basis of its review of its assets at September 30,
2009, Fairmount Bank had $601,000 of classified assets, of which one asset totaling $116,000 was considered impaired based on a fair market
value appraisal for which a specific allowance for loan loss in the amount of $51,000 was established.

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      Non-Performing Assets. The table below sets forth the amounts and categories of Fairmount Bank’s non-performing assets at the dates
indicated. At each date presented, Fairmount Bank had no troubled debt restructurings (loans for which a portion of interest or principal has
been forgiven and loans modified at interest rates materially less than current market rates).

                                                                                                                         At September 30,
                                                                                                                    2009                    2008
                                                                                                                      (Dollars in thousands)
Non-accrual loans:
    One-to four-family owner occupied                                                                           $      —                 $    —
    One-to four-family non-owner occupied                                                                              362                    —
    Home equity (1)                                                                                                    —                      —
    Mobile home                                                                                                         52                    —
    Secured by other properties                                                                                        —                      —
    Construction and land development                                                                                  —                      —
    Secured commercial                                                                                                 —                      —
    Commercial leases                                                                                                  —                      —
    Savings                                                                                                            —                      —
Total non-accrual loans                                                                                                414                    —
Loans delinquent 90 days or more and still accruing interest                                                           —                      —
     Foreclosed assets                                                                                                  95                    —
      Total non-performing assets                                                                               $      509               $    —

Ratios:
     Non-performing loans to total loans                                                                              0.82 %                  — %

      Non-performing assets to total assets                                                                           0.79 %                  — %



(1)   Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.

      Of total non-accrual loans at September 30, 2009, $362,000 were one-to four-family non-owner occupied. Such lending involves
additional risks since the properties are not owner occupied, and borrowers who are not currently delinquent may become delinquent at a later
date. Renters of these properties are less likely to be concerned with property upkeep. At September 30, 2009, Fairmount Bank had four one-to
four-family non-owner occupied loans made to the same borrower on non-accrual status totaling $362,000. In October 2009, Fairmount Bank
invoked an assignment of rents pursuant to the loan terms and received loan payments through a third party management company. Fairmount
Bank currently does not anticipate any losses on these loans. In addition, one loan totalling $95,000 to a different borrower was in foreclosed
real estate. The foreclosed property was under contract at December 31, 2009.

      For the year ended September 30, 2009, the amount of additional interest income that would have been recognized on non-accrual loans if
such loans had continued to perform in accordance with their contractual terms was $11,000. Interest income of $23,000 was recognized on
these loans for the year ended September 30, 2009.

      On the basis of management’s review of its assets, Fairmount Bank had classified or held as special mention the following assets as of the
date indicated:

                                                                                                                      At
                                                                                                                September 30,
                                                                                                              2009          2008
                                                                                                                (In thousands)
                    Substandard                                                                             $ 601         $ 116
                    Doubtful                                                                                  —             —
                    Loss                                                                                      —             —
                    Special mention                                                                           —             —
                    Total classified and special mention assets                                             $ 601         $ 116


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      Delinquent Loans . The following table sets forth certain information with respect to Fairmount Bank’s loan portfolio delinquencies by
type and amount at the dates indicated.

                                                                                                   Loans Delinquent For
                                                                                                                   90 Days and
                                                                                              60-89 Days               Over               Total
                                                                                           Numbe     Amoun      Numbe       Amoun     Numbe    Amoun
                                                                                             r           t         r           t        r        t
                                                                                                             (Dollars in thousands)
At September 30, 2009
Real estate:
     One-to four-family owner occupied                                                        —       $ —          —       $ —          —     $ —
     One-to four-family non-owner occupied                                                    —         —             4      362          4     362
     Home equity (1)                                                                          —         —          —         —          —       —
     Mobile home                                                                                  1      52        —         —            1      52
     Secured by other properties                                                              —         —          —         —          —       —
     Construction and land development                                                        —         —          —         —          —       —
Commercial and consumer loans:
     Secured commercial                                                                       —           —        —           —        —        —
     Commercial leases                                                                        —           —        —           —        —        —
     Savings                                                                                  —           —        —           —        —        —
Total                                                                                             1   $   52          4    $ 362          5   $ 414


At September 30, 2008
Real estate:
     One-to four-family owner occupied                                                            2   $ 161        —       $ —            2   $ 161
     One-to four-family non-owner occupied                                                    —         —          —         —          —       —
     Home equity (1)                                                                              4      92        —         —            4      92
     Mobile home                                                                              —         —          —         —          —       —
     Secured by other properties                                                              —         —          —         —          —       —
     Construction and land development                                                        —         —          —         —          —       —
Commercial and consumer loans:
     Secured commercial                                                                       —           —        —           —        —        —
     Commercial leases                                                                            1        7       —           —          1          7
     Savings                                                                                  —           —        —           —        —        —
Total                                                                                             7   $ 260        —       $ —            7   $ 260



(1)     Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.

       Foreclosed and Repossessed Assets . Real estate acquired by Fairmount Bank as a result of foreclosure or by deed in lieu of foreclosure
is classified as foreclosed real estate until sold. When property is acquired it is recorded at the lower of cost or estimated fair market value at
the date of foreclosure, establishing a new cost basis. Estimated fair value generally represents the sale price a buyer would be willing to pay on
the basis of current market conditions, including normal terms from other financial institutions, less the estimated costs to sell the property.
Holding costs and declines in estimated fair market value result in charges to expense after acquisition. At December 31, 2009, Fairmount Bank
had $95,000 in foreclosed real estate, which was under contract at that date.

Allowance for Loan Losses
       The allowance for loan losses is established through a provision for loan losses. Fairmount Bank maintains the allowance at a level
believed, to the best of management’s knowledge, to cover all known and inherent losses in the portfolio that are both probable and reasonable
to estimate at each reporting date. Management reviews the allowance for loan losses on no less than a quarterly basis in order to identify those
inherent losses and to assess the overall collection probability for the loan portfolio. The evaluation process includes, among other things, an
analysis of delinquency trends, non-performing loan trends, the level of charge-offs and recoveries, prior loss experience, total loans
outstanding, the volume of loan originations, the type, size and geographic concentration of the loans, the value of collateral securing the loan,
the borrower’s ability to repay and repayment performance, the number of loans requiring heightened management oversight, local

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economic conditions and industry experience. Such risk factors are periodically reviewed by management and revised as deemed appropriate.
The establishment of the allowance for loan losses is significantly affected by management’s judgment and uncertainties, and there is a
likelihood that different amounts would be reported under different conditions or assumptions. The Office of Thrift Supervision, as an integral
part of its examination process, periodically reviews the allowance for loan losses. The Office of Thrift Supervision may require Fairmount
Bank to make additional provisions for estimated loan losses based upon judgments different from those of management.

      The allowance generally consists of specific and general components. The specific component relates to loans that are classified as either
doubtful, substandard or special mention. The general component covers non-classified loans and is based on historical loss experience
adjusted for qualitative factors.

      Fairmount Bank will continue to monitor and modify its allowances for loan losses as conditions dictate. No assurances can be given that
the level of allowance for loan losses will cover all of the inherent losses on the loans or that future adjustments to the allowance for loan losses
will not be necessary if economic and other conditions differ substantially from the economic and other conditions used by management to
determine the current level of the allowance for loan losses. At September 30, 2009, an allowance/specific reserve in the amount of $51,000
was established for a loan previously purchased on a participation basis from a local bank.

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        The following table sets forth activity in Fairmount Bank’s allowance for loan losses for the periods indicated.

                                                                                                                                   At or For the Years Ended
                                                                                                                                         September 30,
                                                                                                                                2009                         2008
                                                                                                                                     (Dollars in thousands)
Balance at beginning of period                                                                                              $        103                  $       79

Charge-offs:
Real estate:
      One-to four-family owner occupied                                                                                              —                          —
      One-to four-family non-owner occupied                                                                                          40                         —
      Home equity (1)                                                                                                                —                          —
      Mobile home                                                                                                                    —                          —
      Secured by other properties                                                                                                    —                          —
      Construction and land development                                                                                              —                          —

Total real estate loans                                                                                                               40                        —

Commercial and consumer loans:
    Secured commercial                                                                                                               —                          —
    Commercial leases                                                                                                                27                           6
    Savings                                                                                                                          —                          —
    Other                                                                                                                            —                          20

Total consumer and other loans                                                                                                        27                         26

Total charge-offs                                                                                                                     67                         26

Recoveries:
Real estate:
       One-to four-family owner occupied                                                                                             —                          —
       One-to-four-family non-owner occupied                                                                                         —                          —
       Home equity (1)                                                                                                               —                          —
       Mobile home                                                                                                                   —                          —
       Secured by other properties                                                                                                   —                          —
       Construction and land development                                                                                             —                          —
Total real estate loans                                                                                                              —                          —

Commercial and consumer loans:
    Secured commercial                                                                                                               —                          —
    Commercial leases                                                                                                                  2                        —
    Savings                                                                                                                          —                          —
    Other                                                                                                                            —                          —

Total consumer and other loans                                                                                                         2                        —

Total recoveries                                                                                                                       2                        —

Net (charge-offs) recoveries                                                                                                         (65 )                       (26 )
Provision for loan losses                                                                                                            182                          50

Balance at end of year                                                                                                      $        220                 $      103


Ratios:
Net charge-offs to average loans outstanding                                                                                        0.14 %                      0.07 %
Allowance for loan losses to non-performing loans at end of period                                                                 53.11 %                         *
Allowance for loan losses to total loans at end of period                                                                           0.44 %                      0.23 %


 *    Not meaningful.
(1)   Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.

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       Allocation of Allowance for Loan Losses. The following table sets forth the allowance for loan losses allocated by loan category, the
total loan balances by category (including loans held for sale), 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 September 30,
                                                                     2009                                                      2008
                                                                                    Percent of                                  Loan
                                                                    Loan          Loans in Each                               Balances   Percent of Loans
                                             Allowance for        Balances         Category to            Allowance for          by      in Each Category
                                              Loan Losses        by Category       Total Loans             Loan Losses        Category     to Total Loans
                                                                                          (Dollars in thousands)
Real estate loans:
     One-to four-family owner
       occupied                          $              33       $     22,162             43.99 %       $            33       $ 21,922              48.89 %
     One-to four-family non-owner
       occupied                                         86             17,484             34.70                      30         11,963              26.68
     Home equity (1)                                     4              1,845              3.66                       4          1,933               4.31
     Mobile home                                       —                3,073              6.10                     —            3,360               7.49
     Secured by other properties                        10              2,032              4.03                       6          1,362               3.04
     Construction and land
       development                                      63              2,747              5.45                      31          3,264               7.28
Total real estate loans                                196             49,343             97.93                     104         43,804              97.69
Commercial and consumer loans:
   Secured commercial                                   2                   848            1.69                           2        667               1.49
   Commercial leases                                    4                   133            0.26                           9        311               0.69
   Savings                                             —                     60            0.12                     —               57               0.13
Total commercial and consumer
  loans                                                      6          1,041              2.07                      11          1,035               2.31
Unallocated                                             18                                                          (12 )

Total loans                              $             220       $     50,384           100.00 %        $           103       $ 44,839            100.00 %



(1)   Includes home equity loans secured by second mortgages and home equity lines of credit secured by second mortgages.

Investment Activities
      General. Fairmount Bank is permitted under federal law to invest in various types of liquid assets, including United States Government
obligations, securities of various federal agencies and of state and municipal governments, mortgage-backed securities, deposits at the Federal
Home Loan Bank of Atlanta, certificates of deposit of federally insured institutions, certain bankers’ acceptances and federal funds. Within
certain regulatory limits, Fairmount Bank may also invest a portion of its assets in commercial paper and corporate debt securities. Fairmount
Bank is also required to maintain an investment in Federal Home Loan Bank stock.

      Fairmount Bank’s investment objectives are to maintain high asset quality, to 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. The 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 investment performance. The board of
directors reviews the status of the investment portfolio on a quarterly basis, or more frequently if warranted.

      The current investment policy authorizes Fairmount Bank to invest in debt securities issued by the United States Government, agencies of
the United States Government or United States Government-sponsored enterprises. The policy also permits investments in mortgage-backed
securities, including pass-through securities, issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. The investment policy also
permits investments in federal funds and deposits in other insured institutions. In addition, management is authorized to invest in investment
grade state and municipal obligations, commercial paper and corporate debt obligations within regulatory parameters. Fairmount Bank does not
engage in any hedging activities or trading activities, nor do it purchase any high-risk mortgage derivative products, corporate junk bonds, zero
coupon bonds and certain types of structured notes.
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      Generally accepted accounting principles require that, at the time of purchase, Fairmount Bank designate a security as held-to-maturity,
available-for-sale, or trading, depending on our ability and intent. Securities available for sale are reported at fair value, while securities held to
maturity are reported at amortized cost. Fairmount Bank does not maintain a trading portfolio. Establishing a trading portfolio would require
specific authorization by the board of directors.

      At September 30, 2009, the held to maturity portfolio, which is carried at amortized cost, totaled $1,766,000 or 2.76% of total assets and
the available-for-sale portfolio, which is carried at fair value, totaled $3,328,000 or 5.19% of total assets. Fairmount Bank also held $4,213,000
in federal funds sold in other institutions, $92,000 in interest-bearing deposits at other banks and $601,000 in Federal Home Loan Bank Stock
of Atlanta at September 30, 2009.

      United States Government and Federal Agency Obligations. While United States Government and federal agency securities generally
provide lower yields than other investments in the securities investment portfolio, Fairmount Bank maintains these investments, to the extent
appropriate, for liquidity purposes, as collateral for borrowings and as an interest rate risk hedge in the event of significant mortgage loan
prepayments. At September 30, 2009, United States government and federal agency obligations consisted of fixed-rate callable Freddie Mac
securities.

      Mortgage-Backed Securities. Fairmount Bank invests in mortgage-backed securities insured or guaranteed by Ginnie Mae, Freddie Mac
or Fannie Mae. Fairmount Bank has not purchased privately-issued mortgage-backed securities. Fairmount Bank invests in mortgage-backed
securities to achieve positive interest rate spreads with minimal administrative expense, and to lower its credit risk as a result of the guarantees
provided by Ginnie Mae, Freddie Mac or Fannie Mae.

      Ginnie Mae is a government agency within the Department of Housing and Urban Development which is intended to help finance
government-assisted housing programs. Ginnie Mae securities are backed by loans insured by the Federal Housing Administration, or
guaranteed by the Veterans Administration. The timely payment of principal and interest on Ginnie Mae securities is guaranteed by Ginnie
Mae and backed by the full faith and credit of the U.S. Government. Freddie Mac is a private corporation chartered by the U.S. Government.
Freddie Mac issues participation certificates backed principally by conventional mortgage loans. Freddie Mac guarantees the timely payment of
interest and the ultimate return of principal on participation certificates. Fannie Mae is a private corporation chartered by the U.S. Congress
with a mandate to establish a secondary market for mortgage loans. Fannie Mae guarantees the timely payment of principal and interest on
Fannie Mae securities. In September 2008, the Federal Housing Finance Agency placed Freddie Mac and Fannie Mae into conservatorship. The
U.S. Treasury has implemented a set of financing agreements to ensure that Freddie Mac and Fannie Mae meet their obligations to holders of
bonds that they have issued or guaranteed.

      Investments in mortgage-backed securities involve a risk that actual payments will be greater or less than the prepayment rate estimated
at the time of purchase, which may require adjustments to the amortization of any premium or acceleration of any discount relating to such
interests, thereby affecting the net yield on Fairmount Bank’s securities. Fairmount Bank periodically reviews current prepayment speeds to
determine whether prepayment estimates require modification that could cause amortization or accretion adjustments. There is also
reinvestment risk associated with the cash flows from such securities or in the event such securities are redeemed by the issuer. In addition, the
market value of such securities may be adversely affected by changes in interest rates. At September 30, 2009, mortgage-backed securities
consisted of $2,656,000 in fixed rate securities and $672,000 in variable rate securities.

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      Investment Securities Portfolio. The following table sets forth the composition of Fairmount Bank’s investment securities portfolio at the
dates indicated.

                                                                                                                                    At September 30,
                                                                                                                         2009                             2008
                                                                                                                Amortized           Fair         Amortized            Fair
                                                                                                                  Cost              Value            Cost             Value
                                                                                                                                      (In thousands)
Securities held to maturity:
    U.S. Government and federal agency obligations                                                              $      993      $        998    $       —         $      —
    State and municipal                                                                                                773               799            —                —
       Total securities held to maturity                                                                            1,766            1,797              —                —

Securities available for sale:
    U.S. Government and federal agency obligations                                                                                                     2,998           2,860
    State and municipal                                                                                                                                3,693           3,701
    Mortgage-backed                                                                                                 3,215            3,328               474             458
       Total securities available for sale                                                                          3,215            3,328             7,165           7,019
Total investment securities                                                                                     $   4,981       $ 5,125         $      7,165      $ 7,019


      Investment Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio at September 30, 2009,
are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of
prepayments or early redemptions that may occur. No tax-equivalent adjustments have been made to the yields in the following table.

                                                                                   More than Five
                                                         More than One Year         Years through              More than Ten
                                   One Year or Less      through Five Years           Ten Years                    Years                               Total
                                             Weighted                Weighted                  Weighted                  Weighted                                Weighted
                                 Amortized    Average   Amortized     Average   Amortized       Average     Amortized    Average          Amortized     Fair     Average
                                   Cost         Yield     Cost         Yield       Cost          Yield        Cost        Yield             Cost        Value     Yield
                                                                                 (Dollars in thousands)
Securities held to maturity:
   U.S. Government and
      federal agency
      obligations                $     —          — %   $      —          —     $        —         — %      $        993        5.14 %    $     993 $      998         5.14 %
   State and municipal                 —          —            —          — %            305       5.25 %            468        3.95            773        799         5.52 %

   Total securities held to
      maturity                   $     —          — %   $      —          — %   $        305       5.25 %   $       1,461       4.76 %    $    1,766 $ 1,797           5.30 %

Securities available for sale:
   Mortgage-backed               $     —          —     $      —          — %   $        329       4.42 %   $       2,886       4.84 %    $    3,215 $ 3,328           4.80 %

   Total investment securities   $     —          —     $      —          — %   $        634       4.82 %   $       4,347       4.81 %    $    4,981 $ 5,125           4.82 %


Sources of Funds
      General. Deposits traditionally have been the primary source of funds for Fairmount Bank’s lending and investment activities. In addition
to deposits, Fairmount Bank derives funds primarily from principal and interest payments on loans. Loan repayments are a relatively stable
source of funds, while deposit inflows and outflows are significantly influenced by general interest rates, money market conditions and
competition. Borrowings may also be used on a short-term basis to compensate for reductions in the availability of funds from other sources
and may be used on a longer-term basis for general business purposes.

     Deposits. Fairmount Bank generates deposits primarily from within its market area. Fairmount Bank relies on its competitive pricing
and customer service to attract and retain deposits. It offers a variety of deposit accounts with a range of interest rates and terms. Deposit
accounts consist of savings accounts, certificates of deposit and NOW accounts.

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     Total deposits increased to $45,838,000 at September 30, 2009, compared to $38,891,000 at September 30, 2008. Deposits are generated
primarily from within Fairmount Bank’s market area.

      Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based
primarily on current operating strategies and market interest rates, liquidity requirements, interest rates paid by competitors and deposit growth
goals.

      At September 30, 2009, Fairmount Bank had a total of $32,850,000 in certificates of deposit, of which $20,658,000 or 62.88% had
remaining maturities of one year or less. Based on historical experience and its current pricing strategy, management believes Fairmount Bank
will retain a large portion of these accounts upon maturity.

      The following table shows the distribution of, and certain other information relating to, Fairmount Bank’s deposits by type of deposit, as
of the dates indicated.

                                                                                                                      At September 30,
                                                                                                             2009                               2008
                                                                                                    Amount            %               Amount            %
                                                                                                                    (Dollars in thousands)
1.00%—1.99%                                                                                     $     4,493           9.80 %                 41          0.11 %
2.00%—2.99%                                                                                          12,040          26.27                5,863         15.08
3.00%—3.99%                                                                                           6,832          14.91                6,322         16.25
4.00%—4.99%                                                                                           9,232          20.14               12,760         32.81
5.00%—5.99%                                                                                             253           0.55                1,600          4.11
      Total certificate accounts                                                                     32,850          71.67               26,586         68.36
Non-interest bearing deposits (1)                                                                       447           0.98                  490          1.26
Interest bearing demand deposits                                                                      3,376           7.36                2,626          6.75
Savings                                                                                               9,165          19.99                9,189         23.63
Total transaction accounts                                                                           12,988          28.33               12,305         31.64
Total deposits                                                                                  $ 45,838            100.00 %       $ 38,891            100.00 %



(1)    Includes nondemand escrows.

      The following table shows the average balance by each type of deposit and the average rate paid on each type of deposit for the periods
indicated.

                                                                                                       At September 30,
                                                                                     2009                                                2008
                                                                                                      Average                                          Average
                                                                           Average   Interest          Rate             Average          Interest       Rate
                                                                           Balance   Expense           Paid             Balance          Expense        Paid
                                                                                                     (Dollars in thousands)
Interest bearing demand deposits                                       $     2,790   $      40           1.45 %       $    2,058     $        51         2.46 %
Savings                                                                      9,211         108           1.17              9,412             118         1.25
Certificates of deposit                                                     29,946       1,069           3.57             26,379           1,225         4.65
Total deposits                                                         $ 41,947      $ 1,217             2.90 %       $ 37,849       $ 1,394             3.68 %


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        The following table sets forth the amount and maturities of certificates of deposits at September 30, 2009.

                                                                                                                                                   Percentage
                                                                            Over One        Over Two                                                of Total
                                                            Less Than      Year to Two      Years to          Over Three                           Certificate
                                                            One Year         Years         Three Years          Years              Total            Accounts
                                                                                            (Dollars in thousands)
  Interest Rate:
Less than 2%                                               $    4,065     $          428           —                  —        $    4,493               13.68 %
2.00%—2.99%                                                     5,655              5,328         1,024                 33          12,040               36.65
3.00%—3.99%                                                     5,253                891           664                 24           6,832               20.80
4.00%—4.99%                                                     5,685              2,302           822                423           9,232               28.10
5.00%—5.99%                                                       —                    2           100                151             253                0.77
Total                                                      $ 20,658       $        8,951   $     2,610        $       631      $ 32,850                100.00 %


     As of September 30, 2009, the aggregate amount of outstanding certificates of deposit in amounts greater than or equal to $100,000 was
approximately $11,384,000. The following table sets forth the maturity of these certificates as of September 30, 2009.

                                                                                                                 At September 30, 2009
                                                                                                                     (In thousands)
                                                                                                                                    Weighted
                                                                                                             Amount              Average Rate
             Three months or less                                                                        $        1,552                     3.79 %
             Over three months through six months                                                                 3,712                     3.47
             Over six months through one year                                                                     1,982                     3.31
             Over one year                                                                                        4,138                     3.30
             Total                                                                                       $ 11,384                           3.43 %

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

                                                                                                                           Years Ended
                                                                                                                          September 30,
                                                                                                                     2009               2008
                                                                                                                         (In thousands)
             Beginning balance                                                                                    $ 38,891          $ 37,748
             Net deposits (withdrawals) before interest credited                                                     5,730              (251 )
             Interest credited                                                                                       1,217             1,394
             Net increase in deposits                                                                                 6,947                1,143
             Ending balance                                                                                       $ 45,838          $ 38,891


Borrowings
      Fairmount Bank may obtain advances from the Federal Home Loan Bank of Atlanta upon the security of the common stock it owns in
that bank and certain of its residential mortgage loans, provided certain standards related to creditworthiness have been met. These advances
are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. Federal Home Loan Bank
advances are generally available to meet seasonal and other withdrawals of deposit accounts and to permit increased lending.

     At September 30, 2009, Fairmount Bank was permitted to borrow up to an aggregate total of $19,200,000 from the Federal Home Loan
Bank of Atlanta. Fairmount Bank had $11,000,000 of Federal Home Loan Bank advances outstanding at September 30, 2009. Additionally,
Fairmount Bank has credit availability of $1,500,000 with a correspondent bank for short term liquidity needs, if necessary. There were no
borrowings outstanding at September 30, 2009 and 2008 under this facility.

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      The following table shows certain information regarding Federal Home Loan Bank advances at or for the dates indicated:

                                                                                                                         At of For the Year
                                                                                                                       Ended September 30,
                                                                                                                     2009                   2008
                                                                                                                       (Dollars in thousands)
Average balance outstanding                                                                                       $ 10,751             $    5,947
Maximum outstanding at any month-end during the period                                                              11,000                 10,000
Balance outstanding at the end of the period                                                                        11,000                 10,000
Average interest rate during the period                                                                               2.66 %                 3.77 %
Weighted average interest rate at end of period                                                                       2.50 %                 3.27 %

Properties
     Fairmount Bank conducts its operations from its recently completed sole office located at 8216 Philadelphia Road, Baltimore, Maryland
21237. The net book value of the premises, land and equipment at 8216 Philadelphia Road was $2,562,000 at September 30, 2009.

      Fairmount Bank also owns a contiguous property that may be used for expansion and/or developed and sold. At September 30, 2009, the
book value of this property was $242,000. In addition, the previous headquarters was held by Fairmount Bank at September 30, 2009, in the
amount of $85,000. Management believes that the current market value of this property is approximately $400,000. Management intends to list
this property for sale, since it is no longer used for Fairmount Bank’s operations.

Subsidiary Activities
      Fairmount Bank has no subsidiaries.

       As a federally chartered savings association, Fairmount Bank is permitted by Office of Thrift Supervision regulations to invest up to 2%
of its assets in the stock of, or loans to, service corporation subsidiaries. Fairmount Bank may invest an additional 1% of its assets in service
corporations if the additional funds are used for inner-city or community development purposes, and up to 50% of its total capital in
conforming loans to service corporations in which it owns more than 10% of the capital stock. In addition to investments in service
corporations, Fairmount Bank may invest an unlimited amount in operating subsidiaries engaged solely in activities in which Fairmount Bank
may engage as a federal savings bank.

Legal Proceedings
      At September 30, 2009, Fairmount Bank was not involved in any legal proceeding, the outcome of which is believed to be material to its
financial condition or results of operations.

Expense and Tax Allocation
       Fairmount Bank will enter into an agreement with Fairmount Bancorp, Inc. to provide it with certain administrative support services,
whereby Fairmount Bank will be compensated at not less than the fair market value of the services provided. In addition, Fairmount Bank and
Fairmount Bancorp, Inc. will enter into an agreement to establish a method for allocating and for reimbursing the payment of their consolidated
tax liability.

Personnel
     As of September 30, 2009, Fairmount Bank had 10 full-time employees and two part-time employees. The employees are not represented
by any collective bargaining group. Management believes that Fairmount Bank has a good working relationship with its employees.

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                                                     SUPERVISION AND REGULATION

General
       Fairmount Bank is examined and supervised by the Office of Thrift Supervision and is subject to examination by the Federal Deposit
Insurance Corporation. This regulation and supervision establishes a comprehensive framework of activities in which an institution may engage
and is intended primarily for the protection of the Federal Deposit Insurance Corporation’s deposit insurance funds and depositors. Under this
system of federal regulation, financial institutions are periodically examined to ensure that they satisfy applicable standards with respect to their
capital adequacy, assets, management, earnings, liquidity and sensitivity to market interest rates. Following completion of its examination, the
federal agency critiques the institution’s operations and assigns its rating (known as an institution’s CAMELS rating). Under federal law, an
institution may not disclose its CAMELS rating to the public. Fairmount Bank also is a member of and owns stock in the Federal Home Loan
Bank of Atlanta, which is one of the twelve regional banks in the Federal Home Loan Bank System. Fairmount Bank also is regulated to a
lesser extent by the Board of Governors of the Federal Reserve System, governing reserves to be maintained against deposits and other matters.
The Office of Thrift Supervision will examine Fairmount Bank and prepare reports for the consideration of its board of directors on any
operating deficiencies. Fairmount Bank’s relationship with its depositors and borrowers also is regulated to a great extent by federal law and, to
a much lesser extent, state law, especially in matters concerning the ownership of deposit accounts and the form and content of Fairmount
Bank’s loan documents.

    Any change in these laws or regulations, whether by the Federal Deposit Insurance Corporation, the Office of Thrift Supervision or
Congress, could have a material adverse impact on Fairmount Bancorp, Inc., Fairmount Bank and their operations.

      Fairmount Bancorp, Inc. as a savings and loan holding company following the conversion, will be required to file certain reports with,
will be subject to examination by, and otherwise must comply with the rules and regulations of the Office of Thrift Supervision. Fairmount
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 Fairmount Bank and Fairmount Bancorp, Inc. 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
Fairmount Bank and Fairmount Bancorp, Inc. and is qualified in its entirety by reference to the actual statutes and regulations.

Federal Banking Regulation
      Business Activities. A federal savings association derives its lending and investment powers from the Home Owners’ Loan Act, as
amended, and the regulations of the Office of Thrift Supervision. Under these laws and regulations, Fairmount Bank may invest in mortgage
loans secured by residential real estate without limitation as a percentage of assets, and may invest in non-residential real estate loans up to
400% of capital in the aggregate, commercial business loans up to 20% of assets in the aggregate and consumer loans up to 35% of assets in the
aggregate, and in certain types of debt securities and certain other assets. Fairmount Bank also may establish subsidiaries that may engage in
activities not otherwise permissible for Fairmount Bank, including real estate investment and securities and insurance brokerage.

     Capital Requirements. Office of Thrift Supervision regulations require savings associations to meet three minimum capital standards: a
1.5% tangible capital ratio, a 4.0% leverage ratio (3.0% for savings associations receiving the highest rating on the CAMELS rating system)
and an 8.0% risk-based capital ratio.

      The risk-based capital standard for savings associations requires the maintenance of Tier 1 (core) and total capital (which is defined as
core capital and supplementary capital) to risk-weighted assets of at least 4.0% and 8.0%, respectively. In determining the amount of
risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100%, assigned by the
Office of Thrift Supervision, based on the risks believed inherent in the type of asset. Core 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,

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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 net 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. Additionally, a savings association that
retains credit risk in connection with an asset sale may be required to maintain additional regulatory capital because of the recourse back to the
savings association. In assessing an institution’s capital adequacy, the Office of Thrift Supervision takes into consideration not only these
numeric factors but also qualitative factors as well, and has the authority to establish higher capital requirements for individual associations
where necessary.

     At September 30, 2009, Fairmount Bank’s capital exceeded all applicable requirements. See ―Historical and Pro Forma Regulatory
Capital Compliance.‖

      Loans-to-One Borrower. Generally, a federal savings association may not make a loan or extend credit to a single or related group of
borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be loaned, equal to 10% of unimpaired capital and
surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of September 30, 2009,
Fairmount Bank’s largest lending relationship with a single or related group of borrowers totaled $1,000,000, which represented 14.50% of
unimpaired capital and surplus. Therefore, Fairmount Bank was in compliance with the loans-to-one borrower limitations.

      Qualified Thrift Lender Test. As a federal savings association, Fairmount Bank must satisfy the qualified thrift lender, or ―QTL,‖ test.
Under the QTL test, Fairmount Bank must maintain at least 65% of its ―portfolio assets‖ in ―qualified thrift investments‖ (primarily residential
mortgages and related investments, including mortgage-backed securities) in at least nine months of the most recent 12-month period.
―Portfolio assets‖ generally means total assets of a savings institution, less the sum of specified liquid assets up to 20% of total assets, goodwill
and other intangible assets, and the value of property used in the conduct of the savings association’s business.

     Fairmount Bank also may satisfy the QTL test by qualifying as a ―domestic building and loan association‖ as defined in the Internal
Revenue Code.

      A savings association that fails the qualified thrift lender test must either convert to a bank charter or operate under specified restrictions
set forth in the Home Owners’ Loan Act. At September 30, 2009, Fairmount Bank maintained approximately 90.38% of its portfolio assets in
qualified thrift investments and, therefore, satisfied the QTL test.

      Capital Distributions. Office of Thrift Supervision regulations govern capital distributions by a federal savings association, which
include cash dividends, stock repurchases and other transactions charged to the capital account. A savings association must file an application
for approval of a capital distribution if:
        •    the total capital distributions for the applicable calendar year exceed the sum of the savings association’s net income for that year
             to date plus the savings association’s retained net income for the preceding two years;
        •    the savings association would not be at least adequately capitalized following the distribution;
        •    the distribution would violate any applicable statute, regulation, agreement or Office of Thrift Supervision-imposed condition; or
        •    the savings association is not eligible for expedited treatment of its filings.

      Even if an application is not otherwise required, every savings association that is a subsidiary of a holding company must still file a notice
with the Office of Thrift Supervision at least 30 days before the board of directors declares a dividend or approves a capital distribution.

      The Office of Thrift Supervision may disapprove a notice or application if:
        •    the savings association would be undercapitalized following the distribution;
        •    the proposed capital distribution raises safety and soundness concerns; or
        •    the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

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      In addition, the Federal Deposit Insurance Act provides that an insured depository institution shall not make any capital distribution, if
after making such distribution the institution would be undercapitalized.

     Liquidity. Fairmount Bank maintains sufficient liquidity to ensure safe and sound operation in accordance with Office of Thrift
Supervision regulations. We anticipate that we will maintain higher liquidity levels following the completion of the stock offering.

      Community Reinvestment Act and Fair Lending Laws. All federal savings associations have a responsibility under the Community
Reinvestment Act and related regulations of the Office of Thrift Supervision to help meet the credit needs of their communities, including
low-and moderate-income borrowers. In connection with its examination of a federal savings association, the Office of Thrift Supervision is
required to assess the savings association’s record of compliance with the Community Reinvestment Act. In addition, the Equal Credit
Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics
specified in those statutes. A savings association’s failure to comply with the provisions of the Community Reinvestment Act could, at a
minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. The failure to comply
with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the Office of Thrift Supervision, as well
as other federal regulatory agencies and the Department of Justice. Fairmount Bank received a ―satisfactory‖ Community Reinvestment Act
rating in its most recent federal examination. The Community Reinvestment Act requires all Federal Deposit Insurance—insured institutions to
publicly disclose their ratings.

      Transactions with Related Parties. A federal savings association’s authority to engage in transactions with its affiliates is limited by
Office of Thrift Supervision regulations and by Sections 23A and 23B of the Federal Reserve Act and its implementing Regulation W
promulgated by the Board of Governors of the Federal Reserve System. An affiliate is a company that controls, is controlled by, or is under
common control with an insured depository institution such as Fairmount Bank. Fairmount Bancorp, Inc. is an affiliate of Fairmount Bank. In
general, loan transactions between an insured depository institution and its affiliates are subject to certain quantitative and collateral
requirements. In this regard, transactions between an insured depository institution and its affiliates are limited to 10% of the institution’s
unimpaired capital and unimpaired surplus for transactions with any one affiliate and 20% of unimpaired capital and unimpaired surplus for
transactions in the aggregate with all affiliates. Collateral of specific types and in specified amounts ranging from 10% to 130% of the amount
of the transaction must usually be provided by affiliates in order to receive loans from the savings association. In addition, Office of Thrift
Supervision regulations prohibit a savings association from lending to any of its affiliates that are engaged in activities that are not permissible
for bank holding companies and from purchasing the securities of any affiliate, other than a subsidiary. Finally, transactions with affiliates must
be consistent with safe and sound banking practices, not involve low-quality assets and be on terms that are as favorable to the institution as
comparable transactions with non-affiliates. The Office of Thrift Supervision requires savings associations to maintain detailed records of all
transactions with affiliates.

     Fairmount Bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by
such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the
Federal Reserve Board. Among other things, these provisions generally require that extensions of credit to insiders:
      (i)    be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those
             prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or
             present other unfavorable features; and
      (ii)   not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are
             based, in part, on the amount of Fairmount Bank’s capital.

      In addition, extensions of credit in excess of certain limits must be approved by Fairmount Bank’s board of directors.

      Enforcement. The Office of Thrift Supervision has primary enforcement responsibility over federal savings institutions and has the
authority to bring enforcement action against all ―institution-affiliated parties,‖ including stockholders, and attorneys, appraisers and
accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal
enforcement action by the Office of Thrift Supervision may range from the issuance of a capital directive or cease and desist order, to removal
of officers and/or directors of the institution and the appointment of a receiver or conservator. Civil penalties cover a wide range of violations
and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1.0
million per day. The Federal

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Deposit Insurance Corporation also has the authority to terminate deposit insurance or to recommend to the Director of the Office of Thrift
Supervision that enforcement action be taken with respect to a particular savings institution. If action is not taken by the Director, the Federal
Deposit Insurance Corporation has authority to take action under specified circumstances.

      Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured
depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan
documentation, credit underwriting, interest rate risk exposure, asset growth, compensation, and other operational and managerial standards as
the agency deems appropriate. The federal banking agencies adopted Interagency Guidelines Prescribing Standards for Safety and Soundness to
implement the safety and soundness standards required under federal law. 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
appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may
require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these
standards, the appropriate federal banking agency may require the institution to submit an acceptable compliance plan. Failure to implement
such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil money
penalties.

      Prompt Corrective Action Regulations . Under the prompt corrective action regulations, the Office of Thrift Supervision is required and
authorized to take supervisory actions against undercapitalized savings associations. For this purpose, a savings association is placed in one of
the following five categories based on the savings association’s capital:
        •    well-capitalized (at least 5% leverage capital, 6% Tier 1 risk-based capital and 10% total risk-based capital);
        •    adequately capitalized (at least 4% leverage capital, 4% Tier 1 risk-based capital and 8% total risk-based capital);
        •    undercapitalized (less than 8% total risk-based capital, 4% Tier 1 risk-based capital or 3% leverage capital);
        •    significantly undercapitalized (less than 6% total risk-based capital, 3% Tier 1 risk-based capital or 3% leverage capital); and
        •    critically undercapitalized (less than 2% tangible capital).

       Generally, the banking regulator is required to appoint a receiver or conservator for a savings association that is ―critically
undercapitalized‖ within specific time frames. The regulations also provide that a capital restoration plan must be filed with the Office of Thrift
Supervision within 45 days of the date a savings association receives notice that it is ―undercapitalized,‖ ―significantly undercapitalized‖ or
―critically undercapitalized.‖ The criteria for an acceptable capital restoration plan include, among other things, the establishment of the
methodology and assumptions for attaining adequately capitalized status on an annual basis, procedures for ensuring compliance with
restrictions imposed by applicable federal regulations, the identification of the types and levels of activities in which the savings association
will engage while the capital restoration plan is in effect, and assurances that the capital restoration plan will not appreciably increase the
current risk profile of the savings association. Any holding company for the savings association required to submit a capital restoration plan
must guarantee the lesser of an amount equal to 5% of the savings association’s assets at the time it was notified or deemed to be
undercapitalized by the Office of Thrift Supervision, or the amount necessary to restore the savings association to adequately capitalized status.
This guarantee remains in place until the Office of Thrift Supervision notifies the savings association that it has maintained adequately
capitalized status for each of four consecutive calendar quarters, and the Office of Thrift Supervision has the authority to require payment and
collect payment under the guarantee. Failure by a holding company to provide the required guarantee will result in certain operating restrictions
on the savings association, such as restrictions on the ability to declare and pay dividends, pay executive compensation and management fees,
and increase assets or expand operations. The Office of Thrift Supervision may also take any one of a number of discretionary supervisory
actions against undercapitalized associations, including the issuance of a capital directive and the replacement of senior executive officers and
directors.

      At September 30, 2009, Fairmount Bank met the criteria for being considered ―well-capitalized.‖

       Insurance of Deposit Accounts. Fairmount Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the
Federal Deposit Insurance Corporation. Under the Federal Deposit Insurance Corporation’s risk-based assessment system, insured institutions
are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors, with less risky
institutions paying lower assessments. No institution may pay a dividend if it is in default of the federal deposit insurance assessment.

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      For 2008, assessments ranged from five to forty-three basis points of assessable deposits. Due to losses incurred by the Deposit Insurance
Fund in 2008 from failed institutions, and anticipated future losses, the Federal Deposit Insurance Corporation, pursuant to a Restoration Plan
to replenish the fund, adopted an across the board seven basis point increase in the assessment range for the first quarter of 2009. The Federal
Deposit Insurance Corporation adopted further refinements to its risk-based assessment that were effective April 1, 2009 and effectively make
the range seven to 77 1 / 2 basis points. The Federal Deposit Insurance Corporation has also provided for the possibility of two additional
special assessments for the final two quarters of 2009, if deemed necessary.

       Due to the recent difficult economic conditions, deposit insurance per account owner has been raised to $250,000 for all types of accounts
until January 1, 2014. In addition, the Federal Deposit Insurance Corporation adopted an optional Temporary Liquidity Guarantee Program by
which, for a fee, noninterest-bearing transaction accounts would receive unlimited insurance coverage, and certain senior unsecured debt issued
by institutions and their holding companies would temporarily be guaranteed by the Federal Deposit Insurance Corporation. Fairmount Bank
made the business decision not to participate in the unlimited noninterest-bearing transaction account coverage and also opted not to participate
in the unsecured debt guarantee program.

     The Federal Deposit Insurance Corporation may pay dividends to insured institutions once the Deposit Insurance Fund reserve ratio
equals or exceeds 1.35% of estimated insured deposits.

     In addition to the assessment for deposit insurance, institutions are required to make payments on bonds issued in the late 1980s by the
Financing Corporation to recapitalize a predecessor deposit insurance fund. This payment is established quarterly and during the four quarters
ended June 30, 2009 averaged 1.10 basis points of assessable deposits.

      The Federal Deposit Insurance Corporation has authority to increase insurance assessments. A significant increase in insurance premiums
would likely have an adverse effect on the operating expenses and results of operations of Fairmount Bank. Management cannot predict what
insurance assessment rates will be in the future.

      Insurance of deposits may be terminated by the Federal Deposit Insurance Corporation upon a finding that an 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. The management of Fairmount Bank does not know of any practice,
condition or violation that might lead to termination of its deposit insurance.

      U.S. Treasury’s Troubled Asset Relief Program Capital Purchase Program . The Emergency Economic Stabilization Act of 2008
provides the U.S. Secretary of the Treasury with broad authority to implement certain actions to help restore stability and liquidity to U.S.
financial markets. One of the programs resulting from the legislation is the Troubled Asset Relief Program/Capital Purchase Program, or CPP,
which provides direct equity investment by the U.S. Treasury Department in perpetual preferred stock of qualified financial institutions. The
program is voluntary and requires an institution to comply with a number of restrictions and provisions, including limits on executive
compensation, stock redemptions and declaration of dividends. The CPP provides for a minimum investment of 1.0% of total risk-weighted
assets and a maximum investment equal to the lesser of three percent of total risk-weighted assets or $25 billion. Participation in the program is
not automatic and is subject to approval by the U.S. Treasury Department. We opted not to participate in the CPP.

      Prohibitions Against Tying Arrangements . Federal savings associations are prohibited, subject to some exceptions, from extending
credit to or offering any other service, or fixing or varying the consideration for such extension of credit or service, on the condition that the
customer obtain some additional service from the institution or its affiliates or not obtain services of a competitor of the institution.

     Federal Home Loan Bank System. Fairmount Bank is a member of the Federal Home Loan Bank System, which consists of 12 regional
Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. As a
member of the Federal Home Loan Bank of Atlanta, Fairmount Bank is required to acquire and hold shares of capital stock in the Federal
Home Loan Bank. As of September 30, 2009, Fairmount Bank was in compliance with this requirement.

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Other Regulations
      Interest and other charges collected or contracted for by Fairmount Bank are subject to state usury laws and federal laws concerning
interest rates. Fairmount Bank’ operations are also subject to federal laws applicable to credit transactions, such as the:
        •    Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
        •    Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to
             determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
        •    Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
        •    Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;
        •    Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
        •    Truth in Savings Act; and
        •    rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

      The operations of Fairmount Bank also are subject to the:
        •    Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes
             procedures for complying with administrative subpoenas of financial records;
        •    Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals
             from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic
             banking services;
        •    Check Clearing for the 21 st Century Act (also known as ―Check 21‖), which gives ―substitute checks,‖ such as digital check
             images and copies made from that image, the same legal standing as the original paper check;
        •    The USA Patriot Act and the related regulations of the Office of Thrift Supervision, which require savings associations operating
             in the United States, among other things, to develop anti-money laundering compliance programs, due diligence policies and
             controls to ensure the detection and reporting of money laundering. These compliance programs are intended to supplement
             existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign
             Assets Control regulations; and
        •    The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions
             with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial
             products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such
             customers the opportunity to ―opt out‖ of the sharing of certain personal financial information with unaffiliated third parties.

Holding Company Regulation
      General . Upon completion of the conversion, Fairmount Bancorp, Inc. will be a non-diversified savings and loan holding company
within the meaning of the Home Owners’ Loan Act. As such, Fairmount Bancorp, Inc. will be registered with the Office of Thrift Supervision
and subject to Office of Thrift Supervision regulations, examinations, supervision and reporting requirements. In addition, the Office of Thrift
Supervision will have enforcement authority over Fairmount Bancorp, Inc. and its 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 the subsidiary savings institution. Unlike
bank holding companies, federal savings and loan holding companies are not subject to any regulatory capital requirements or to supervision by
the Federal Reserve board .

      Permissible Activities. Under present law, the business activities of Fairmount Bancorp, Inc. will be generally limited to those activities
permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act of 1956, as amended, or for multiple
savings and loan holding companies. A financial holding company may engage in activities that are financial in nature, including underwriting
equity securities and insurance as well as activities that are incidental to

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financial activities or complementary to a financial activity. A multiple savings and loan holding company is generally limited to activities
permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, subject to the prior approval of the Office of
Thrift Supervision, and certain additional activities authorized by Office of Thrift Supervision regulations.

       Federal law prohibits a savings and loan holding company, including Fairmount Bancorp, Inc., directly or indirectly, or through one or
more subsidiaries, from acquiring more than 5.0% of another savings institution or holding company thereof, without prior written approval of
the Office of Thrift Supervision. It also prohibits the acquisition or retention of, with certain exceptions, more than 5.0% of a nonsubsidiary
company engaged in activities that are not closely related to banking or financial in nature, or acquiring or retaining control of an institution
that is not federally insured. In evaluating applications by holding companies to acquire savings institutions, the Office of Thrift Supervision
must consider the financial and managerial resources, future prospects of the company and institution involved, the effect of the acquisition on
the risk to the federal deposit insurance fund, the convenience and needs of the community and competitive factors.

    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, subject to two exceptions:
      (i)    the approval of interstate supervisory acquisitions by savings and loan holding companies; and
      (ii)   the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit
             such acquisition.

      The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Federal Securities Laws
      We have filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 for the registration
of the shares of common stock to be issued pursuant to the stock offering. Upon completion of the stock offering, our common stock will be
registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. We will be subject to the information,
proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

      The registration under the Securities Act of 1933 of shares of common stock to be issued in the stock offering does not cover the resale of
those shares. Shares of common stock purchased by persons who are not our affiliates may be resold without registration. Shares purchased by
our affiliates will be subject to the resale restrictions of Rule 144 under the Securities Act of 1933. If we meet the current public information
requirements of Rule 144 under the Securities Act of 1933, each affiliate of ours that complies with the other conditions of Rule 144, including
those that require the affiliate’s sale to be aggregated with those of 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. In the future, we may permit affiliates to have their shares registered
for sale under the Securities Act of 1933.

Sarbanes-Oxley Act of 2002
      The Sarbanes-Oxley Act of 2002 addresses, among other issues, corporate governance, auditing and accounting, executive compensation,
and enhanced and timely disclosure of corporate information. As directed by the Sarbanes-Oxley Act, our Chief Executive Officer and Chief
Financial Officer will be required to certify that our quarterly and annual reports do not contain any untrue statement of a material fact. The
rules adopted by the Securities and Exchange Commission under the Sarbanes-Oxley Act have several requirements, including having these
officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over
financial reporting; they have made certain disclosures to our auditors and the audit committee of the board of directors about our internal
control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether
there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over
financial reporting. We will be subject to further reporting and audit requirements beginning with the fiscal year ending September 30, 2010
under the requirements of the Sarbanes-Oxley Act. We will prepare policies, procedures and systems designed to ensure compliance with these
regulations.

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                                                                  TAXATION

Federal Taxation
      General. Fairmount Bancorp, Inc. and Fairmount Bank are subject to federal income taxation in the same general manner as other
corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize material
federal income tax matters and is not a comprehensive description of the tax rules applicable to Fairmount Bancorp, Inc. and Fairmount Bank.

      Method of Accounting . For federal income tax purposes, Fairmount Bank currently reports its income and expenses on the cash method
of accounting and uses a tax year ending September 30 for filing its federal income tax return. The Small Business Protection Act of 1996
eliminated the use of a special reserve method of accounting for bad debts by savings institutions, effective for taxable years beginning after
1995.

       Minimum Tax. The Internal Revenue Code of 1986, as amended, imposes an alternative minimum tax at a rate of 20% on a base of
regular taxable income plus certain tax preferences, referred to as ―alternative minimum taxable income.‖ The alternative minimum tax is
payable to the extent alternative minimum taxable income is in excess of an exemption amount. Net operating losses can, in general, offset no
more than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against regular
tax liabilities in future years. At September 30, 2009, Fairmount Bank had no minimum tax credit carry forward.

      Net Operating Loss Carryovers. A financial institution may carry back net operating losses to the preceding two taxable years and
forward to the succeeding 20 taxable years. At September 30, 2009, Fairmount Bank had no net operating loss carry forward for federal income
tax purposes.

       Corporate Dividends. We may exclude from our income 100% of dividends received from Fairmount Bank as a member of the same
affiliated group of corporations.

      Audit of Tax Returns. Fairmount Bank’s federal income tax returns have not been audited in the most recent five-year period.

Maryland Taxation
       Fairmount Bancorp, Inc. is subject to Maryland’s Corporation Business Tax at the rate of 8.25% on its table income, before net operating
loss deductions and special deductions for federal income tax purposes. Fairmount Bank is required to file Maryland income tax returns. For
this purpose, ―taxable income‖ generally means federal taxable income subject to certain adjustments (including addition of interest income on
state and municipal obligations).

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                                                                MANAGEMENT

Shared Management Structure
      The directors of Fairmount Bancorp, Inc. are the same persons who are the directors of Fairmount Bank. In addition, each executive
officer of Fairmount Bancorp, Inc. is also an executive officer of Fairmount Bank. We expect that Fairmount Bancorp, Inc. and Fairmount
Bank will continue to have common executive officers until there is a business reason to establish separate management structures. To date,
executive officers and directors have been compensated for their services by Fairmount Bank. In the future, directors and executive officers
may receive additional compensation for their services to Fairmount Bancorp, Inc.

Executive Officers of Fairmount Bancorp, Inc. and Fairmount Bank
       The following table sets forth information regarding the executive officers of Fairmount Bancorp, Inc. and Fairmount Bank.

Name                                                                 Age (1)     Position
Joseph M. Solomon                                                      59        President, Chief Executive Officer and Director
Jodi L. Beal, CPA                                                      39        Vice President, Chief Financial Officer and Treasurer

(1)    As of September 30, 2009.

       The executive officers of Fairmount Bancorp, Inc. and Fairmount Bank are elected annually.

Directors of Fairmount Bank and Fairmount Bancorp, Inc.
      Fairmount Bancorp, Inc. has five directors. Directors serve three-year staggered terms so that approximately one-third of the directors are
elected at each annual meeting. Directors of Fairmount Bank will be elected by Fairmount Bancorp, Inc. as its sole stockholder.

     The following table states our directors’ names, their ages as of September 30, 2009, the years when they began serving as directors of
Fairmount Bank and when their current terms expire:

                                                                                                                                             Current
                                                                                                                               Director       Term
Name                                                      Position(s) Held With Fairmount Bank                     Age (1)      Since        Expires
William G. Yanke                                          Chairman of the Board                                      64           1998         2011
Joseph M. Solomon                                         President, Chief Executive Officer and Director            59           2007         2011
James E. Elliott                                          Director                                                   65           2004         2010
Edward J.Lally                                            Director and Secretary                                     62           1995         2012
Mary R. Craig                                             Director                                                   57           2005         2012

(1)    As of September 30, 2009.

Board Independence
      Since our common stock will be quoted on the Over-the-Counter Electronic Bulletin Board upon completion of the offering, we will not
be subject to certain rules respecting the independence of directors applicable to companies traded on the Nasdaq Stock Market or on a national
securities exchange. However, the board of directors has determined that each of our directors, with the exception of Mr. Solomon and
Mr. Lally, is ―independent‖ as defined in the listing standards of the Nasdaq Stock Market. Mr. Solomon and Mr. Lally are not independent
because Mr. Solomon serves as a compensated executive officer of Fairmount Bank and Mr. Lally serves as the non-compensated Secretary of
Fairmount Bank and provides printing services to Fairmount Bank.

The Business Background of Our Directors and Executive Officers
      The business experience for the past five years of each of our directors and executive officers is set forth below. Unless otherwise
indicated, directors and executive officers of Fairmount Bank have held their positions for the past five years.

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      William G. Yanke , Chairman of the Board of each of Fairmount Bank and Fairmount Bancorp, Inc., is a Certified Public Accountant. He
has conducted an accounting and tax practice since 1974.

      Joseph M. Solomon is President, Chief Executive Officer, and a director of Fairmount Bank, positions he has held since April 2007. As
President and Chief Executive Officer, he is responsible for overseeing the day to day operations of Fairmount Bank. Mr. Solomon previously
served as President, Chief Executive Officer and a director of Valley Bancorp, Inc. and its subsidiary, Valley Bank of Maryland, from
December 1997 to January 2007, when the companies were sold in a negotiated acquisition.

     James E. Ellio tt is President of Maryland Agency, Inc., an insurance/investment firm, a position he has held since 1981. From 1992 until
2006, he was a general agent for The Penn Mutual Life Insurance Company.

     Edward J. Lally has been owner/President of Master Graphics, Inc., a printing and graphic design company, since 1979. He has also
served as Secretary of Fairmount Bank since 2002.

      Mary R. Craig has served as Administrative Law Judge for the Maryland Office of Administrative Hearings since September 2005. Prior
to that, she was an attorney in private practice.

      Jodi L. Beal, CPA served as Acting Chief Financial Officer of Fairmount Bank from September 2005 until September 2009, when she
became Vice President, Chief Financial Officer and Treasurer. From 1998 until June 2005, she served as Senior Vice President and Chief
Financial Officer of The Bank of Delmarva, Salisbury, Maryland and as Vice President and Secretary of Delmar Bancorp, the holding company
for The Bank of Delmarva.

Meetings and Committees of the Board of Directors
     We conduct business through meetings of our board of directors and its committees. During the year ended September 30, 2009, the
board of directors of Fairmount Bank met 13 times.

     The board of directors of Fairmount Bancorp, Inc. will establish an audit committee, a compensation committee, and a nominating and
corporate governance committee prior to the closing of the conversion.

      The audit committee will consist of Messrs. Yanke and Elliott and Ms. Craig. 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 will be independent in accordance with the listing standards of the Nasdaq Stock Market. The board of directors of
Fairmount Bancorp, Inc. has determined that William G. Yanke is an ―audit committee financial expert‖ under the rules of the Securities and
Exchange Commission.

      The compensation committee will consist of Messrs. Yanke and Elliott and Ms. Craig. The compensation committee will be responsible
for human resources policies, salaries and benefits, incentive compensation, executive development and management succession planning.
Each member of the compensation committee will be independent in accordance with the listing standards of the Nasdaq Stock Market.

      The nominating and corporate governance committee will consist of Messrs. Yanke and Elliott and Ms. Craig. The nominating and
corporate governance committee will be responsible for identifying individuals qualified to become board members and recommending a group
of nominees for election as directors at each annual meeting of stockholders, ensuring that the board and its committees have the benefit of
qualified and experienced independent directors, and developing corporate governance policies and procedures. Each member of the
nominating and corporate governance committee will be independent in accordance with the listing standards of the Nasdaq Stock Market.

      Each of these committees will operate under a written charter, which governs its composition, responsibilities and operations.

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Corporate Governance Policies and Procedures
      In addition to establishing committees of the board of directors, Fairmount Bancorp, Inc. will adopt policies governing the activities of
both Fairmount Bancorp, Inc. and Fairmount Bank, including a corporate governance policy and a code of business conduct and ethics. The
corporate governance policy will set forth:
        •     the duties and responsibilities of each director;
        •     the composition, responsibilities and operation of the board of directors;
        •     the establishment and operation of board committees, including audit, nominating and compensation committees;
        •     succession planning;
        •     convening executive sessions of independent directors;
        •     the board of directors’ interaction with management and third parties; and
        •     the evaluation of the performance of the board of directors and the chief executive officer.

      Fairmount Bancorp, Inc. will adopt a code of ethics that applies to its principal executive officer, principal financial officer, principal
accounting officer and persons performing similar functions. The code of ethics is 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.

Directors Compensation
     Director Summary Compensation Table. The following table sets forth the compensation paid to our directors for the fiscal year ended
September 30, 2009, except for Mr. Solomon who is in the summary compensation table below.

                                                                                               Fees
                                                                                             earned or
                                                                                              paid in              All other
      Name                                                                                     cash              Compensation                 Total
      William G. Yanke                                                                       $ 13,600            $       —                  $ 13,600
      James E. Elliott                                                                          9,450                    —                     9,450
      Edward J. Lally                                                                           8,350                 18,928 (1)              27,278
      Mary R. Craig                                                                             7,150                    —                     7,150

(1)    Payment for printing services to Fairmount Bank.

      Director Fees . Each of the individuals who serves as a director of Fairmount Bancorp, Inc. also serves as a director of Fairmount Bank
and earns director and committee fees in that capacity. Each director other than the chairman is paid $600 for each board meeting attended. The
chairman is paid $900 for each meeting attended. Each member of the audit committee, consisting of Messrs. Yanke and Elliott and Ms. Craig,
receives $300 per meeting attended.

Executive Officer Compensation
      Summary Compensation Table. The following table sets forth for the fiscal year ended September 30, 2009, certain information as to
the total compensation paid by Fairmount Bank to Joseph M. Solomon, its principal executive officer. No other executive officer of Fairmount
Bank received total compensation exceeding $100,000 for the 2009 fiscal year.

                                                                  Fiscal                                                 All Other
Name and Principal Position                                       Year           Salary(1)               Bonus         Compensation                   Total
Joseph M. Solomon                                                 2009          $ 130,279          $ 24,428            $        1,352 (2)      $ 156,059
     President and Chief Executive Officer
                                                                  2008          $ 125,024          $ 13,712            $         —             $ 138,736

(1)    Includes director fees of $7,300 in 2009 and $7,150 in 2008.
(2)    Consists of matching contributions under 401(k) plan.

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Annual Cash Incentives
      We use annual cash incentives as a short-term incentive to drive achievement of our annual performance goals.

      The annual cash incentive focuses on the achievement of annual financial goals and awards in cash. It is designed to:
        •    support our strategic business objectives;
        •    promote the attainment of specific financial goals;
        •    reward achievement of specific performance objectives; and
        •    encourage teamwork.

      Cash bonuses, if any, are entirely discretionary, based on an annual assessment of Fairmount Bank’s performance at year-end. Annual
cash bonus incentives are designed to provide competitive levels of compensation based upon the experience, duties and scope of
responsibilities of executives and other employees. The size of an annual cash bonus incentives is influenced by these factors, as well as
individual performance. Annual cash incentives are accrued for expected levels of performance, with upside opportunities for superior
performance, subject to the discretion of the Compensation Committee. Annual cash bonus incentive awards are contingent upon employment
with Fairmount Banks through the end of the fiscal year.

Benefit Plans
      Current Employment Agreement. Fairmount Bank has entered enter into an employment agreement with Mr. Solomon. The agreement
with Mr. Solomon has a term of three years. On the anniversary of the agreement, the agreement may be extended for an additional year by the
board . Under the agreement, the base salary for Mr. Solomon currently is $125,580. Mr. Solomon’s base salary is reviewed at least annually
and may be increased. In addition to the base salary, the agreement provides for, among other things, inclusion in discretionary bonuses that the
board may award from time to time to senior management employees, retirement and medical plans, customary fringe benefits, vacation and
sick leave.

      The employment agreement provides for termination for just cause at any time. If the agreement is terminated for just cause,
Mr. Solomon would not be entitled to any further compensation or other benefits after such a termination. In the event termination is without
just cause and not in connection with a change in control, Mr. Solomon would be entitled to receive the greater of a continuation of his salary
through the remaining term of the employment agreement or the severance benefit payable in connection with a change in control (described
below), and at Mr. Solomon’s election, either cash in an amount equal to the cost to him of obtaining health, life, disability, and other benefits
that he would have been eligible to participate in through the employment agreement’s expiration date or continued participation in such
benefit plans through such date.

      In the event of Mr. Solomon’s termination of employment for ―good reason‖ in connection with or within 12 months after any change in
control of Fairmount Bank or Fairmount Bancorp, Inc., he would be entitled to receive an amount equal to the difference between 2.99 times
his ―base amount,‖ as defined in Section 280G(b)(3) of the Internal Revenue Code, and the sum of any other parachute payments, as defined in
Section 280G(b)(2) of the Internal Revenue Code, that he receives on account of the change in control. ―Good reason‖ includes: (i) without
Mr. Solomon’s consent, a material reduction of his then base compensation; (ii) without Mr. Solomon’s consent, a material diminution in his
authority, duties or responsibilities; (iii) material diminution in the authority, duties or responsibilities of the supervisor to whom Mr. Solomon
reports; (iv) a relocation of the principal executive office more than 30 miles; or (v) the failure of Fairmount Bank to obtain the assumption of
and agreement to perform the employment agreement by any successor.

     The employment agreement also provides that, in the event of a constructive discharge of Mr. Solomon without a change in control, he
may terminate his employment and receive the compensation and benefits that are payable upon termination without just cause.

      New Employment Agreements . Fairmount Bank intends to enter into new employment agreements with Mr. Solomon, to be effective
upon completion of the conversion to stock form. Also upon completion of the conversion, Fairmount Bancorp, Inc. will enter into a separate
employment agreement with Mr. Solomon, which will have essentially identical provisions as the new Fairmount Bank agreement, except that
the employment agreement will provide that Fairmount Bancorp, Inc. will make any payments not made by Fairmount Bank under its
agreement with Mr. Solomon and that

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Mr. Solomon will not receive any duplicate payments. Our continued success depends to a significant degree on the skills and competence of
our president and chief executive officer, and the employment agreements are intended to ensure that we maintain a stable management base
following the offering. The discussion below addresses the new employment agreements for Mr. Solomon with Fairmount Bank and Fairmount
Bancorp, Inc.

      The employment agreements each provide for three-year terms, subject to annual renewal by the board of directors for an additional year
beyond the then-current expiration date. The initial aggregate base salary under the employment agreements is $125,580. We and Fairmount
Bank will apportion between us the aggregate base salary, based upon the services rendered by Mr. Solomon to us and to Fairmount Bank. The
agreements also provide for participation in employee benefit plans and programs maintained for the benefit of senior management personnel,
including discretionary bonuses, participation in stock-based benefit plans, and certain fringe benefits as described in the agreements.

       Upon termination of Mr. Solomon’s employment for cause, as defined in each of the agreements, he would receive no further
compensation or benefits under the agreements. If we terminate Mr. Solomon for reasons other than for cause or if he terminates voluntarily
under specified circumstances that constitute constructive termination, he will receive an amount equal to the base salary and cash bonus and
employer contributions to benefit plans that would have been payable for the remaining term of the agreement. We will also continue to pay for
his life, health and dental coverage for up to three years, with the executive responsible for his share of the employee premium.

      If Mr. Solomon terminates employment for any reason other than for cause within 12 months following a change in control, he will
receive the greater of (a) the amount he would have received if we terminated him for a reason other than for cause or if he voluntarily
terminated under specified circumstances that constitute constructive termination (as described in the immediately preceding paragraph), or
(b) three times his prior five-year average of taxable compensation less one dollar. We will also continue to pay for his life, health an dental
coverage for up to three years.

Change in Control Severance Agreement
      Upon completion of the conversion, we intend to enter into change in control severance agreements with two of our employees, Jodi L.
Beal, our Vice President, Chief Financial Officer and Treasurer, and Lisa A. Cuddy, our Vice President-Bank Operations. The discussion under
this heading describes the material provisions under these change in control severance agreements.

      We expect to enter into these agreements because the banking industry has been consolidating for a number of years, and we do not want
our key employees distracted by a rumored or actual change in control. Further, if a change in control should occur, we want our key
employees to be focused on the business of the organization and the interests of stockholders. In addition, we think it is important that our key
employees can react neutrally to a potential change in control and not be influenced by personal financial concerns. We believe these
agreements are consistent with market practice and will assist us in retaining our talented employees.

      Under these agreements, Ms. Beal and Ms. Cuddy will be entitled to collect severance benefits not in excess of 12 months base salary in
the event that (i) the employee voluntarily terminates employment within 90 days of an event that both occurs during a protected period and
constitutes good reason, (ii) the employee’s employment is terminated for any reason other than just cause during a protected period, or (iii) the
employee voluntarily terminates employment for any reason other than just cause within 30 days after a change in control, provided that any
such termination constitutes a separation from service. The ―protected period‖ is the period beginning three months before a change in control
and ending on the later of the third anniversary of the change in control or the expiration date of the agreement. The severance payment is one
year’s base salary.

      401(k) Plan. Fairmount Bank has established a tax-advantaged safe harbor 401(k) program for its employees in order to encourage them
to save for their retirement. Fairmount Bank pays all administrative expenses and provides a 100% employee match up to 4% of a participating
employee’s annual salary. The 401(k) Plan will not invest in Fairmount Bancorp, Inc. common stock.

Stock Benefit Plans
      Employee Stock Ownership Plan and Trust . We intend to implement an employee stock ownership plan in connection with the stock
offering. Employees who are at least 21 years old with at least one year of employment with Fairmount Bank will be eligible to participate. As
part of the stock offering, the employee stock ownership plan trust intends to borrow funds from Fairmount Bancorp, Inc. and use those funds
to purchase a number of shares equal to 8% of the common stock to be issued. Collateral for the loan will be the common stock purchased by
the employee stock ownership plan. The loan will be

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repaid principally from discretionary contributions by Fairmount Bank to the employee stock ownership plan over a period of up to 10 years.
The loan documents will provide that the loan may be repaid over a shorter period, without penalty for prepayments. We anticipate that the
interest rate on the loan will equal the prime interest rate at the closing of the stock offering, and will adjust annually at the beginning of each
calendar year. Shares purchased by the employee stock ownership plan will be held in a suspense account for allocation among participants as
the loan is repaid.

      Shares released from the suspense account will be allocated among employee stock ownership plan participants on the basis of
compensation in the year of allocation. Benefits under the plan will vest at the rate of 20% per year, and become fully vested upon completion
of six years of service. Credit will be given for vesting purposes to participants for years of service with Fairmount Bank prior to the adoption
of the plan, up to five years. A participant’s interest in his account under the plan will also fully vest in the event of termination of service due
to a participant’s early retirement, normal retirement, death, disability, or upon a change in control (as defined in the plan). Vested benefits will
be payable in a lump sum or by payment in a series of equal annual installments over a period of five years, in the form of common stock and,
to the extent the participant’s account contains cash, benefits will be paid in cash, unless the participant elects to receive his entire vested
interest in the form of stock. Fairmount Bank’s contributions to the employee stock ownership plan are discretionary, subject to the loan terms
and tax law limits. Therefore, benefits payable under the employee stock ownership plan cannot be estimated. Pursuant to SOP 93-6, we will be
required to record compensation expense each year in an amount equal to the fair market value of the shares released from the suspense
account. In the event of a change in control, the employee stock ownership plan will terminate.

Transactions with Certain Related Persons
       Loans and Extensions of Credit . The Sarbanes-Oxley Act of 2002 generally prohibits us from making loans to our executive officers
and directors, but it contains a specific exemption from such prohibition for loans made by Fairmount Bank to our 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 or repayment or present other
unfavorable features. Fairmount Bank is therefore prohibited from making any loans or extensions of credit to executive officers and directors
at different rates or terms than those offered to the general public, except for loans made under a benefit program generally available to all
other employees and that does not give preference to any executive officer or director over any other employee. Fairmount Bank is in
compliance with these federal regulations with respect to its loans and extensions of credit to executive officers and directors, and all loans and
extensions of credit made to these individuals are made on substantially the same terms, including interest-rates and collateral, as those made to
individuals unrelated to Fairmount Bank.

     In addition, loans made to a director or executive officer must be approved in advance by a majority of the disinterested members of the
board of directors. The aggregate amount of our loans to our officers and directors and their related entities was $694,000 at September 30,
2009. As of September 30, 2009, these loans were performing according to their original terms.

      All loans made by Fairmount Bank to executive officers, directors, immediate family members of executive officers and directors, or
organizations with which executive officers and directors are affiliated, were made in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to Fairmount
Bank, and did not present any unusual risk of collectability or have any other unfavorable features. Fairmount Bank is in compliance with these
federal regulations with respect to its loans and extensions of credit to executive officers and directors.

      Other Transactions . Since October 1, 2006, there have been no transactions, and there are no currently proposed transactions, in which
we were or are to be a participant and the amount involved exceeds of $120,000, and in which any of our executive officers and directors had
or will have a direct or indirect material interest.

Benefits to be Considered Following Completion of the Conversion
      We intend to adopt and request stockholder approval of one or more stock-based incentive plans, including a stock option plan and a
stock recognition and retention plan, no earlier than six months after the completion of the conversion. The stock option plan and stock
recognition and retention plan may be established as separate plans or part of a single stock-based incentive plan.

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      The following table summarizes the number of shares of common stock underlying, and aggregate dollar value of, grants that are
available under the stock recognition and retention plan and the stock option plan if such plans are adopted within one year following the
completion of the conversion and the offering. The table shows the dilution to stockholders if all these shares are issued from authorized but
unissued shares, instead of shares purchased in the open market. The table also sets forth the number of shares of common stock to be acquired
by the employee stock ownership plan for allocation to all employees. A portion of the stock grants shown in the table below may be made to
non-management employees.

                                                                                                                                   Dilution
                                                                                                                                  Resulting
                                                                                                                                    From
                                                                                                                                  Issuance
                                                                                                                                  of Shares
                                                                                                                                  for Stock
                                                                                                                                   Benefit
                                                           Number of Shares to be Granted or Purchased                              Plans                            Value of Grants (1)
                                                                                                     As a
                                                                                                 Percentage
                                                         At           At                         of Common                                                  At              At
                                                      Minimum     Maximum            At            Stock to                                             Minimum         Maximum               At
                                                         of           of          Adjusted       be Issued in                                               of              of             Adjusted
                                                      Offering     Offering      Maximum              the                                                Offering        Offering          Maximum
                                                       Range        Range         of Range       Offering (2)                                             Range           Range            of Range
Employee stock ownership plan                            34,000       46,000         52,900                8.00 %                        — %            $ 340,000       $ 460,000        $     529,000
Stock recognition and retention plan                     17,000       23,000         26,450                4.00 %                        3.85 %            170,000         230,000             264,500
Stock option plan                                        42,500       57,500         66,125               10.00 %                        9.09 %            170,850         231,150             265,823

Total                                                     93,500         126,500          145,475                 22.00 %               12.28 %         $ 680,850       $ 921,150        $   1,059,323



(1)     The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For purposes of this table, the fair value of shares underlying the
        employee stock ownership plan and the recognition and retention plan is assumed to be the same as the offering price of $10.00 per share. The fair value of stock options has been
        estimated at $4.02 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; dividend yield
        of 0.00%; an expected option life of 10 years; a risk-free interest rate of 3.31%; and a volatility rate of 22.35% based on an index of publicly traded thrift institutions. The actual expense
        of the stock option plan will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used in the option
        pricing model ultimately adopted, which may or may not be Black-Scholes.
(2)     The stock option plan and stock recognition and retention plan may award a greater number of options and shares, respectively, if the plans are adopted more than 12 months after the
        completion of the conversion.

       As noted above, the actual value of restricted stock grants will be determined based on their fair value (the market price of shares of
common stock of Fairmount Bancorp, Inc.) as of the date grants are made. The stock recognition and retention plan, which is subject to
stockholder approval, cannot be implemented until at least six months after the completion of the conversion. The following table presents the
total value of all shares to be available for award and issuance under the stock recognition and retention plan, assuming the shares for the plan
are purchased or issued in a range of market prices from $8.00 per share to $14.00 per share at the time of the grant.

                                                                                                                                                                                      26,450 Shares
                                                                                            17,000 Shares               20,000 Shares                 23,000 Shares                     Awarded
                                                                                              Awarded                      Awarded                      Awarded                      at Maximum of
                                                                                           at Minimum of                at Midpoint of               at Maximum of                   Offering Range,
Share Price                                                                                Offering Range               Offering Range               Offering Range                    As Adjusted
$ 8.00                                                                                    $         136,000            $        160,000             $        184,000             $           211,600
 10.00                                                                                              170,000                     200,000                      230,000                         264,500
 12.00                                                                                              204,000                     240,000                      276,000                         317,400
 14.00                                                                                              238,000                     280,000                      322,000                         370,300

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      The grant-date fair value of the options granted under the stock option plan will be based, in part, on the price of shares of common stock
of Fairmount Bancorp, Inc. at the time the options are granted, which, subject to stockholder approval, cannot be implemented until at least six
months after the completion of the conversion. The value will also depend on the various assumptions utilized in the option-pricing model
ultimately adopted. The following table presents the total estimated value of the options to be available for grant under the stock option plan,
assuming the range of market prices for the shares are $8.00 per share to $14.00 per share at the time of the grant.

                      Grant-                                                                                                       66,125 Options at
                     Date Fair              42,500 Options at            50,000 Options at            57,500 Options at              Maximum of
 Exercise            Value Per                Minimum of                    Midpoint of                 Maximum of                     Range, As
  Price               Option                     Range                        Range                        Range                       Adjusted
$ 8.00              $     3.22          $            136,850         $            161,000         $            185,150         $            212,923
 10.00                    4.02                       170,850                      201,000                      231,150                      265,823
 12.00                    4.83                       205,275                      241,500                      277,725                      319,384
 14.00                    5.63                       239,275                      281,500                      323,725                      372,284

      The tables presented above are provided for informational purposes only. There can be no assurance that our stock price will not
trade below $10.00 per share. Before you make an investment decision, we urge you to carefully read this prospectus, including, but
not limited to, the section entitled “Risk Factors” beginning on page .

      Stock Option Plan. If adopted within one year of the conversion and approved by stockholders, the stock option plan would reserve an
amount equal to 10% of the shares of common stock issued in the offering for issuance upon exercise of stock options, which would amount to
42,500 shares, 50,000 shares, 57,500 shares and 66,125 shares at the minimum, midpoint, maximum and adjusted maximum of the offering
range, respectively. If we adopt the stock option plan after one year following the completion of the conversion, we may grant options in an
amount greater than 10% of the shares of common stock issued in the offering. We have not yet determined whether we will present this plan
for stockholder approval within 12 months or more than 12 months following the completion of the conversion. No options would be granted
under the new stock option plan until stockholder approval of the plan is received. In the event that shares underlying options come from
authorized but unissued shares of common stock, stockholders would experience dilution of approximately 9.09% of their ownership interest in
Fairmount Bancorp, Inc. We will have to recognize compensation expense for accounting purposes ratably over the vesting period, equal to the
fair value of the options on the original grant date.

      The exercise price of the options granted under the stock option plan will be equal to the fair market value of Fairmount Bancorp, Inc.
common stock on the date of grant of the stock options. If the stock option plan is adopted within one year following the conversion, options
may vest no faster than 20% per year beginning 12 months after the date of grant. Options granted under the stock option plan would be
adjusted for capital changes such as stock splits and stock dividends. Awards will be 100% vested upon termination of employment due to
death, disability or following a change in control, and if the stock option plan is adopted more than one year after the conversion, awards would
be 100% vested upon normal retirement. Under Office of Thrift Supervision regulations, if the stock option plan is adopted within one year of
the conversion, no individual officer may receive more than 25% of the awards under the plan, no non-employee director may receive more
than 5% of the awards under the plan and all non-employee directors as a group may receive in the aggregate no more than 30% of the awards
under the plan.

      The stock option plan would be administered by a committee of non-employee members of the board of directors of Fairmount Bancorp,
Inc. Options granted under the stock option plan to employees may be ―incentive‖ stock options, which are designed to result in a beneficial tax
treatment to the employee but no tax deduction to Fairmount Bancorp, Inc. Non-qualified stock options may also be granted to employees
under the stock option plan, and will be granted to the non-employee directors who receive stock options. In the event an option recipient
terminates his or her employment or service as an employee or director, the options would terminate after certain specified periods following
termination.

      Stock Recognition and Retention Plan. If adopted within one year of the conversion and approved by stockholders, the stock recognition
and retention plan would reserve an amount equal to 4% of the shares of common stock sold in the offering, or 17,000 shares, 20,000 shares,
23,000 shares and 26,450 shares at the minimum, midpoint, maximum and adjusted maximum of the offering range, respectively. If we adopt
the recognition and retention plan after one year following the completion of the conversion, we may grant shares in an amount greater than 4%
of the shares of common stock issued in the offering. We have not yet determined whether we will present this plan for stockholder approval
within 12 months or more than 12 months following the completion of the conversion. We must recognize an expense for shares of common
stock

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awarded over their vesting period at the fair market value of the shares on the date they are awarded. The recipients will be awarded shares of
common stock under the stock recognition and retention plan at no cost to them. No awards would be made under the stock recognition and
retention plan until the plan is approved by stockholders. If the shares awarded under the stock recognition and retention plan come from
authorized but unissued shares of the common stock totaling 4% of the shares sold in the offering, stockholders would experience dilution of
approximately 3.85% in their ownership interest in Fairmount Bancorp, Inc.

      Awards granted under the stock recognition and retention plan would be nontransferable and nonassignable. Under Office of Thrift
Supervision regulations, if the stock recognition and retention plan is adopted within one year following the conversion, the shares of common
stock which are subject to an award may vest no faster than 20% per year beginning 12 months after the date of grant of the award. Awards
would be adjusted for capital changes such as stock dividends and stock splits. Awards would be % vested upon termination of employment
or service due to death, disability or following a change-in-control, and if the stock recognition and retention plan is adopted more than one
year after the conversion, awards also would be 100% vested upon normal retirement. Under Office of Thrift Supervision rules, if the stock
recognition and retention plan is adopted within one year of the conversion, no individual officer may receive more than 25% of the awards
under the plan, no non-employee director may receive more than 5% of the awards under the plan, and all non-employee directors as a group
may receive no more than 30% of the awards under the plan in the aggregate.

      The recipient of an award will recognize income equal to the fair market value of the stock earned, determined as of the date of vesting,
unless the recipient makes an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, to be taxed earlier. The amount
of income recognized by the recipient would be a deductible expense of Fairmount Bancorp, Inc. for tax purposes.

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                                    SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

      The following table sets forth information regarding intended common stock subscriptions by each of the directors and executive officers
of Fairmount Bank and their associates, and by all directors and executive officers as a group. In the event the individual maximum purchase
limitation is increased, persons subscribing for the maximum amount may increase their purchase order. Directors and executive officers will
purchase shares of common stock at the same $10.00 purchase price per share and on the same terms as other purchasers in the offering. This
table excludes shares of common stock to be purchased by the employee stock ownership plan, as well as any recognition and retention plan
awards or stock option grants that may be made no earlier than six months after the completion of the offering. The directors and officers have
indicated their intention to subscribe in the offering for an aggregate of $650,000 of shares of common stock, equal to 15.29% of the number of
shares of common stock to be sold in the offering at the minimum of the offering range, and 11.31% of the shares of common stock to be sold
at the maximum of the offering range, assuming shares are available. Purchases by directors, executive officers and their associates will be
included in determining whether the required minimum number of shares has been subscribed for in the offering. The shares being acquired by
the directors, executive officers and their associates are being acquired for investment purposes, and not with a view towards resale.

                                                                                                                                       Percent
                                                                                        Number        Aggregate                          at
                                                                                          of          Purchase        Percent at       Maximu
Name                                                                                    Shares          Price         Minimum            m
Joseph M. Solomon                                                                        15,000     $ 150,000               3.53 %       2.61 %
William G. Yanke                                                                         10,000       100,000               2.35         1.74
James E. Elliott                                                                         15,000       150,000               3.53         2.61
Mary R. Craig                                                                            10,000       100,000               2.35         1.74
Edward J. Lally                                                                           5,000        50,000               1.18         0.87
Jodi L. Beal                                                                             10,000       100,000               2.35         1.74
All directors and executive officers as a group (six persons)                            65,000     $ 650,000             15.29 %       11.31 %


      Includes purchases by the individual’s spouse and other relatives of the named individual living in the same household. The above named
individuals are not aware of any other purchases by a person who, or entity which, would be considered an associate of the named individuals
under the plan of conversion.


                                                    THE CONVERSION AND OFFERING

General
      Fairmount Bank’s board of directors has approved the plan of conversion. The plan of conversion must also be approved by its members.
A special meeting of members (depositors) has been called for this purpose. The Office of Thrift Supervision has conditionally approved the
plan of conversion; however, such approval does not constitute a recommendation or endorsement of the plan of conversion by that agency.

      Fairmount Bank’s board of directors adopted the plan of conversion on October 21, 2009. Pursuant to the plan of conversion, Fairmount
Bank will convert from the mutual form (no stockholders) of organization to the fully stock form, and we will sell shares of common stock to
the public in our offering. In effecting the conversion, we will organize a new Maryland stock holding company named Fairmount Bancorp,
Inc. When the conversion is completed, all of the capital stock of Fairmount Bank will be owned by Fairmount Bancorp, Inc., and all of the
common stock of Fairmount Bancorp, Inc. will be owned by public stockholders.

      We intend to retain between $1,775,000 and $2,525,000 of the net proceeds of the offering, or $2,956,250 if the offering range is
increased by 15%, and to contribute the balance of the net proceeds to Fairmount Bank. The conversion will be consummated only upon the
issuance of at least 425,000 shares of our common stock offered pursuant to the plan of conversion.

      The plan of conversion provides that we will offer shares of common stock for sale in the subscription offering to eligible account
holders, our tax-qualified employee benefit plans, including our employee stock ownership plan, supplemental eligible account holders and
other members. If all shares are not subscribed for in the subscription offering, we may, in our discretion, offer common stock for sale in a
community offering to members of the general public, with a preference given to natural persons residing in the Maryland counties of
Baltimore and Harford and the City of Baltimore.

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      We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the community
offering. The community offering, if any, may begin at the same time as, during, or after the subscription offering, and must be completed
within 45 days after the completion of the subscription offering unless otherwise extended by us with the approval of the Office of Thrift
Supervision. See ―—Community Offering.‖

      We also may offer for sale shares of common stock not purchased in the subscription or community offering through a syndicated
community offering to be managed by Stifel, Nicolaus & Company, Incorporated. For a complete description of the syndicated community
offering, see ―—Syndicated Community Offering‖ herein.

      We determined the number of shares of common stock to be offered in the offering based upon an independent valuation of the estimated
pro forma market value of Fairmount Bancorp, Inc. All shares of common stock to be sold in the offering will be sold at $10.00 per share.
Investors will not be charged a commission to purchase shares of common stock. The independent valuation will be updated and the final
number of the shares of common stock to be issued in the offering will be determined at the completion of the offering. See ―—Determination
of Share Price and Number of Shares to be Issued‖ for more information as to the determination of the estimated pro forma market value of the
common stock.

      The following is a brief summary of the conversion. We recommend reading the plan in its entirety for more information. A copy of the
plan of conversion is available for inspection at the home office of Fairmount Bank, and at the Southeast Regional and the Washington, D.C.
offices of the Office of Thrift Supervision. The plan of conversion is also filed as an exhibit to Fairmount Bank’s application to convert from
mutual to stock form of which this prospectus is a part, copies of which may be obtained from the Office of Thrift Supervision. See ―Where
You Can Find Additional Information.‖

Reasons for the Conversion and Offering
      Our primary reasons for converting Fairmount Bank to the stock form of organization and raising additional capital through the offering
are to:
        •    provide a larger capital cushion for asset growth, which will primarily be realized through existing operations;
        •    support growth and diversification of operations, products and services to transition Fairmount Bank into a full-service community
             bank;
        •    improve our overall capital and competitive position;
        •    increase Fairmount Bank’s loans to one borrower limit and allow Fairmount Bank to make larger loans, including larger
             commercial real estate loans;
        •    provide additional financial resources to pursue branch expansion and possible future acquisition opportunities, although we have
             no current arrangements or agreements with respect to any such branches or acquisitions;
        •    provide better capital management tools, including the ability to pay dividends and to repurchase shares of our common stock,
             subject to market conditions; and
        •    attract and retain qualified directors, officers and other employees by establishing stock-based compensation plans including a
             stock option plan, a stock recognition and retention plan and an employee stock ownership plan.

      The offering is expected to provide local customers and other residents with an opportunity to become equity owners of Fairmount
Bancorp, Inc., consistent with the objective of being a locally-owned financial institution serving local financial needs. The board and
management believe that, through local stock ownership, purchasers of our stock will seek to enhance our financial success by consolidating
their banking business in, and referring prospective customers to, Fairmount Bank.

      In the stock holding company structure, we will have easier access to the capital markets and we will have greater flexibility in
structuring mergers and acquisitions. Our current mutual structure prevents us from offering shares of our common stock as consideration for a
merger or acquisition. Potential sellers often want stock for at least part of the acquisition consideration. Our new stock holding company
structure will enable us to offer stock or cash consideration, or a combination thereof, and will therefore enhance our ability to compete with
other bidders when acquisition opportunities arise.

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Approvals Required
      The affirmative vote of a majority of the total eligible votes of our members at the special meeting of members is required to approve the
plan of conversion. The plan of conversion also must be approved by the Office of Thrift Supervision, which has given its conditional approval.

      A special meeting of members (depositors) to consider and vote upon the plan of conversion has been set for                 , 2010.

Effects of Conversion on Depositors, Borrowers and Members
      Continuity . While the conversion is being accomplished, our normal business of accepting deposits and making loans will continue
without interruption. We will continue to be a federally chartered savings association and will continue to be regulated by the Office of Thrift
Supervision. After the conversion, we will continue to offer existing services to depositors, borrowers and other customers. The directors
serving Fairmount Bank at the time of the conversion will be the directors of Fairmount Bank and of Fairmount Bancorp, Inc., a Maryland
corporation, after the conversion.

      Effect on Deposit Accounts . Pursuant to the plan of conversion, each depositor of Fairmount Bank at the time of the conversion will
automatically continue as a depositor after the conversion, and the deposit balance, interest rate and other terms of such deposit accounts will
not change as a result of the conversion. Each such account will be insured by the Federal Deposit Insurance Corporation to the same extent as
before the conversion. Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.

      Effect on Loans . No loan outstanding from Fairmount Bank will be affected by the conversion, and the amount, interest rate, maturity
and security for each loan will remain as it was contractually fixed prior to the conversion.

      Effect on Voting Rights of Members . At present, all of our depositors are members of, and have voting rights in, Fairmount Bank as to
all matters requiring membership action. Upon completion of the conversion, depositors will cease to be members of Fairmount Bank and will
no longer have voting rights. Upon completion of the conversion, all voting rights in Fairmount Bank will be vested in Fairmount Bancorp, Inc.
as the sole stockholder of Fairmount Bank. The stockholders of Fairmount Bancorp, Inc. will possess exclusive voting rights with respect to
Fairmount Bancorp, Inc. common stock.

     Tax Effects . We will receive an opinion of counsel or tax advisor with regard to federal and state income tax consequences of the
conversion to the effect that the conversion will not be taxable for federal or state income tax purposes to Fairmount Bank or its members. See
―—Material Income Tax Consequences.‖

       Effect on Liquidation Rights . Each depositor in Fairmount Bank has both a deposit account in Fairmount Bank and a pro rata
ownership interest in the net worth of Fairmount Bank based upon the deposit balance in his or her account. This ownership interest is tied to
the depositor’s account and has no tangible market value separate from the deposit account. This interest may only be realized in the event of a
complete liquidation of Fairmount Bank. Any depositor who opens a deposit account obtains a pro rata ownership interest in Fairmount Bank
without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or
all, respectively, of the balance in the deposit account but nothing for his or her ownership interest in the net worth of Fairmount Bank, which is
lost to the extent that the balance in the account is reduced or closed.

      Consequently, depositors in a mutual savings association normally have no way of realizing the value of their ownership interest, which
has realizable value only in the unlikely event that the association is completely liquidated. If this occurs, the depositors of record at that time,
as owners, would share pro rata in any residual surplus and reserves of Fairmount Bank after other claims, including claims of depositors to the
amounts of their deposits, are paid.

       In the unlikely event that Fairmount Bank were to liquidate after the conversion, all claims of creditors, including those of depositors,
also would be paid first, followed by distribution of the ―liquidation account‖ to depositors as of September 30, 2008
and             ,            who continue to maintain their deposit accounts as of the date of liquidation, with any assets remaining thereafter
distributed to Fairmount Bancorp, Inc. as the holder of Fairmount Bank’s capital stock. Pursuant to the rules and regulations of the Office of
Thrift Supervision, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured
savings institution would not be considered a liquidation and, in such a transaction, the liquidation account would be assumed by the surviving
institution. See ―—Liquidation Rights.‖

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Determination of Share Price and Number of Shares to be Issued
       The plan of conversion and federal regulations require that the aggregate purchase price of the common stock sold in the offering be
based on the appraised pro forma market value of the common stock, as determined by an independent valuation. We have retained Feldman
Financial Advisors, Inc. to prepare an independent valuation appraisal. For its services in preparing the initial valuation, Feldman Financial
Advisors, Inc. will receive a fee of $20,000, and will be reimbursed for its expenses. Feldman Financial Advisors, Inc. will receive an
additional fee of $3,000 for each update to the valuation appraisal. Except for the foregoing, Feldman Financial Advisors, Inc. has not received
any compensation from us during the past two years. We have agreed to indemnify Feldman Financial Advisors, Inc. and its employees and
affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as
independent appraiser, except where such liability results from its negligence or bad faith.

      The independent valuation appraisal considered the pro forma impact of the offering. Consistent with the Office of Thrift Supervision
appraisal guidelines, the appraisal applied three primary methodologies: the pro forma price-to-book value approach applied to both reported
book value and tangible book value; the pro forma price-to-earnings approach applied to reported and core earnings; and the pro forma
price-to-assets approach. The market value ratios applied in the three methodologies were based upon the current market valuations of the peer
group companies identified by Feldman Financial Advisors, Inc., subject to valuation adjustments applied by Feldman Financial Advisors, Inc.
to account for differences between us and our peer group.

     The independent valuation was prepared by Feldman Financial Advisors, Inc. in reliance upon the information contained in this
prospectus, including our financial statements. Feldman Financial Advisors, Inc. also considered the following material factors.
        •    our present and projected results and financial condition;
        •    the economic and demographic conditions in our existing market area;
        •    certain historical, financial and other information relating to us;
        •    a comparative evaluation of our operating and financial characteristics with those of other similarly situated publicly traded savings
             institutions;
        •    the impact of the conversion and the offering on our equity and earnings potential;
        •    our proposed dividend policy;
        •    the aggregate size of the offering of common stock; and
        •    the trading market for securities of comparable institutions and general conditions in the market for such securities.

      Included in the independent valuation were certain assumptions as to our pro forma earnings after the conversion that were utilized in
determining the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return on the net offering
proceeds of 0.96% and purchases in the open market of 4.0% of the common stock issued in the offering by the stock-based benefit plan at the
$10.00 purchase price. See ―Pro Forma Data‖ for additional information concerning these assumptions. The use of different assumptions may
yield different results.

      The independent valuation states that as of November 30, 2009, the estimated pro forma market value of Fairmount Bancorp, Inc. ranged
from $4,250,000 to $5,750,000, with a midpoint of $5,000,000. Our board of directors decided to offer the shares of common stock for a price
of $10.00 per share primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions. The number
of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation range and the
$10.00 price per share, the minimum of the offering range will be 425,000 shares, the midpoint of the offering range will be 500,000 shares and
the maximum of the offering range will be 575,000 shares, or 661,250 shares if the maximum amount is adjusted because of demand for shares
or changes in market conditions.

     The following table presents a summary of selected pricing ratios for Fairmount Bancorp, Inc. and our peer group companies identified
by Feldman Financial Advisors, Inc. Our pro forma price-to-earnings multiple is based on earnings for the twelve months ended September 30,
2009, while information for the peer group companies is based on earnings for the twelve months ended September 30, 2009 or October 31,
2009. Our pro forma price-to-book value and price-to-tangible book value ratios are based on our equity as of September 30, 2009, while
information for the peer group is based on equity as of September 30, 2009 or October 31, 2009. Compared to the average pricing of the peer
group, our pro forma pricing ratios at

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the maximum of the offering range indicated a discount of 23.1% on a price-to-book basis, a discount of 23.9% on a price-to-tangible book
basis and a discount of 24.9% on a price-to-earnings basis. Our board of directors, in reviewing and approving the valuation, considered our pro
forma earnings and the range of price-to-earnings multiples, price-to-book value ratios and price-to-tangible book value ratios at the different
amounts of shares to be sold in the offering. The appraisal did not consider one valuation approach to be more important than the other. Instead,
the appraisal concluded that these ranges represented the appropriate balance of the three approaches to valuing us, and the number of shares to
be sold, in comparison to the peer group institutions. Specifically, in approving the valuation, the board believed that Fairmount Bancorp, Inc.
would not be able to sell its shares at a price-to-book value that was in line with the peer group without unreasonably exceeding the identified
peer group on a price-to-earnings basis. The estimated appraised value and the resulting premium/discount took into consideration the potential
financial impact of the conversion and offering.

                                                                          Pro forma                  Pro forma                   Pro forma
                                                                       price-to-earnings            price-to-book             price-to-tangible
                                                                           multiple                  value ratio              book value ratio
Fairmount Bancorp, Inc. (1)
Minimum                                                                               9.9 x                  43.2 %                         43.2 %
Midpoint                                                                             11.9                    47.7                           47.7
Maximum                                                                              13.9                    51.6                           51.6
Maximum, as adjusted                                                                 16.4                    55.5                           55.5
Valuation of peer group companies using stock prices as
  of November 30, 2009 (2)
Averages                                                                             18.5 x                  67.1 %                         67.8 %
Medians                                                                              16.7                    66.7                           66.8

(1)   Based on Fairmount Bank’s financial data as of and for the twelve months ended September 30, 2009.
(2)   Reflects earnings for the most recent twelve month periods for which data was publicly available.

      Our board of directors reviewed the appraisal report of Feldman Financial Advisors, Inc., including the methodology and the assumptions
used by Feldman Financial Advisors, Inc., and determined that the valuation range was reasonable and adequate. Assuming that the shares are
sold at $10.00 per share in the offering, the estimated number of shares would be between 425,000 at the minimum of the valuation range and
575,000 at the maximum of the valuation range, with a midpoint of 500,000. The purchase price of $10.00 per share was determined by us,
taking into account, among other factors, the requirement under Office of Thrift Supervision regulations that the common stock be offered in a
manner that will achieve the widest distribution of the stock and desired liquidity in the common stock after the offering.

      All of these factors are set forth in the independent valuation. The board of directors also reviewed the methodology and the assumptions
used Feldman Financial Advisors, Inc. in preparing the independent valuation and believes that such assumptions were reasonable. The
offering range may be amended with the approval of the Office of Thrift Supervision, if required, as a result of subsequent developments in the
financial condition of Fairmount Bank or market conditions generally. In the event the independent valuation is updated to amend the pro
forma market value of Fairmount Bancorp, Inc. to less than $4,250,000 or more than $5,750,000, the appraisal will be filed with the Securities
and Exchange Commission by a post-effective amendment to Fairmount Bancorp, Inc.’s registration statement.

       The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of
purchasing shares of our common stock. Feldman Financial Advisors, Inc. did not independently verify our Financial Statements and
other information that we provided to them, nor did Feldman Financial Advisors, Inc. independently value our assets or liabilities. The
independent valuation considers Fairmount Bank as a going concern and should not be considered as an indication of the liquidation
value of Fairmount Bank. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters,
all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the offering will
thereafter be able to sell their shares at prices at or above the $10.00 offering price per share.

      Following commencement of the subscription offering, the maximum of the valuation range may be increased by up to 15%, or up to
$6,612,500, without resoliciting subscribers, which will result in a corresponding increase of up to 15% in the maximum of the offering range
to up to 661,250 shares, to reflect changes in the market and financial conditions, demand for the shares or regulatory considerations. We will
not decrease the minimum of the valuation range and the minimum of the

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offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See ―—Limitations on
Common Stock Purchases‖ as to the method of distribution and allocation of additional shares that may be issued in the event of an increase in
the offering range to fill unfilled orders in the offering.

      If the update to the independent valuation at the conclusion of the offering period results in an increase in the maximum of the valuation
range to more than $6,612,500 and a corresponding increase in the offering range to more than 661,250 shares, or a decrease in the minimum of
the valuation range to less than $4,250,000 and a corresponding decrease in the offering range to fewer than 425,000 shares, after consulting
with the Office of Thrift Supervision, we may terminate the plan of conversion and offering, promptly return with interest at Fairmount Bank’s
passbook savings rate of interest all funds previously delivered to us to purchase shares of common stock, and cancel deposit account
withdrawal authorizations. Alternatively, we may establish a new offering range, extend the offering period and commence a resolicitation of
subscribers or take other actions as permitted by the Office of Thrift Supervision in order to complete the conversion and the offering. In the
event that a resolicitation is commenced, we will notify subscribers of the opportunity to maintain, change or cancel their orders for a specified
period of time. Any resolicitation following the conclusion of the subscription and community offerings would not exceed 45 days unless
further extended by the Office of Thrift Supervision for periods of up to 90 days.

      An increase in the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and our pro forma
stockholders’ equity on a per share basis while increasing pro forma earnings on a per share basis and pro forma earnings and stockholders’
equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership
interest and our pro forma stockholders’ equity on a per share basis, while decreasing pro forma earnings on a per share basis and pro forma
earnings and stockholders’ equity on an aggregate basis. For a presentation of the effects of these changes, see ―Pro Forma Data.‖

      Copies of the independent valuation appraisal report of Feldman Financial Advisors, Inc., including the method and assumptions used in
the appraisal report are available for inspection at our main office and as specified under ―Where You Can Find Additional Information.‖

Subscription Offering and Subscription Rights
       In accordance with the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted
in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock
after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and to the maximum and minimum and
overall purchase limitations set forth in the plan of conversion and as described below under ―—Limitations on Common Stock Purchases.‖

      Priority 1: Eligible Account Holders . Each depositor with aggregate deposit account balances of $50 or more (a ―Qualifying Deposit‖)
on September 30, 2008 (an ―Eligible Account Holder‖) will receive, without payment therefore, nontransferable subscription rights to
purchase, subject to the overall purchase limitations, up to the greater of: (1) 15,000 shares of our common stock; (2) 0.10% of the total number
of shares of common stock issued in the offering; or (3) 15 times the number of subscription shares offered multiplied by a fraction of which
the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposits of all
Eligible Account Holders, subject to the overall purchase limitations. See ―—Limitations on Common Stock Purchases.‖ If there are not
sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a
number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she
subscribed. Thereafter, unallocated shares will be allocated to each Eligible Account Holder whose subscription remains unfilled in the
proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account
Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible
Account Holders, the excess shall be reallocated among those Eligible Account Holders whose subscriptions are not fully satisfied until all
available shares have been allocated.

      To ensure proper allocation of shares of our common stock, each Eligible Account Holder must list on his or her stock order form all
deposit accounts in which he or she has an ownership interest on September 30, 2008. In the event of oversubscription, failure to list an account
could result in fewer shares being allocated than if all accounts had been disclosed. In the event of an oversubscription, the subscription rights
of Eligible Account Holders who are also our directors or executive officers or their associates will be subordinated to the subscription rights of
other Eligible Account Holders to the extent attributable to increased deposits in the twelve months preceding September 30, 2008.

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      Priority 2: Tax-Qualified Plans . Our tax-qualified employee benefit plans, such as our employee stock ownership plan, will receive,
without payment therefore, nontransferable subscription rights to purchase in the aggregate up to 8% of the shares of common stock sold in the
offering.

      Priority 3: Supplemental Eligible Account Holders . To the extent that there are sufficient shares of common stock remaining after
satisfaction of subscriptions by Eligible Account Holders and our tax-qualified employee benefit plans, each depositor with a Qualifying
Deposit on             , who is not an Eligible Account Holder (―Supplemental Eligible Account Holder‖) will receive, without payment
therefore, nontransferable subscription rights to purchase up to the greater of: (1) 15,000 shares of common stock (subject to adjustment);
(2) 0.10% of the total number of shares of common stock issued in the offering; or (3) 15 times the number of subscription shares offered
multiplied by a fraction of which the numerator is the aggregate Qualifying Deposit of the Supplemental Eligible Account Holder and the
denominator is the aggregate Qualifying Deposits of all Supplemental Eligible Account Holders, subject to the overall purchase limitations. See
―—Limitations on Common Stock Purchases.‖ If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so
as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to
the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be
allocated to each Supplemental Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her
Qualifying Deposit bears to the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain
unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess
shall be reallocated among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares
have been allocated.

      To ensure proper allocation of common stock, each Supplemental Eligible Account Holder must list on the stock order form all deposit
accounts in which he or she has an ownership interest at            , . In the event of oversubscription, failure to list an account could result
in fewer shares being allocated than if all accounts had been disclosed.

      Priority 4: Other Members . To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible
Account Holders, our tax-qualified employee benefit plans and Supplemental Eligible Account Holders, each depositor on the voting record
date of            , 2010 who is not an Eligible Account Holder or Supplemental Eligible Account Holder (―Other Members‖) will receive,
without payment therefore, nontransferable subscription rights to purchase up to the greater of: (1) 15,000 shares of common stock; or
(2) 0.10% of the total number of shares of common stock issued in the offering, subject to the overall purchase limitations. See ―—Limitations
on Common Stock Purchases.‖ If there are not sufficient shares available to satisfy all subscriptions, available shares will be allocated on a pro
rata basis based on the size of the order of each Other Member whose order remains unfilled.

      Expiration Date . The Subscription Offering will expire at : .m., Eastern time, on                 , 2010, unless extended by us for up to
45 days or additional periods with the approval of the Office of Thrift Supervision, if necessary. Subscription rights will expire whether or not
each eligible depositor can be located. We may decide to cancel or extend the expiration date of the subscription offering for any reason,
whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights
that have not been exercised prior to the expiration date will become void.

      We will not execute orders until we have received orders to purchase at least the minimum number of shares of common stock. If we
have not received orders to purchase at least 425,000 shares within 45 days after the expiration date of the subscription offering and the Office
of Thrift Supervision has not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be
returned promptly to the subscribers with interest at our passbook savings rate and all deposit account withdrawal authorizations will be
canceled. If an extension beyond is granted by the Office of Thrift Supervision , we will resolicit subscribers as described above. Aggregate
offering extensions may not go beyond              , 2012, which is two years after the date of the special meeting of our members to vote on the
conversion.

Community Offering
      To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of the Eligible Account
Holders, our tax-qualified employee benefit plans, Supplemental Eligible Account Holders and Other Members, we may offer shares pursuant
to the plan of conversion to members of the general public in a community offering. Shares may be offered with a preference to natural persons
residing in the Maryland counties of Baltimore and Harford and the City of Baltimore.

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     Subscribers in the community offering may purchase up to 15,000 shares of common stock (subject to adjustment), subject to the
maximum and overall purchase limitations. See ―—Limitations on Common Stock Purchases.‖ The opportunity to purchase shares of
common stock in the community offering category is subject to our right, in our sole discretion, to accept or reject any such orders in
whole or in part either at the time of receipt of an order or as soon as practicable following the expiration date of the offering.

      If we do not have sufficient shares of common stock available to fill the orders of natural persons residing in the Maryland counties of
Baltimore and Harford or within Baltimore City, we will allocate the available shares among those persons in a manner that permits each of
them, to the extent possible, to purchase the lesser of 100 shares, or the number of shares subscribed for by such person. Thereafter, unallocated
shares will be allocated among natural persons residing in the Maryland counties of Baltimore and Harford and Baltimore City, whose orders
remain unsatisfied on an equal number of shares basis per order.

      The term ―residing‖ or ―resident‖ as used in this prospectus means any person who occupies a dwelling within the Maryland counties of
Baltimore and Harford or within Baltimore City, has a present intent to remain within 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 this presence
within the community is something other than merely transitory in nature. We may utilize deposit or loan records or other evidence provided to
us to decide whether a person is a resident. In all cases, however, the determination shall be in our sole discretion.

      Expiration Date. The community offering may begin during or after the subscription offering, and is currently expected to terminate at
the same time as the subscription offering, and must terminate no more than 45 days following the subscription offering. We may decide to
extend the community offering for any reason and are not required to give purchasers notice of any such extension unless such period extends
beyond            , 2010. These extensions may not go beyond             , 2012, which is two years after the special meeting of our members
to vote on the conversion.

Syndicated Community Offering
       The plan of conversion also provides that, if necessary, 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 through a syndicate of registered
broker-dealers managed by Stifel, Nicolaus & Company, Incorporated as our agent. We call this a syndicated community offering. We expect
that the syndicated community offering will begin as soon as practicable after termination of the subscription offering and the community
offering, if any. We, in our sole discretion, have the right to reject orders in whole or in part received in the syndicated community offering.
Neither Stifel, Nicolaus & Company, Incorporated nor any registered broker-dealer shall have any obligation to take or purchase any shares of
common stock in the syndicated community offering; however, Stifel, Nicolaus & Company, Incorporated has agreed to use its best efforts in
the sale of shares in any syndicated community offering.

      The price at which common stock is sold in the syndicated community offering will be the same price at which shares are offered and
sold in the subscription and community offerings. No person may purchase more than $150,000 (15,000 shares) of common stock in the
syndicated community offering, subject to the maximum and overall purchase limitations. See ―—Limitations on Common Stock Purchases.‖
The syndicated community offering will be completed within 45 days after the expiration of the subscription offering, unless extended by
Fairmount Bank with the approval of the Office of Thrift Supervision.

     The syndicated community offering, if held, will be managed by Stifel, Nicolaus & Company, Incorporated acting as our agent. See
―—Plan of Distribution; Selling Agent Compensation‖ below for a discussion of fees associated with a syndicated community offering. In such
capacity, Stifel, Nicolaus & Company, Incorporated may form a syndicate of other broker-dealers who are Financial Industry Regulatory
Authority member firms. Neither Stifel, Nicolaus & Company, Incorporated nor any registered broker-dealer will have any obligation to take or
purchase any shares of the common stock in the syndicated community offering. The syndicated community offering will be conducted in
accordance with certain Securities and Exchange Commission rules applicable to best efforts offerings. Generally under those rules,

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Stifel, Nicolaus & Company, Incorporated, a broker-dealer, will deposit funds it receives prior to closing from interested investors into a
separate non-interest-bearing bank account. If and when all the conditions for the closing are met, funds for common stock sold in the
syndicated community offering will be promptly delivered to us. If the offering is consummated, but some or all of an interested investor’s
funds are not accepted by us, those funds will be returned to the interested investor promptly, without interest. If the offering is not
consummated, funds in the account will be promptly returned, without interest, to the potential investor. Normal customer ticketing will be
used for order placement. In the syndicated community offering, order forms will not be used.

      If for any reason we cannot effect a syndicated community offering of shares of common stock not purchased in the subscription and
community offerings, or in the event that there is an insignificant number of shares remaining unsold after the subscription, community and
syndicated community offerings, we will try to make other arrangements for the sale of unsubscribed shares, if possible. The Office of Thrift
Supervision must approve any such arrangements. If other purchase arrangements cannot be made, we may terminate the offering and promptly
return all funds; set a new offering range, notify all subscribers and give them the opportunity to confirm, cancel or change their orders; or take
such other action as may be permitted with any required regulatory approval or non-objection.

Limitations on Common Stock Purchases
      The plan of conversion includes the following limitations on the number of shares of common stock that may be purchased in the
offering:
        •    No person may purchase fewer than 25 shares of common stock or more than 15,000 shares, subject to adjustment as described
             below;
        •    Our tax-qualified stock benefit plans, such as our employee stock ownership plan, may purchase in the aggregate up to 10% of the
             shares of common stock issued in the offering;
        •    Except for the tax-qualified employee benefit plans, as described above, no person or entity, together with associates or persons
             acting in concert with such person or entity, may purchase more than 15,000 shares in all categories of the offering combined,
             subject to adjustment as described below; and
        •    The maximum number of shares of common stock that may be purchased in all categories of the offering by our executive officers
             and directors and their associates, in the aggregate, may not exceed % of the shares issued in the offering.

      Depending upon market or financial conditions, our board of directors, with the approval of the Office of Thrift Supervision and without
further approval of our members, may decrease or increase the purchase limitations. If a purchase limitation is increased, subscribers in the
subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large subscribers may be, given the
opportunity to increase their subscriptions up to the then applicable limit. The effect of this type of resolicitation will be an increase in the
number of shares of common stock owned by subscribers who choose to increase their subscriptions. In the event that the maximum purchase
limitation is increased to 5% of the shares sold in the offering, such limitation may be further increased to 9.99%, provided that orders for our
common stock exceeding 5% of the shares sold in the offering shall not exceed in the aggregate 10% of the total shares sold in the offering.

      In the event of an increase in the offering range of up to $       , shares will be allocated in the following order of priority in accordance
with the plan of conversion:
      (1)    to fill our tax-qualified employee benefit plans’ subscriptions for up to 10% of the total number of shares of common stock issued
             in the offering;
      (2)    in the event that there is an oversubscription at the Eligible Account Holder, Supplemental Eligible Account Holder or Other
             Member levels, to fill unfulfilled subscriptions of these subscribers according to their respective priorities; and
      (3)    to fill unfulfilled subscriptions in the community offering, with preference given first to natural persons residing in the Maryland
             counties of Baltimore and Harford and the City of Baltimore.

      The term ―associate‖ of a person means:
      (1)    any corporation or organization, other than Fairmount Bank or a majority-owned subsidiary of Fairmount Bank, of which the
             person is a senior officer, partner or 10% beneficial stockholder;

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      (2)    any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a fiduciary capacity,
             excluding any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a
             fiduciary capacity; and
      (3)    any blood or marriage relative of the person, who either lives in the same home as the person or who is a director or officer of
             Fairmount Bank or Fairmount Bancorp, Inc.

      The term ―acting in concert‖ means:
      (1)    knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not
             pursuant to an express agreement; or
      (2)    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 arrangement, whether written or otherwise.

       We have the right to determine whether prospective purchasers are associates or acting in concert. A person or company that 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 that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with
its trustee or a person who serves in a similar capacity solely for the purpose of determining whether common stock held by the trustee and
common stock held by the employee stock benefit plan will be aggregated.

      Our directors are not treated as associates of each other solely because of their membership on the board of directors. Shares of common
stock purchased in the offering will be freely transferable except for shares purchased by our executive officers and directors and except as
described below. Any purchases made by any associate of Fairmount Bank or Fairmount Bancorp, Inc. for the explicit purpose of meeting the
minimum number of shares of common stock required to be sold in order to complete the offering shall be made for investment purposes only
and not with a view toward redistribution. In addition, under the guidelines of the Financial Industry Regulatory Authority, Inc., members of
the Financial Industry Regulatory Authority and their associates are subject to certain restrictions on transfer of securities purchased in
accordance with subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of
limitations on purchases of shares of our common stock at the time of conversion and thereafter, see ―—Certain Restrictions on Purchase or
Transfer of Our Shares After Conversion‖ and ―Restrictions on Acquisition of Fairmount Bancorp, Inc.‖

Plan of Distribution; Selling Agent Compensation
     We have engaged Stifel, Nicolaus & Company, Incorporated, a registered broker-dealer, as a financial advisor and marketing agent in
connection with the offering of our common stock. In its role as conversion advisor and marketing agent, Stifel, Nicolaus & Company,
Incorporated will assist us in the conversion and offering as follows:
        •    acting as our financial advisor for the conversion and offering;
        •    educating our employees about the conversion and offering;
        •    managing the Stock Information Center and providing administrative services;
        •    targeting our sales efforts, including assisting in the preparation of marketing materials;
        •    soliciting orders for common stock; and
        •    assisting in soliciting votes of Fairmount Bank voting members.

     For these services, Stifel, Nicolaus & Company, Incorporated will receive a success fee of $150,000. We have made an advance payment
of $25,000 to Stifel, Nicolaus & Company, Incorporated.

      The plan of conversion provides that, if necessary, 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 Stifel, Nicolaus & Company,
Incorporated. In such capacity, Stifel, Nicolaus & Company, Incorporated may form a syndicate of other broker-dealers. Neither Stifel,
Nicolaus & Company, Incorporated nor any registered broker-dealer will have any obligation to take or purchase any shares of common stock
in the syndicated community offering; however, Stifel, Nicolaus & Company, Incorporated has agreed to use its best efforts in the sale of
shares in any syndicated community offering. If there is a syndicated community offering, Stifel, Nicolaus & Company, Incorporated will
receive a management

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fee of 1.00% of the aggregate dollar amount of the common stock sold in the syndicated community offering. The total fees payable to Stifel,
Nicolaus & Company, Incorporated and other Financial Industry Regulatory Authority member firms in the syndicated community offering
will not exceed 6.00% of the aggregate dollar amount of the common stock sold in the syndicated community offering.

      In the event we are required to resolicit subscriptions in the subscription offering and community offering, and Stifel, Nicolaus &
Company, Incorporated is required to provide significant additional services in connection with such resolicitation, additional compensation
due to Stifel, Nicolaus & Company, Incorporated shall not exceed $20,000.

       We will also reimburse Stifel, Nicolaus & Company, Incorporated for its expenses associated with this marketing effort, up to a
maximum of $15,000. In addition, we will reimburse Stifel, Nicolaus & Company, Incorporated for its legal fees (including the out-of-pocket
expenses of counsel) up to $50,000. In the event of a syndicated community offering, we will reimburse Stifel, Nicolaus & Company,
Incorporated for all reasonable out-of-pocket expenses incurred in connection with that offering phase. If the plan of conversion and
reorganization is terminated or if Stifel, Nicolaus & Company, Incorporated terminates its agreement with us in accordance with the provisions
of the agreement, Stifel, Nicolaus & Company, Incorporated will receive reimbursement of its reasonable out-of-pocket expenses plus $25,000
for its advisory and administrative services.

      We will indemnify Stifel, Nicolaus & Company, Incorporated 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.

      Some of our directors and executive officers may participate in the solicitation of offers to purchase common stock. These persons will be
reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other regular, full-time employees of
Fairmount Bank may assist in the offering, but only in ministerial capacities, and may provide clerical work in effecting a sales transaction. No
offers or sales may be made by tellers or at the teller counters. All sales activity will be conducted in a segregated or separately identifiable area
of Fairmount Bank’s main office apart from the area accessible to the general public. Investment-related questions of prospective purchasers
will be directed to executive officers or registered representatives of Stifel, Nicolaus & Company, Incorporated. Our other employees have
been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will
rely on Rule 3a4-1 under the Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the
requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers,
directors or employees will be compensated in connection with their participation in the offering.

      In addition, we have engaged Stifel, Nicolaus & Company, Incorporated to act as our records management agent in connection with the
conversion and offering. In its role as records management agent, Stifel, Nicolaus & Company, Incorporated will coordinate with our data
processing contacts and interface with the Stock Information Center to provide the records processing and the proxy and stock order services,
including but not limited to: (1) consolidation of deposit accounts and vote calculation; (2) preparation of information for order forms and
proxy cards; (3) interface with our financial printer; (4) record stock order information; and (5) tabulate proxy votes. For these services, Stifel,
Nicolaus & Company, Incorporated will receive a fee of $15,000 (which may be negotiated in the event unexpected circumstances arise). We
have made an advance payment of $5,000 with respect to this fee. We will also reimburse Stifel, Nicolaus & Company, Incorporated for its
reasonable out-of-pocket expenses associated with its acting as records management agent in an amount not to exceed $5,000.

Offering Deadline
      Expiration Date . The subscription and community offerings will expire at : p.m., Eastern time, on                       , 2010, unless we
extend it for up to 45 days, with the approval of the Office of Thrift Supervision, if required. This extension may be approved by us, in our sole
discretion, without further approval or additional notice to purchasers in the offering. Any extension of the subscription and/or community
offering beyond              ,     would require the Office of Thrift Supervision’s approval. In such event, we would conduct a resolicitation of
subscribers. In a resolicitation, subscribers will be given the opportunity to maintain, change or cancel their stock orders during a specified
resolicitation period. If a written indication of a subscriber’s interest is not received, the stock order will be cancelled and funds will be returned
with interest, and deposit account withdrawal authorizations will be cancelled. If we have not received orders to purchase the minimum number
of shares offered in the offering by the expiration date or any extension thereof, we may terminate the offering and cancel all orders as
described above.

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      To ensure that each purchaser in the subscription and community offerings receives a prospectus at least 48 hours before the expiration
date of the offering in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, as amended, 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 the expiration date. Execution of an order form will
confirm receipt of delivery in accordance with Rule 15c2-8. Order forms will be distributed only with, or preceded by, a prospectus.
Subscription funds will be maintained in a segregated account at Fairmount Bank or at another insured depository institution and will earn
interest at our passbook savings rate, currently 1.00% per annum, from the date of processing.

     We reserve the right in our sole discretion to terminate the offering at any time and for any reason, in which case we will cancel any
deposit account withdrawal orders and promptly return all funds delivered to us, with interest at our passbook savings rate.

      We have the right to reject any order submitted in the 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 conversion.

Procedure for Purchasing Shares in the Subscription and Community Offerings
      Use of Stock Order Forms . In order to purchase shares of common stock in the subscription offering and community offering, you must
complete an order form and remit full payment or appropriate deposit withdrawal authorization. We will not be required to accept photocopied
or facsimilated order forms, or unsigned order forms. We must receive all order forms prior to : p.m., Eastern time, on                    , 2010.
We are not required to accept order forms that are not received by that time, are executed defectively or are received without full payment or
without appropriate withdrawal instructions. We have the right to permit the correction of incomplete or improperly executed order forms or
waive immaterial irregularities. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective
subscriber of any such defects. You may submit your order form and payment by mail using the stock order return envelope provided, by
bringing your order form to our Stock Information Center or by overnight delivery to the indicated address on the order form. Once tendered,
an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject orders received
in the community offering, in whole or in part, at the time of receipt or at any time prior to completion of the offering. If you are ordering
shares in the subscription offering, you must represent that you are purchasing shares for your own account and that you have no agreement or
understanding with any person for the sale or transfer of the shares. Our interpretation of the terms and conditions of the plan of conversion and
of the acceptability of the order forms will be final, subject to the authority of the Office of Thrift Supervision.

      By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account and is not federally
insured or otherwise guaranteed by Fairmount Bank or the federal government, and that you received a copy of this prospectus. However,
signing the order form will not result in you waiving your rights under the Securities Act of 1933 or the Securities Exchange Act of 1934.

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 by:
      (1)    personal check, bank check or money order, payable to Fairmount Bancorp, Inc.; or
      (2)    authorization of withdrawal from the types of Fairmount Bank deposit accounts designated on the stock order form.

      You may not submit cash or wire transfers. Appropriate means for designating withdrawals from deposit accounts at Fairmount Bank are
provided in the order forms. The funds designated must be available in the account(s) at the time the order form is received. A hold will be
placed on these funds, making them unavailable to the depositor. Funds authorized for withdrawal will continue to earn interest within the
account at the contract rate until the offering is completed, at which time the designated withdrawal will be made. Interest penalties for early
withdrawal applicable to certificate accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if
a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be
canceled at the time of withdrawal without penalty and the remaining balance will earn interest at our passbook savings rate subsequent to the

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withdrawal. You may not designate on your stock order form a direct withdrawal from a Fairmount Bank individual retirement account. See the
following section for additional information regarding the use of individual retirement accounts.

      In the case of payments made by personal check, these funds must be available in the account(s). Payments made by check or money
order will be immediately cashed and deposited in a segregated account at Fairmount Bank and/or another insured depository institution and
will earn interest at our passbook savings rate from the date payment is processed until the offering is completed or terminated, at which time a
subscriber will be issued a check for interest earned.

     You may not use a check drawn on a Fairmount Bank line of credit, and we will not accept third-party checks (a check written by
someone other than you) payable to you and endorsed over to Fairmount Bancorp, Inc. If you request that we place a hold on your Fairmount
Bank checking account for the aggregate subscription price, we reserve the right to interpret that as your authorization to treat those funds as if
we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account.

     Once we receive your executed order form, it may not be modified, amended or rescinded without our consent, unless the offering is
terminated or extended beyond          , 2010.

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

      Our employee stock ownership plan will not be required to pay for any shares purchased in the offering until consummation of the
offering, provided there is a loan commitment from an unrelated financial institution or Fairmount Bancorp, Inc. to lend to the employee stock
ownership plan the necessary amount to fund the purchase.

      Regulations prohibit Fairmount Bank from knowingly lending funds or extending credit to any persons to purchase shares of common
stock in the offering.

Using Individual Retirement Account Funds
       If you are interested in using your individual retirement account funds to purchase shares of common stock, you must do so through a
self-directed individual retirement account, such as a brokerage firm individual retirement account. By regulation, Fairmount Bank’ individual
retirement accounts are not self-directed, so they cannot be invested in shares of our common stock. Therefore, if you wish to use your funds
that are currently in a Fairmount Bank individual retirement account, you may not designate on the order form that you wish funds to be
withdrawn from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will have to be
transferred to an independent trustee or custodian account, such as a brokerage account. There will be no early withdrawal or Internal Revenue
Service interest penalties for these transfers. Purchasers interested in using funds in an individual retirement account held at Fairmount Bank or
elsewhere to purchase shares of common stock should contact our Stock Information Center for guidance as soon as possible, preferably at
least two weeks prior to the offering deadline, because processing such transactions takes additional time, and whether such funds can be used
may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use
such funds.

Delivery of Stock Certificates
       Certificates representing shares of common stock issued in the offering will be mailed by regular mail to the persons entitled thereto at
the certificate registration address noted by them on the stock order form, as soon as practicable following consummation of the offering. Any
certificates returned as undeliverable will be held by our transfer agent until claimed by persons legally entitled thereto or otherwise disposed
of in accordance with applicable law. Until certificates for the shares of common stock are available and delivered to purchasers,
purchasers may not be able to sell the shares of common stock that they ordered, even though the common stock will have begun
trading. Your ability to sell the shares of common stock prior to your receipt of the stock certificate will depend on arrangements you
may make with a brokerage firm.

     Other Restrictions . Notwithstanding any other provision of the plan of conversion, no person is entitled to purchase any shares of
common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state ―blue sky‖ regulations, or
would violate regulations or policies of the Financial Industry Regulatory Authority, particularly those regarding free riding and withholding.
We may ask for an acceptable legal opinion from any purchaser as

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to the legality of his or her purchase and we may refuse to honor any purchase order if an opinion is not timely furnished. In addition, we are
not required to offer shares of common stock to any person who resides in a foreign country or in a state of the United States with respect to
which any of the following apply: (a) a small number of persons otherwise eligible to subscribe for shares under the plan of conversion reside
in such state; (b) the issuance of subscription rights or the offer or sale of shares of common stock to such persons would require us, under the
securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify our securities for sale in such
state; or (c) such registration or qualification would be impracticable for reasons of cost or otherwise.

Restrictions on Transfer of Subscription Rights and Shares
       Office of Thrift Supervision regulations prohibit any person with subscription rights, including the Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members, from transferring or entering into any agreement or understanding to transfer the
legal or beneficial ownership of the subscription rights issued under the plan of conversion or the shares of common stock to be issued upon
their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. When registering
your stock purchase on the stock order form, you should not add the name(s) of persons who do not have subscription rights or who qualify
only in a lower subscription offering purchase priority than you do. Doing so may jeopardize your subscription rights. Each person exercising
subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no
agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an
announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise
prior to completion of the offering.

     We intend to pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights,
and we will not honor orders that we believe involve the transfer of subscription rights.

Stock Information Center
      Our office personnel may not, by law, assist with investment-related decisions. If you have any questions regarding the offering, please
call our Stock Information Center, toll-free, at - -             , Monday through Friday between 10:00 a.m. and 4:00 p.m., Eastern time. The
Stock Information Center will be closed weekends and bank holidays. Fairmount Bank will only accept hand-delivered stock order forms and
proxy cards at its office, located at 8216 Philadelphia Road, Baltimore, Maryland 21237.

Liquidation Rights
      In the unlikely event of a complete liquidation of Fairmount Bank prior to the conversion, all claims of creditors of Fairmount Bank,
including those of depositors of Fairmount Bank (to the extent of their deposit balances), would be paid first. Then, if there were any assets of
Fairmount Bank remaining, members of Fairmount Bank would receive those remaining assets, pro rata, based upon the deposit balances in
their deposit account in Fairmount Bank immediately prior to liquidation. In the unlikely event that Fairmount Bank were to liquidate after the
conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution of the ―liquidation account‖ to
certain depositors, with any assets remaining thereafter distributed to Fairmount Bancorp, Inc. as the holder of Fairmount Bank capital stock.
Pursuant to the rules and regulations of the Office of Thrift Supervision, a post-conversion merger, consolidation, sale of bulk assets or similar
combination or transaction with another insured savings institution would not be considered a liquidation and, in these types of transactions, the
liquidation account would be assumed by the surviving institution.

      The plan of conversion provides for the establishment, upon the completion of the conversion, of a special ―liquidation account‖ for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders in an amount equal to the total equity of Fairmount Bank as of
the date of its latest balance sheet contained in this prospectus.

       The purpose of the liquidation account is to provide Eligible Account Holders and Supplemental Eligible Account Holders who maintain
their deposit accounts with Fairmount Bank after the conversion with a liquidation interest in the unlikely event of the complete liquidation of
Fairmount Bank after the conversion. Each Eligible Account Holder and Supplemental Eligible Account Holder that continues to maintain his
or her deposit account at Fairmount Bank, would be entitled, on a complete liquidation of Fairmount Bank after the conversion, to an interest in
the liquidation account prior to any payment to the stockholders of Fairmount Bank. Each Eligible Account Holder and Supplemental Eligible
Account Holder would have an initial interest in the liquidation account for each deposit account, including savings accounts, transaction
accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50 or
more held in Fairmount Bank on September 30, 2008, and December 31, 2009, respectively. Each Eligible Account Holder and Supplemental
Eligible Account Holder would have a pro rata interest in the total liquidation account for each such deposit account, based on the proportion
that the balance of each such deposit account on

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September 30, 2008, and December 31, 2009, respectively, bears to the balance of all deposit accounts in Fairmount Bank on such dates.

      If, however, on any September 30 annual closing date commencing on or after the effective date of the conversion, the amount in any
such deposit account is less than the amount in the deposit account on               , and              , , as applicable, or any other annual
closing date, then the interest in the liquidation account relating to such deposit account would be reduced from time to time by the proportion
of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account
would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible
Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to
such depositor. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account
Holders are satisfied would be distributed to Fairmount Bancorp, Inc., as the sole stockholder of Fairmount Bank.

Material Income Tax Consequences
      Consummation of the conversion is subject to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state
income taxation that the conversion will not be a taxable transaction to Fairmount Bank, Fairmount Bancorp, Inc., Eligible Account Holders,
Supplemental Eligible Account Holders, and other members of Fairmount Bank. Unlike private letter rulings, opinions of counsel or tax
advisors are not binding on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In
the event of such disagreement, there can be no assurance that Fairmount Bank or Fairmount Bancorp, Inc. would prevail in a judicial
proceeding.

    Fairmount Bank and Fairmount Bancorp, Inc. have received an opinion of counsel, Jones, Walker, Waechter, Poitevent, Carrère &
Denègre, L.L.P., regarding all of the material federal income tax consequences of the conversion, which includes the following:
      1.     The conversion of Fairmount Bank to a federally chartered stock savings bank will qualify as a tax-free reorganization within the
             meaning of Internal Revenue Code Section 368(a)(1)(F).
      2.     The assets of Fairmount Bank will have the same basis in the hands of the stock Fairmount Bank as they had in the hands of
             Fairmount Bank immediately prior to the conversion. The holding period of Fairmount Bank’s assets to be received by the stock
             Fairmount Bank will include the period during which the assets were held by Fairmount Bank prior to the conversion. (Sections
             362(b) and 1223(2) of the Internal Revenue Code).
      3.     For purposes of Section 381 of the Internal Revenue Code, the stock Fairmount Bank will be treated as if there had been no
             reorganization. Accordingly, the taxable year of the Fairmount Bank will not end on the effective date of the conversion merely
             because of the transfer of assets of Fairmount Bank to the stock Fairmount Bank, and the tax attributes of Fairmount Bank will be
             taken into account by the stock Fairmount Bank as if there had been no reorganization.
      4.     The part of the taxable year of Fairmount Bank before the reorganization and the part of the taxable year of the stock Fairmount
             Bank after the reorganization will constitute a single tax year of the stock Fairmount Bank.
            Consequently, Fairmount Bank will not be required to file a federal income tax return for any portion of such taxable year solely by
            reason of the conversion.
      5.     The tax attributes of Fairmount Bank enumerated in Internal Revenue Code Section 381(c) will be taken into account by the stock
             Fairmount Bank.
      6.     No gain or loss will be recognized by the account holders of Fairmount Bank upon the issuance to them of withdrawable deposit
             accounts in the stock Fairmount Bank in the same dollar amount and under the same terms as their deposit accounts in Fairmount
             Bank, and no gain or loss will be recognized by Eligible Account Holders or Supplemental Eligible Account Holders upon receipt
             by them of an interest in the Liquidation Account of the stock Fairmount Bank, in exchange for their deemed ownership interests in
             Fairmount Bank. (Section 354(a) of the Internal Revenue Code).
      7.     The basis of the account holders’ deposit accounts in the stock Fairmount Bank will be the same as the basis of their deposit
             accounts in Fairmount Bank surrendered in exchange therefore. The basis of each Eligible Account Holder’s and Supplemental
             Eligible Account Holder’s interests in the liquidation account of the stock Fairmount Bank will be zero, that being the cost of such
             property.
      8.     It more likely than not that the nontransferable subscription rights have no value. Accordingly, no gain or loss will be recognized
             by Fairmount Bank, Eligible Account Holders, Supplemental Eligible Account Holders or Other Members upon distribution to
             them of nontransferable subscription rights to purchase shares of our common stock, provided that the amount to be paid for such
             common stock is equal to its fair market value.

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      9.     No gain or loss will be recognized by us upon receipt of money from the sale of our common stock. (Section 1032(a) of the Internal
             Revenue Code).
      10.    No gain or loss will be recognized by the stock Fairmount Bank on the transfer of a portion of the offering proceeds by us to
             Fairmount Bank in exchange for Fairmount Bank shares. (Section 1032(a) of the Internal Revenue Code).
      11.    It is more likely than not that the basis of our common stock to our stockholders will be the purchase price thereof. (Section 1012
             of the Internal Revenue Code).
      12.    The holding period of the our common stock purchased pursuant to the exercise of nontransferable subscription rights will
             commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of the Internal Revenue Code).

      In the view of Feldman Financial Advisors, Inc. (which is acting as independent appraiser of the value of the shares of Fairmount
Bancorp, Inc. common stock in connection with the conversion), which view is not binding on the Internal Revenue Service, the subscription
rights do not have any value for the reasons set forth above. If the subscription rights granted to Eligible Account Holders and Supplemental
Eligible Account Holders are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible
Account Holders and Supplemental Eligible Account Holders who exercise the subscription rights in an amount equal to their value, and
Fairmount Bancorp, Inc. could recognize gain on a distribution. Eligible Account Holders and Supplemental Eligible Account Holders are
encouraged to consult with their own tax advisors as to the tax consequences in the event that subscription rights are deemed to have an
ascertainable value.

      The Internal Revenue Service has announced that it will not issue private letter rulings with respect to the issue of whether
nontransferable rights have value. Unlike private letter rulings, an opinion of counsel or the view of an independent appraiser is not binding on
the Internal Revenue Service and the Internal Revenue Service could disagree with the conclusions reached therein. Depending on the
conclusion or conclusions with which the Internal Revenue Service disagrees, the Internal Revenue Service may take the position that the
transaction is taxable to any one or more of Fairmount Bank, the members of Fairmount Bank, Fairmount Bancorp, Inc. or the Eligible Account
Holders and Supplemental Eligible Account Holders who exercise their subscription rights. In the event of a disagreement, there can be no
assurance that Fairmount Bancorp, Inc. or Fairmount Bank would prevail in a judicial or administrative proceeding.

     The federal tax opinion has been filed with the Securities and Exchange Commission as an exhibit to the registration statement of
Fairmount Bancorp, Inc. Advice regarding the Maryland state income tax consequences consistent with the federal tax opinion has been issued
by          , tax advisors to Fairmount Bank and Fairmount Bancorp, Inc.

Certain Restrictions on Purchase or Transfer of Our Shares after Conversion
       The shares being acquired by the directors, executive officers are being acquired for investment purposes, and not with a view towards
resale. All shares of common stock purchased in the offering by a director or an executive officer of Fairmount Bank generally may not be sold
for a period of one year following the closing of the conversion, except in the event of the death of the director or executive officer. Each
certificate for restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that
any transfer within this time period of any certificate or record ownership of the shares other than as provided above is a violation of the
restriction. Any shares of common stock issued at a later date as a stock dividend, stock split or otherwise with respect to the restricted stock
will be similarly restricted. The directors and executive officers of Fairmount Bancorp, Inc. also will be restricted by the insider trading rules
promulgated pursuant to the Securities Exchange Act of 1934.

      Purchases of shares of our common stock by any of our directors, executive officers and their associates, during the three-year period
following the closing of the conversion 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 purchases of our common stock by our stock option plan or any of our
tax-qualified employee stock benefit plans or nontax-qualified employee stock benefit plans, including any recognition and retention plans.

      Office of Thrift Supervision regulations prohibit Fairmount Bancorp, Inc. from repurchasing its shares of common stock during the first
year following conversion unless compelling business reasons exist for such repurchases. After one year, the Office of Thrift Supervision does
not impose any repurchase restrictions.

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                                 RESTRICTIONS ON ACQUISITION OF FAIRMOUNT BANCORP, INC.

      Although the board of directors of Fairmount Bancorp, Inc. is not aware of any effort that might be made to obtain control of Fairmount
Bancorp, Inc. after the conversion, the board of directors believes that it is appropriate to include certain provisions as part of the articles of
incorporation of Fairmount Bancorp, Inc. to protect the interests of Fairmount Bancorp, Inc. and its stockholders from takeovers which our
board of directors might conclude are not in the best interests of Fairmount Bank, Fairmount Bancorp, Inc. or the stockholders of Fairmount
Bancorp, Inc.

      The following discussion is a general summary of the material provisions of Fairmount Bancorp’s articles of incorporation and bylaws,
Fairmount Bank’s charter and bylaws and certain other regulatory provisions that may be deemed to have an ―anti-takeover‖ effect. The
following description of certain of these provisions is general and, with respect to provisions contained in the articles of incorporation and
bylaws of Fairmount Bancorp, Inc. and Fairmount Bank’s stock charter and bylaws, reference should be made in each case to the document in
question, each of which is part of Fairmount Bank’s application for conversion with the Office of Thrift Supervision and the registration
statement of Fairmount Bancorp, Inc. filed with the Securities and Exchange Commission. See ―Where You Can Find Additional Information.‖

Articles of Incorporation and Bylaws
      The articles of incorporation and bylaws of Fairmount Bancorp, Inc. contain a number of provisions relating to corporate governance and
rights of stockholders that might discourage future takeover attempts. As a result, stockholders who might desire to participate in such
transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of the board of directors or
management of Fairmount Bancorp, Inc. more difficult.

      Directors . The board of directors will be divided into three classes. The members of each class will be elected for a term of three years
and only one class of directors will be elected annually. Thus, it would take at least two annual elections to replace a majority of our board of
directors. Further, the articles of incorporation and bylaws authorize the board of directors to fill any vacancies so created, including any
vacancy created by an increase in the number of directors, by a two-thirds vote of directors then in office. The bylaws impose notice and
information requirements in connection with the nomination by stockholders of candidates for election to the board of directors or the proposal
by stockholders of business to be acted upon at an annual meeting of stockholders.

      Restrictions on Call of Special Meetings . The bylaws provide that special meetings of stockholders can be called by the President, or the
board of directors pursuant to a resolution adopted by a majority of the total number of directors. Special meetings of stockholders shall also be
called upon the upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting.

      Prohibition of Cumulative Voting . The articles of incorporation prohibit cumulative voting for the election of directors.

     Limitation of Voting Rights . The articles of incorporation provide that in no event will any person who beneficially owns more than
10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the
10% limit.

       Restrictions on Removing Directors from Office . The articles of incorporation provide that directors may be removed from office only
for cause, and only by the affirmative vote of the holders of at least 50% of the voting power of all of our then-outstanding common stock
entitled to vote (after giving effect to the limitation on voting rights discussed above in ―—Limitation of Voting Rights.‖)

       Authorized but Unissued Shares . After the conversion, Fairmount Bancorp, Inc. will have authorized but unissued shares of common
and preferred stock. See ―Description of Capital Stock.‖ The articles of incorporation authorize 4,000,000 shares of common stock and
1,000,000 shares of serial preferred stock. The board of directors of Fairmount Bancorp, Inc. may amend the articles of incorporation, without
action by the stockholders, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or
series that Fairmount Bancorp, Inc. has authority to issue. In addition, the board of directors of Fairmount Bancorp, Inc. is authorized, without
further approval of the stockholders, to issue shares of preferred stock from time to time in series, and the board of directors is authorized to fix
the designations, and relative preferences, limitations, voting rights, if any, including, without limitation, offering rights of such shares (which
could be multiple or as a separate class). In the event of a proposed merger, tender offer or other attempt to gain control of Fairmount Bancorp,
Inc. that the board of directors does not approve, it might be possible for the board of directors to authorize the issuance of a series of preferred
stock with rights and preferences that would impede the completion of the

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transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt to gain control of Fairmount
Bancorp, Inc. The board of directors has no present plan or understanding to issue any preferred stock.

       Amendments to Articles of Incorporation and Bylaws. Maryland law provides that, subject to limited exceptions, the amendment or
repeal of any provision of our articles of incorporation requires the approval of at least two-thirds shares of common stock entitled to vote on
the matter (after giving effect to the limitation on voting rights discussed above in ―—Limitation of Voting Rights‖). Our articles of
incorporation, however, provide that if a proposed amendment or repeal is approved by at least two-thirds of the total number of authorized
directors, assuming no vacancies, of Fairmount Bancorp, Inc., the proposed amendment or repeal need only be approved by a majority of the
shares entitled to vote on the matter (after giving effect to the limitation on voting rights discussed above in ―—Limitation of Voting Rights‖).
Maryland law and our articles of incorporation also provide that, in any event, the proposed amendment or repeal of any provision of our
articles of incorporation must be approved and deemed advisable by our board of directors before it can be submitted for consideration at an
annual or special meeting. Notwithstanding the foregoing, our articles of incorporation provide that approval by at least 80% of the outstanding
voting stock is generally required to amend the following provisions:
        •    The limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares of
             common stock;
        •    The inability of stockholders to act by written consent;
        •    The division of the board of directors into three staggered classes;
        •    The ability of the board of directors to issue shares of preferred stock;
        •    The ability of the board of directors to fill vacancies on the board;
        •    The inability to deviate from the manner prescribed in the bylaws by which stockholders nominate directors and bring other
             business before meetings of stockholders;
        •    The requirement that at least 80% of stockholders must vote to remove directors, and can only remove directors for cause;
        •    The rights of our directors and officers to indemnification;
        •    The ability of the board of directors to amend and repeal the bylaws; and
        •    The ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire Fairmount
             Bancorp, Inc.

      The bylaws may be amended by the affirmative vote of a majority of our directors or the affirmative vote of at least 80% of the total votes
eligible to be voted at a duly constituted meeting of stockholders.

Conversion Regulations
       Office of Thrift Supervision regulations prohibit any person from making an offer, announcing an intent to make an offer or participating
in any other arrangement to purchase stock or acquiring stock or subscription rights in a converting institution or its holding company from
another person prior to completion of its conversion. Further, without the prior written approval of the Office of Thrift Supervision, no person
may make an offer or announcement of an offer to purchase shares or actually acquire shares of a converted institution or its holding company
for a period of three years from the date of the completion of the conversion if, upon the completion of such offer, announcement or
acquisition, the person would become the beneficial owner of more than 10% of the outstanding stock of the institution or its holding company.
The Office of Thrift Supervision has defined ―person‖ to include any individual, group acting in concert, corporation, partnership, association,
joint stock company, trust, unincorporated organization or similar company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities of an insured institution. However, offers made exclusively to a bank or its holding company, or an
underwriter or member of a selling group acting on the converting institution’s or its holding company’s behalf for resale to the general public
are excepted. The regulation also provides civil penalties for willful violation or assistance in any such violation of the regulation by any person
connected with the management of the converting institution or its holding company or who controls more than 10% of the outstanding shares
or voting rights of a converted institution or its holding company.

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Change in Control Regulations
      Under the Change in Bank Control Act, no person may acquire control of an insured federal savings association or its parent holding
company unless the Office of Thrift Supervision has been given 60 days’ prior written notice and has not issued a notice disapproving the
proposed acquisition. In addition, Office of Thrift Supervision regulations provide that no company may acquire control of a savings
association without the prior approval of the Office of Thrift Supervision. Any company that acquires such control becomes a ―savings and
loan holding company‖ subject to registration, examination and regulation by the Office of Thrift Supervision.

      Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any
class of voting stock, control in any manner of the election of a majority of the institution’s directors, or a determination by the Office of Thrift
Supervision that the acquiror has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or
policies of the institution. Acquisition of more than 10% of any class of a savings association’s voting stock, if the acquiror is also subject to
any one of eight ―control factors,‖ constitutes a rebuttable determination of control under the regulations. Such control factors include the
acquiror being one of the two largest stockholders. The determination of control may be rebutted by submission to the Office of Thrift
Supervision, prior to the acquisition of stock or the occurrence of any other circumstances giving rise to such determination, of a statement
setting forth facts and circumstances which would support a finding that no control relationship will exist and containing certain undertakings.
The regulations provide that persons or companies that acquire beneficial ownership exceeding 10% or more of any class of a savings
association’s stock who do not intend to participate in or seek to exercise control over a savings association’s management or policies may
qualify for a safe harbor by filing with the Office of Thrift Supervision a certification form that states, among other things, that the holder is not
in control of such institution, is not subject to a rebuttable determination of control and will take no action which would result in a
determination or rebuttable determination of control without prior notice to or approval of the Office of Thrift Supervision, as applicable. There
are also rebuttable presumptions in the regulations concerning whether a group ―acting in concert‖ exists, including presumed action in concert
among members of an ―immediate family.‖

      The Office of Thrift Supervision may prohibit an acquisition of control if it finds, among other things, that:
        •    the acquisition would result in a monopoly or substantially lessen competition;
        •    the financial condition of the acquiring person might jeopardize the financial stability of the institution; or
        •    the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors or the
             public to permit the acquisition of control by such person.


                                                     DESCRIPTION OF CAPITAL STOCK

General
      At the effective date, Fairmount Bancorp, Inc. will be authorized to issue 4,000,000 shares of common stock, par value of $0.01 per
share, and 1,000,000 shares of preferred stock, par value $0.01 per share. Fairmount Bancorp, Inc. currently expects to issue in the offering up
to 575,000 shares of common stock, subject to adjustment. Fairmount Bancorp, Inc. will not issue shares of preferred stock in the conversion.
Each share of Fairmount Bancorp, Inc. common stock will have the same relative rights as, and will be identical in all respects to, each other
share of common stock. Upon payment of the subscription price for the common stock, in accordance with the plan of conversion, all of the
shares of common stock will be duly authorized, fully paid and nonassessable.

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

Common Stock
      Dividends . Fairmount Bancorp, Inc. may pay dividends out of statutory surplus or from net earnings if, as and when declared by our
board of directors. The payment of dividends by Fairmount Bancorp, Inc. is subject to limitations that are imposed by law and applicable
regulation. The holders of common stock of Fairmount Bancorp, Inc. will be entitled to receive and share equally in dividends as may be
declared by our board of directors out of funds legally available therefore. If Fairmount Bancorp, Inc. issues shares of preferred stock, the
holders thereof may have a priority over the holders of the common stock with respect to dividends.

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      Voting Rights . Upon consummation of the conversion, the holders of common stock of Fairmount Bancorp, Inc. will have exclusive
voting rights in Fairmount Bancorp, Inc. They will elect the board of directors and act on other matters as are required to be presented to them
under Maryland law or as are otherwise presented to them by the board of directors. Generally, 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. Any person who beneficially owns more than 10%
of the then-outstanding shares of common stock, however, will not be entitled or permitted to vote any shares of common stock held in excess
of the 10% limit. If Fairmount Bancorp, Inc. issues shares of preferred stock, holders of the preferred stock may also possess voting rights.
Certain matters require an 80% stockholder vote.

      As a federal stock savings association, corporate powers and control of Fairmount Bank are vested in its board of directors, who elect the
officers of Fairmount Bank and who fill any vacancies on the board of directors. Voting rights of Fairmount Bank are vested exclusively in the
owners of the shares of capital stock of Fairmount Bank, which will be Fairmount Bancorp, Inc., and voted at the direction of Fairmount
Bancorp, Inc.’s board of directors. Consequently, the holders of the common stock of Fairmount Bancorp, Inc. will not have direct control of
Fairmount Bank.

       Liquidation . In the event of any liquidation, dissolution or winding up of Fairmount Bank, Fairmount Bancorp, Inc., as the holder of
100% of Fairmount Bank’s capital stock, would be entitled to receive all assets of Fairmount Bank available for distribution, after payment or
provision for payment of all debts and liabilities of Fairmount Bank, including all deposit accounts and accrued interest thereon, and after
distribution of the balance in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. In the event of
liquidation, dissolution or winding up of Fairmount Bancorp, Inc., the holders of its common stock would be entitled to receive, after payment
or provision for payment of all its debts and liabilities, all of the assets of Fairmount Bancorp, Inc. available for distribution. If preferred stock
is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

      Preemptive Rights . Holders of the common stock of Fairmount Bancorp, Inc. will not be entitled to preemptive rights with respect to any
shares that may be issued, unless such preemptive rights are approved by the board of directors. The common stock is not subject to
redemption.

Preferred Stock
      None of the shares of authorized preferred stock will be issued as part of the offering or the conversion. Preferred stock may be issued
with preferences and designations as our board of directors may from time to time determine. Our board of directors may, without stockholder
approval, issue shares of 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.


                                                                TRANSFER AGENT

      The transfer agent and registrar for the common stock of Fairmount Bancorp, Inc. is Registrar and Transfer Company, Cranford, New
Jersey.


                                                                      EXPERTS

      The Financial Statements of Fairmount Bank as of September 30, 2009 and 2008, and for each of the years in the two-year period ended
September 30, 2009, appearing elsewhere in this prospectus have been included herein and in the registration statement in reliance upon the
report of Smith Elliott Kearns & Company, LLC, independent registered public accounting firm, which is included herein and upon the
authority of that firm as experts in accounting and auditing.

       Feldman Financial Advisors, Inc. has consented to the publication herein of the summary of its report to Fairmount Bancorp, Inc. setting
forth its opinion as to the estimated pro forma market value of the shares of common stock upon completion of the conversion and offering and
its letter with respect to subscription rights.

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                                                               LEGAL MATTERS

      Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., Washington, D.C., counsel to Fairmount Bancorp, Inc. and Fairmount
Bank, will issue to Fairmount Bancorp, Inc. its opinion regarding the legality of the common stock and the federal income tax consequences of
the conversion. Certain legal matters will be passed upon for Stifel, Nicolaus & Company, Incorporated by Kilpatrick Stockton LLP,
Washington, D.C.


                                         WHERE YOU CAN FIND ADDITIONAL INFORMATION

      Fairmount Bancorp, Inc. has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933
with respect to the shares of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange
Commission, this prospectus does not contain all the information set forth in the registration statement. Such information, including the
appraisal report which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the
Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from
the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330.
In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically with the Securities and Exchange Commission, including
Fairmount Bancorp, Inc. The statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to
the registration statement are, of necessity, brief descriptions of the material terms of, and should be read in conjunction with, such contract or
document.

      Fairmount Bank has filed with the Office of Thrift Supervision an Application on Form AC with respect to the conversion. This
prospectus omits certain information contained in the application. The application may be examined at the principal office of the Office of
Thrift Supervision, 1700 G Street, N.W., Washington, D.C. 20552, and at the Southeast Regional Office of the Office of Thrift Supervision,
located at 1475 Peachtree Street, N.E., Atlanta, Georgia 30309. Our plan of conversion is available, upon request, at our home office.

      In connection with the offering, Fairmount Bancorp, Inc. will register its common stock under Section 12(g) of the Securities
Exchange Act of 1934 and, upon such registration, Fairmount Bancorp, Inc. and the holders of its common stock will become subject
to the proxy solicitation rules, reporting requirements and restrictions on common stock purchases and sales by directors, officers and
greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities Exchange Act of
1934. Under the plan of conversion, Fairmount Bancorp, Inc. has undertaken that it will not terminate such registration for a period of
at least three years following the offering.

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                                                           T ABLE OF CONTENTS

                                                                                                                                         Page
Report of Independent Registered Public Accounting Firm                                                                                          F-2
Financial Statements
     Balance Sheets                                                                                                                              F-3
     Statements of Income                                                                                                                        F-4
     Statements of Changes in Equity                                                                                                             F-5
     Statements of Cash Flows                                                                                                                    F-6
     Notes to Financial Statements                                                                                                      F-7 – F-21

     Separate financial statements for Fairmount Bancorp, Inc. have not been included in this prospectus because Fairmount Bancorp, Inc. is a
newly formed holding company and has not engaged in any significant activities, has no significant assets, and has no contingent liabilities,
revenue or expenses.

      All financial statement schedules have been omitted as the required information either is not applicable or is included in the financial
statements or related notes.

                                                                       F-1
Table of Contents




                              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Fairmount Bank
Baltimore, Maryland

      We have audited the accompanying balance sheets of Fairmount Bank (the Bank) as of September 30, 2009 and 2008, and the related
statements of income, changes in equity and cash flows for the years 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 audits 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. The Bank is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide 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 Fairmount Bank
as of September 30, 2009 and 2008, and the results of its operations and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.




Chambersburg, Pennsylvania
December 2, 2009

                                                                        F-2
Table of Contents

                                                               FAIRMOUNT BANK
                                                              BALANCE SHEETS
                                                          September 30, 2009 and 2008

                                                                                                                    2009             2008
           ASSETS
Cash and due from banks                                                                                     $         327,769   $     366,867
Interest bearing deposits in other banks                                                                               92,562         154,160
Federal funds sold                                                                                                  4,212,574         890,654
     Cash and cash equivalents                                                                                      4,632,905        1,411,681
Securities available for sale                                                                                       3,327,518        7,018,727
Securities held to maturity                                                                                         1,766,370              —
Federal Home Loan Bank stock, at cost                                                                                 600,900          539,200
Loans, net of allowance for loan and lease losses of $219,717 in 2009 and $102,838 in 2008                         50,333,670       45,154,888
Accrued interest receivable, investments                                                                               27,976           45,908
Accrued interest receivable, loans                                                                                    206,208          184,457
Bank buildings, equipment, furniture and fixtures, net                                                              2,889,105        1,047,752
Foreclosed real estate, net                                                                                            95,000              —
Cash surrender value of life insurance                                                                                 64,929           62,935
Other assets                                                                                                           96,335           45,987
           Total assets                                                                                     $      64,040,916   $   55,511,535

         LIABILITIES
Deposits
    Noninterest bearing deposits                                                                            $         447,413   $      489,925
    Interest bearing demand deposits                                                                                3,375,914        2,625,600
    Savings deposits                                                                                                9,164,916        9,189,354
    Certificates of deposit                                                                                        32,850,201       26,585,627
           Total deposits                                                                                          45,838,444       38,890,506
Liability for borrowed funds                                                                                       11,000,000       10,000,000
Accounts payable                                                                                                      194,666              —
Income taxes payable                                                                                                   51,635          290,360
Accrued interest payable                                                                                               43,255           43,594
Deferred compensation liability                                                                                        30,417           35,170
Deferred income tax liabilities                                                                                        50,542           41,936
Other liabilities                                                                                                      42,117           17,608
           Total liabilities                                                                                       57,251,076       49,319,174
           Commitments and contingencies                                                                                   —                —

         EQUITY
Retained earnings                                                                                                   6,727,340        6,282,080
Accumulated other comprehensive income (loss)                                                                          62,500          (89,719 )
           Total equity                                                                                             6,789,840        6,192,361
           Total liabilities and equity                                                                     $      64,040,916   $   55,511,535




                                     The notes to financial statements are an integral part of these statements.
F-3
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                                                              FAIRMOUNT BANK
                                                         STATEMENTS OF INCOME
                                                   Years Ended September 30, 2009 and 2008

                                                                                                                      2009              2008
Interest and Dividend Income
     Interest on loans                                                                                            $   3,133,354     $   2,422,268
     Interest and dividends on investments                                                                              303,911           527,200
           Total interest income                                                                                      3,437,265         2,949,468

Interest Expense
     Interest on deposits                                                                                             1,217,027         1,394,271
     Interest on borrowings                                                                                             285,569           224,399
     Capitalized interest                                                                                               (44,651 )             —
           Total interest expense                                                                                     1,457,945         1,618,670
           Net interest income                                                                                        1,979,320         1,330,798
Provision for Loan and Lease Losses                                                                                    182,000            50,000
           Net interest income after provision for loan and lease losses                                              1,797,320         1,280,798

Other Income
    Service charges on deposit accounts                                                                                  2,366             3,068
    Other service charges, collection and exchange charges, commissions and fees                                       144,247           118,996
    Gain on the sale of securities available for sale                                                                      592            22,320
    Other income                                                                                                        10,261             6,757
           Total other income                                                                                          157,466           151,141

Other Expenses
    Salaries, fees and employment expenses                                                                             738,527           650,159
    Building and occupancy expense                                                                                      47,723            37,714
    Furniture and equipment expenses                                                                                    24,028            31,988
    Professional fees                                                                                                  105,144            89,838
    Data processing expenses                                                                                            66,618            64,389
    FDIC insurance premium                                                                                              46,340             4,456
    Insurance and bond premiums                                                                                          8,292            12,705
    Stationery, printing and supplies                                                                                   37,464            17,313
    Other operating expenses                                                                                           166,427           128,778
           Total other expenses                                                                                       1,240,563         1,037,340
        Income before income taxes                                                                                     714,223           394,599
Applicable Income Taxes                                                                                                268,963           148,237
           Net income                                                                                             $    445,260      $    246,362




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

                                                                           F-4
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                                                              FAIRMOUNT BANK
                                                 STATEMENTS OF CHANGES IN EQUITY
                                                  Years Ended September 30, 2009 and 2008

                                                                                                            Accumulated
                                                                                                               Other
                                                                                          Retained         Comprehensive          Total
                                                                                          Earnings         Income (Loss)          Equity
Balance September 30, 2007                                                            $    6,035,718      $       (81,369 )   $   5,954,349
Comprehensive income:
   Net income                                                                                246,362                                246,362
     Unrealized gain (loss) on investment securities available for sale (net of
       tax effect of $5,254 )                                                                                      (8,350 )          (8,350 )
Total comprehensive income                                                                                                          238,012
Balance September 30, 2008                                                                 6,282,080              (89,719 )       6,192,361
Comprehensive income:
   Net income                                                                                445,260                                445,260
     Unrealized gain (loss) on investment securities available for sale (net of
       tax effect of $95,775)                                                                                     152,219           152,219
Total comprehensive income                                                                                                          597,479
Balance September 30, 2009                                                            $    6,727,340      $        62,500     $   6,789,840




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

                                                                        F-5
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                                                              FAIRMOUNT BANK
                                                      STATEMENTS OF CASH FLOWS
                                                   Years Ended September 30, 2009 and 2008

                                                                                                          2009                2008
Cash flows from operating activities:
    Net income                                                                                        $     445,260      $      246,362
    Adjustments to reconcile net income to net cash provided by operating activities:
         Depreciation and amortization                                                                       31,351               35,762
         Provision for loan and lease losses                                                                182,000               50,000
         Deferred income taxes                                                                              (87,169 )           (142,123 )
         (Increase) in cash surrender value of life insurance                                                (1,994 )             (2,048 )
         (Gain) on the sale of securities available for sale                                                   (592 )            (22,320 )
         (Increase) decrease in accrued interest receivable                                                  (3,820 )             14,553
         (Increase) decrease in income tax refund claims                                                        —                 76,200
         (Increase) decrease in other assets                                                                (50,348 )            144,522
         Increase (decrease) in accounts payable                                                             11,649                8,890
         Increase (decrease) in accrued interest payable                                                       (338 )             30,494
         Increase (decrease) in income taxes payable                                                       (238,725 )            290,360
         Increase (decrease) in other liabilities                                                            24,577              (14,198 )
Net cash provided by operating activities                                                                   311,851             716,454

Cash flows from investing activities:
    Maturities of available for sale securities                                                            2,813,441           5,795,000
    Proceeds from the sale of available for sale securities                                                  500,717           1,500,000
    Purchases of available for sale securities                                                              (837,512 )        (3,300,434 )
    Purchases of held to maturity securities                                                                (305,469 )               —
    Purchases of Federal Home Loan Bank stock                                                                (61,700 )          (340,600 )
    Net (increase) in loans                                                                               (5,360,779 )       (12,965,094 )
    Purchases of bank premises and equipment                                                              (1,778,124 )          (195,204 )
    Loss on disposal of equipment                                                                             (4,317 )               —
Net cash provided (used) by investing activities                                                          (5,033,743 )        (9,506,332 )

Cash flows from financing activities:
    Net increase in deposits                                                                              6,931,594            1,026,972
    Increase (decrease) in advances by borrowers, net                                                        16,275              (35,425 )
    Proceeds from borrowings                                                                              1,000,000            7,250,000
    Payments on accrued deferred compensation obligation                                                     (4,753 )             (6,178 )
Net cash provided by financing activities                                                                 7,943,116            8,235,369
Net increase (decrease) in cash and cash equivalents                                                      3,221,224             (554,509 )
Cash and cash equivalents, beginning balance                                                              1,411,681            1,966,190
Cash and cash equivalents, ending balance                                                             $   4,632,905      $     1,411,681

Supplemental disclosure of cash flows information:
     Cash paid during the year for:
         Interest (net of capitalized interest of $44,651—2009 and $0—2008)                           $   1,458,284      $     1,588,176
         Income taxes                                                                                       603,311                  —
Supplemental schedule of noncash investing and financing activities:
     Change in unrealized gain (loss) on securities available for sale—net of tax effect of $95,775
       and $5,254, respectively                                                                       $     152,219      $           (8,350 )
     Foreclosed assets acquired in settlement of loans                                                $      95,000                     —
     Available-for-sale securities transferred to held-to-maturity                                        1,472,073                     —
The notes to financial statements are an integral part of these statements.

                                   F-6
Table of Contents

                                                    NOTES TO FINANCIAL STATEMENTS

Note 1.    Significant Accounting Policies
Nature of Operations
      Fairmount Bank (the ―Bank‖) is a community-oriented federal savings bank, which provides a variety of financial services to individuals
and corporate customers through its home office in the Rosedale area of Baltimore County, Maryland, and is subject to competition from other
financial institutions. The Bank’s primary deposit products are interest-bearing savings, certificates of deposit, and individual retirement
accounts. The Bank’s primary lending products are single-family residential mortgage loans. The Bank is subject to the regulations of certain
Federal agencies and undergoes periodic examinations by those regulatory authorities. The accounting policies of the Bank conform to
accounting principles generally accepted in the United States of America and general practices within the banking industry.

Estimates
      The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the 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 relate to the determination of the allowance for losses on loans
and leases and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the
determination of the allowances for losses on loans and leases and foreclosed real estate, management obtains independent appraisals for
significant properties.

Cash and Cash Equivalents
      Cash and cash equivalents consist of cash and interest-bearing deposits in other financial institutions and Federal funds sold as stated on
the balance sheet.

Securities
     Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of
each balance sheet date.

     Securities that the Bank has the positive intent and ability to hold to maturity are classified as held to maturity and are reported at
amortized cost (including amortization of premium or accretion of discount).

      Securities classified as available for sale are those securities that the Bank intends to hold for an indefinite period of time but not
necessarily to maturity. Securities available for sale are carried at fair value. Unrealized gains and losses are reported as increases or decreases
in other comprehensive income. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in
earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the
fair value of available for sale securities below their cost that are deemed to be other than temporary, if any, 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.

FHLB Stock
      Federal Home Loan Bank of Atlanta (―FHLB‖) stock is an equity interest in the FHLB, which does not have a readily determinable fair
value for purposes of Generally Accepted Accounting Standards related to Accounting for Certain Investments in Debt and Equity Securities,
because its ownership is restricted and it lacks a market. FHLB stock can be sold back only at par value of $ 100 per share and only to the
FHLB or another member institution. As of September 30, 2009, the Bank owned shares totaling $ 600,900.

                                                                         F-7
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       The Bank evaluates the FHLB stock for impairment in accordance with generally accepted accounting principles. The Bank’s
determination of whether this investment is impaired is based on an assessment of the ultimate recoverability of its cost rather than by
recognizing temporary declines in value. The determination of whether a decline in value affects the ultimate recoverability of its cost is
influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the
FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and
the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on
institutions and, accordingly on the customer base of the FHLB.

Loans
       Loans are generally carried at the amount of unpaid principal, less the allowance for loan losses and adjusted for deferred loan fees,
which are amortized over the term of the loan using the interest method. Interest on loans is accrued based on the principal amounts
outstanding. It is the bank’s policy to discontinue the accrual of interest when a loan is specifically determined to be impaired or when the
principal or interest is delinquent for 90 days or more. When a loan is placed on nonaccrual status, all interest previously accrued but not
collected is reversed against current period interest income. Interest income generally is not recognized on specific impaired loans unless the
likelihood of further loss is remote. Cash collections on such loans are applied as reductions of the loan principal and no interest income is
recognized on those loans until the principal balance has been collected. The carrying value of impaired loans is based on the present value of
the loan’s expected future cash flows or, alternatively, the observable market price of the loan or the fair value of the collateral.

Allowance for Loan and Lease Losses
      The allowance for loan and lease losses is established as losses are estimated to have occurred through a provision for loan losses charged
to earnings. Loan and lease losses are charged against the allowance when management believes the collectability of a principal balance is
unlikely. Subsequent recoveries, if any, are credited to the allowance.

      The allowance 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, general, and unallocated components. The specific component relates to loans that are classified as
doubtful, substandard, or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted
cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of the loan. The general
component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component of
the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and
general losses in the portfolio.

      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. Impairment is measured on a loan by loan basis for commercial and construction 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, unless such loans are the subject of a restructuring agreement.

      The Bank maintains the allowance for loan and lease losses at a level considered adequate to provide for losses inherent in the loan
portfolio. While the Bank utilizes available information to recognize losses on loans, future additions to the allowance for loan and lease losses
may be necessary based on changes in economic conditions, particularly in its’ market area in the state of Maryland. In addition, regulatory
agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan and lease losses. Such agencies
may require the Bank to recognize additions to the allowance for loan and lease losses based on their judgments about information available to
them at the time of their examination.

                                                                       F-8
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     Actual loan losses may be significantly more than the allowance for loan and lease losses the Bank has established, which could have a
material negative effect on its financial statements.

Premises and Equipment
      Land is carried at cost. Property and equipment is carried at cost less accumulated depreciation. Depreciation is computed on the
straight-line method over estimated useful lives of assets. When assets are retired or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and
repairs is charged to expense as incurred; significant renewals and betterments are capitalized.

Income Taxes
       Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus
deferred taxes. Deferred taxes are provided for the temporary differences between the tax basis and the financial basis of the Bank’s assets and
liabilities. Deferred tax assets and liabilities are determined based on the enacted rates that are expected to be in effect when the differences are
expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not
that some portion of the deferred tax assets will not be realized. Deferred tax expense or benefit is the result of the changes in the deferred tax
assets and liabilities.

Comprehensive Income (Loss)
      Accounting principles generally accepted in the United States of America 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 available for sale securities,
are reported as a separate component of equity, such items, along with net income, are components of comprehensive income.

    The Bank has elected to report its comprehensive income (loss) in the statement of changes in equity. The only element of ―other
comprehensive income‖ that the Bank has is the unrealized gains or losses on available for sale securities.

      The components of other comprehensive income (loss) and related tax effects at September 30, 2009 and 2008 were as follows:

                                                                                                                      2009                2008
Unrealized holding gains (losses) on available-for-sale securities                                                $ 248,278           $     8,716
Amortization of unrealized loss on securities transferred to held-to-maturity                                           308                   —
Reclassification adjustment for losses (gains) realized in income                                                      (592 )             (22,320 )
Net unrealized gains (losses)                                                                                         247,994             (13,604 )
Tax effect                                                                                                            (95,775 )             5,254
Net-of-tax amount                                                                                                 $ 152,219           $    (8,350 )


      Components of accumulated other comprehensive income as of September 30 are as follows:

                                                                                                                       2009               2008
Unrealized gain (loss) on available-for-sale securities                                                             $ 69,168          $   (89,719 )
Unamortized loss on available-for-sale securities transferred to held-to-maturity                                     (6,668 )                —
Accumulated other comprehensive income (loss)                                                                       $ 62,500          $   (89,719 )


      Effective June 1, 2009, the Bank transferred three securities with an aggregate carrying value of $1,472,073 from available-for-sale to
held-to-maturity as the Bank intends to hold those securities until they mature. The unrealized loss on the date of transfer was ($11,172), which
will be amortized over the remaining life of the securities.

                                                                         F-9
Table of Contents

Off-Balance Sheet Financial Instruments
      In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend
credit. These loans involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized on the balance
sheet. Such financial instruments are recorded in the statement of income when they are funded.

      The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments is
represented by the contractual amount of these instruments. The Bank uses the same credit policies for these instruments as it does for the
on-balance sheet instruments.

Advertising Costs
     Advertising costs are expensed as incurred. Advertising costs totaled $22,986 and $10,416 for the years ending September 30, 2009 and
2008, respectively.

Concentrations of Credit Risk
      The Bank has deposits in other financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation
(―FDIC‖). The Bank’s management considers this a normal business risk. The Bank also maintains accounts with stock brokerage firms
containing securities. These balances are insured up to $500,000 by the Securities Investor Protection Corporation. The Bank was required to
maintain a $100,000 minimum balance in a deposit account with Maryland Financial as of September 30, 2009 and 2008 in relation to a sweep
account.

     Most of the Bank’s activities are with customers in the Maryland counties of Baltimore and Harford and portions of the City of
Baltimore. Note 1 discusses the type of activities that the Bank engages in. Note 3 discusses the types of lending that the Bank engages in. The
Bank does not have any significant concentrations in any one industry or customer.

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

Note 2.    Securities
Securities Available For Sale
      Securities available for sale at September 30, 2009 and 2008 consisted of the following:

                                                                                                       Gross            Gross
                                                                                 Amortized           Unrealized       Unrealized
                                                                                   Cost                Gains           Losses             Fair Value
September 30, 2009
U.S. Government and Federal Agency Obligations                                          —                  —                  —                  —
Mortgage -Backed Securities—FHLMC                                                   917,335             28,920                —              946,255
Mortgage -Backed Securities—FNMA                                                  1,283,482             43,182                —            1,326,664
Mortgage -Backed Securities—GNMA                                                  1,014,013             44,963             (4,377 )        1,054,599
State and Municipal Securities                                                          —                  —                  —                  —
                                                                             $    3,214,830      $ 117,065        $        (4,377 )   $    3,327,518

September 30, 2008
U. S. Government and Federal Agency Obligations                              $    2,998,083      $       1,518    $     (139,756 )    $    2,859,845
Mortgage -Backed Securities—FHLMC                                                 1,258,546                —              (9,492 )         1,249,054
Mortgage -Backed Securities—FNMA                                                  1,599,543              2,593           (11,555 )         1,590,581
Mortgage -Backed Securities—GNMA                                                    835,026             26,212               (61 )           861,177
State and Municipal Securities—Fixed Rate                                           473,699                —             (15,629 )           458,070
                                                                             $    7,164,897      $      30,323    $     (176,493 )    $    7,018,727


                                                                      F-10
Table of Contents

      The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have
been in a continuous gross unrealized loss position, at September 30, 2009 and September 30, 2008 were as follows:

                                                             Less than 12 months                 12 months or more                                Total
                                                                              Gross                              Gross                                       Gross
                                                                            Unrealized                         Unrealized                                  Unrealized
                                                          Fair Value          Losses         Fair Value          Losses              Fair Value             Losses
September 30, 2009
U. S. Government and Federal Agency
  Obligations                                                    —                —                    —              —                     —                    —
Mortgage -Backed Securities                                 $317,090           $4,377                  —              —                $317,090               $4,377
State and Municipal Securities                                   —                —                    —              —                     —                    —
                                                            $317,090           $4,377               $—              $—                 $317,090               $4,377


                                                             Less than 12 months                 12 months or more                                Total
                                                                              Gross                              Gross                                       Gross
                                                                            Unrealized                         Unrealized                                  Unrealized
                                                          Fair Value          Losses         Fair Value          Losses              Fair Value             Losses
September 30, 2008
U. S. Government and Federal Agency
  Obligations                                         $      964,797      $    48,516    $    1,430,840      $     91,240       $     2,395,637           $ 139,756
Mortgage -Backed Securities                                1,836,822           21,108               —                 —               1,836,822              21,108
State and Municipal Securities                               466,182           15,629               —                 —                 466,182              15,629
                                                      $    3,267,801      $    85,253    $    1,430,840      $     91,240       $     4,698,641           $ 176,493


      At September 30, 2009, gross unrealized losses totaled ($4,377). At September 30, 2008, gross unrealized losses totaled ($176,493). At
September 30, 2009, the Bank held one investment security having an unrealized loss position. Since the Bank has the ability to hold this
security until maturity, no unrealized losses are deemed to be other than temporary.

     The amortized cost and fair values of investment securities available for sale at September 30, 2009 by contractual maturity are shown
below. Contractual maturities will differ from expected maturities because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.

                                                                                                       Amortized
                    Maturities                                                                           Cost                   Fair Value
                    One year or less                                                               $          —             $             —
                    After one year to five years                                                              —                           —
                    After five years to ten years                                                         328,730                     341,869
                    After ten years                                                                     2,886,100                   2,985,649
                                                                                                   $    3,214,830           $       3,327,518


     Proceeds from sales of available for sale securities during 2009 totaled $500,125, realizing gross gains of $592 for the year. Proceeds
from sales of available for sale securities during 2008 totaled $1,500,000, with gross gains of $22,320.

                                                                          F-11
Table of Contents

Securities Held to Maturity
      Securities held to maturity at September 30, 2009 and 2008 consisted of the following:

                                                                                                          Gross            Gross
                                                                                    Amortized           Unrealized       Unrealized
                                                                                      Cost                Gains           Losses              Fair Value
September 30, 2009
U. S. Government and Federal Agency Obligations                                 $      993,348         $    5,280        $         —      $       997,628
Mortgage -Backed Securities                                                                —                  —                    —                  —
State and Municipal Securities—Fixed Rate                                              773,022             25,547                  —              798,569
                                                                                $    1,766,370         $   30,827        $         —      $    1,796,197

September 30, 2008
U. S. Government and Federal Agency Obligations                                 $           —          $         —       $         —      $            —
Mortgage -Backed Securities                                                                 —                    —                 —                   —
State and Municipal Securities                                                              —                    —                 —                   —
                                                                                $           —          $         —       $         —      $            —


      There were no securities held to maturity in a loss position at September 30, 2009 and 2008.

     The amortized cost and fair values of investment securities held to maturity at September 30, 2009 by contractual maturity are shown
below. Contractual maturities will differ from expected maturities because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.

                                                                                                     Amortized
                    Maturities                                                                         Cost                  Fair Value
                    One year or less                                                             $          —        $              —
                    After one year to five years                                                            —                       —
                    After five years to ten years                                                       305,367                 312,928
                    After ten years                                                                   1,461,003               1,484,269
                                                                                                 $    1,766,370      $        1,797,197


Market Risks
      Investments of the Bank are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk
associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible
that changes in risks in the near term would materially affect investment assets reported in the financial statements.

      In addition, recent economic uncertainty and market events have led to unprecedented volatility in currency, commodity, credit and
equity markets, culminating in failures of some banking and financial service firms and government intervention to solidify others. These
recent events underscore the level of investment risk associated with the current economic environment, and accordingly, the level of risk in the
Bank’s investments.

                                                                       F-12
Table of Contents

Note 3.    Loans and Allowance for Loan and Lease Losses
      The Bank makes loans to customers primarily in the counties of Baltimore and Harford and in the City of Baltimore Maryland. The
principal categories of the loan portfolio at September 30, 2009 and 2008 were as follows:

                                                                                                     2009                     2008
      Real estate loans
           One-to four-family owner occupied                                                    $   22,161,602           $   21,921,670
           One-to four-family non-owner occupied                                                    17,483,806               11,963,023
           Home equity                                                                               1,845,430                1,933,334
           Mobile home                                                                               3,072,435                3,359,624
           Secured by other properties                                                               2,031,949                1,361,851
           Construction and land development                                                         2,747,384                3,264,901
      Total real estate loans                                                                       49,342,606               43,804,403
      Commercial and consumer loans
         Secured commercial                                                                           847,612                  667,282
         Commercial leases                                                                            133,339                  310,795
         Savings                                                                                       60,239                   57,010
      Total commercial and consumer loans                                                            1,041,190                1,035,087
      Total loans                                                                                   50,383,796               44,839,490
      Unamortized premiums and loan fees                                                               548,461                  643,027
      Unearned income on loans                                                                        (378,871 )               (224,791 )
      Allowance for loan and lease losses                                                             (219,717 )               (102,838 )
      Total loans, net                                                                          $   50,333,669           $   45,154,888


      The Bank had a mobile home loan program that began in 2005 in which it is no longer participating. At September 30, 2009 and 2008,
these loan balances totaled $3,072,435 and $3,359,624, respectively. Mobile home loans were purchased from by a third-party originator and
funded by the Bank at settlement. The Bank paid a premium/loan origination fee to the third-party originator, of which one-half was wired
upon settlement of the loan and the remainder was kept by the Bank in a depository account in the name of the third-party. At September 30,
2009 and 2008, the balance in the account was $232,694 and $266,958, respectively, and can be accessed by the Bank in the event of
prepayment, foreclosure or deterioration of the value of the mobile home. As of September 30, 2009 and 2008, the Bank had prepaid loan
origination fees related to this program of $530,727 and $624,383, which are being amortized over the estimated lives of the loans.

     In October 2004, the Bank purchased a block of mortgage loans from another financial institution for $2,126,620, with an average yield
of 6%. At September 30, 2009 and 2008, the loan balances were $788,286 and $802,483, respectively, and included in mortgage loans secured
by one-to-four family residences. In addition, the Bank has unamortized loan premiums of $17,735 and $18,643 as of September 30, 2009 and
2008, respectively, that are being amortized over the terms of the purchased loans.

      In May 2009, the Bank purchased a block of one-to four-family mortgage loans totaling $1,109,768, with an average yield of 6.08%.
There was no premium paid on the purchase. The balances of purchased loans at September 30, 2009 and 2008 are included in the breakdown
of loans shown above.

      Loans and their remaining contractual maturities at September 30, 2009 were as follows:

                                                                                                            Maturities
                         One year or less                                                               $     2,496,198
                         After one year to five years                                                         3,873,044
                         After five years to ten years                                                       11,581,715
                         After ten years to fifteen years                                                    13,856,840
                         After fifteen years                                                                 18,575,999
                                                                                                        $    50,383,796


                                                                    F-13
Table of Contents

      In the normal course of banking business, loans are made to officers and directors and related affiliates. In the opinion of management,
these loans are consistent with sound banking practices, are within regulatory limitations, and do not involve more than the normal risk of
collectability.

      Loans to officers, directors and related affiliates at September 30, 2009 and 2008 were as follows:

                                                                                                2009                2008
                    Balance, beginning of year                                              $ 300,836           $ 164,385
                        Additions                                                             423,000             150,000
                        Repayments                                                            (30,144 )           (13,549 )
                    Balance, end of year                                                    $ 693,692           $ 300,836


      The allowance for loan and lease losses is summarized at September 30, 2009 and 2008 as follows:

                                                                                                2009                2008
                    Balance, beginning of year                                              $ 102,838           $    79,000
                    Provision                                                                 182,000                50,000
                    Charge-offs                                                               (67,180 )             (26,162 )
                    Recoveries                                                                  2,059                   —
                    Balance, end of year                                                    $ 219,717           $ 102,838


      At September 30, 2009, there were no loans 90 days past due and still accruing interest. The Bank had five loans on non-accrual status at
September 30, 2009 totaling $413,664 with forgone interest in the amount of $11,273. There were no loans on non-accrual status at
September 30, 2008. Also, the recorded investment of impaired loans at September 30, 2009 was $116,219, with a related allowance for loan
losses of $51,483. The interest recognized as of September 30, 2009 was $8,135. There were no loans considered impaired at September 30,
2008. There were no troubled debt restructurings in fiscal years 2009 or 2008.

Note 4.    Foreclosed Real Estate
     At September 30, 2009 and 2008, the Bank had $ 95,000 and $0 in foreclosed real estate, respectively. A charge to the Allowance for
Loan Losses of $39,763 was taken at the time the foreclosed property was placed in Other Real Estate.

Note 5.    Financial Instruments with Off-Balance Sheet Risk
      The Bank is party to 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 originate loans. These loans involve, to varying degrees, elements of credit and
interest rate risk in excess of the amounts recognized on the balance sheet.

      The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments is
represented by the contractual amount of these instruments. The Bank uses the same credit policies for these instruments as it does for
on-balance sheet instruments.

      The commitment to originate loans is an agreement to lend to a customer provided there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates and may require the payment of a fee. The Bank expects that a large majority of
its commitments will be fulfilled subsequent to the balance sheet date and therefore, represent future cash requirements.

     The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is
based on management’s credit evaluation of the borrower.

                                                                      F-14
Table of Contents

      Loan commitments representing off-balance sheet risk at September 30, 2009 and 2008 were as follows:

                                                                                                  Contract or Notional Amount
                                                                                                  2009                   2008
                    Mortgage loan commitments—Fixed Rate (7.5% – 7.75%)                    $       587,750           $       695,000
                    Unused lines of credit                                                       2,359,774                 1,510,093
                    Available home equity lines of credit                                          652,617                   556,007
                                                                                           $     3,600,141           $     2,761,100


Note 6.    Premises and Equipment
      Premises and equipment at September 30, 2009 and 2008 were as follows:

                                                                                                                         Depreciable
                                                                        2009                   2008                        Lives
                    Cost
                           Land                                   $       772,751      $        756,403                 —
                           Construction in progress                           —                 163,402                 —
                           Buildings and land improvements              2,015,534               198,494              10 – 50 yrs
                           Furniture, fixtures, and equipment             315,854               156,922               3 – 7 yrs
                    Total                                               3,104,139              1,275,221
                    Less: accumulated depreciation                       (215,034 )             (227,469 )
                                                                  $     2,889,105      $       1,047,752

      Depreciation expense totaled $31,351 and $35,762 for the years ended September 30, 2009 and 2008, respectively.

     The Bank had capitalized interest on the construction of the new headquarters building of $ 44,651 and $0 for the years ended
September 30, 2009 and 2008, respectively.

Note 7.    Income Taxes
     The income tax provision reflected in the statements of income consisted of the following components for the years ended September 30,
2009 and 2008:

                                                                                               2009                       2008
                    Income tax expense
                        Current tax expense
                             Federal                                                    $ 286,942                $        242,260
                             State                                                         69,333                          48,100
                           Total current                                                   356,275                        290,360
                           Deferred tax expense (benefit)
                                Federal                                                        (71,517 )                 (116,370 )
                                State                                                          (15,795 )                  (25,753 )
                           Total deferred                                                      (87,312 )                 (142,123 )
                    Total income tax expense                                            $ 268,963                $        148,237


                                                                      F-15
Table of Contents

     A reconciliation of tax computed at the Federal statutory tax rate of 34% to the actual tax expense for the years ended September 30, 2009
and 2008 is as follows:

                                                                                                  2009                 2008
                    Tax at Federal statutory rate                                            $ 242,836             $ 134,164
                    Tax effect of:
                         Tax exempt interest                                                       (9,159 )             (6,486 )
                         Graduated rates                                                          (20,899 )            (28,184 )
                    State income taxes, net of federal benefit                                     56,185               48,743
                    Income tax expense                                                       $ 268,963             $ 148,237

                    Effective tax rate                                                               37.7 %               37.6 %


      The components of the net deferred tax liability at September 30, 2009 and 2008 were as follows:

                                                                                                  2009                 2008
                    Deferred income tax assets:
                    Accrued interest                                                          $    16,705          $    16,836
                    Deferred loan origination fees                                                146,320               86,814
                    Deferred compensation                                                          11,747               13,583
                    Allowance for loan losses                                                      84,855               39,716
                    Accrued expenses                                                               20,765                6,731
                    Net unrealized loss on securities                                                   0               56,451
                                                                                                  280,392              220,131
                    Deferred income tax liabilities:
                    Net unrealized again on securities                                             39,325                    0
                    Accrued interest & fees on loans & investments                                 90,442               88,967
                    Accumulated depreciation                                                       50,872               18,949
                    Prepaid expenses                                                               35,197               16,113
                    Prepaid loan fees on manufactured housing loans                               115,098              138,038
                                                                                                  330,934              262,067
                    Net deferred income tax (liability) asset                                 $   (50,542 )        $   (41,936 )


      The Bank files cash basis Federal income tax returns on a fiscal year basis. Management has determined that no valuation allowance is
required as it is more likely not that the net deferred tax benefits will be fully realizable in future years.

      The Bank maintains $731,536 of its retained earnings as a reserve for loan losses for tax purposes. This amount has not been charged
against earnings and is a restriction on retained earnings. If this balance in the reserve account is used for anything but losses on mortgage loans
or payment of special assessment taxes, it will be subject to federal income taxes.

     The Financial Accounting Standards Board has delayed the effective date of new standards for accounting for uncertain tax positions for
non-public companies until fiscal years beginning after December 15, 2008.

       Since the Bank is not required to implement recently issued provisions for accounting for uncertain tax positions, until its fiscal year
beginning October 1, 2009, the Bank continues to utilize its prior policy of accounting for these positions. A liability for taxes is recorded when
it is probable that the liability has been incurred and the amount of the liability can be reasonably estimated. If a tax liability is probable, but
cannot be reasonably estimated, or it is reasonably possible that a tax liability has been incurred, disclosure is required. Using that guidance, as
of September 30, 2009, the Bank has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The
Bank is no longer subject to federal, state, or local income tax examinations for years prior to 2005.

                                                                       F-16
Table of Contents

Note 8.    Deposits
     The aggregate amount of deposits with a balance of $100,000 or more totaled $15,180,475 and $12,007,695 at September 30, 2009 and
2008, respectively.

      Certificates of deposit and their remaining maturities at September 30, 2009 are as follows:

                        2010                                                                                $    20,657,826
                        2011                                                                                      8,950,930
                        2012                                                                                      2,609,937
                        2013                                                                                        587,139
                        2014                                                                                         44,369
                                                                                                            $    32,850,201


      Interest expense on deposits for the years ended September 30 was as follows:

                                                                                                 2009               2008
                        Interest bearing demand deposits                                           40,545             50,724
                        Savings deposits                                                          107,921            118,072
                        Certificates of deposit                                                 1,068,561          1,225,475
                                                                                                1,217,027          1,394,271


     Deposit balances of officers, directors and their affiliated interests totaled approximately $663,194 and $534,978 at September 30, 2009
and 2008, respectively.

      The Bank had no brokered deposits at September 30, 2009 and 2008.

      Deposit balances in excess of $250,000 are not insured by the FDIC.

Note 9.    Borrowings
      The Bank has advances outstanding from the Federal Home Loan Bank (―FHLB‖). A schedule of the borrowings follows:

            Advance                                                            Maturity
            Amount                              Rate                            Date                                    Balance at September 30
                                                                                                                 2009                             2008
          $1,000,000                                   4.2350%                      7/31/2017           $        1,000,000               $        1,000,000
           1,000,000                                   4.0100%                      8/21/2017                    1,000,000                        1,000,000
           1,500,000                                   3.2270%                     11/24/2017                    1,500,000                        1,500,000
           1,500,000                                   3.4000%                     11/27/2017                    1,500,000                        1,500,000
           1,000,000                                   2.5990%                      10/2/2018                    1,000,000                        1,000,000
           1,000,000                                   2.6000%                       7/2/2018                    1,000,000                        1,000,000
           1,000,000                                   3.0500%                       7/3/2018                    1,000,000                        1,000,000
           2,000,000                                   3.2500%                      9/24/2009                          —                          2,000,000
           3,000,000                                   0.3600%                      9/24/2010                    3,000,000                              —
                                                                                                        $       11,000,000               $    10,000,000


     Interest payments are due quarterly. After a loan specific holding period, the borrowings are callable by the FHLB, at which time the
Bank is able to convert from a fixed rate to a variable rate based on LIBOR. The Bank has credit availability of 30% of the Bank’s total assets.
The Bank has pledged their residential mortgage portfolio as collateral for this credit.

     Additionally, the Bank has credit availability of $1,500,000 with a correspondent bank for short term liquidity needs, if necessary. There
were no borrowings outstanding at September 30, 2009 and 2008 under these facilities.

                                                                      F-17
Table of Contents

Note 10.    Defined Contribution Benefit Plan
      In July 2009, the Bank established a 401(k) plan covering all full-time employees who have attained an age of 21 and have completed 12
months of service. The plan provides for the Bank to make contributions which will match employee deferrals on a one-to-one basis up to 4%
of an employee’s eligible compensation. Participants are 100% vested in their deferrals and employer matching contributions. Additional
contributions can be made at the discretion of the Board of Directors based on the Bank’s performance. Contributions for the years ended
September 30, 2009 and 2008 were $5,252 and $0, respectively.

Note 11.    Deferred Compensation Obligation
      In February 1985, the Bank entered into a deferred compensation arrangement with its former president, with payments to him or his
heirs to commence on the first day of the month coinciding with the date the president attained seventy-one years of age and continue for a
minimum of 10 years. The former president, at his own discretion, decided to delay the start of this agreement until fiscal year 2004.

      In June 2004, the Bank accrued a deferred compensation obligation of $66,237, relating to this agreement, utilizing a 5% interest factor
for present value calculations. This liability is intended to be ultimately funded by a $100,000 whole life insurance policy owned by the Bank,
insuring the former president. As of September 30, 2009, this policy had a $64,929 cash surrender value. Annual installments for the deferred
compensation obligation are $8,578, which include interest of $3,825. As of September 30, 2009, the Bank had $30,417 remaining on this
obligation to be paid over the remaining five years.

Note 12.    Regulatory Capital Requirements
      The Bank is subject to various regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Bank’s financial statements. The Bank must meet specific capital adequacy guidelines that involve quantitative
measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s
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 require the Bank to maintain minimum amounts and ratios (as
defined in the regulations) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to adjusted total assets. Management believes,
as of September 30, 2009 and 2008, that the Bank meets all capital adequacy requirements to which it is subject.

      As of September 30, 2009, the most recent notification from the Office of Thrift Supervision (―OTS‖) categorized the Bank as ―well
capitalized‖ under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain
minimum total risk-based capital, Tier 1 capital to risk-weighted assets, and Tier 1 capital to adjusted total assets, ratios. There have been no
conditions or events since that notification that management believes have changed the Bank’s category.

                                                                        F-18
Table of Contents

      The actual and required capital amounts and ratios as of September 30, 2009 and 2008, were as follows (dollars in thousands):

                                                                                                                                    To Be Well
                                                                                                                                  Capitalized under
                                                                                                                                    the Prompt
                                                                                                  For Capital Adequacy            Corrective Action
                                                                              Actual                    Purposes                     Provisions
                                                                         Amount      Ratio        Amount         Ratio           Amount        Ratio
As of September 30, 2009:
Total Risk-based Capital (to Risk-Weighted Assets)                         6,896     19.27 %        2,862           8.0 %        3,578          10.0 %
Tier I Capital (to Risk-weighted Assets)                                   6,727     18.80 %        1,431           4.0 %        2,147           6.0 %
Tier I Capital (to Adjusted Total Assets)                                  6,727     10.52 %        2,558           4.0 %        3,197           5.0 %
Tangible Capital (to Tangible Assets)                                      6,727     10.52 %          959           1.5 %         N/A            N/A

As of September 30, 2008:
Total Risk-based Capital (to Risk-Weighted Assets)                         6,385     21.47 %        2,379           8.0 %        2,974          10.0 %
Tier I Capital (to Risk-weighted Assets)                                   6,282     21.13 %        1,189           4.0 %        1,784           6.0 %
Tier I Capital (to Adjusted Total Assets)                                  6,282     11.29 %        2,226           4.0 %        2,783           5.0 %
Tangible Capital (to Tangible Assets)                                      6,282     11.29 %          835           1.5 %         N/A            N/A

      A reconciliation of equity reported under GAAP to regulatory capital is as follows:

                                                                                                            September 30,                  September 30,
                                                                                                                2009                           2008
Total equity                                                                                                $       6,790                 $        6,192
Adjustments for regulatory capital purposes:
     Accumulated losses (gains) on certain securities and cash flow hedges                                               (63 )                          90
           Total tangible, leverage and core (tier 1) capital                                                       6,727                          6,282
Qualifying allowance for loan losses                                                                                     169                           103
           Total risk based capital                                                                         $       6,896                 $        6,385


Note 13.    Fair Value Measurements
      Generally accepted accounting principles (GAAP) define fair value, establish a framework for measuring fair value, establish a
three-level valuation hierarchy for disclosure of fair value measurement and enhance disclosure requirements for fair value measurements. The
valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. GAAP clarifies
the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.

      The three levels are defined as follows:
      Level 1 : Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
      Level 2 : Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for
      identical or similar instruments in markets that are not active or by model-based techniques in which all significant inputs are observable
      in the market for the asset or liability, for substantially the full term of the financial instrument.
      Level 3 : Inputs to the valuation methodology are unobservable and significant to the fair value measurement and based on the Bank’s
      own assumptions about market participants’ assumptions.

      Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification
of such instruments pursuant to the valuation hierarchy:

   Securities
      Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 would
include highly liquid government bonds, mortgage products and exchange traded equities. If quoted market

                                                                        F-19
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prices are not available, securities are classified within level 2 and fair values are estimated by using pricing models, quoted prices of securities
with similar characteristics, or discounted cash flow. Level 2 would include U.S. agency securities, mortgage-backed agency securities,
obligations of states and political subdivisions and certain corporate, asset-backed and other securities. In certain cases where there is limited
activity or less transparency around inputs to the valuation, securities are classified within level 3 of the valuation hierarchy.

   Impaired Loans
      Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all
amounts due according to the contractual terms of the loan agreement will not be collected. Impaired loans are measured at an observable
market price (if available), or at fair value of the loan’s collateral ( if the loan is collateral dependent). When the loan is dependent on collateral,
fair value of collateral is determined by appraisal or independent valuation which is then adjusted for the related cost to sell. Impaired loans
allocated to the Allowance for Loan Losses are measured at the lower of cost or fair value on a nonrecurring basis.

   Foreclosed Real Estate
      Foreclosed real estate is measured at fair value less cost to sell. The valuation of the fair value measurement follows GAAP. Foreclosed
real estate is measured on a nonrecurring basis.

     The following table presents a summary of financial assets and liabilities measured at fair value on a recurring basis at September 30,
2009 and September 30, 2008:

                                                                                               Level 1         Level 2           Level 3           Total
September 30, 2009
    Securities available for sale                                                          $      —      $      3,327,518       $       —   $     3,327,518

September 30, 2008
    Securities available for sale                                                          $      —      $      7,018,727       $       —   $     7,018,727

     The following table presents a summary of financial assets and liabilities measured at fair value on a non-recurring basis at September 30,
2009 and 2008

                                                                                                                                                 Total
                                                                                                                                                 Gains
                                                                                Level 1    Level 2           Level 3            Total           (Losses)
September 30, 2009
    Impaired loans                                                              $   —      $     —       $ 116,219          $ 116,219       $        —
    Foreclosed real estate                                                      $   —      $     —       $ 95,000           $ 95,000        $    (39,763 )

September 30, 2008
    Impaired loans                                                              $   —      $     —       $         —        $           —   $         —
    Foreclosed real estate                                                      $   —      $     —       $         —        $           —   $         —

     In accordance with generally accepted accounting principles concerning accounting for Loan and Lease Losses, a loss of $39,763 was
recognized as a charge to the Allowance for Loan and Lease Losses at the time the foreclosed property was acquired based on an independent
appraisal of the property’s fair value.

      The Bank is not required to disclose the fair value of its financial instruments since its total assets are less than $100 million and it has no
derivative instruments.

Note 14.    Subsequent Events
      The Bank has evaluated events and transactions subsequent to September 30, 2009 through December 2, 2009, the date these financial
statements were issued. Based on the definitions and requirements of Generally Accepted Accounting Principles for ―Subsequent Events‖, we
have identified two events that have occurred subsequent to September 30, 2009 and through December 2, 2009, that require disclosure in the
financial statements. The first event is:
        •    The Bank plans to convert from a mutual institution to a stock based institution during the first quarter of 2010 as further explained
             in Note 16.

                                                                         F-20
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        •    The Bank plans to file a ―Change in Accounting Method‖ election with the Internal Revenue Service in December 2009 to begin
             filing its tax returns on the accrual basis of accounting starting with its 2009-2010 fiscal year.

Note 15.    Other Operating Expenses
      Other operating expenses consist of the following:

                                                                                                       2009              2008
                    Advertising                                                                    $    22,986       $    10,416
                    Bank service charges                                                                23,758            19,851
                    Software maintenance                                                                21,906            24,486
                    Organization dues and subscriptions                                                  7,231             5,738
                    Supervisory examination                                                             25,512            21,982
                    Telephone                                                                            5,526             5,595
                    Postage                                                                              8,800             6,556
                    Meals and entertainment                                                              9,825             5,336
                    Training and seminars                                                                7,630             4,985
                    Other operating expenses                                                            33,253            23,833
                        Total other operating expenses                                             $ 166,427         $ 128,778


Note 16.    Plan of Conversion
       On October 21, 2009, the Bank’s Board of Directors approved a plan (the ―Plan‖) to convert from a federally-chartered mutual savings
bank to a federally-chartered stock form of organization, subject to approval by its members. The Plan, which includes formation of a holding
company to own all of the outstanding capital stock of the Bank, is subject to approval by the Office of Thrift Supervision (OTS) and includes
the filing of a registration statement with the Securities and Exchange Commission.

      The cost of conversion and issuing and selling the capital stock will be deferred and deducted from the proceeds of the offering. In the
event the conversion and offering are not completed, any deferred costs will be charged to operations. Through September 30, 2009, the Bank
had incurred no conversion costs.

      The Plan calls for the common stock of the holding company to be offered to various parties in a subscription offering at a price based on
an independent appraisal of the Bank. It is anticipated that any shares not purchased in the subscription offering will be offered in a community
offering. The Bank may not declare or pay a cash dividend if the effect thereof would cause its net worth to be reduced below either the amount
required for the liquidation account discussed below or the regulatory capital requirements imposed by the OTS.

       At the time of conversion, the Bank will establish a liquidation account in an amount equal to its retained earnings as reflected in the
latest balance sheet used in the final conversion prospectus. The liquidation account will be maintained for the benefit of eligible account
holders who continue to maintain their deposit accounts in the Bank after conversion. The liquidation account will be reduced annually to the
extent that eligible depositors have reduced their qualifying deposits. In the event of a complete liquidation of the Bank, eligible depositors who
continue to maintain accounts in accordance with OTS regulations shall be entitled to receive a distribution from the liquidation account before
any liquidation may be made with respect to common stock.

                                                                       F-21
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      You should rely only on the information contained in this document or that to which we have referred you. No person has been
authorized to give any information or to make any representation other than as contained in this prospectus and, if given or made,
such other information or representation must not be relied upon as having been authorized by Fairmount Bancorp, Inc. or Fairmount
Bank. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any
person in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation
is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the
delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change
in the affairs of Fairmount Bancorp, Inc. or Fairmount Bank since any of the dates as of which information is furnished herein or since
the date hereof.




                            FAIRMOUNT BANCORP, INC.
                                                (Holding Company for Fairmount Bank)


                                                     Up to 575,000 Shares of
                                                         Common Stock
                                                     Par value $0.01 per share
                                              (Subject to Increase to up to 661,250 Shares)




                                                          PROSPECTUS




                                                        Stifel Nicolaus

                                                                        ,




      Until           , 2010 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. This is in addition to the dealers’ obligation to deliver the prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
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                                     PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.      Other Expenses of Issuance and Distribution

                                                                                                                      Amount
                                                                                                                        (1)

                    *     Registrant’s Legal Fees and Expenses                                                      $ 200,000
                    *     Registrant’s Accounting Fees and Expenses                                                    60,000
                    *     Conversion Agent and Data Processing Fees                                                    20,000
                    *     Marketing Agent Fees (1)                                                                    150,000
                    *     Marketing Agent Expenses (Including Legal Fees and Expenses)                                 65,000
                    *     Appraisal Fees and Expenses                                                                  30,000
                    *     Printing, Postage, Mailing and EDGAR Fees                                                    65,000
                    *     Filing Fees (OTS, FINRA and SEC)                                                             20,000
                    *     Transfer Fees and Expenses                                                                   15,000
                    *     Stock Certificate Printer Fees and Expenses                                                  10,000
                    *     Business Plan Fees and Expenses                                                              30,000
                    *     Blue Sky Fees and Expenses                                                                   25,000
                    *     Other                                                                                        10,000
                    *     Total                                                                                     $ 700,000



*     Estimated
(1)   Fairmount Bancorp, Inc. has retained Stifel, Nicolaus & Company, Incorporated to assist in the sale of common stock on a best efforts
      basis in the offerings.

Item 14.      Indemnification of Directors and Officers
      Articles 10 and 11 of the Articles of Incorporation of Fairmount Bancorp, Inc. (the ―Corporation‖) set forth circumstances under which
directors, officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in their capacities
as such:

   ARTICLE 10. Indemnification, etc. of Directors and Officers.
       A. Indemnification. The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation
or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be
authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with
respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.

      B. Procedure. If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period
shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the
claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall
be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to
repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation
by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any
suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to
an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met
the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors,
independent

                                                                       II-1
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legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee
is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual
determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not
met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in
the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under
this Article 10 or otherwise shall be on the Corporation.

      C. Non-Exclusivity. The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive
of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any agreement,
any vote of stockholders or the Board of Directors, or otherwise.

     D. Insurance. The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

      E. Miscellaneous. The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any
indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the
amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B
of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall
inure to the benefit of the indemnitee’s heirs, executors and administrators.

      Any repeal or modification of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of
such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this
Article 10 is in force.

      ARTICLE 11. Limitation of Liability. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its
stockholders for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in
money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a
judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person’s
action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding;
or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers
and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the
MGCL, as so amended.

      Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation existing at the time of such repeal or modification.

Item 15.        Recent Sales of Unregistered Securities
      Not Applicable.

                                                                        II-2
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Item 16.          Exhibits and Financial Statement Schedules:
          The exhibits and financial statement schedules filed as part of this registration statement are as follows:
        (a) List of Exhibits

    1.1           Engagement Letter between Fairmount Bank and Stifel Nicolaus.
    1.2           Agency Agreement between Fairmount Bancorp, Inc. and Stifel Nicolaus.
    2             Plan of Conversion*
    3.1           Articles of Incorporation of Fairmount Bancorp, Inc., as amended
    3.2           Bylaws of Fairmount Bancorp, Inc.*
    4             Form of Common Stock Certificate of Fairmount Bancorp, Inc.*
    5.1           Opinion of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. regarding legality of securities being registered
    8.1           Federal Tax Opinion of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P.
    8.2           State Tax Opinion of Smith Elliott Kearns & Company, LLC
10.1              Employment Agreement between Fairmount Bank and Joseph M. Solomon*
10.2              Form of Employment Agreement between Fairmount Bank and Joseph M. Solomon, as amended
10.3              Form of Employment Agreement between Fairmount Bancorp, Inc. and Joseph M. Solomon, as amended
10.4              Form of Change in Control Agreement with Jodi L. Beal and Lisa A. Cuddy, as amended
10.5              Fairmount Bank Employee Stock Ownership Plan*
23.1              Consent of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P. (contained in Opinions included as Exhibits 5 and 8.1)
23.2              Consent of Smith Elliott Kearns & Company, LLC
23.3              Consent of Feldman Financial Advisors, Inc.
24                Power of Attorney (set forth on signature page)
99.1              Appraisal Agreement between Fairmount Bank and Feldman Financial Advisors, Inc.*
99.2              Letter of Feldman Financial Advisors, Inc. with respect to Subscription Rights*
99.3              Appraisal Report of Feldman Financial Advisors, Inc.*
99.4              Marketing Materials
99.5              Stock Order Form
99.6              Business Plan Agreement with RP Financial, LC.*
99.7              Records Processing Services Agreement between Stifel Nicolaus and Fairmount Bank.*

*          Previously filed.

        (b) Financial Statement Schedules
      No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial
statements or related notes.

                                                                            II-3
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Item 17.      Undertakings
      The undersigned Registrant hereby undertakes:

      (1) To file, during any period in which it offers or sales are being made, a post-effective amendment to this registration statement:
            (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
            (ii) 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 a 20 percent change in the maximum aggregate offering price set forth
      in the ―Calculation of Registration Fee‖ table in the effective registration statement;
            (iii) 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.

    (2) 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 offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

     (3) 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 offering.

      (4) 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.

       (5) 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:

       (6) That, 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.

      (7) That, 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.

       (8) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

                                                                         II-4
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      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:
           (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to
      Rule 424 (§230.424 of this chapter);
            (ii) 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;
            (iii) 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
            (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

                                                                        II-5
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                                                                 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 County of Baltimore, State of Maryland on February 5, 2010.

                                                                                        FAIRMOUNT BANCORP, INC.

                                                                                        By:            /S/    J OSEPH M. S OLOMON
                                                                                                                 Joseph M. Solomon
                                                                                                        President and Chief Executive Officer
                                                                                                          (Duly Authorized Representative)


                                                           POWER OF ATTORNEY

      We, the undersigned directors and officers of Fairmount Bancorp, Inc. (the ―Company‖) hereby severally constitute and appoint Joseph
M. Solomon as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said
Joseph M. Solomon may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, and any rules,
regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form S-1 relating to
the offering of the Company’s common stock, including specifically, but not limited to, power and authority to sign for us in our names in the
capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we
hereby approve, ratify and confirm all that said Joseph M. Solomon shall do or cause to be done by virtue thereof.

     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 indicated.

                             Signatures                                                  Title                                           Date


             /S/     J OSEPH M. S OLOMON                     President, Chief Executive Officer and Director                     February 5, 2010
                          Joseph M. Solomon                  (Principal Executive Officer)

                    /S/    J ODI L. B EAL                    Vice President, Chief Financial Officer and Treasurer               February 5, 2010
                             Jodi L. Beal                    (Principal Financial and Accounting Officer)

                                  *                          Chairman of the Board                                               February 5, 2010
                          William G. Yanke


                                  *                          Director                                                            February 5, 2010
                           James E. Elliott


                                  *                          Director and Secretary                                              February 5, 2010
                           Edward J. Lally


                                  *                          Director                                                            February 5, 2010
                            Mary R. Craig


             /S/     J OSEPH M. S OLOMON
                          Joseph M. Solomon
                           Attorney-In-Fact

                                                                        II-6
                                                                                                                                     Exhibit 1.1

                                                              CONFIDENTIAL

January 15, 2010

Mr. Joseph M. Solomon
President and Chief Executive Officer
Fairmount Bank
8201 Philadelphia Road
Baltimore, Maryland 21237

           Re:       Proposed Full Conversion – Advisory, Administrative and Marketing Services

Dear Mr. Solomon:

Stifel, Nicolaus & Company, Incorporated (―Stifel Nicolaus‖) is pleased to submit this engagement letter setting forth the terms of the proposed
engagement between Stifel Nicolaus and Fairmount Bank (the ―Bank‖) in connection with the proposed mutual-to-stock conversion of the
Bank (―the Conversion‖) and the concurrent sale of common stock of a stock holding company (the ―Company‖) to be formed in connection
with the Conversion.

1. BACKGROUND ON STIFEL NICOLAUS
Stifel Nicolaus is a full service brokerage and investment banking firm established in 1890. Stifel Nicolaus is a registered broker-dealer with
the Securities and Exchange Commission, and is a member of the New York Stock Exchange, Inc., Financial Industry Regulatory Authority
(―FINRA‖), the Securities Industry and Financial Markets Association and the Securities Investor Protection Corporation. Stifel Nicolaus has
built a national reputation as a leading full service investment bank to both public and private financial institutions.

2. CONVERSION AND OFFERING
The Bank will effect the Conversion by forming the Company (the Bank and the Company are referred to collectively herein as the
―Company.‖) The common stock of the Company (the ―Common Stock‖) would be offered for sale on a first priority basis in a subscription
offering with any remaining shares expected to be sold in a community offering and, if necessary, a syndicated community offering
(collectively the ―Offering‖). In connection therewith, the Bank’s Board of Directors plan to adopt a plan of conversion (the ―Plan‖). Stifel
Nicolaus will act as conversion advisor to the Company with
Fairmount Bank
Page 2

respect to the Conversion, and as marketing agent on a best-efforts basis with respect to the Offering. Specific terms of services shall be set
forth in an agency agreement, in the case of the subscription and community offering and a syndicated community offering or, if appropriate, a
public underwriting agreement (together, the ―Definitive Agreement‖) between Stifel Nicolaus and the Company. The Definitive Agreement
will include customary representations and warranties, covenants, conditions, termination provisions and indemnification, contribution and
limitation of liability provisions, all to be mutually agreed upon by Stifel Nicolaus and the Company.

3. SERVICES TO BE PROVIDED BY STIFEL NICOLAUS
Stifel Nicolaus will provide and coordinate certain advisory, administrative and marketing services in connection with the Company’s
Conversion and Offering as outlined below.

a. Advisory Services - Stifel Nicolaus will work with the Company and its counsel to evaluate financial, marketing and regulatory issues.

Our advisory responsibilities include:
           •       Advise with respect to business planning issues in preparation for a public offering;
           •       Advise with respect to the choice of charter and form of organization;
           •       Review and advise with respect to the Plan (e.g. sizes of benefit plan purchases; maximum purchase limits for investors);
           •       Advise with respect to listing on appropriate stock exchange or other trading venue;
           •       Review and provide input with respect to the business plan to be prepared in connection with the Conversion;
           •       Discuss the appraisal process and analyze the appraisal with the Board of Directors and management;
           •       Participate in drafting the offering disclosure documents and any Bank customer proxy materials, and assist in obtaining all
                   requisite regulatory approvals;
           •       Develop a marketing plan for the subscription and community offerings, considering various sales method options,
                   including direct mail, advertising, community meetings and telephone solicitation;
           •       Develop a Bank customer proxy solicitation plan;
           •       Stifel Nicolaus will work with the Company to provide specifications and assistance (including recommendations) in
                   selecting certain other professionals that will perform functions in connection with the Conversion and Offering process.
                   Fees and expenses of financial printers, transfer agent and other service providers will be borne by the Company, subject to
                   agreements between the Company and the service providers;
           •       Advise/Assist client through the planning process and organization of the Stock Information Center (the ―Center‖);
           •       Develop a layout for the Center, where stock order processing and customer vote solicitation occur;
Fairmount Bank
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           •       Provide a list of equipment, staff and supplies needed for the Center;
           •       Draft marketing materials including press releases, letters, stock order form, advertisements, and informational brochures. If
                   a community meeting or ―road show‖ is anticipated, we will help draft the presentation – saving you the time and legal
                   expense; and
           •       After consulting with management, determining whether and when to conduct a syndicated community offering through
                   assembling a group of selected broker/dealers (including Stifel Nicolaus) to sell stock remaining after the community
                   offering, on a best-effort basis and then conducting/managing such syndicated community offering. Alternatively, after
                   consulting with management, conducting a ―stand-by‖ firm commitment public underwriting, including Stifel Nicolaus and
                   other broker/dealers.

b. Administrative Services and Stock Information Center Management – Stifel Nicolaus will manage substantially all aspects of the stock
offering and customer voting processes.

The Stock Information Center (as defined above) serves as the ―command center‖ during a stock offering. Stifel Nicolaus staff will train and
supervise the staff that the Company assigns to the Center to help record stock orders, answer customer inquiries, place vote solicitation calls
and participate in other activities of the Center.

Our administrative services include:
           •       Provide experienced on-site Stifel Nicolaus FINRA registered representatives to manage and supervise the Center. All
                   technical stock offering and customer proxy vote matters and inquiries will be handled by Stifel Nicolaus;
           •       Prepare procedures for processing customer proxy votes, stock orders, deposit account withdrawals and cash, and for
                   handling requests for materials;
           •       Provide scripts and training for the telephone team who solicit customer proxies and, if needed, help conduct a stock sales
                   telemarketing effort;
           •       Educate the Company’s directors, officers and employees about the Conversion and Offering, their roles and relevant
                   securities laws;
           •       Train branch managers and customer-contact employees on the proper response to stock purchase and proxy vote inquiries;
           •       Coordinate functions with and between the printer, transfer agent, stock certificate printer and other professionals;
           •       Design and implement procedures for facilitating stock orders within IRA and Keogh accounts;
           •       Supervise Center staff in order processing and in proxy solicitation efforts;
           •       Prepare daily sales reports for management, ensuring funds processed balance to the reports;
           •       Monitor the proxy vote response and make any needed revisions to the calling/reminder mailing plan;
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           •       Manage the pro-ration process in the event of subscription and community offering oversubscription;
           •       Coordinate with stock exchange and the Depository Trust Company to ensure a smooth closing and orderly stock trading;
                   and
           •       Provide post-offering subscriber assistance.

c. Securities Marketing Services – Stifel Nicolaus uses various sales techniques including direct mail, advertising, community investor
meetings, telephone solicitation, and if necessary, assembling a selling group of broker-dealers for a syndicated community offering.

Our securities marketing services include:
           •       If applicable, assisting management in developing a list of potential investors who are viewed as priority prospects;
           •       The Stifel Nicolaus registered representatives at the Center will seek to manage the sales function and, if applicable, will
                   solicit orders from the prospects described above;
           •       Responding to investment-related and other questions regarding information in the Offering disclosure documents provided
                   to potential investors;
           •       If the sales plan calls for community meetings, participate in them. ;
           •       Continually advise management on sales progress, market conditions and customer/community responsiveness to the
                   Offering;
           •       In case of a best-efforts syndicated community offering, manage the selling group. Alternatively, manage the underwriters
                   participating in a ―stand-by‖ firm commitment underwritten public offering. In either case, we will prepare broker ―fact
                   sheets‖ and arrange ―road shows‖ for the purpose of stimulating interest in the stock offering and informing the brokerage
                   community of the particulars of the Offering; and
           •       Contacting other market makers to maximize after-market support for the Company’s Common Stock.

4. COMPENSATION
For its services hereunder, the Company will pay to Stifel Nicolaus the following compensation:
     a.    A conversion and proxy vote advisory and administrative services fee of $25,000 in connection with the services set forth in
           section 3.a. and 3.b. hereof. In view of the long preparation phase prior to commencement of the Offering, this fee shall be payable
           as follows: $12,500 upon executing this letter and $12,500 upon the initial filing of the Offering disclosure documents.
     b.    A success fee of $150,000.
     c.    For stock sold by a group of selected dealers (including Stifel Nicolaus) pursuant to a syndicated community offering solely
           managed by Stifel Nicolaus (the ―Selling Group‖), a fee equal to one percent (1.00%) of the aggregate dollar amount of Common
           Stock sold in the syndicated community offering, which fee paid to Stifel Nicolaus, along with the fee payable directly by the
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Page 5

            Company to Stifel Nicolaus and the other selected dealers for their sales shall not exceed six percent (6.00%) of the aggregate
            dollar amount of Common Stock so sold, provided Stifel Nicolaus will endeavor to limit the aggregate fees to be paid by the
            Company under any such selected dealers’ agreement to an amount competitive with gross underwriting discounts charged at such
            time. In consultation with Stifel Nicolaus, the Company will determine which FINRA member firms will participate in the Selling
            Group and the extent of their participation. Stifel Nicolaus will not commence sales of the Common Stock through the Selling
            Group without the specific prior approval of the Company.
      d.    If, pursuant to a resolicitation of subscribers undertaken by the Company, Stifel Nicolaus is required to provide significant
            additional services, the additional compensation due will not exceed $20,000.

            The above compensation, less the amount of advance payments described in subparagraph a., is to be paid to Stifel Nicolaus at the
closing of the Offering.

             If (i) the Plan is abandoned or terminated by the Bank; (ii) the Offering is not consummated by September 30, 2010; (iii) Stifel
Nicolaus terminates this relationship because there has been a material adverse change in the financial condition or operations of the Bank
since September 30, 2009; or (iv) immediately prior to commencement of the Offering, Stifel Nicolaus terminates this relationship because in
its opinion, which shall have been formed in good faith after reasonable determination and consideration of all relevant factors, there has been a
failure to satisfactorily disclose all relevant information in the offering document or other disclosure documents or market conditions exist
which might render the sale of the Common Stock inadvisable to the Company, Stifel Nicolaus shall not be entitled to the compensation set
forth in subparagraph 4.b through 4.d above, but in addition to reimbursement of its reasonable out-of-pocket expenses as set forth in paragraph
7 below, Stifel Nicolaus shall be entitled to retain its fee in subparagraph 4.a above for its conversion and proxy solicitation advisory and
administrative services.

5. MARKET MAKING
Stifel Nicolaus agrees to use its best efforts to maintain a market after the Offering and to solicit other broker-dealers to make a market in the
Common Stock at the conclusion of the Offering.

6. DOCUMENTS
The Company and its counsel will complete, file with the appropriate regulatory authorities and, as appropriate, amend from time to time, the
information to be contained in the Company’s applications to banking and securities regulators and any related exhibits thereto. In this regard,
the Company and its counsel will prepare offering documents relating to the offering of the Common Stock in conformance with applicable
rules and regulations. As the Company’s financial advisor, Stifel Nicolaus will, in conjunction with its counsel, conduct an examination of the
relevant documents and records of the Company and will make such other reasonable investigations as deemed necessary and
Fairmount Bank
Page 6

appropriate under the circumstances. The Company agrees to make all documents, records and other information deemed necessary by Stifel
Nicolaus, or its counsel, available to them upon reasonable notice. Stifel Nicolaus’ counsel will prepare, subject to the approval of Company’s
counsel, the Definitive Agreement. Stifel Nicolaus’ counsel will be selected by Stifel Nicolaus.

7. EXPENSES AND REIMBURSEMENT
The Company will bear all of its expenses in connection with the Conversion and the Offering of Common Stock including, but not limited to:
appraisal and business plan preparation; the Company’s attorney fees; FINRA filing fees; ―blue sky‖ legal fees and state filing fees; fees and
expenses of service providers such as transfer agent, information/data processing agent, financial and stock certificate printers, auditors and
accountants; advertising; postage; ―road show‖ and other syndicated community or publicly underwritten offering costs; and all costs of
operating the Stock Information Center, including hiring temporary personnel, if necessary. In the event Stifel Nicolaus incurs such expenses
on behalf of the Company, the Company shall reimburse Stifel Nicolaus for such reasonable fees and expenses regardless of whether the
Conversion and Offering are successfully completed. Stifel Nicolaus will not incur actual accountable reimbursable out-of-pocket expenses in
excess of $15,000 in the subscription and community offerings and in excess of $20,000 in the syndicated community offering. Stifel Nicolaus
will not incur any single expense of more than $1,000, pursuant to this paragraph without the prior approval of the Company.

The Company also agrees to reimburse Stifel Nicolaus for its reasonable out-of-pocket expenses, including legal fees and expenses, incurred by
Stifel Nicolaus in connection with the services contemplated hereunder. In the subscription and community offering, Stifel Nicolaus will not
incur legal fees (including the out-of-pocket expenses of counsel) in excess of $50,000. The parties acknowledge, however, that such cap may
be increased by the mutual consent of the Company and Stifel Nicolaus in the event of a material delay in the Offering which would require an
update of the financial information in tabular form to reflect a period later than that set forth in the original filing of the offering document;
provided that under such circumstances, Stifel Nicolaus will not incur any additional accountable reimbursable out-of-pocket expenses in
excess of $5,000 or additional reimbursable legal fees in excess of $10,000 and that the aggregate of all reimbursable expenses and legal fees
shall not exceed $100,000. In addition, in the event of a syndicated community offering or publicly underwritten offering, the Company will
reimburse all reasonable out-of-pocket expenses incurred in connection with that offering phase. Not later than two days before closing, Stifel
Nicolaus will provide the Company with a detailed accounting of all reimbursable expenses of Stifel Nicolaus and its counsel to be paid at
closing.

8. BLUE SKY
To the extent required by applicable state law, Stifel Nicolaus and the Company must obtain or confirm exemptions, qualifications or
registration of the Common Stock under applicable state securities laws and FINRA policies. The cost of such legal work and related state
filing fees will be paid by the Company to the law firm furnishing such legal work. The Company will instruct the
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Page 7

counsel performing such services to prepare a Blue Sky memorandum related to the Offering including Stifel Nicolaus’ participation therein
and shall furnish Stifel Nicolaus a copy thereof, regarding which such counsel shall state Stifel Nicolaus may rely.

9. INFORMATION AGENT SERVICES
Pursuant to a separate agreement by and between the Company and Stifel Nicolaus and in connection with the Conversion and Offering, Stifel
Nicolaus shall serve as information agent for the Company. ,

10. INDEMNIFICATION
The Definitive Agreement will provide for indemnification of the type usually found in underwriting agreements as to certain liabilities,
including liabilities under the Securities Act of 1933. The Company also agrees to defend, indemnify and hold harmless Stifel Nicolaus and its
officers, directors, employees and agents against all claims, losses, actions, judgments, damages or expenses, including but not limited to
reasonable attorney fees, arising solely out of the engagement described herein, except that such indemnification shall not apply to Stifel
Nicolaus’ own bad faith, willful misconduct or gross negligence.

11. CONFIDENTIALITY
To the extent consistent with legal requirements and except as otherwise set forth in the offering document, all information given to Stifel
Nicolaus by the Company, unless publicly available or otherwise available to Stifel Nicolaus without restriction to breach of any confidentiality
agreement (―Confidential Information‖), will be held by Stifel Nicolaus in confidence and will not be disclosed to anyone other than Stifel
Nicolaus’ agents without the Company’s prior approval or used for any purpose other than those referred to in this engagement letter. Upon the
termination of its engagement, Stifel Nicolaus, at the request of the Company, will promptly deliver to the Company all materials specifically
produced for it and will return to the Company all Confidential Information provided to Stifel Nicolaus during the course of its engagement
hereunder.

12. FINRA MATTERS
Stifel Nicolaus has an obligation to file certain documents and to make certain representations to the Financial Industry Regulatory Authority in
connection with the Offering. The Company agrees to cooperate with Stifel Nicolaus and provide such information as may be necessary for
Stifel Nicolaus to comply with all FINRA requirements applicable to its participation in the Offering. Stifel Nicolaus is and will remain through
completion of the Offering a member in a good standing of the FINRA and will comply with all applicable FINRA requirements.
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13. OBLIGATIONS
Except as set forth below, this engagement letter is merely a statement of intent. While Stifel Nicolaus and the Company agree in principle to
the contents hereof and propose to proceed promptly and in good faith to work out the arrangements with respect to the Offering, any legal
obligations between Stifel Nicolaus and the Company shall be only: (i) those set forth herein in paragraphs 2, 3 and 4 regarding services and
payments; (ii) those set forth in paragraph 7 regarding reimbursement for certain expenses; (iii) those set forth in paragraph 10 regarding
indemnification; (iv) those set forth in paragraph 11 regarding confidentiality; and (v) as set forth in a duly negotiated and executed Definitive
Agreement.

The obligation of Stifel Nicolaus to enter into the Definitive Agreement shall be subject to there being, in Stifel Nicolaus’ opinion, which shall
have been formed in good faith after reasonable determination and consideration of all relevant factors: (i) no material adverse change in the
condition or operation of the Company; (ii) satisfactory disclosure of all relevant information in the offering disclosure documents and a
determination that the sale of stock is reasonable given such disclosures; (iii) no market conditions which might render the sale of the shares by
the Company hereby contemplated inadvisable to the Company; (iv) agreement that the price established by the independent appraiser is
reasonable in the then-prevailing market conditions, and (v) approval of Stifel Nicolaus’ internal Commitment Committee.

14. INDEPENDENT CONTRACTOR; NO FIDUCIARY DUTY
The Company acknowledges and agrees that it is a sophisticated business enterprise and that Stifel Nicolaus has been retained pursuant to this
engagement letter to act as financial advisor to the Company solely with respect to the matters set forth herein. In such capacity, Stifel Nicolaus
will act as an independent contractor, and any duties of Stifel Nicolaus arising out of this engagement pursuant to this letter shall be contractual
in nature and shall be owed solely to the Company. Each party disclaims any intention to impose any fiduciary duty on the other.

15. GOVERNING LAW
This engagement letter shall be governed by and construed in accordance with the laws of the State of Maryland applicable to contracts
executed and to be wholly performed therein without giving effects to its conflicts of laws principles or rules. Any dispute here under shall be
brought in a court in the State of Maryland.

16. WAIVER OF TRIAL BY JURY
BOTH STIFEL NICOLAUS AND THE COMPANY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING
OUT OF THIS AGREEMENT.
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Page 9

Please acknowledge your agreement to the foregoing by signing in the place provided below and returning one copy of this letter to our office
together with the retainer payment in the amount of $12,500. We look forward to working with you.

STIFEL, NICOLAUS & COMPANY,
INCORPORATED

BY:
      David P. Lazar
      Managing Director

Accepted and Agreed to This      Day of          , 2010

FAIRMOUNT BANK

BY:
      Joseph M. Solomon
      President and Chief Executive Officer

      cc:   Edward B. Crosland, Jr.
            Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P.
                                                                                                                                    Exhibit 1.2

                                                      FAIRMOUNT BANCORP, INC.
                                                           (a Maryland corporation)
                                                             Up to 575,000 Shares
                                                  (Subject to Increase Up to 661,250 Shares)

                                                    COMMON STOCK ($0.01 Par Value)
                                                     Subscription Price $10.00 Per Share

                                                     FORM OF AGENCY AGREEMENT

                                                                           , 2010

Stifel, Nicolaus & Company, Incorporated
237 Park Avenue, 8th Floor
New York, New York 10017

Ladies and Gentlemen:

     Fairmount Bancorp, Inc., a Maryland corporation (the ―Holding Company‖), and Fairmount Bank (the ―Bank‖ and, together with the
Holding Company, the ―Primary Parties‖), hereby confirm, jointly and severally, their agreement with Stifel, Nicolaus & Company,
Incorporated (the ―Agent‖), as follows:

       Section 1. The Offering . On October 21, 2009, the Board of Directors of the Bank adopted a Plan of Conversion (the ―Plan‖), which
provides for (i) the conversion of the Bank from the mutual to the stock form of organization in accordance with the laws of the United States
and the applicable regulations of the Office of Thrift Supervision (the ―OTS‖) (collectively, the ―Conversion Regulations‖), the issuance of all
of the Bank’s outstanding common stock to the Holding Company and the issuance of all of the outstanding common stock of the Holding
Company in the Offering (as hereinafter defined) (the ―Conversion‖). Upon completion of the Conversion, the Bank will be a wholly owned
subsidiary of the Holding Company. As part of the Plan, the Holding Company is offering up to 575,000 shares (subject to an increase of up to
661,250 shares) (the ―Shares‖) of common stock, par value $0.01 per share (the ―Common Stock‖), in (i) a subscription offering (the
―Subscription Offering‖) and, if necessary, (ii) a direct community offering (the ―Community Offering‖) and (iii) a syndicated community
offering (the ―Syndicated Community Offering‖ and, collectively with the Subscription Offering and the Community Offering, the ―Offering‖),
in connection with the Conversion. The Holding Company will issue the Shares at a purchase price of $10.00 per share (the ―Purchase Price‖).
If the number of Shares is increased or decreased in accordance with the Plan, the term ―Shares‖ as used herein shall mean such greater or
lesser number, where applicable. All references to the Bank herein shall include the Bank in its current form and post-Conversion as a wholly
owned subsidiary of the Holding Company, as applicable.
      In the Subscription Offering, non-transferable rights to subscribe for between 425,000 and 575,000 Shares (subject to an increase of up to
661,250 Shares) of the Common Stock (the ―Subscription Rights‖) will be granted, in the following order of priority: (i) the Bank’s depositors
with aggregate account balances of at least $50.00 as of the close of business on September 30, 2008 (the ―Eligible Account Holders‖); (ii) the
Bank’s tax-qualified employee benefit plans; (iii) the Bank’s depositors with aggregate account balances of at least $50.00 as of the close of
business on                 (the ―Supplemental Eligible Account Holders‖); and (iv) to depositors of the Bank as of               (the ―Other
Members‖). The Holding Company may offer Shares, if any, remaining after the Subscription Offering in the Community Offering on a
priority basis to natural persons residing in the City of Baltimore, Maryland and the Maryland Counties of Baltimore and Harford and then to
the general public. In the event the Community Offering is held, it may be held at any time during or immediately after the Subscription
Offering. Depending on market conditions, Shares available for sale but not subscribed for in the Subscription Offering or purchased in the
Community Offering may be offered in the Syndicated Community Offering to selected members of the general public through a syndicate of
registered broker-dealers managed by the Agent which are members of the Financial Industry Regulatory Authority, Inc. (the ―FINRA‖).

      It is acknowledged that the number of Shares to be sold in the Offering may be increased or decreased as described in the Prospectus (as
hereinafter defined); that the purchase of Shares in the Offering is subject to maximum and minimum purchase limitations as described in the
Prospectus; and that the Holding Company may reject, in its sole discretion, in whole or in part, any subscription received in the Community
Offering and Syndicated Community Offering.

      The Holding Company has filed with the U.S. Securities and Exchange Commission (the ―Commission‖) a Registration Statement on
Form S-1 (File No. 333-163797) in order to register the Shares under the Securities Act of 1933, as amended (the ―1933 Act‖), and the
regulations promulgated thereunder (the ―1933 Act Regulations‖), and has filed such amendments thereto as have been required to the date
hereof (the ―Registration Statement‖). The prospectus, as amended, included in the Registration Statement at the time it initially became
effective is hereinafter called the ―Prospectus,‖ except that if any prospectus is filed by the Holding Company pursuant to Rule 424(b) or (c) of
the 1933 Act Regulations differing from the prospectus included in the Registration Statement at the time it initially becomes effective, the
term ―Prospectus‖ shall refer to the prospectus filed pursuant to Rule 424(b) or (c) from and after the time said prospectus is filed with the
Commission and shall include any supplements and amendments thereto from and after their dates of effectiveness or use, respectively.

      In connection with the Conversion, (i) the Bank has filed with the OTS an Application for Conversion on Form AC (together with any
other required ancillary applications and/or notices, the ―Conversion Application‖) and amendments thereto as required by the OTS in
accordance with the Conversion Regulations and (ii) the Holding Company has filed with the OTS an application on Form H-(e)1-S (together
with any other required ancillary applications and/or notices, the ―Holding Company Application‖) and amendments thereto as required by the
OTS in accordance with the Conversion Regulations. Collectively, the Conversion Application and the Holding Company Application may
also be defined as the ―Applications.‖

                                                                        2
      Concurrently with the execution of this Agreement, the Holding Company is delivering to the Agent copies of the Prospectus
dated              , 2010 to be used in the Subscription Offering and Community Offering (if any) and, if necessary, will deliver copies of the
Prospectus and any prospectus supplement for use in the Syndicated Community Offering.

      Section 2. Appointment of Agent . Subject to the terms and conditions of this Agreement, the Primary Parties hereby appoint the Agent
to consult with, advise and assist the Primary Parties in connection with the sale of the Shares in the Offering.

      On the basis of the representations and warranties of the Primary Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to use its best efforts to assist the Primary Parties with the solicitation of
subscriptions and purchase orders for the Shares and agrees to consult with and advise the Primary Parties as to the matters set forth in
Section 3 of the letter agreement, dated August 19, 2009 between the Bank and the Agent (the ―Letter Agreement‖) (a copy of which is
attached hereto as Exhibit A ). It is acknowledged by the Primary Parties that the Agent shall not be obligated to purchase any Shares and shall
not be obligated to take any action which is inconsistent with any applicable law, regulation, decision or order. Except as set forth in Section 13
hereof, the appointment of the Agent to provide services hereunder shall terminate upon consummation of the Offering.

      If selected broker-dealers are used to assist in the sale of Shares in the Syndicated Community Offering, the Primary Parties hereby,
subject to the terms and conditions of this Agreement, appoint the Agent to manage such broker-dealers in the Syndicated Community
Offering. On the basis of the representations and warranties of the Primary Parties contained in, and subject to the terms and conditions of, this
Agreement, the Agent accepts such appointment and agrees to manage the selling group of broker-dealers in the Syndicated Community
Offering.

      Section 3. Refund of Purchase Price . In the event that the Conversion and Offering are not consummated for any reason, including but
not limited to the inability to sell a minimum of 425,000 Shares during the Offering (including any permitted extension thereof) or such other
minimum number of Shares as shall be established consistent with the Plan and the Conversion Regulations, this Agreement shall terminate
and any persons who have subscribed for or ordered any of the Shares shall have refunded to them the full amount which has been received
from such person, together with interest, if applicable, as provided in the Prospectus. Upon termination of this Agreement, neither the Agent
nor the Primary Parties shall have any obligation to the other except that (i) the Primary Parties shall remain liable for any amounts due
pursuant to Sections 4, 9, 11 and 12 hereof, unless the transaction is not consummated due to the breach by the Agent of a warranty,
representation or covenant; and (ii) the Agent shall remain liable for any amount due pursuant to Sections 11 and 12 hereof, unless the
transaction is not consummated due to the breach by the Primary Parties of a warranty, representation or covenant.

                                                                         3
     Section 4. Fees . In addition to the expenses specified in Section 9 hereof, as compensation for the Agent’s services under this
Agreement, the Agent has received or will receive the following fees from the Primary Parties:

           (a) A conversion and proxy vote advisory and administrative services fee of $25,000, paid as follows: (i) $12,500 was paid upon the
execution of the Letter Agreement, and (ii) $12,500 was paid upon the initial filing of the Registration Statement.

           (b) A success fee of $150,000.

            (c) If any of the Shares remain unsubscribed for after the Subscription Offering and Community Offering, at the request of the
Holding Company, the Agent will form a group of approved broker-dealer firms (the ―Assisting Brokers‖) in accordance with Section 2 for
purposes of the Syndicated Community Offering. The fees payable by the Holding Company pursuant to this Section 4(c) will not exceed six
percent (6.0%) of the aggregate dollar amount of the Shares sold in the Syndicated Community Offering. Of such fee, the Agent will receive
one percent (1.0%) of the aggregate dollar amount of the Shares sold pursuant to this Section 4(c) as a management fee, and the Primary Parties
will pay the remainder to the Assisting Brokers, which may include the Agent, in amounts relating to the number of Shares sold by such
Assisting Brokers pursuant to this Section 4(c). All such fees payable under this Section 4(c) shall be in addition to all fees payable under
Section 4(a) and 4(b) and shall be paid at the Closing Time (as defined in Section 5). A form of Assisting Brokers Agreement is attached hereto
as Exhibit B .

      In the event that the Holding Company is required to resolicit subscribers for Shares in the Subscription Offering and Community
Offering and the Agent is required to provide significant additional services in connection with such a resolicitation, the Primary Parties shall
pay to the Agent an additional amount not to exceed $20,000.

       If this Agreement is terminated in accordance with the provisions of Sections 3, 10 or 14 and the sale of the Shares is not consummated,
the Agent shall not be entitled to receive the fees set forth in Sections 4(b)-(c), but the Agent will retain the fee for its conversion and proxy
solicitation advisory and administrative services already earned of $25,000 and the Primary Parties will reimburse the Agent for its reasonable
expenses pursuant to Section 9 hereof.

      Section 5. Closing . If the minimum number of Shares permitted to be sold in the Offering on the basis of the most recently updated
Appraisal (as defined in Section 6(j)) are subscribed for at or before the termination date of the Offering (which may be extended), and the
other conditions (including those in Section 10) to the completion of the Conversion are satisfied, the Holding Company agrees to issue the
Shares on the Closing Date (as hereinafter defined) against payment therefor by the means authorized by the Plan and to deliver certificates
evidencing ownership of the Shares in such authorized denominations and registrations directly to the purchasers thereof or as instructed as
promptly as practicable after the Closing Date. The closing (the ―Closing‖) shall be held at the offices of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre L.L.P. (―Jones Walker‖), Washington, D.C., or at such other place as shall be agreed upon among the Primary Parties and
the Agent, at 10:00 a.m., Eastern Time, on the business day selected by the Primary Parties, which business day shall be no less than two
(2) business days following the giving of prior notice by the Holding Company to the Agent or at such other time as shall be agreed upon by
the Primary Parties and the Agent. At the Closing, the Primary Parties shall deliver to the Agent by wire transfer in same-day funds the

                                                                         4
commissions, fees and expenses owing to the Agent as set forth in Section 4 and Section 9 hereof and the opinions required hereby and other
documents deemed reasonably necessary for the Agent shall be executed and delivered to effect the sale of the Shares as contemplated hereby
and pursuant to the terms of the Prospectus; and the Agent shall deliver to the Holding Company by wire transfer in same day funds the
aggregate proceeds of the Shares sold by the Agents in the Syndicated Community Offering, net of commissions and fees owing to the Agents
under paragraph (c) of Section 4 of this Agreement provided, however, that all out-of-pocket expenses to which the Agent is entitled under
Section 9 hereof shall be due and payable upon receipt by the Holding Company or the Bank of a written accounting therefor setting forth in
reasonable detail the expenses incurred by the Agent. The hour and date upon which the Holding Company shall release the Shares for delivery
in accordance with the terms hereof is referred to herein as the ―Closing Date.‖

     The Agent shall have no liability to any party for the records or other information provided by the Primary Parties (or their agents) to the
Agent for use in allocating the Shares. Subject to the limitations of Section 11 hereof, the Primary Parties shall indemnify and hold harmless
the Agent for any liability arising out of the allocation of the Shares in accordance with (i) the Plan generally, and (ii) the records or other
information provided to the Agent (or its agents) by the Primary Parties (or their agents).

     Section 6. Representations and Warranties of the Primary Parties . The Primary Parties jointly and severally represent and warrant to
the Agent that:
            (a) Each of the Primary Parties has all such power, authority, authorizations, approvals and orders as may be required to enter into
this Agreement, and, as of the Closing Date, each of the Primary Parties will have all such power, authority, authorizations, approvals and
orders as may be required to carry out the provisions and conditions hereof and to issue and sell the Shares as described in the Prospectus. The
consummation of the Conversion, the execution, delivery and performance of this Agreement and the Letter Agreement and the consummation
of the transactions contemplated herein have been duly and validly authorized by all necessary corporate action on the part of the Primary
Parties and, as of the Closing Date, will have been duly and validly authorized by all necessary corporate action on the part of each of the
Primary Parties. This Agreement has been validly executed and delivered by the Primary Parties, and is a valid, legal and binding obligation of
the Primary Parties, in each case enforceable in accordance with its terms, except to the extent, if any, that the provisions of Sections 11 and 12
hereof may be unenforceable as against public policy, and except to the extent that such enforceability may be limited by bankruptcy laws,
insolvency laws, or other laws affecting the enforcement of creditors’ rights generally, or the rights of creditors of savings institutions insured
by the Federal Deposit Insurance Corporation (the ―FDIC‖) (including the laws relating to the rights of the contracting parties to equitable
remedies).

           (b) The Registration Statement was declared effective by the Commission on                  , 2010. No stop order has been issued
with respect to the Registration Statement. No proceedings related to the Registration Statement have been initiated or, to the knowledge of the
Primary Parties, threatened by the Commission. At the time the Registration Statement, including the Prospectus contained therein (including
any amendment or supplement

                                                                         5
thereto), became effective, the Registration Statement complied as to form in all material respects with the 1933 Act and the 1933 Act
Regulations and the Registration Statement, including the Prospectus contained therein (including any amendment or supplement thereto), any
Blue Sky Application or any Sales Information (as such terms are defined in Section 11 hereof) authorized by the Primary Parties for use in
connection with the Offering, did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. At the time any Rule
424(b) or (c) Prospectus was filed with the Commission and at the Closing Date referred to in Section 5, the Registration Statement, including
the Prospectus contained therein (including any amendment or supplement thereto) and, when taken together with the Prospectus, any Blue Sky
Application (if applicable) or Sales Information (as defined below) authorized for use by any of the Primary Parties in connection with the
Offering, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the
representations and warranties in this Section 6(b) shall not apply to statements or omissions made in reliance upon and in conformity with
written information furnished to the Primary Parties by the Agent expressly regarding the Agent for use under the caption ―The Conversion and
Offering – Marketing Arrangements‖ or written statements or omissions from any sales information or information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent.

            (c) At the time of filing the Registration Statement and at the date hereof, the Holding Company was not, and is not, an ineligible
issuer, as defined in Rule 405. At the time of the filing of the Registration Statement and at the time of the use of any issuer free writing
prospectus, as defined in Rule 433(h), the Holding Company met the conditions required by Rules 164 and 433 for the use of a free writing
prospectus. If required to be filed, the Holding Company has filed any issuer free writing prospectus related to the offered Shares at the time it
is required to be filed under Rule 433 and, if not required to be filed, will retain such free writing prospectus in the Holding Company’s records
pursuant to Rule 433(g) and if any issuer free writing prospectus is used after the date hereof in connection with the offering of the Shares the
Holding Company will file or retain such free writing prospectus as required by Rule 433.

           (d) As of the Applicable Time, neither (i) the Issuer-Represented General Free Writing Prospectus(es) issued at or prior to the
Applicable Time and the Statutory Prospectus, all considered together (collectively, the ―General Disclosure Package‖), nor (ii) any individual
Issuer-Represented Limited-Use Free Writing Prospectus, when considered together with the General Disclosure Package, included any untrue
statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any
Prospectus included in the Registration Statement relating to the offered Shares or any Issuer-Represented Free Writing Prospectus based upon
and in conformity with written information furnished to the Holding Company by the Agent specifically for use therein. As used in this
paragraph and elsewhere in this Agreement:
               (1) ―Applicable Time‖ means each and every date when a potential purchaser submitted a subscription or otherwise
           committed to purchase Shares.

                                                                         6
                 (2) ―Issuer-Represented Free Writing Prospectus‖ means any ―issuer free writing prospectus,‖ as defined in Rule 433(h),
           relating to the offered Shares that is required to be filed with the Commission by the Holding Company or required to be filed with
           the Commission. The term does not include any writing exempted from the definition of prospectus pursuant to clause (a) of
           Section 2(a)(10) of the 1933 Act, without regard to Rule 172 or Rule 173.
                 (3) ―Issuer-Represented General Free Writing Prospectus‖ means any Issuer-Represented Free Writing Prospectus that is
           intended for general distribution to prospective investors.
                 (4) ―Issuer-Represented Limited-Use Free Writing Prospectus‖ means any Issuer-Represented Free Writing Prospectus that is
           not an Issuer-Represented General Free Writing Prospectus. The term Issuer-Represented Limited-Use Free Writing Prospectus also
           includes any ― bona fide electronic road show,‖ as defined in Rule 433(h), that is made available without restriction pursuant to
           Rule 433(d)(8)(ii) or otherwise, even though not required to be filed with the Commission.
                 (5) ―Statutory Prospectus,‖ as of any time, means the Prospectus relating to the offered Shares that is included in the
           Registration Statement relating to the offered Shares immediately prior to that time, including any document incorporated by
           reference therein.

            (e) Each Issuer-Represented Free Writing Prospectus, as of its date of first use and at all subsequent times through the completion of
the Offering and sale of the offered Shares or until any earlier date that the Holding Company notified or notifies the Agent (as described in the
next sentence), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in
the Registration Statement relating to the offered Shares, including any document incorporated by reference therein that has not been
superseded or modified. If at any time following the date of first use of an Issuer-Represented Free Writing Prospectus there occurred or occurs
an event or development as a result of which such Issuer-Represented Free Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement relating to the offered Shares or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the Holding Company has notified or will notify promptly the Agent so that
any use of such Issuer-Represented Free Writing Prospectus may cease until it is amended or supplemented and the Holding Company has
promptly amended or will promptly amend or supplement such Issuer-Represented Free Writing Prospectus to eliminate or correct such
conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer-Represented
Free Writing Prospectus based upon and in conformity with written information furnished to the Holding Company by the Agent specifically
for use therein.

                                                                         7
            (f) The Conversion Application, including the Prospectus and the proxy statement for the solicitation of proxies from the members
of the Bank for the special meeting to approve the Plan (the ―Proxy Statement‖), was approved by the OTS on                       , 2010 and the
Prospectus and the Proxy Statement have been authorized for use by the OTS. At the time the Conversion Application, including the
Prospectus and the Proxy Statement contained therein (including any amendment or supplement thereto), were approved and authorized for use
by the OTS and at all times subsequent thereto until the Closing Date, the Conversion Application, including the Prospectus and the Proxy
Statement contained therein (including any amendment or supplement thereto), complied and will comply as to form in all material respects
with the Conversion Regulations. At the time of the approval by the OTS and at all times subsequent thereto until the Closing Date, the
Conversion Application, including the Prospectus and the Proxy Statement, did not and will not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that representations or warranties in this subsection (f) shall not apply to statements
or omissions made in reliance upon and in conformity with written information furnished to the Primary Parties by the Agent expressly
regarding the Agent for use in Prospectus contained under the captions ―The Conversion and Offering – Marketing Arrangements‖ or written
statements or omissions from any sales information or information filed pursuant to state securities or blue sky laws or regulations regarding
the Agent.

           (g) No order has been issued by the Commission, the OTS, the FDIC or any other state or federal regulatory authority, preventing or
suspending the use of the Registration Statement or the Prospectus and no action by or before any such government entity to revoke any
approval, authorization or order of effectiveness related to the Conversion is pending or, to the knowledge of the Primary Parties, threatened.

           (h) The Plan has been duly adopted by the Board of Directors of the Holding Company and the Bank. To the knowledge of the
Primary Parties, no person has sought, or at the Closing Date will have sought, to obtain review of the final action of the OTS in approving the
Plan, the Conversion Application or the Holding Company Application.

            (i) The Holding Company Application was approved by the OTS on                       , 2010. The Holding Company Application did
and will comply as to form in all material respects with all applicable rules and regulations of the OTS (except as modified or waived by the
OTS). At the time of the approval and at all times subsequent thereto until the Closing Date, the Holding Company Application (including any
amendment or supplement thereto) did not and does not include any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not
misleading; provided, however, that representations or warranties in this subsection (i) shall not apply to statements or omissions made in
reliance upon and in conformity with written information furnished to the Primary Parties by the Agent expressly regarding the Agent for use in
the Holding Company Application.

                                                                        8
           (j) Feldman Financial Advisors, Inc., which prepared the appraisal of the aggregate pro forma market value of the Common Stock
on which the Offering was based (the ―Appraisal‖), has advised the Primary Parties in writing that it is independent with respect to each of the
Primary Parties and the Primary Parties believe Feldman Financial Advisors, Inc. to be expert in preparing appraisals of savings institutions.

           (k) Smith Elliott Kearns & Company. LLC (―Smith Elliot Kearns‖), which certified the financial statements filed as part of the
Registration Statement and the Applications, has advised the Primary Parties that it is an independent certified public accountant within the
meaning of the Code of Ethics of the AICPA, and Smith Elliott Kearns is, with respect to each of the Primary Parties, an independent certified
public accountant as required by the 1933 Act and the 1933 Act Regulations and the regulations of the Public Company Accounting Oversight
Board (the ―PCAOB Regulations‖).

            (l) The financial statements and the notes thereto which are included in the Registration Statement and which are a part of the
Prospectus present fairly the financial condition and retained earnings of the Bank as of the dates indicated and the results of operations and
cash flows for the periods specified. The financial statements comply in all material respects with the applicable accounting requirements of
Title 12 of the Code of Federal Regulations, Regulation S-X of the Commission and accounting principles generally accepted in the United
States (―GAAP‖) applied on a consistent basis during the periods presented, except as otherwise noted therein, and present fairly in all material
respects the information required to be stated therein. The other financial, statistical and pro forma information and related notes included in the
Prospectus present fairly the information shown therein on a basis consistent with the audited and any unaudited financial statements included
in the Prospectus, and as to the pro forma adjustments, the adjustments made therein have been properly and consistently applied on the basis
described therein.

            (m) Since the respective dates as of which information is given in the Registration Statement, including the Prospectus, other than
as disclosed therein: (i) there has not been any material adverse change in the financial condition, results of operations, capital, properties,
business affairs or prospects of any of the Primary Parties or the Primary Parties considered as one enterprise, whether or not arising in the
ordinary course of business; (ii) there has not been any material change in total assets of the Primary Parties on a consolidated basis, any
material increase in the aggregate amount of loans past due ninety (90) days or more, or any real estate acquired by foreclosure or loans
characterized as ―in substance foreclosure;‖ (iii) none of the Primary Parties have issued any securities or incurred any liability or obligation for
borrowings other than in the ordinary course of business; and (iv) there have not been any material transactions entered into by any of the
Primary Parties, other than those in the ordinary course of business. The capitalization, liabilities, assets, properties and business of the Primary
Parties conform in all material respects to the descriptions thereof contained in the Registration Statement and the Prospectus and, none of the
Primary Parties has any material liabilities of any kind, contingent or otherwise, except as disclosed in the Registration Statement and the
Prospectus.

                                                                         9
            (n) The Holding Company is, and as of the Closing Date will be, a stock corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland, with corporate power and authority to own its properties and to conduct its business as
described in the Prospectus, and will be qualified to transact business and will be in good standing in Maryland and in each jurisdiction in
which the conduct of business requires such qualification, unless the failure to qualify in one or more of such jurisdictions would not have a
material adverse effect on the financial condition, results of operations, capital, properties, business affairs or prospects of the Primary Parties
taken as a whole (a ―Material Adverse Effect‖). As of the Closing Date, the Holding Company will have obtained all licenses, permits and
other governmental authorizations required for the conduct of its business, except those that individually or in the aggregate would not have a
Material Adverse Effect; and as of the Closing Date, all such licenses, permits and governmental authorizations will be in full force and effect,
and the Holding Company will be in compliance therewith in all material respects.

           (o) The Holding Company does not, and as of the Closing Date will not, own any equity securities or any equity interest in any
business enterprise except as described in the Prospectus.

             (p) Except as described in the Prospectus there are no contractual encumbrances or restrictions or requirements or material legal
restrictions or requirements required to be described therein, on the ability of the Holding Company or the Bank, (A) to pay dividends or make
any other distributions on its capital stock or to pay any indebtedness owed to another party, (B) to make any loans or advances to, or
investments in, another party or (C) to transfer any of its property or assets to another party. Except as described in the Prospectus, there are no
restrictions, encumbrances or requirements affecting the payment of dividends or the making of any other distributions on any of the capital
stock of the Holding Company.

             (q) The Bank has properly administered all accounts for which it acts as a fiduciary, including but not limited to accounts for which
it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation, except where the failure to be in compliance would not have a
Material Adverse Effect. Neither the Bank nor any of its respective directors, officers or employees has committed any material breach of trust
with respect to any such fiduciary account, and the accountings for each such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account in all material respects.

            (r) The Bank is a duly organized and validly existing federally chartered savings bank in mutual form and is duly authorized to
conduct its business as described in the Prospectus; the activities of the Bank are permitted by the rules, regulations and practices of the OTS;
the Bank has obtained all licenses, permits and other governmental authorizations currently required for the conduct of its business, except
those that individually or in the aggregate would not have a Material Adverse Effect, and all such licenses, permits and other governmental

                                                                         10
authorizations are in full force and effect; the Bank is, and as of the Closing Date will be, duly organized and validly existing under the laws of
the United States; the Bank is duly qualified as a foreign corporation to transact business in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect. All of the issued and outstanding capital stock of the Bank after the Conversion will be duly and validly
issued to the Holding Company and will be fully paid and nonassessable; and as of the Closing Date, the Holding Company will directly own
all of the capital stock of the Bank free and clear of any mortgage, pledge, lien, encumbrance, claim or restriction of any kind. The Bank does
not own equity securities or any equity interest in any other business enterprise except as otherwise described in the Prospectus or as are
immaterial in amount and are not required to be described in the Prospectus.

          (s) The Bank is a member of the Federal Home Loan Bank (the ―FHLB‖) of Atlanta. The deposit accounts of the Bank are insured
by the FDIC up to applicable limits.

           (t) As of the Closing Date, the Bank will be a wholly-owned subsidiary of the Holding Company.

            (u) As of the date hereof, the Bank does not have any direct or indirect subsidiaries. As of the Closing Date, the Bank will not have
any direct or indirect subsidiaries and the Bank will be the only subsidiary of the Holding Company.

         (v) The Holding Company and the Bank carry, or are covered by, insurance in such amounts and covering such risks as the Holding
Company and the Bank deem reasonably adequate for the conduct of their respective businesses and the value of their respective properties.

             (w) Upon consummation of the Conversion, the authorized, issued and outstanding capital stock of the Holding Company will be
within the range set forth in the Prospectus under the caption ―Capitalization‖ and no shares of Common Stock have been or will be issued and
outstanding prior to the Closing Date; the Shares to be subscribed for in the Offering have been duly and validly authorized for issuance and,
when issued and delivered by the Holding Company pursuant to the Plan against payment of the consideration calculated as set forth in the
Plan and the Prospectus, will be duly and validly issued and fully paid and nonassessable; and the terms and provisions of the shares of
Common Stock will conform in all material respects to the description thereof contained in the Prospectus. Upon issuance of the Shares sold,
good title to the Shares will be transferred from the Holding Company to the purchasers of Shares against payment therefor in the Offering as
set forth in the Plan and the Prospectus.

            (x) The Primary Parties are not, and as of the Closing Date will not be, in violation of their respective articles of incorporation or
charters or their respective bylaws, or in material default in the performance or observance of any obligation, agreement, covenant, or condition
contained in any contract, lease, loan agreement, indenture or other instrument to which they are a party or by which they, or any of their
respective properties, may be bound which would result in a Material Adverse Effect. The consummation of the transactions contemplated
herein and in the Plan will not (i) conflict with or constitute a breach of, or default

                                                                        11
under, the articles of incorporation, charter or bylaws of any of the Primary Parties, or materially conflict with or constitute a material breach
of, or default under, any material contract, lease or other instrument to which any of the Primary Parties has a beneficial interest, or any
applicable law, rule, regulation or order that is material to the financial condition or results of operations of the Primary Parties; (ii) violate any
authorization, approval, judgment, decree, order, statute, rule or regulation applicable to the Primary Parties except for such violations which
would not have a Material Adverse Effect; or (iii) result in the creation of any material lien, charge or encumbrance upon any property of the
Primary Parties.

            (y) No default exists, and no event has occurred that with notice or lapse of time, or both, would constitute a default on the part of
any of the Primary Parties, in the due performance and observance of any term, covenant or condition of any indenture, mortgage, deed of trust,
note, bank loan or credit agreement or any other instrument or agreement to which any of the Primary Parties is a party or by which any of their
property is bound or affected in any respect which, in any such case, would have a Material Adverse Effect on the Primary Parties individually
or taken as a whole, and all such agreements are in full force and effect; and no other party to any such agreements has instituted or, to the
knowledge of any of the Primary Parties, threatened any action or proceeding wherein any of the Primary Parties is alleged to be in default
thereunder under circumstances where such action or proceeding, if determined adversely to any of the Primary Parties, would have a Material
Adverse Effect.

             (z) The Primary Parties have good and marketable title to all assets which are material to the businesses, financial condition, results
of operations, capital, properties, and assets of the Primary Parties and to those assets described in the Prospectus as owned by them, free and
clear of all liens, charges, encumbrances, restrictions or other claims, except such as are described in the Prospectus or which do not have a
Material Adverse Effect; and all of the leases and subleases that are material to the businesses of the Primary Parties, including those described
in the Registration Statement and Prospectus, are in full force and effect.

            (aa) The Primary Parties are not in material violation of any directive from the OTS, the Commission or any other agency to make
any material change in the method of conducting their respective businesses; the Primary Parties have conducted and are conducting their
respective businesses so as to comply in all respects with all applicable statutes and regulations (including, without limitation, regulations,
decisions, directives and orders of the OTS and the Commission), except where the failure to so comply would not reasonably be expected to
result in a Material Adverse Effect, and there is no charge, investigation, action, suit or proceeding before or by any court, regulatory authority
or governmental agency or body pending or, to the knowledge of any of the Primary Parties, threatened, which would reasonably be expected
to materially and adversely affect the Conversion, the performance of this Agreement, or the consummation of the transactions contemplated in
the Plan as described in the Registration Statement, or which would reasonably be expected to result in a Material Adverse Effect.

            (bb) Prior to the Closing Date, the Primary Parties will have received an opinion of their special counsel, Jones Walker, with respect
to the federal income tax consequences of the Conversion, as described in the Registration Statement and the Prospectus,

                                                                          12
and an opinion from Smith Elliott Kearns with respect to the tax consequences of the Conversion under the laws of the State of Maryland; and
the facts and representations upon which such opinions will be based, will be truthful, accurate and complete, and none of the Primary Parties
will take any action inconsistent therewith.

           (cc) The Primary Parties have timely filed all required federal, state and local tax returns, paid all taxes that have become due and
payable, and have made adequate reserves for known future tax liabilities, and no deficiency has been asserted with respect thereto by any
taxing authority.

            (dd) No approval, authorization, consent or other order of any regulatory or supervisory or other public authority is required for the
execution and delivery by the Primary Parties of this Agreement, or the sale and issuance of the Shares, except for the approval of the OTS and
the Commission and any necessary qualification, notification, or registration or exemption under the securities or blue sky laws of the various
states in which the Shares are to be offered for sale.

            (ee) None of the Primary Parties has: (i) issued any securities within the last 18 months; (ii) had any dealings with respect to sales of
securities within the 12 months prior to the date hereof with any member of FINRA, or any person related to or associated with such member,
other than discussions and meetings relating to the Offering and purchases and sales of U.S. government and agency and other securities in the
ordinary course of business; (iii) entered into a financial or management consulting agreement relating to the Conversion and the Offering
except for the Letter Agreement and as contemplated hereunder; or (iv) engaged any intermediary between the Agent and the Primary Parties in
connection with the Offering, and no person is being compensated in any manner for such services.

           (ff) Neither any of the Primary Parties nor, to the knowledge of the Primary Parties, any employee of the Primary Parties, has made
any payment of funds of the Primary Parties as a loan to any person for the purchase of Shares, except for the Holding Company’s loan to the
Bank’s employee stock ownership plan the proceeds of which will be used to purchase Shares, or has made any other payment or loan of funds
prohibited by law, and no funds have been set aside to be used for any payment prohibited by law.

          (gg) The Bank complies in all material respects with the applicable financial record keeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, and the regulations and rules thereunder.

          (hh) The Primary Parties have not relied upon the Agent or its counsel for any legal, tax or accounting advice in connection with the
Conversion.

           (ii) The records of Eligible Account Holders and Supplemental Eligible Account Holders and Other Members are accurate and
complete in all material respects.

                                                                         13
             (jj) The Primary Parties comply in all material respects with all laws, rules and regulations relating to environmental protection, and
none of them has been notified or is otherwise aware that any of them is potentially liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any other Federal, state or local
environmental laws and regulations; no action, suit, regulatory investigation or other proceeding is pending, or to the knowledge of the Primary
Parties, threatened against the Primary Parties relating to environmental protection, nor do the Primary Parties have any reason to believe any
such proceedings may be brought against any of them; and no disposal, release or discharge of hazardous or toxic substances, pollutants or
contaminants, including petroleum and gas products, as any of such terms may be defined under federal, state or local law, has occurred on, in,
at or about any facilities or properties owned or leased by any of the Primary Parties or in which the Bank has a security interest, except, in the
case of facilities or properties in which the Bank has a security interest, to the extent such disposal, release or discharge would not have a
Material Adverse Effect.

            (kk) All of the loans represented as assets in the most recent financial information of the Primary Parties included in the Prospectus
meet or are exempt from all requirements of federal, state and local law pertaining to lending, including, without limitation, truth in lending
(including the requirements of Regulations Z and 12 C.F.R. Part 226), real estate settlement procedures, consumer credit protection, equal
credit opportunity and all disclosure laws applicable to such loans, except for violations which, if asserted, would not result in a Material
Adverse Effect.

           (ll) None of the Primary Parties are required to be registered as an investment company under the Investment Company Act of
1940, as amended.

           (mm) To the Holding Company’s and the Bank’s knowledge, there are no affiliations or associations between any member of the
FINRA and any of the Holding Company’s and the Bank’s officers, directors or 5% or greater securityholders, except as set forth in the
Registration Statement and the Prospectus.

            (nn) The statistical and market related data contained in any Permitted Free Writing Prospectus, the Prospectus and the Registration
Statement are based on or derived from sources which the Holding Company and the Bank believe were reliable and accurate at the time they
were filed with the Commission. No forward-looking statement (within the meaning of Section 27A of the 1933 Act and Section 21E of the
Securities Exchange Act of 1934 (the ―1934 Act‖)) contained in the Registration Statement, the Prospectus, or any Permitted Free Writing
Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

           (oo) The Primary Parties have taken all actions necessary to obtain at Closing a Blue Sky Memorandum from Jones Walker on
which the Agent may rely.

       Any certificates signed by an officer of any of the Primary Parties and delivered to the Agent or its counsel that refer to this Agreement
shall be deemed to be a representation and warranty by the Primary Parties to the Agent as to the matters covered thereby with the same effect
as if such representation and warranty were set forth herein.

                                                                        14
     Section 7. Representations and Warranties of the Agent . The Agent represents and warrants to the Primary Parties that:

           (a) The Agent is a corporation and is validly existing and in good standing under the laws of the State of Missouri with full power
and authority to provide the services to be furnished to the Primary Parties hereunder.

            (b) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein have
been duly and validly authorized by all necessary corporate action on the part of the Agent, and each of this Agreement and the Letter
Agreement is the legal, valid and binding agreement of the Agent, enforceable in accordance with its terms, except to the extent, if any, that the
provisions of Sections 11 and 12 hereof may be unenforceable as against public policy, and except to the extent that such enforceability may be
limited by bankruptcy laws, insolvency laws, or other laws affecting the enforcement of creditors’ rights generally or general equity principles.

            (c) Each of the Agent and its employees, agents and representatives who shall perform any of the services hereunder shall have, and
until the Offering is consummated or terminated shall maintain, all licenses, approvals and permits necessary to perform such services and shall
comply in all material respects with all applicable laws and regulations in connection with the performance of such services.

            (d) No action, suit, charge or proceeding before the Commission, FINRA, any state securities commission or any court is pending,
or to the knowledge of the Agent, threatened against the Agent which, if determined adversely to such Agent, would have a material adverse
effect upon the ability of Agent to perform its obligations under this Agreement.

           (e) The Agent is registered as a broker/dealer pursuant to Section 15(b) of the 1934 Act and is a member of FINRA.

            (f) Any funds received in the Offering by the Agent will be handled by the Agent in accordance with Rule 15c2-4 under the 1934
Act to the extent applicable.

     Section 8. Covenants of the Primary Parties . The Primary Parties hereby jointly and severally covenant with the Agent as follows:

            (a) The Holding Company will not, at any time after the date the Registration Statement is declared effective, file any amendment
or supplement to the Registration Statement without providing the Agent and its counsel an opportunity to review and comment on such
amendment or supplement or file any amendment or supplement to the Registration Statement to which amendment or supplement the Agent or
its counsel shall reasonably object. The Holding Company will furnish promptly to the Agent and its counsel copies of all correspondence from
the Commission with respect to the Registration Statement and the Holding Company’s responses thereto.

                                                                       15
            (b) The Holding Company represents and agrees that, unless it obtains the prior consent of the Agent, and the Agent represents and
agrees that, unless it obtains the prior consent of the Holding Company, it has not made and will not make any offer relating to the offered
Shares that would constitute an ―issuer free writing prospectus,‖ as defined in Rule 433, or that would constitute a ―free writing prospectus,‖ as
defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Holding Company and the
Agent is hereinafter referred to as a ―Permitted Free Writing Prospectus.‖ The Holding Company represents that it has and will comply with the
requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending
and record keeping. The Holding Company need not treat any communication as a free writing prospectus if it is exempt from the definition of
prospectus pursuant to Clause (a) of Section 2(a)(10) of the 1933 Act without regard to Rule 172 or 173.

           (c) The Primary Parties will not, at any time after the date any Application is approved, file any amendment or supplement to such
Application without providing the Agent and its counsel an opportunity to review and comment on such amendment or supplement or file any
amendment or supplement to such Application to which amendment or supplement the Agent or its counsel shall reasonably object. The
Primary Parties will furnish promptly to the Agent and its counsel copies of all correspondence from the OTS with respect to the Applications
and the Primary Parties’ responses thereto.

            (d) The Primary Parties will use their best efforts to cause the OTS to approve the Holding Company’s acquisition of the Bank, and
will use their best efforts to cause any post-effective amendment to the Registration Statement to be declared effective by the Commission and
any post-effective amendment to the Conversion Application to be approved by the OTS, and will promptly upon receipt of any information
concerning the events listed below notify the Agent (i) when the Registration Statement, as amended, has become effective; (ii) when the
Conversion Application as amended, has been approved by the OTS; (iii) when the Holding Company Application, as amended, has been
approved by the OTS; (iv) of the receipt of any comments from the OTS or any other governmental entity with respect to the Conversion or the
transactions contemplated by this Agreement; (v) of any request by the Commission, the OTS or any other governmental entity for any
amendment or supplement to the Registration Statement or the Applications or for additional information; (vi) of the issuance by the
Commission, the OTS or any other governmental agency of any order or other action suspending the Offering or the use of the Registration
Statement, the Prospectus, the Proxy Statement or any other filing of the Primary Parties under the Conversion Regulations or other applicable
law, or the threat of any such action; (vii) of the issuance by the Commission, the OTS or any other state authority of any stop order suspending
the effectiveness of the Registration Statement or of the initiation or threat of initiation or threat of any proceedings for that purpose; or (viii) of
the occurrence of any event mentioned in subsection (g) below. The Primary Parties will make every reasonable effort to prevent the issuance
by the Commission, the OTS or any other state authority of any order referred to in (vi) and (vii) above and, if any such order shall at any time
be issued, to obtain the lifting thereof at the earliest possible time.

                                                                          16
            (e) The Primary Parties will deliver to the Agent and to its counsel conformed copies of each of the following documents, with all
exhibits: the Applications as originally filed and of each amendment or supplement thereto, and the Registration Statement, as originally filed
and each amendment thereto. Further, the Primary Parties will deliver such additional copies of the foregoing documents to counsel to the
Agent as may be required for any FINRA filings. In addition, the Primary Parties will also deliver to the Agent such number of copies of the
Prospectus, as amended or supplemented, as the Agent may reasonably request.

             (f) The Primary Parties will comply in all material respects with any and all terms, conditions, requirements and provisions with
respect to the Conversion and the transactions contemplated thereby imposed by the Commission, by applicable state law and regulations, and
by the 1933 Act, the 1933 Act Regulations, the 1934 Act and the regulations promulgated thereunder (the ―1934 Act Regulations‖) to be
complied with prior to the Closing Date; and when the Prospectus is required to be delivered, the Primary Parties will comply in all material
respects, at their own expense, with all requirements imposed upon them by the OTS, the Conversion Regulations (except as modified or
waived in writing by the OTS), the Commission, by applicable state law and regulations and by the 1933 Act, the 1934 Act and the rules and
regulations of the Commission promulgated under such statutes, in each case as from time to time in force, so far as is necessary to permit the
continuance of sales or dealing in shares of Common Stock during such period in accordance with the provisions hereof and the Prospectus.

            (g) The Primary Parties will inform the Agent of any event or circumstance of which it is or becomes aware as a result of which the
Registration Statement and/or Prospectus, as then supplemented or amended, would include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein not misleading. If it is necessary, in the reasonable opinion of counsel for
the Primary Parties, to amend or supplement the Registration Statement or the Prospectus in order to correct such untrue statement of a material
fact or to make the statements therein not misleading in light of the circumstances existing at the time of their use, the Primary Parties will, at
their expense, prepare, file with the Commission and the OTS, and furnish to the Agent, a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration Statement and the Prospectus (in form and substance reasonably
satisfactory to counsel for the Agent after a reasonable time for review) which will amend or supplement the Registration Statement and/or the
Prospectus so that as amended or supplemented it will not contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances existing at the time, not misleading. For the purpose of this
subsection, each of the Primary Parties will furnish such information with respect to itself as the Agent may from time to time reasonably
request.

            (h) Pursuant to the terms of the Plan, the Holding Company will endeavor in good faith, in cooperation with the Agent, to register or
to qualify the Shares for offering and sale or to exempt such Shares from registration and to exempt the Holding Company and its officers,
directors and employees from registration as broker-dealers, under the applicable securities laws of the jurisdictions in which the Offering will
be conducted; provided, however, that the Holding Company shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation to do business in any jurisdiction in which it is not so qualified. In each jurisdiction where any of the Shares
shall have been registered or qualified as above provided, the Holding Company will make and file such statements and reports in each year as
are or may be required by the laws of such jurisdiction.

                                                                        17
          (i) Upon consummation of the Conversion, the Bank will establish a liquidation account for the benefit of the Bank’s depositors, in
accordance with the Plan and the requirements of the Conversion Regulations.

            (j) The Holding Company will not sell or issue, contract to sell or otherwise dispose of, for a period of ninety (90) days after the
date hereof, any shares of Common Stock or securities into or exercisable for shares of Common Stock, without the Agent’s prior written
consent other than in connection with any plan or arrangement described in the Prospectus.

            (k) For a period of three years from the date of this Agreement, the Holding Company will furnish to the Agent, as soon as practical
after such information is available (i) a copy of each report of the Holding Company furnished to or filed with the Commission under the 1934
Act or any national securities exchange or system on which any class of securities of the Holding Company is listed or quoted, (ii) a copy of
each report of the Holding Company mailed to holders of Common Stock, (iii) each press release and material news item and article released
by the Holding Company and/or Bank, and (iv) from time-to-time, such other publicly available information concerning the Primary Parties as
the Agent may reasonably request. For purposes of this paragraph, any document filed electronically with the Commission shall be deemed to
be furnished to the Agent.

            (l) The Primary Parties will use the net proceeds from the sale of the Common Stock in the manner set forth in the Prospectus under
the caption ―How We Intend to Use the Proceeds From the Offering.‖

            (m) The Holding Company and the Bank will distribute the Prospectus or other offering materials in connection with the offering
and sale of the Common Stock only in accordance with the Conversion Regulations, the 1933 Act and the 1934 Act and the rules and
regulations promulgated under such statutes, and, as applicable, the laws of any state in which the shares are qualified for sale.

            (n) Prior to the Closing Date, the Holding Company shall register its Common Stock under Section 12(b) of the 1934 Act, and will
request that such registration statement be effective no later than the completion of the Conversion. The Holding Company shall maintain the
effectiveness of such registration for not less than three years or such shorter period as permitted by the OTS.

           (o) For so long as the Common Stock is registered under the 1934 Act, the Holding Company will furnish to its stockholders as
soon as practicable after the end of each fiscal year such reports and other information as are required to be furnished to its stockholders under
the 1934 Act.

           (p) The Holding Company will report the use of proceeds of the Offering in accordance with Rule 463 under the 1933 Act
Regulations.

                                                                         18
            (q) The Primary Parties will maintain appropriate arrangements for depositing all funds received from persons mailing subscriptions
for or orders to purchase Shares on an interest bearing basis as described in the Prospectus until the Closing Date and satisfaction of all
conditions precedent to the release of the Holding Company’s obligation to refund payments received from persons subscribing for or ordering
Shares in the Offering, in accordance with the Plan as described in the Prospectus, or until refunds of such funds have been made to the persons
entitled thereto or withdrawal authorizations canceled in accordance with the Plan and as described in the Prospectus. The Primary Parties will
maintain such records of all funds received to permit the funds of each subscriber to be separately insured by the FDIC (to the maximum extent
allowable) and to enable the Primary Parties to make the appropriate refunds of such funds in the event that such refunds are required to be
made in accordance with the Plan and as described in the Prospectus.

           (r) Within ninety (90) days following the Closing Date, the Holding Company will register as a savings and loan holding company
under the Home Owners’ Loan Act (the ―HOLA‖).

           (s) The Primary Parties will take such actions and furnish such information as are reasonably requested by the Agent in order for the
Agent to ensure compliance with FINRA Rule 5130 (Restrictions on the Purchase and Sale of IPOs of Equity Securities).

            (t) The Primary Parties will conduct their businesses in compliance in all material respects with all applicable federal and state laws,
rules, regulations, decisions, directives and orders, including all decisions, directives and orders of the Commission, the OTS and the FDIC.

            (u) The Primary Parties shall comply with any and all terms, conditions, requirements and provisions with respect to the Conversion
and the transactions contemplated thereby imposed by the OTS, the HOLA, the Conversion Regulations, the Commission, the 1933 Act, the
1933 Act Regulations, the 1934 Act, the 1934 Act Regulations to be complied with subsequent to the Closing Date. The Holding Company will
comply with all provisions of all undertakings contained in the Registration Statement.

           (v) The Primary Parties will not amend the Plan without notifying the Agent prior thereto.

            (w) The Holding Company shall provide the Agent with any information necessary to allow the Agent to assist with the allocation
process in order to permit the Holding Company to carry out the allocation of the Shares in the event of an oversubscription, and such
information shall be accurate and reliable in all material respects.

           (x) The Holding Company will not deliver the Shares until the Primary Parties have satisfied or caused to be satisfied each
condition set forth in Section 10 hereof, unless such condition is waived in writing by the Agent.

                                                                        19
            (y) On or before the Closing Date, the Primary Parties will have completed all conditions precedent to the Conversion specified in
the Plan and the offer, sale and issuance of the Shares will have been conducted in all material respects in accordance with the Plan, the
Conversion Regulations (except as modified or waived in writing by the OTS) and with all other applicable laws, regulations, decisions and
orders, including all terms, conditions, requirements and provisions precedent to the Conversion imposed upon any of the Primary Parties by
the OTS, the Commission or any other regulatory authority and in the manner described in the Prospectus.

            (z) Immediately upon completion of the sale by the Holding Company of the Shares and the completion of certain transactions
necessary to implement the Plan, (i) all of the issued and outstanding shares of capital stock of the Bank shall be owned by the Holding
Company, (ii) the Holding Company shall have no direct subsidiaries other than the Bank, and (iii) the Conversion shall have been effected in
all material respects in accordance with all applicable statutes, regulations, decisions and orders; and all terms, conditions, requirements and
provisions with respect to the Conversion (except those that are conditions subsequent) imposed by the OTS, the Commission, or any other
governmental agency, if any, shall have been complied with by the Primary Parties in all material respects or appropriate waivers shall have
been obtained and all notice and waiting periods shall have been satisfied, waived or elapsed.

           (aa) Prior to the Closing Date, the Plan shall have been approved by the voting members of the Bank in accordance with the Plan,
the Conversion Regulations, the applicable provisions, if any, of the Bank’s charter and bylaws and the Proxy Statement.

            (bb) The Holding Company shall notify the Agent when funds shall have been received for the minimum number of Shares set forth
in the Prospectus.

       Section 9. Payment of Expenses . Whether or not the Conversion is completed or the sale of the Shares by the Holding Company is
consummated, the Primary Parties will pay for all their expenses incident to the performance of this Agreement, including without limitation:
(a) the preparation and filing of the Applications and Registration Statement; (b) the preparation, printing, filing, delivery and mailing of the
Registration Statement, including the Prospectus, and all documents related to the Offering and proxy solicitation; (c) all filing fees and
expenses in connection with the qualification or registration of the Shares for offer and sale by the Holding Company or the Bank under the
securities or ―blue sky‖ laws, including without limitation filing fees, reasonable legal fees and disbursements of counsel in connection
therewith, and in connection with the preparation of a blue sky law survey; (d) the filing fees of FINRA related to the Agent’s fairness filing
under FINRA Rule 5110; (e) fees and expenses related to the preparation of the independent appraisal; (f) fees and expenses related to
providers providing printing, data processing, auditing, accounting and other services; (g) all expenses relating to advertising, temporary
personnel, investor meetings and stock information center; and (h) transfer agent fees and costs of preparation and distribution of stock
certificates. The Primary Parties also agree to reimburse the Agent for reasonable out-of-pocket expenses, including legal fees and expenses,
incurred by the Agent in connection with the services hereunder. The Agent will not incur reimbursable legal fees (including counsel’s
out-of-pocket expenses) in excess of $50,000. The Agent will not incur actual accountable reimbursable out-of-pocket expenses in

                                                                        20
excess of $15,000 in the Subscription Offering and Community Offering and in excess of $20,000 in the Syndicated Community Offering. In
the event that the Agent incurs any expenses on behalf of the Primary Parties, the Primary Parties will pay or reimburse the Agent for such
expenses regardless of whether the Conversion is successfully completed, and such reimbursements will not be included in the expense
limitations set forth in this paragraph. The Agent will not incur any single out-of-pocket expense of more than $1,000 pursuant to this
paragraph without the prior approval of the Holding Company or the Bank. The Primary Parties acknowledge, however, that such limitations
on expenses and legal fees may be increased by the mutual consent of the Holding Company and the Agent in the event of delay in the
Offering, a delay as a result of circumstances requiring material additional work by the Agent or its counsel or an update of the financial
information contained in the Prospectus to reflect a period later than set forth in the financial statements in the original Registration Statement;
provided, however, that under such circumstances, the Agent will not incur any additional accountable reimbursable expenses in excess of
$5,000 or additional reimbursable legal fees in excess of $10,000 and that the aggregate of all reimbursable expenses and legal fees to be paid
by the Primary Parties to the Agent in connection with the Conversion and Offering shall not exceed $100,000. Not later than two (2) days
prior to the Closing Date, the Agent will provide the Bank with a detailed accounting of all reimbursable expenses of the Agent and its counsel
to be paid at the Closing.

       Section 10. Conditions to Agent’s Obligations . The obligations of the Agent hereunder and the occurrence of the Closing and the
Conversion are subject to the condition that all representations and warranties of the Primary Parties herein contained are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and correct, the condition that the Primary Parties shall have performed
all of their obligations hereunder to be performed on or before such dates and to the following further conditions:

           (a) The Registration Statement shall have been declared effective by the Commission and the Conversion Application and Holding
Company Application shall have been approved by the OTS, and no stop order or other action suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor initiated or, to the knowledge of the Primary Parties, threatened by
the Commission or any state authority and no order or other action suspending the authorization for use of the Prospectus or the consummation
of the Conversion shall have been issued, or proceedings therefor initiated or, to the knowledge of the Primary Parties, threatened by the OTS,
the Commission or any other governmental body.

           (b) At the Closing Date, the Agent shall have received:
                (1) The opinion, dated as of the Closing Date, of Jones Walker acceptable to the Agent, in form and substance satisfactory to
           the Agent and counsel for the Agent to the effect that:
                         (i) The Holding Company is a corporation duly organized and validly existing and in good standing under the laws of
                   the State of Maryland, with corporate power and authority to own its properties and to conduct its business as described in
                   the Prospectus and is duly qualified to transact business and is in good standing in Maryland and in each other jurisdiction in
                   which the conduct of its business requires such qualification, except where the failure to qualify would not have a Material
                   Adverse Effect.

                                                                         21
      (ii) The Bank is a federally chartered mutual savings bank incorporated under the laws of the United States of
America, and upon consummation of the Conversion, the Bank will be a validly existing federally chartered stock savings
bank duly incorporated as a federal stock savings bank and validly existing under the laws of the United States of America,
with full power and authority to own its properties and to conduct its business as described in the Prospectus; the activities of
the Bank as described in the Prospectus are permitted by federal law and the rules, regulations and practices of the OTS; and
at the Closing Date, the issuance and sale of the capital stock of the Bank to the Holding Company in the Conversion has
been duly and validly authorized by all necessary corporate action on the part of the Holding Company and the Bank and,
upon payment therefor in accordance with the terms of the Plan, will be validly issued, fully paid and nonassessable and will
be owned of record and beneficially by the Holding Company, free and clear of any mortgage, pledge, lien, encumbrance,
claim or restriction.
     (iii) The activities of the Holding Company and the Bank, as described in the Prospectus, are permitted by federal law.
To such counsel’s knowledge, each of the Holding Company and the Bank has obtained all licenses, permits, and other
governmental authorizations that are material for the conduct of its business, and all such licenses, permits and other
governmental authorizations are in full force and effect, and to such counsel’s knowledge the Holding Company and the
Bank are complying therewith in all material respects.
      (iv) The Bank is a member of the FHLB of Atlanta. The Bank is an insured depository institution under the provisions
of the Federal Deposit Insurance Act, as amended, and no proceedings for the termination or revocation of the federal
deposit insurance of the Bank are pending or, to such counsel’s knowledge, threatened.
      (v) The authorized capital stock of the Bank consists of one million (1,000,000) shares of serial preferred stock, par
value $0.01 per share, and four million (4,000,000) share of common stock, par value $0.01 per share. When issued pursuant
to the Plan, shares of such common stock will be owned beneficially and of record solely by the Holding Company free and
clear of any security interest, mortgage, pledge, lien or encumbrance. All of the shares of the Bank’s common stock to be
issued to the Holding Company, when issued to the Holding Company, will have been duly authorized, validly issued and
fully paid and nonassessable and will be exempt from registration under the 1933 Act.

                                                     22
     (vi) The Bank does not have any direct or indirect subsidiaries and the only subsidiary of the Holding Company at the
Closing Date is the Bank.
      (vii) Upon consummation of the Conversion, (a) the authorized, issued and outstanding capital stock of the Holding
Company will be within the range set forth in the Prospectus under the caption ―Capitalization,‖ and no shares of Common
Stock have been or will be issued and outstanding prior to the Closing Date; (b) the Shares to be subscribed for in the
Offering will have been duly and validly authorized for issuance, and when issued and delivered by the Holding Company
pursuant to the Plan against payment of the consideration calculated as set forth in the Plan, will be fully paid and
nonassessable; and (d) the issuance of the Shares is not subject to preemptive rights under the articles of incorporation or
bylaws of the Holding Company, or arising or outstanding by operation of law or under any contract, indenture, agreement,
instrument or other document known to such counsel, except for the subscription rights under the Plan.
      (viii) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the Primary Parties; and this Agreement
constitutes a valid, legal and binding obligation of each of the Primary Parties, enforceable in accordance with its terms,
except to the extent that the provisions of Sections 11 and 12 hereof may be unenforceable as against public policy, and
except to the extent that such enforceability may be limited by bankruptcy laws, insolvency laws, or other laws affecting the
enforcement of creditors’ rights generally, or the rights of creditors of savings institutions insured by the FDIC (including
laws and judicial decisions relating to the rights of the contracting parties to equitable remedies).
     (ix) The Plan has been duly adopted by the Board of Directors of the Holding Company and the Bank and has been
approved by the members of the Bank in the manner required by the Conversion Regulations and the charter and bylaws of
the Bank.
       (x) The Conversion, including the Offering, was effected in accordance with the Plan and all applicable laws, including
statutes, regulations, decisions and orders; all terms, conditions, requirements and provisions with respect to the Conversion
imposed by the OTS, the Commission, or any other governmental agency, if any, were complied with by the Primary Parties
in all material respects or appropriate waivers were obtained and all notices and waiting periods were satisfied, waived or
elapsed.

                                                    23
      (xi) The Conversion Application and the Holding Company Application have been approved by the OTS, and the
Proxy Statement has been authorized for use by the OTS, and subject to the satisfaction of any conditions set forth in such
approvals, no further approval, registration, authorization, consent or other order of any federal or state regulatory agency,
public board or body is required in connection with the execution and delivery of this Agreement, the offer, sale and
issuance of the Shares, and the consummation of the Conversion.
     (xii) The purchase by the Holding Company of all of the issued and outstanding common stock of the Bank has been
authorized by the OTS, and no action has been taken or is pending or threatened to revoke any such authorization or
approval.
      (xiii) The Registration Statement has become effective under the 1933 Act, and no stop order suspending the
effectiveness of the Registration Statement has been issued or proceedings for that purpose have been instituted or, to such
counsel’s knowledge, threatened by the Commission.
     (xiv) The material tax consequences of the Conversion are set forth in the Prospectus under the captions ―Summary –
Tax Consequences‖ and ―Federal and State Taxation.‖ The information in the Prospectus under the captions ―Summary –
Tax Consequences‖ and ―Federal and State Taxation‖ has been reviewed by such counsel and fairly describes such opinion
rendered by such counsel and Smith Elliott Kearns to the Primary Parties with respect to such matters.
      (xv) The terms and provisions of the shares of Common Stock conform to the description thereof contained in the
Registration Statement and the Prospectus, and the form of certificate to be used to evidence the shares of Common Stock is
in due and proper form.
      (xvi) At the time the Applications were approved and as of the Closing Date, the Applications (as amended or
supplemented), the Prospectus (as amended or supplemented) and the Proxy Statement (as amended or supplemented),
complied as to form in all material respects with the requirements of the Conversion Regulations and all applicable laws,
rules and regulations and decisions and orders of the OTS, except as modified or waived in writing (other than the financial
statements, notes to financial statements, financial tables and other financial and statistical data included therein and the
appraisal valuation and the business plan as to which counsel need express no opinion). To such counsel’s knowledge, no
person has sought to obtain regulatory or judicial review of the final action of the OTS in approving the Applications.

                                                     24
                        (xvii) At the time that the Registration Statement became effective and as of the Closing Date, the Registration
                  Statement, including the Prospectus (as amended or supplemented) (other than the financial statements, notes to financial
                  statements, financial tables or other financial and statistical data included therein and the appraisal valuation and the business
                  plan as to which such counsel need express no opinion), complied as to form in all material respects with the requirements of
                  the 1933 Act and the 1933 Act Regulations.
                         (xviii) There are no legal or governmental proceedings pending, or, to such counsel’s knowledge, threatened
                  (i) asserting the invalidity of this Agreement or (ii) seeking to prevent the Conversion or the offer, sale or issuance of the
                  Shares.
                       (xix) The information in the Prospectus under the captions ―Summary,‖ ―Supervision and Regulation,‖ ―Taxation,‖
                  ―Restrictions on Acquisition of Fairmount Bancorp, Inc.,‖ ―Description of Capital Stock‖ and ―The Conversion and
                  Offering,‖ to the extent that such information constitutes matters of law, summaries of legal matters, documents or
                  proceedings, or legal conclusions, has been reviewed by such counsel and is accurate in all material respects.
                       (xx) None of the Primary Parties is required to be registered as an ―investment company‖ as such term is defined in the
                  Investment Company Act of 1940.
                        (xxi) None of the Primary Parties is in violation of its articles of incorporation or its charter, as the case may be, or its
                  bylaws or, to such counsel’s knowledge, any obligation, agreement, covenant or condition contained in any contract,
                  indenture, mortgage, loan agreement, note, lease or other instrument filed as an exhibit to, or incorporated by reference in,
                  the Registration Statement, which violation would have a Material Adverse Effect. In addition, the execution and delivery of
                  and performance under this Agreement by the Primary Parties, the incurrence of the obligations set forth herein and the
                  consummation of the transactions contemplated herein will not result in (i) any violation of the provisions of the articles of
                  incorporation or charter, as the case may be, or the bylaws of any of the Primary Parties, (ii) any violation of any applicable
                  law, act, regulation, order or court order, writ, injunction or decree, and (iii) any violation of any obligation, agreement,
                  covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument filed as
                  an exhibit to, or incorporated by reference in, the Registration Statement, which violation would have a Material Adverse
                  Effect.

      The opinion may be limited to matters governed by the laws of the United States and the State of Maryland. In rendering such opinion,
such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the United States, to the extent such
counsel deems proper and specified in such opinion, upon the opinion of counsel reasonably acceptable

                                                                        25
to the Agent, as long as such other opinion indicates that the Agent may rely on the opinion, and (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Primary Parties and public officials; provided copies of any such opinion(s)
or certificates of public officials are delivered to Agent together with the opinion to be rendered hereunder by special counsel to the Primary
Parties. The opinion of such counsel for the Primary Parties shall state that it has no reason to believe that the Agent is not reasonably justified
in relying thereon. The opinion of such counsel for the Primary Parties also shall state that the Agent’s counsel may rely for purposes of its own
opinion on the opinion of such counsel and, if applicable, local counsel, whose opinion(s) shall expressly authorize such reliance. The opinion
of such counsel for the Primary Parties may state that it is to be governed or qualified by the Legal Opinion Accord of the ABA Section of
Business Law (1991).
                 (2) The letter of Jones Walker in form and substance to the effect that during the preparation of the Registration Statement and
           the Prospectus, Jones Walker participated in conferences with certain officers of and other representatives of the Primary Parties,
           counsel to the Agent, representatives of the independent public accountants for the Primary Parties and representatives of the Agent
           at which the contents of the Registration Statement and the Prospectus and related matters were discussed and has considered the
           matters required to be stated therein and the statements contained therein and, although (without limiting the opinions provided
           pursuant to Section 10(b)(1)), Jones Walker has not independently verified the accuracy, completeness or fairness of the statements
           contained in the Registration Statement and Prospectus, on the basis of the foregoing, nothing has come to the attention of Jones
           Walker that caused Jones Walker to believe that the Registration Statement at the time it was declared effective by the Commission
           and as of the date of such letter or that the General Disclosure Package as of the Applicable Time, contained or contains any untrue
           statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements
           therein in light of the circumstances under which they were made not misleading (it being understood that counsel need express no
           comment or opinion with respect to financial statements, notes to financial statements, schedules and other financial and statistical
           data included, or statistical or appraisal methodology employed, in the Registration Statement, or Prospectus or General Disclosure
           Package).
                 (3) The favorable opinion, dated as of the Closing Date, of Kilpatrick Stockton LLP, counsel for the Agent, with respect to
           such matters as the Agent may reasonably require; such opinion may rely, as to matters of fact, upon certificates of officers and
           directors of the Primary Parties delivered pursuant hereto or as such counsel may reasonably request and upon the opinion of Jones
           Walker.
                 (4) The letter of Kilpatrick Stockton LLP in form and substance to the effect that during the preparation of the Registration
           Statement and the Prospectus, Kilpatrick Stockton LLP participated in conferences with certain officers of and other representatives
           of the Primary Parties, counsel to the Primary Parties, representatives of the independent public accountants for the Primary

                                                                        26
           Parties and representatives of the Agent at which the contents of the Registration Statement and the Prospectus and related matters
           were discussed and has considered the matters required to be stated therein and the statements contained therein and, although
           (without limiting the opinions provided pursuant to Section 10(b)(3)), Kilpatrick Stockton LLP has not independently verified the
           accuracy, completeness or fairness of the statements contained in the Registration Statement and Prospectus, on the basis of the
           foregoing, nothing has come to the attention of Kilpatrick Stockton LLP that caused Kilpatrick Stockton LLP to believe that the
           Registration Statement at the time it was declared effective by the Commission and as of the date of such letter or that the General
           Disclosure Package as of the Applicable Time, contained or contains any untrue statement of a material fact or omitted to state any
           material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they
           were made not misleading (it being understood that counsel need express no comment or opinion with respect to financial
           statements, notes to financial statements, schedules and other financial and statistical data included, or statistical or appraisal
           methodology employed, in the Registration Statement, or Prospectus or General Disclosure Package).
                 (5) A Blue Sky Memorandum from Jones Walker addressed to the Holding Company and the Agent relating to the offering,
           including Agent’s participation therein. The Blue Sky Memorandum will address the necessity of obtaining or confirming
           exemptions, qualifications or the registration of the Common Stock under applicable state securities law.

            (c) Concurrently with the execution of this Agreement, the Agent shall receive a letter from Smith Elliot Kearns, dated the date
hereof and addressed to the Agent, such letter (i) confirming that Smith Elliot Kearns is a firm of independent registered public accountants
within the meaning of the 1933 Act, the 1933 Act Regulations and the PCAOB Regulations, and stating in effect that in Smith Elliot Kearns’
opinion the financial statements of the Bank included in the Prospectus comply as to form in all material respects with generally accepted
accounting principles, the 1933 Act and the 1933 Act Regulations, and the 1934 Act and the 1934 Act Regulations; (ii) stating in effect that, on
the basis of certain agreed upon procedures (but not an audit examination in accordance with the auditing standards of the PCAOB) consisting
of a review (in accordance with Statement of Auditing Standards No. 100, Interim Financial Information) of the unaudited interim financial
statements of the Bank prepared by the Primary Parties as of and for the interim periods ended December 31, 2009, a reading of the minutes of
the meetings of the Board of Directors and Audit Committee of the Bank and consultations with officers of the Bank responsible for financial
and accounting matters, nothing came to their attention which caused them to believe that: (A) such unaudited financial statements and any
―Recent Developments‖ information in the Prospectus are not in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included in the Prospectus; or (B) during the period from the date of the
Recent Developments information included in the Prospectus to a date not more than three business days prior to the date of the Prospectus
there was any increase in non-performing loans, special mention loans or borrowings of the Bank or any decrease in total assets, the allowance
for loan losses, total deposits or equity of the Bank or there was any

                                                                       27
decrease in noninterest income, net interest income, net income after provision for loan losses, provision for loan losses, tax expense or net
income or any increase in noninterest expense for the number of full months commencing immediately after the Recent Developments period
and ended on the last month-end prior to the date of the Prospectus as compared to the corresponding period in the preceding year, which was
material to the financial position or results of operations of the Bank; and (iii) stating that, in addition to the audit examination referred to in its
opinion included in the Prospectus and the performance of the procedures referred to in clause (ii) of this subsection (c), they have compared
with the general accounting records of the Bank, which are subject to the internal controls of the accounting system of the Bank and other data
prepared by the Bank directly from such accounting records, to the extent specified in such letter, such amounts and/or percentages set forth in
the Prospectus as Agent may reasonably request, and they have found such amounts and percentages to be in agreement therewith (subject to
rounding).

            (d) At the Closing Date, the Agent shall receive a letter from Smith Elliott Kearns dated the Closing Date, addressed to the Agent,
confirming the statements made by its letter delivered by it pursuant to subsection (c) of this Section 10, the ―specified date‖ referred to in
clause (ii)(B) thereof to be a date specified in such letter, which shall not be more than three (3) business days prior to the Closing Date.

            (e) At the Closing Date, counsel to the Agent shall have been furnished with such documents and opinions as counsel for the Agent
may require for the purpose of enabling them to advise the Agent with respect to the issuance and sale of the Common Stock as herein
contemplated and related proceedings, or in order to evidence the accuracy of any of the representations and warranties, or the fulfillment of
any of the conditions herein contained.

             (f) At the Closing Date, the Agent shall receive a certificate of the Chief Executive Officer and Chief Financial Officer of each of
the Primary Parties, dated the Closing Date, to the effect that: (i) they have examined the Registration Statement and at the time the
Registration Statement became authorized for final use, the Prospectus did not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading; (ii) there has not been, since the respective dates as of which
information is given in the Registration Statement, any Material Adverse Effect otherwise than as set forth or contemplated in the Registration
Statement; (iii) the representations and warranties contained in Section 6 of this Agreement are true and correct with the same force and effect
as though made at and as of the Closing Date; (iv) the Primary Parties have complied in all material respects with all material agreements and
satisfied all conditions on their part to be performed or satisfied at or prior to the Closing Date including the conditions contained in this
Section 10; (v) no stop order has been issued or, to the best of their knowledge, is threatened, by the Commission or any other governmental
body; (vi) no order suspending the Offering, the Conversion, the acquisition of all of the shares of the Bank by the Holding Company, the
transactions required under the Plan to consummate the Conversion or the effectiveness of the Prospectus has been issued and to the best of
their knowledge, no proceedings for any such purpose have been initiated or threatened by the OTS, the Commission or any other federal or
state authority; and (vii) to the best of their knowledge, no person has sought to obtain regulatory or judicial review of the action of the OTS in
approving the Plan or to enjoin the Conversion.

                                                                           28
             (g) At the Closing Date, the Agent shall receive a letter from Feldman Financial Advisors, Inc., dated as of the Closing Date,
(i) confirming that said firm is independent of the Primary Parties and is experienced and expert in the area of corporate appraisals, (ii) stating
in effect that the Appraisal complies in all material respects with the applicable requirements of the Conversion Regulations, and (iii) further
stating that its opinion of the aggregate pro forma market value of the Primary Parties, as converted, expressed in the Appraisal as most
recently updated, remains in effect.

             (h) Prior to and at the Closing Date, none of the Primary Parties shall have sustained, since the date of the latest financial statements
included in the Registration Statement and Prospectus, any material loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set
forth in the Registration Statement and the Prospectus, and since the respective dates as of which information is given in the Registration
Statement and the Prospectus, there shall not have been any material change, or any development involving a prospective material change in, or
affecting the general affairs of, management, financial position, retained earnings, long-term debt, stockholders’ equity results of operations,
capital or prospects of any of the Primary Parties, otherwise than as set forth or contemplated in the Registration Statement and the Prospectus,
the effect of which, in any such case described above, in the Agent’s reasonable judgment, is sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the Offering or the delivery of the Shares on the terms and in the manner contemplated in the
Prospectus.

             (i) Prior to and at the Closing Date: (i) in the reasonable opinion of the Agent, there shall have been no material adverse change in
the financial condition or in the earnings, capital, properties or business affairs of the Primary Parties considered as one enterprise, from and as
of the latest date as of which such condition is set forth in the Prospectus, except as referred to therein; (ii) there shall have been no material
transaction entered into by the Primary Parties, independently or considered as one enterprise, from the latest date as of which the financial
condition of the Primary Parties is set forth in the Prospectus, other than transactions referred to or contemplated therein; (iii) none of the
Primary Parties shall have received from the OTS any direction (oral or written) to make any material change in the method of conducting their
business with which it has not complied in all material respects (which direction, if any, shall have been disclosed to the Agent) and which
would reasonably be expected to have a Material Adverse Effect; (iv) none of the Primary Parties shall have been in default (nor shall an event
have occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any agreement or instrument
relating to any material outstanding indebtedness; (v) no action, suit or proceeding, at law or in equity or before or by any federal or state
commission, board or other administrative agency, shall be pending or, to the knowledge of the Primary Parties, threatened against any of the
Primary Parties or affecting any of their properties wherein an unfavorable decision, ruling or finding would reasonably be expected to have a
Material Adverse Effect; and (vi) the Shares shall have been qualified or registered for offering and sale, as applicable, under the securities or
―blue sky‖ laws of the jurisdictions requested by the Agent.

                                                                         29
           (j) At or prior to the Closing Date, the Agent shall receive (i) a copy of the Conversion Application and a copy of the letters from
the OTS approving the Conversion Application and authorizing the Prospectus and the Proxy Statement for use, (ii) if available, a copy of the
order from the Commission declaring the Registration Statement effective, (iii) a certified copy of the articles of incorporation of the Holding
Company, (iv) a copy of the Holding Company Application and a copy of the letter from the OTS approving the Holding Company
Application, (v) a certificate from the FDIC evidencing the Bank’s insurance of accounts, (vi) a certificate of the FHLB of Atlanta evidencing
the Bank’s membership therein and (vii) any other documents that Agent shall reasonably request.

             (k) Subsequent to the date hereof, there shall not have occurred any of the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange or American Stock Exchange or in the over-the-counter market, or quotations halted
generally on the Nasdaq Stock Market, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required by either of such exchanges or FINRA or by order of the Commission or any other governmental authority other
than temporary trading halts or limitation (A) imposed as a result of intraday changes in the Dow Jones Industrial Average, (B) lasting no
longer than until the regularly scheduled commencement of trading on the next succeeding business-day and (C) which when combined with all
other such halts occurring during the previous five (5) business days, total less than three (3); (ii) a general moratorium on the operations of
federally-insured financial institutions or a general moratorium on the withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities; (iii) any material adverse change in the financial markets in the United
States or elsewhere; or (iv) any outbreak of hostilities or escalation thereof or other calamity or crisis, including, without limitation, terrorist
activities after the date hereof, the effect of any of (i) through (iv) herein, in the judgment of the Agent, is so material and adverse as to make it
impracticable to market the Shares or to enforce contracts, including subscriptions or purchase orders, for the sale of the Shares.

      All such opinions, certificates, letters and documents will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Agent and to counsel for the Agent. Any certificate signed by an officer of the Holding Company or
the Bank and delivered to the Agent or to counsel for the Agent shall be deemed a representation and warranty by the Holding Company or the
Bank, as the case may be, to the Agent as to the statements made therein. If any condition to the Agent’s obligations hereunder to be fulfilled
prior to or at the Closing Date is not fulfilled, the Agent may terminate this Agreement (provided that if this Agreement is so terminated but the
sale of Shares is nevertheless consummated, the Agent shall be entitled to the full compensation provided for in Section 4 hereof) or, if the
Agent so elect, may waive any such conditions which have not been fulfilled or may extend the time of their fulfillment.

      Section 11. Indemnification .
            (a) The Primary Parties, jointly and severally, agree to indemnify and hold harmless the Agent, its officers, directors, agents,
attorneys, servants and employees and each person, if any, who control the Agent within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act, against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement
expenses, subject to the limitation set forth in the last sentence of subsection (c) below), joint or several, that the Agent or any of such officers,

                                                                          30
directors, agents, attorneys, servants, employees and controlling Persons (collectively, the ―Related Persons‖) may suffer or to which the Agent
or the Related Persons may become subject under all applicable federal and state laws or otherwise, and to promptly reimburse the Agent and
any Related Persons upon written demand for any reasonable expenses (including reasonable fees and disbursements of counsel) incurred by
the Agent or any Related Persons in connection with investigating, preparing or defending any actions, proceedings or claims (whether
commenced or threatened) to the extent such losses, claims, damages, liabilities or actions: (i) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment or supplement thereto), the
Prospectus (or any amendment or supplement thereto), any Issuer-Represented Free Writing Prospectus, the Applications, or any blue sky
application, or other instrument or document of the Primary Parties or based upon written information supplied by any of the Primary Parties
filed in any state or jurisdiction to register or qualify any or all of the Shares under the securities laws thereof (collectively, the ―Blue Sky
Applications‖), or any application or other document, advertisement, or communication (―Sales Information‖) prepared, made or executed by
or on behalf of any of the Primary Parties with its consent or based upon written information furnished by or on behalf of any of the Primary
Parties, whether or not filed in any jurisdiction, in order to qualify or register the Shares under the securities laws thereof, (ii) arise out of or are
based upon the omission or alleged omission to state in any of the foregoing documents or information, a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iii) arise from
any theory of liability whatsoever relating to or arising from or based upon the Registration Statement (or any amendment or supplement
thereto), the Prospectus (or any amendment or supplement thereto), any Issuer-Represented Free Writing Prospectus, the Applications, any
Blue Sky Applications or Sales Information or other documentation distributed in connection with the Offering; or (iv) result from any claims
made with respect to the accuracy, reliability and completeness of the records of Eligible Account Holders and Supplemental Eligible Account
Holders or Other Members or for any denial or reduction of a subscription or order to purchase Common Stock, whether as a result of a
properly calculated allocation pursuant to the Plan or otherwise, based upon such records; provided, however, that no indemnification is
required under this subsection (a) to the extent such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue
material statements or alleged untrue material statements in, or material omission or alleged material omission from, the Registration Statement
(or any amendment or supplement thereto) or the Prospectus (or any amendment or supplement thereto), any Issuer-Represented Free Writing
Prospectus, the Applications, the Blue Sky Applications or Sales Information or other documentation distributed in connection with the
Conversion made in reliance upon and in conformity with written information furnished to the Primary Parties by the Agent or its
representatives (including counsel) with respect to the Agent expressly for use in the Registration Statement (or any amendment or supplement
thereto) or Prospectus (or any amendment or supplement thereto) under the caption ―The Conversion and Offering – Marketing Arrangements;‖
provided, further , that the Primary Parties will not be responsible for any loss, liability, claim, damage or expense to the extent a court of
competent jurisdiction finds they result primarily from material oral misstatements by the Agent to a purchaser of Shares which are not based
upon information in the Registration Statement or Prospectus, or from actions taken or omitted to be taken by the Agent in bad faith or from the
Agent’s gross negligence or willful misconduct, and the Agent agrees to repay to the Primary Parties any amounts advanced to it by the
Primary Parties in connection with matters as to which it is found by a court of competent jurisdiction not to be entitled to indemnification
hereunder.

                                                                           31
             (b) The Agent agrees to indemnify and hold harmless the Primary Parties, their directors and officers, agents, servants and
employees and each person, if any, who controls any of the Primary Parties within the meaning of Section 15 of the 1933 Act or Section 20(a)
of the 1934 Act against any and all loss, liability, claim, damage or expense whatsoever (including but not limited to settlement expenses,
subject to the limitation set forth in the last sentence of subsection (c) below), joint or several, which they, or any of them, may suffer or to
which they, or any of them, may become subject under all applicable federal and state laws or otherwise, and to promptly reimburse the
Primary Parties and any such persons upon written demand for any reasonable expenses (including fees and disbursements of counsel) incurred
by them in connection with investigating, preparing or defending any actions, proceedings or claims (whether commenced or threatened) to the
extent such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment or supplement thereto), any Issuer-Represented Free Writing
Prospectus, the Applications or any Blue Sky Applications or Sales Information or are based upon the omission or alleged omission to state in
any of the foregoing documents a material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that each Agent’s obligations under this Section 11(b) shall
exist only if and only to the extent that such untrue statement or alleged untrue statement was made in, or such material fact or alleged material
fact was omitted from, the Applications, Registration Statement (or any amendment or supplement thereto), the Prospectus (or any amendment
or supplement thereto), any Blue Sky Applications or Sales Information in reliance upon and in conformity with written information furnished
to the Primary Parties by the Agent or its representatives (including counsel) expressly for use under the caption ―The Conversion and Offering
– Marketing Arrangements.‖

            (c) Each indemnified party shall give prompt written notice to each indemnifying party of any action, proceeding, claim (whether
commenced or threatened), or suit instituted against it in respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve it from any liability which it may have on account of this Section 11, Section 12 or otherwise. An
indemnifying party may participate at its own expense in the defense of such action. In addition, if it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving such notice, may assume the defense of
such action with counsel chosen by it reasonably acceptable to the indemnified parties that are defendants in such action, unless such
indemnified parties reasonably object to such assumption on the ground that there may be legal defenses available to them that are different
from or in addition to those available to such indemnifying party. If an indemnifying party assumes the defense of such action, the
indemnifying parties shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with
such action, proceeding or claim, other than reasonable costs of investigation. In no event shall the indemnifying parties be liable for the fees
and expenses of more than one separate firm of attorneys (unless an indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or in addition to those of other indemnified parties) for all indemnified parties
in

                                                                        32
connection with any one action, proceeding or claim or separate but similar or related actions, proceedings or claims in the same jurisdiction
arising out of the same general allegations or circumstances. The Primary Parties shall be liable for any settlement of any claim against the
Agent (or its directors, officers, employees, affiliates or controlling persons), made with the consent of the Primary Parties, which consent shall
not be unreasonably withheld. The Primary Parties shall not, without the written consent of the Agent, settle or compromise any claim against
them based upon circumstances giving rise to an indemnification claim against the Primary Parties hereunder unless such settlement or
compromise provides that the Agent and the other indemnified parties shall be unconditionally and irrevocably released from all liability in
respect of such claim.

             (d) The agreements contained in this Section 11 and in Section 12 hereof and the representations and warranties of the Primary
Parties set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of
the Agent or its officers, directors, controlling persons, agents, attorneys, servants or employees or by or on behalf of any of the Primary Parties
or any officers, directors, controlling persons, agents, attorneys, servants or employees of any of the Primary Parties; (ii) delivery of and
payment hereunder for the Shares; or (iii) any termination of this Agreement. To the extent required by law, Sections 11 and 12 hereof are
subject to and limited by Sections 23A and 23B of the Federal Reserve Act.

       Section 12. Contribution . In order to provide for just and equitable contribution in circumstances in which the indemnification provided
for in Section 11 is due in accordance with its terms but is found in a final judgment by a court to be unavailable from the Primary Parties or
the Agent, the Primary Parties and the Agent shall contribute to the aggregate losses, claims, damages and liabilities of the nature contemplated
by such indemnification in such proportion so that (i) the Agent is responsible for that portion represented by the percentage that the fees paid
to the Agent pursuant to Section 4 of this Agreement (not including expenses) (―Agent’s Fees‖), less any portion of Agent’s Fees paid by the
Agent to Assisting Brokers, bear to the total proceeds received by the Primary Parties from the sale of the Shares in the Offering, net of all
expenses of the Offering, except Agent’s Fees and (ii) the Primary Parties shall be responsible for the balance. If, however, the allocation
provided above is not permitted by applicable law or if the indemnified party failed to give the notice required under Section 11 above, then
each indemnifying party shall contribute to such amount paid or payable to such indemnified party in such proportion as is appropriate to
reflect not only such relative fault of the Primary Parties on the one hand and the Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or actions, proceedings or claims in respect thereof), but also the
relative benefits received by the Primary Parties on the one hand and the Agent on the other from the Offering, as well as any other relevant
equitable considerations. The relative benefits received by the Primary Parties on the one hand and the Agent on the other hand shall be deemed
to be in the same proportion as the total proceeds from the Offering, net of all expenses of the Offering except Agent’s Fees, received by the
Primary Parties bear, with respect to the Agent, to the total fees (not including expenses) received by the Agent less the portion of such fees
paid by the Agent to Assisting Brokers. The relative fault shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the
Primary Parties on the one hand or the Agent on the other and the parties relative intent, good

                                                                        33
faith, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Primary Parties and the Agent
agree that it would not be just and equitable if contribution pursuant to this Section 12 were determined by pro-rata allocation or by any other
method of allocation which does not take account of the equitable considerations referred to above in this Section 12. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or liabilities (or action, proceedings or claims in respect thereof)
referred to above in this Section 12 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action, proceeding or claim. It is expressly agreed that the Agent shall not be liable for any
loss, liability, claim, damage or expense or be required to contribute any amount which in the aggregate exceeds the amount paid (excluding
reimbursable expenses) to the Agent under this Agreement less the portion of such fees paid by the Agent to Assisting Brokers. It is understood
and agreed that the above-stated limitation on the Agent’s liability is essential to the Agent and that the Agent would not have entered into this
Agreement if such limitation had not been agreed to by the parties to this Agreement. No person found guilty of any fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution with respect to any loss or liability
arising from such misrepresentation from any person who was not found guilty of such fraudulent misrepresentation. For purposes of this
Section 12, each of Agent’s and the Primary Parties’ officers and directors and each person, if any, who controls the Agent or any of the
Primary Parties within the meaning of the 1933 Act and the 1934 Act shall have the same rights to contribution as the Primary Parties and the
Agent. Any party entitled to contribution, promptly after receipt of notice of commencement of any action, suit, claim or proceeding against
such party in respect of which a claim for contribution may be made against another party under this Section 12, will notify such party from
whom contribution may be sought, but the omission to so notify such party shall not relieve the party from whom contribution may be sought
from any other obligation it may have hereunder or otherwise than under this Section 12.

      Section 13. Survival . All representations, warranties and indemnities contained in this Agreement (and in Paragraph 11 of the Letter
Agreement, ―Confidentiality‖), or all statements contained in certificates of officers of the Primary Parties or the Agent submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation
made by or on behalf of the Agent or its controlling persons, or by or on behalf of the Primary Parties and shall survive the issuance of the
Shares, and any legal representative, successor or assign of the Agent, any of the Primary Parties, and any indemnified person shall be entitled
to the benefit of the respective agreements, indemnities, warranties and representations.

      Section 14. Termination . The Agent may terminate this Agreement by giving the notice indicated below in this Section at any time after
this Agreement becomes effective as follows:

           (a) In the event (i) the Plan is abandoned or terminated by the Bank; (ii) the Holding Company fails to consummate the sale of the
minimum number of Shares prior to September 30, 2010 in accordance with the provisions of the Plan or as required by the Conversion
Regulations and applicable law; (iii) the Agent terminates this relationship because there has been a material adverse change in the financial
condition or operations of the Primary

                                                                        34
Parties considered as one enterprise since the date of the latest financial statements included in the Prospectus; or (iv) immediately prior to
commencement of the Offering, the Agent terminates this relationship because in its opinion, which shall have been formed in good faith after
reasonable determination and consideration of all relevant factors, there has been a failure to satisfactorily disclose all relevant information in
the Prospectus or the existence of market conditions which might render the sale of the Shares inadvisable, this Agreement shall terminate and
no party to this Agreement shall have any obligation to the other hereunder except as set forth in Sections 3, 4, 9, 11 and 12 hereof.

            (b) If any of the conditions specified in Section 10 hereof shall not have been fulfilled when and as required by this Agreement, or
by the Closing Date, or waived in writing by the Agent, this Agreement and all of the Agent’s obligations hereunder may be canceled by the
Agent by notifying the Bank of such cancellation in writing at any time at or prior to the Closing Date, and any such cancellation shall be
without liability of any party to any other party except as otherwise provided in Sections 3, 4, 9, 11 and 12 hereof.

           (c) If the Agent elects to terminate this Agreement as provided in this Section, the Primary Parties shall be notified by the Agent as
provided in Section 15 hereof.

           (d) If this Agreement is terminated in accordance with the provisions of this Agreement, the Agent shall retain the conversion
advisory and administrative services fee earned and paid to it pursuant to Section 4 and the Primary Parties shall reimburse the Agent for its
reasonable out-of-pocket expenses pursuant to Section 9.

      Section 15. Notices . All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the Agent shall be directed to Stifel, Nicolaus & Company,
Incorporated, 237 Park Avenue, 8th Floor, New York, New York 10017, Attention: David Lazar, Managing Director (with a copy to Kilpatrick
Stockton LLP, 607 14th Street, NW, Suite 900, Washington, DC 20005, Attention: Lori M. Beresford, Esq.). Notices to the Primary Parties
shall be directed to Fairmount Bank, 8216 Philadelphia Road, Baltimore, Maryland 21237, Attention: Joseph M. Solomon, President and Chief
Executive Officer (with a copy to Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P., 499 S. Capital Street, SW, Suite 600,
Washington, DC 20003 (Attention: Edward B. Crosland, Jr., Esq.).

      Section 16. Parties . This Agreement shall inure to the benefit of and be binding upon the Agent and the Primary Parties, and their
respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in
Sections 11 and 12 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement
or any provisions herein contained. It is understood and agreed that this Agreement is the exclusive agreement among the parties, supersedes
any prior Agreement among the parties and may not be varied except by a writing signed by all parties, except for Paragraph 11 of the Letter
Agreement (―Confidentiality‖), which is not hereby superseded.

                                                                         35
       Section 17. Partial Invalidity . In the event that any term, provision or covenant herein or the application thereof to any circumstances or
situation shall be invalid or unenforceable, in whole or in part, the remainder hereof and the application of said term, provision or covenant to
any other circumstance or situation shall not be affected thereby, and each term, provision or covenant herein shall be valid and enforceable to
the full extent permitted by law.

      Section 18. Entire Agreement; Amendment . This Agreement represents the entire understanding of the Primary Parties and the Agent
with respect to the transactions contemplates hereby and supersedes any and all other oral or written agreements heretofore made. No waiver,
amendment or other modification of this Agreement shall be effective unless in writing and signed by the parties hereto.

     Section 19. Construction and Waiver of Jury Trial . This Agreement shall be construed in accordance with the laws of the State of
New York without giving effect to its conflicts of laws principles. Any dispute hereunder shall be brought in a court in the State of New York.
Each of the Primary Parties and the Agent waives all right to trial by jury in any action, proceeding, claim or counterclaim (whether
based on contract, tort or otherwise) related to or arising out of this Agreement.

                                                    [Remainder of page intentionally blank]

                                                                        36
       If the foregoing is in accordance with your understanding of our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement between you and us in accordance with its terms.

                                                                                      Very truly yours,

                                                                                      FAIRMOUNT BANCORP, INC.

                                                                                      By:
                                                                                            Joseph M. Solomon
                                                                                            President and Chief Executive Officer

                                                                                      FAIRMOUNT BANK

                                                                                      By:
                                                                                            Joseph M. Solomon
                                                                                            President and Chief Executive Officer

The foregoing Agency Agreement is
hereby confirmed and accepted as
of the date first set forth above.

STIFEL, NICOLAUS & COMPANY, INCORPORATED

By:
      David P. Lazar
      Managing Director

                                                                      37
    EXHIBIT A

LETTER AGREEMENT
        EXHIBIT B

ASSITING BROKERS AGREEMENT
                                                                             , 2010

Stifel, Nicolaus & Company, Incorporated
237 Park Avenue, 8th Floor
New York, New York 10017

Ladies and Gentlemen:

       (1) General. We understand that Stifel, Nicolaus & Company, Incorporated (―Stifel‖) is entering into this Agreement with us and other
firms who may be offered the right to purchase as principal a portion of securities being distributed to the public. The terms and conditions of
this Agreement shall be applicable to any public offering of securities (―Securities‖) pursuant to a registration statement filed under the
Securities Act of 1933 (the ―Securities Act‖) or exempt from registration thereunder (other than a public offering of Securities effected wholly
outside the United States of America), wherein Stifel (acting for its own account or for the account of any underwriting or similar group or
syndicate) is responsible for managing or otherwise implementing the sale of the Securities to selected dealers (―Selected Dealers‖) and has
informed us that such terms and conditions shall be applicable. Any such offering of Securities to us as a Selected Dealer is hereinafter called
an ―Offering.‖ In the case of any Offering in which you are acting for the account of any underwriting or similar group or syndicate
(―Underwriters‖), the terms and conditions of this Agreement shall be for the benefit of, and binding upon, such Underwriters, including, in the
case of any Offering in which you are acting with others as representatives of Underwriters, such other representatives. The term ―preliminary
prospectus‖ means any preliminary prospectus relating to an Offering of Securities or any preliminary prospectus supplement together with a
prospectus relating to an Offering of Securities; the term ―Prospectus‖ means the prospectus, together with the final prospectus supplement, if
any, relating to an Offering of Securities, filed pursuant to Rule 424(b) or Rule 424(c) under the Securities Act or any successor or similar
rules.

            This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof and supersedes any prior oral
or written agreements or understanding between the parties hereto or their predecessors with respect to the subject matter hereof.

      (2) Conditions of Offering, Acceptance and Purchase. Any Offering will be subject to delivery of the Securities and their acceptance by
you and any other Underwriters, may be subject to the approval of all legal matters by counsel and the satisfaction of other conditions, and may
be made on the basis of reservation of Securities or an allotment against subscription. You will advise us by telegram, telex, facsimile, e-mail,
or other form of written communication (―Written Communication‖) of the particular method and supplementary terms and conditions
(including, without limitation, the information as to prices and offering date referred to in Section 3(c)) of any Offering in which we are invited
to participate. To the extent such supplementary terms and conditions are inconsistent with any provision herein, such terms and

                                                                       B-1
conditions shall supersede any such provision. Unless otherwise indicated in any such Written Communication, acceptances and other
communications by us with respect to any Offering should be sent to Stifel. You may close the subscription books at any time in your sole
discretion without notice, and you reserve the right to reject any acceptance in whole or in part. Payment for Securities purchased by us is to be
made at such office as you may designate, at the public offering price, or, if you shall so advise us, at such price less the concession to dealers
or at the price set forth or indicated in a Written Communication, on such date as you shall determine, on one day’s prior notice to us, by wire
transfer to a Stifel account, against delivery of certificates or other forms evidencing such Securities. If payment is made for Securities
purchased by us at the public offering price, the concession to which we shall be entitled will be paid to us upon termination of the provisions
of Section 3(c) with respect to such Securities.

    Unless we promptly give you written instructions otherwise, if transactions in the Securities may be settled through the facilities of The
Depository Trust Company, delivery of Securities purchased by us will be made through such facilities if we are a member, or if we are not a
member, settlement may be made through our ordinary correspondent who is a member.

     (3) Representations, Warranties, and Agreements.
      (a) Registered Offering. In the case of any Offering of Securities that are registered under the Securities Act (―Registered Offering‖), you
shall provide us with such number of copies of each preliminary prospectus, the Prospectus and any supplement thereto relating to each
Registered Offering as we may reasonably request for the purposes contemplated by the Securities Act and the Securities Exchange Act of
1934 (the ―Exchange Act‖) and the applicable Rules and regulations of the Securities and Exchange Commission thereunder. We represent that
we are familiar with Rule 15c2-8 under the Exchange Act relating to the distribution of preliminary and final prospectuses and agree that we
will comply therewith. We agree to keep an accurate record of our distribution (including dates, number of copies, and persons to whom sent)
of copies of the Prospectus or any preliminary prospectus (or any amendment or supplement to any thereof), and promptly upon request by you,
to bring all subsequent changes to the attention of anyone to whom such material shall have been furnished. We agree to furnish to persons who
receive a confirmation of sale a copy of the Prospectus filed pursuant to Rule 424(b) or Rule 424(c) under the Securities Act. We agree that in
purchasing Securities in a Registered Offering we will rely upon no statements whatsoever, written or oral, other than the statements in the
Prospectus delivered to us by you. We will not be authorized by the issuer or other seller of Securities offered pursuant to a Prospectus or by
any Underwriter to give any information or to make any representation not contained in the Prospectus in connection with the sale of such
Securities. We will not use any free writing prospectus, unless consented to by you or authorized expressly in writing to you by the issuer in the
Registered Offering.

      (b) Offering Pursuant to Offering Circular. In the case of any Offering of Securities, other than a Registered Offering, which is made
pursuant to an offering circular or other document comparable to a prospectus in a Registered Offering, including, without limitation, an
Offering of ―exempted securities‖ as defined in Section 3(a)(2) of the Securities Act (an ―Exempted Securities Offering‖), you shall provide us
with such number of copies of each preliminary offering circular, the final offering circular and any supplement thereto relating to each
Offering as we may reasonably request. We agree that we will comply with the applicable

                                                                       B-2
federal and state laws, and the applicable rules and regulations of any regulatory body promulgated thereunder, governing the use and
distribution of offering circulars by brokers or dealers. We agree that in purchasing Securities pursuant to an offering circular we will rely upon
no statements whatsoever, written or oral, other than the statements in the final offering circular delivered to us by you. We will not be
authorized by the issuer or other seller of Securities offered pursuant to an offering circular or by any Underwriter to give any information or to
make any representation not contained in the offering circular in connection with the sale of such Securities.

      (c) Offer and Sale to the Public. With respect to any Offering of Securities, you will inform us by a Written Communication of the public
offering price, the selling concession, the reallowance (if any) to dealers, and the time when we may commence selling Securities to the public.
After such public offering has commenced, you may change the public offering price, the selling concession, and the reallowance to dealers.
With respect to each Offering of Securities, until the provisions of this Section 3(c) shall be terminated pursuant to Section 5, we agree to offer
Securities to the public only at the public offering price, except that if a reallowance is in effect, a reallowance from the public offering price
not in excess of such reallowance may be allowed as consideration for services rendered in distribution to dealers who are actually engaged in
the investment banking or securities business, who execute the written agreement prescribed by Rule 2740 of the Rules of Conduct of the
Financial Industry Regulatory Authority (the ―FINRA‖) and who are either members in good standing of the FINRA or foreign brokers or
dealers not eligible for membership in the FINRA who represent to us that they will promptly reoffer such Securities at the public offering
price and will abide by the conditions with respect to foreign brokers and dealers set forth in Section 3(f) hereof.

       (d) Stabilization and Overallotment. You may, with respect to any Offering, be authorized to over-allot in arranging sales to Selected
Dealers, to purchase and sell Securities, any other securities of the issuer of the Securities of the same class and series and any other securities
of such issuer that you may designate for long or short account, and to stabilize or maintain the market price of the Securities. We agree not to
purchase and sell Securities for which an order from a client has not been received without your consent in each instance. We agree to advise
you from time to time upon request, prior to the termination of the provisions of Section 3(c) with respect to any Offering, of the amount of
Securities purchased by us hereunder remaining unsold and we will, upon your request, sell to you, for the accounts of the Underwriters, such
amount of Securities as you may designate, at the public offering price thereof less an amount to be determined by you not in excess of the
concession to dealers. In the event that prior to the later of (i) the termination of the provisions of Section 3(c) with respect to any Offering, or
(ii) the covering by you of any short position created by you in connection with such Offering for your account or the account of one or more
Underwriters, you purchase or contract to purchase for the account of any of the Underwriters, in the open market or otherwise, any Securities
theretofore delivered to us, you reserve the right to withhold the above-mentioned concession to dealers on such Securities if sold to us at the
public offering price, or if such concession has been allowed to us through our purchase at a net price, we agree to repay such concession upon
your demand, plus in each case any taxes on redelivery, commissions, accrued interest, and dividends paid in connection with such purchase or
contract to purchase.

                                                                        B-3
      (e) Open Market Transactions. We agree to abide by Regulation M under the Exchange Act and we agree not to bid for, purchase,
attempt to purchase, or sell, directly or indirectly, any Securities, any other Reference Securities (as defined in Regulation M) of the issuer, or
any other securities of such issuer as you may designate, except as brokers pursuant to unsolicited orders and as otherwise provided in this
Agreement. If the Securities are common stock or securities convertible into common stock, we agree not to effect, or attempt to induce others
to effect, directly or indirectly, any transactions in or relating to any stock of such issuer, except to the extent permitted by Rule 101 of
Regulation M under the Exchange Act.

       (f) FINRA. We represent that we are actually engaged in the investment banking or securities business and we are either (i) a member in
good standing of the FINRA, (ii) if not such a member, a foreign dealer not eligible for membership, or (iii) solely in connection with an
Exempted Securities Offering, a bank, as defined in Section 3(a)(6) of the Exchange Act, that does not otherwise fall within provision (i) or
(ii) of this sentence (a ―Bank‖). If we are a member as described in (i), we agree that in making sales of the Securities we will comply with all
applicable interpretative materials and Conduct Rules of the FINRA, including, without limitation, Conduct Rules 2740 (relating to Selling
Concessions, Discounts and Other Allowances) and 2790 (relating to New Issues). If we are a foreign dealer as described in (ii), we agree not
to offer or sell any Securities in the United States of America, its territories or its possessions or to persons who are citizens thereof or residents
therein (other than through you), and in making sales of Securities outside the United States of America we agree to comply as though we were
a member with Conduct Rules 2730 (relating to Securities Taken in Trade), 2740 (relating to Selling Concessions), 2750 (relating to
Transactions with Related Persons) and 2790 (relating to New Issues) as though we were such a member and to comply with Conduct Rule
2420 (relating to Dealing with Non-Members) as it applies to a nonmember broker or dealer in a foreign country. In connection with an
Exempted Securities Offering, if we are a Bank, we agree to also comply, as though we were an FINRA member, with the provision of Rules
2730, 2740 and 2750 of the Conduct Rules. We further represent, by our participating in an Offering, that we have provided to you all
documents and other information required to be filed with respect to us, any related person or any person associated with us or any such related
person pursuant to the supplementary requirements of the FINRA’s interpretation with respect to review of corporate financing as such
requirements relate to such Offering.

           We further agree that, in connection with any purchase of Securities from you that is not otherwise covered by the terms of this
Agreement (whether you are acting as manager, as member of an underwriting syndicate or a selling group or otherwise), if a selling
concession, discount or other allowance is granted to us, the preceding paragraph will be applicable.

      (g) Relationship among Underwriters and Selected Dealers. You may buy Securities from or sell Securities to any Underwriter or
Selected Dealer and, with your consent, the Underwriters (if any) and the Selected Dealers may purchase Securities from and sell Securities to
each other at the public offering price less all or any part of the concession. We are not authorized to act as agent for you or any Underwriter or
the issuer or other seller of any Securities in offering Securities to the public or otherwise. Nothing contained herein or in any Written
Communication from you shall constitute the Selected Dealers partners with you or any Underwriter or with one another. If the Selected
Dealers, among themselves or with the Underwriters, should be deemed to constitute a partnership for federal income tax purposes, then

                                                                         B-4
we elect to be excluded from the application of Subchapter K, Chapter 1, Subtitle A of the Internal Revenue Code of 1986 and agree not to take
any position inconsistent with that election. We authorize you, in your discretion, to execute and file on our behalf such evidence of that
election as may be required by the Internal Revenue Service. Neither you nor any Underwriter shall be under any obligation to us except for
obligations assumed hereby or in any Written Communication from you in connection with any Offering. In connection with any Offering, we
agree to pay our proportionate share of any tax, claim, demand, or liability asserted against us, and the other Selected Dealers or any of them, or
against you or the Underwriters, if any, based on any claim that such Selected Dealers or any of them constitute an association, unincorporated
business, or other separate entity, including in each case our proportionate share of any expense incurred in defending against any such tax,
claim, demand, or liability.

      (h) Blue Sky Laws. Upon application to you, you will inform us as to the jurisdictions in which you believe the Securities have been
qualified for sale or are exempt under the respective securities or ―blue sky‖ laws of such jurisdictions. We understand and agree that
compliance with the securities or ―blue sky‖ laws in each jurisdiction in which we shall offer or sell any of the Securities shall be our sole
responsibility and that you assume no responsibility or obligations as to the eligibility of the Securities for sale or our right to sell the Securities
in any jurisdiction.

      (i) Compliance with Law. We agree that in selling Securities pursuant to any Offering (which agreement shall also be for the benefit of
the issuer or other seller of such Securities), we will comply with the applicable provisions of the Securities Act and the Exchange Act, the
applicable Rules and regulations of the Securities and Exchange Commission thereunder, the applicable Rules and regulations of the FINRA,
the applicable Rules and regulations of any securities exchange having jurisdiction over the Offering, and the applicable laws, rules and
regulations specified in Section 3(c) hereof. Without limiting the foregoing, (a) we agree that, at all times since we were invited to participate in
an Offering of Securities, we have complied with the provisions of Regulation M applicable to such Offering, in each case after giving effect to
any applicable exemptions and (b) we represent that our incurrence of obligations hereunder in connection with any Offering of Securities will
not result in the violation by us of Rule 15c3-1 under the Exchange Act, if such requirements are applicable to us. You shall have full authority
to take such action as you may deem advisable in respect of all matters pertaining to any Offering. Neither you nor any Underwriter shall be
under any liability to us, except for lack of good faith and for obligations expressly assumed by you in this Agreement; provided, however, that
nothing in this sentence shall be deemed to relieve you from any liability imposed by the Securities Act.

      (j) Best Efforts Offering . If you communicate to us that a particular offering is being made on a best efforts basis, then the terms in this
Section 3(j) apply and other inconsistent terms in this Agreement do not apply.

           (i) The offering will be a best efforts offering. The offering also will be contingent and involve a closing only after receipt of
necessary documentation from the issuer and satisfaction of other conditions, if any, specified in the prospectus or offering circular and the
agency or engagement agreement with you and the issuer. The offering is designed to comply with applicable Commission rules, including
Rules 15c2-4, 10b-9, and 15c6-1. See FINRA Notice to Members 98-4, 87-61 and 84-7.

                                                                          B-5
            (ii) We represent and agree that we shall take necessary steps to comply with Commission Rules 15c2-4, 10b-9 and 15c6-1,
including, but not limited to, depositing funds in a complying special account if funds are received before all closing conditions have been met.
We also represent that we are aware that those who purchase in this best efforts offering are subject to the investor purchase limitations
described in the prospectus or offering circular.

      (4) Indemnification. We agree to indemnify and hold harmless Stifel, the issuer of the Securities, each person, if any, who controls
(within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) Stifel or the issuer of the Securities, and their
respective directors, officers and employees from and against any and all losses, liabilities, costs or claims (or actions in respect thereof)
(collectively, ―Losses‖) to which any of them may become subject (including all reasonable costs of investigating, disputing or defending any
such claim or action), insofar as such Losses arise out of or are in connection with the breach of any representation, warranty or agreement
made by us herein.

             If any claim, demand, action or proceeding (including any governmental investigation) shall be brought or alleged against an
indemnified party in respect of which indemnity is to be sought against an indemnifying party, the indemnified party shall promptly notify the
indemnifying party in writing, and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to
the indemnified party to represent the indemnified party and any others the indemnified party may designate in such proceeding and shall pay
the reasonable fees and expenses of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has failed
within a reasonable time to retain counsel reasonably satisfactory to such indemnified party or (iii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests between them. It is agreed that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one
separate law firm (in addition to local counsel where necessary) for all such indemnified parties. Such firm shall be designated in writing by the
indemnified party. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

                                                                        B-6
           The indemnity agreements contained in this Section and the representations and warranties by us in this Agreement shall remain
operative and in full force and effect regardless of: (i) any termination of this Agreement, (ii) any investigation made by an indemnified party
or on such party’s behalf or any person controlling an indemnified party or by or on behalf of the indemnifying party, its directors or officers or
any person controlling the indemnifying party, and (iii) acceptance of and payment for any Securities.

      (5) Termination; Supplements and Amendments. This Agreement may be terminated by either party hereto upon five business days’
written notice to the other party; provided that with respect to any Offering for which a Written Communication was sent and accepted prior to
such notice, this Agreement as it applies to such Offering shall remain in full force and effect and shall terminate with respect to such Offering
in accordance with the last sentence of this Section. This Agreement may be supplemented or amended by you by written notice thereof to us,
and any such supplement or amendment to this Agreement shall be effective with respect to any Offering to which this Agreement applies after
the date of such supplement or amendment. Each reference to ―this Agreement‖ herein shall, as appropriate, be to this Agreement as so
amended and supplemented. The terms and conditions set forth in Sections 3(c) and (e) with regard to any offering will terminate at the close of
business on the thirtieth day after the date of the initial public offering of the Securities to which such Offering relates, but such terms and
conditions, upon notice to us, may be terminated by you at any time.

      (6) Successors and Assigns. This Agreement shall be binding on, and inure to the benefit of, the parties hereto and other persons specified
or indicated in Section 1, and the respective successors and assigns of each of them.

     (7) Governing Law. This Agreement and the terms and conditions set forth herein with respect to any Offering together with such
supplementary terms and conditions with respect to such Offering as may be contained in any Written Communication from you to us in
connection therewith shall be governed by, and construed in accordance with, the laws of the State of Missouri without regard to conflicts of
laws principles.

                                                     [Remainder of page intentionally blank]

                                                                       B-7
       By signing this Agreement we confirm that our subscription to, or our acceptance of any reservation of, any Securities pursuant to an
Offering shall constitute (i) acceptance of and agreement to the terms and conditions of this Agreement (as supplemented and amended
pursuant to Section 5) together with and subject to any supplementary terms and conditions contained in any Written Communication from you
in connection with such Offering, all of which shall constitute a binding agreement between us and you, individually, or as representative of
any Underwriters, (ii) in confirmation that our representations and warranties set forth in Section 3 are true and correct at that time and
(iii) confirmation that our agreements set forth in Sections 2 and 3 have been and will be fully performed by us to the extent and at the times
required thereby.

                                                                                      Very truly yours,


                                                                                      (Name of Firm)

                                                                                      By:

Confirmed, as of the date
first above written.

STIFEL, NICOLAUS & COMPANY, INCORPORATED

By:


                                                                                      Execution Date:

                                                                     B-8
                                                                                                                                       Exhibit 3.1

                                                     ARTICLES OF INCORPORATION

                                                       FAIRMOUNT BANCORP, INC.

       The undersigned, Edward B. Crosland, Jr., whose address is 499 South Capitol St., S.W., Suite 600, Washington, DC 20003, being at
least eighteen years of age, acting as incorporator, does hereby form a corporation under the general laws of the State of Maryland, having the
following Articles of Incorporation (the ―Articles‖):

     ARTICLE 1. Name. The name of the corporation is Fairmount Bancorp, Inc. (herein the ―Corporation‖).

     ARTICLE 2. Principal Office. The address of the principal office of the Corporation in the State of Maryland is 8216 Philadelphia
Road, Baltimore, Maryland 21237.

     ARTICLE 3. Purpose. The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations
may be organized under the general laws of the State of Maryland as now or hereafter in force.

     ARTICLE 4. Resident Agent. The name and address of the registered agent of the Corporation in the State of Maryland is The
Corporation Trust Incorporated, 351 West Camden Street, Baltimore, Maryland 21201. Said resident agent is a Maryland corporation.

     ARTICLE 5.
     A. Capital Stock. The total number of shares of capital stock of all classes that the Corporation has authority to issue is five million
(5,000,000) shares, consisting of:

           1. One million (1,000,000) shares of preferred stock, par value one cent ($.01) per share (the ―Preferred Stock‖); and

           2. Four million (4,000,000) shares of common stock, par value one cent ($.01) per share (the ―Common Stock‖).

      The aggregate par value of all the authorized shares of capital stock is fifty thousand dollars ($50,000). Except to the extent required by
governing law, rule or regulation, the shares of capital stock may be issued from time to time by the Board of Directors without further
approval of the stockholders of the Corporation. The Corporation shall have the authority to purchase its capital stock out of funds lawfully
available therefore, which funds shall include, without limitation, the Corporation’s unreserved and unrestricted capital surplus. The Board of
Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by
the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of
any class or series that the Corporation has authority to issue. For the purposes of these Articles, the term ―Whole Board‖ shall mean the total
number of directors that the Corporation would have if there were no vacancies on the Board of Directors at the time any such resolution is
presented to the Board of Directors for adoption.

      B. Common Stock. Except as provided under the terms of any series of Preferred Stock and as limited by Section D of this Article 5, the
exclusive voting power shall be vested in the Common Stock, the holders thereof being entitled to one vote for each share of such Common
Stock standing in the holder’s name on the books of the Corporation. Subject to any rights and preferences of any series of Preferred Stock,
holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors out of funds lawfully available
therefore. Upon any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of
Common Stock shall be entitled to receive pro rata the remaining assets of the Corporation after payment or provision for payment of all debts
and liabilities of the Corporation and payment or provision for payment of any amounts owed to the holders of any series of Preferred Stock
having preference over the Common Stock on distributions on liquidation, dissolution or winding up of the Corporation.
      C. 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. 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.

     D. Restrictions on Voting Rights of the Corporation’s Equity Securities.
             1. Notwithstanding any other provision of these Articles, in no event shall any record owner of any outstanding Common Stock that
is beneficially owned, directly or indirectly, by a Person who, as of any record date for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 10% of the then-outstanding shares of Common Stock (the ―Limit‖), be entitled, or permitted to any vote
in respect of the shares held in excess of the Limit. The number of votes that may be cast by any record owner by virtue of the provisions
hereof in respect of Common Stock beneficially owned by such Person owning shares in excess of the Limit (a ―Holder in Excess‖) shall be a
number equal to the total number of votes that a single record owner of all Common Stock owned by such Holder in Excess would be entitled
to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the number of shares of such class or
series beneficially owned by such Holder in Excess and owned of record by such record owner and the denominator of which is the total
number of shares of Common Stock beneficially owned by such Holder in Excess. The provisions of this Section D of this Article 5 shall not
be applicable if, before the Holder in Excess acquired beneficial ownership of such shares in excess of the Limit, such acquisition was
approved by a majority of the ―Unaffiliated Directors.‖ For this purpose, the term ―Unaffiliated Director‖ means any member of the Board of
Directors who is unaffiliated with the Holder in Excess and was a member of the Board of Directors prior to the time that the Holder in Excess
became such, and any director who is thereafter chosen to fill any vacancy on the Board of Directors and who is elected and who, in either
event, is unaffiliated with the Holder in Excess and in connection with his or her initial assumption of office is recommended for appointment
or election by a majority of the Unaffiliated Directors then serving on the Board of Directors.

           2. The following definitions shall apply to this Section D of this Article 5.

            (a) An ―affiliate‖ of a specified Person shall mean a Person that directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, the Person specified.

             (b) ―Beneficial ownership‖ shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934 (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor
rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on December 31, 2007; provided, however, that a Person shall, in
any event, also be deemed the ―beneficial owner‖ of any Common Stock:

                   (1) that such Person or any of its affiliates beneficially owns, directly or indirectly; or

                   (2) that such Person or any of its affiliates has (i) the right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner of any
voting shares solely by reason of an agreement, contract, or other arrangement with the Corporation to effect any transaction of the type
described in clause (i) or (ii) of the first sentence of Article 9 hereof) or upon the exercise of conversion rights, exchange rights, warrants, or
options or otherwise, or (ii) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement,
understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a
revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to
shares of which neither such Person nor any such affiliate is otherwise deemed the beneficial owner); or
                      (3) that are beneficially owned, directly or indirectly, by any other Person with which such first mentioned Person or any of
its affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that (i) no
director or officer of the Corporation (or any affiliate of any such director or officer) shall, solely by reason of any or all of such directors or
officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any Common Stock beneficially owned by
any other such director or officer (or any affiliate thereof), and (ii) neither any employee stock ownership or similar plan of the Corporation or
any subsidiary of the Corporation nor any trustee with respect thereto (or any affiliate of such trustee) shall, solely by reason of such capacity
of such trustee, be deemed, for any purposes hereof, to beneficially own any Common Stock held under any such plan. For purposes of
computing the percentage of beneficial ownership of Common Stock of a Person, the outstanding Common Stock shall include shares deemed
owned by such Person through application of this subsection but shall not include any other shares of Common Stock that may be issuable by
the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the
outstanding Common Stock shall include only Common Stock then outstanding and shall not include any Common Stock that may be issuable
by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise.

            (c) A ―Person‖ shall mean any individual, firm, corporation, or other entity.

             (d) The Board of Directors shall have the power to construe and apply the provisions of this Section D and to make all
determinations necessary or desirable to implement such provisions, including but not limited to matters with respect to (i) the number of
shares of Common Stock beneficially owned by any Person, (ii) whether a Person is an affiliate of another, (iii) whether a Person has an
agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership, (iv) the
application of any other definition or operative provision of this Section D to the given facts, or (v) any other matter relating to the applicability
or effect of this Section D.

       3. The Board of Directors shall have the right to demand that any Person reasonably believed by the Board of Directors to be a Holder in
Excess (or holder of record of Common Stock beneficially owned by any Holder in Excess) supply the Corporation with complete information
as to (i) the record owner(s) of all shares beneficially owned by such Holder in Excess, and (ii) any other factual matter relating to the
applicability or effect of this section as may reasonably be requested of such Holder in Excess. The Board of Directors shall further have the
right to receive from any Holder in Excess reimbursement for all expenses incurred by the Board in connection with its investigation of any
matters relating to the applicability or effect of this section on such Holder in Excess, to the extent such investigation is deemed appropriate by
the Board of Directors as a result of the Holder in Excess refusing to supply the Corporation with the information described in the previous
sentence.

      4. Except as otherwise provided by law or expressly provided in this Section D, the presence, in person or by proxy, of the holders of
record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to
the provisions of this Section D) entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote shall constitute a
quorum at all meetings of the stockholders, and every reference in these Articles to a majority or other proportion of capital stock (or the
holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed
to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.

      5. Any constructions, applications, or determinations made by the Board of Directors pursuant to this Section D in good faith and on the
basis of such information and assistance as was then reasonably available for such purpose, shall be conclusive and binding upon the
Corporation and its stockholders.

      6. In the event any provision (or portion thereof) of this Section D shall be found to be invalid, prohibited or unenforceable for any
reason, the remaining provisions (or portions thereof) of this Section D shall remain in full force and effect, and shall be construed as if such
invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the
Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section D remain, to the fullest extent permitted
by law, applicable and enforceable as to all stockholders, including Holders in Excess, notwithstanding any such finding.
       E. Majority Vote. Notwithstanding any provision of law requiring the authorization of any action by a greater proportion than a majority
of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, such action shall be
valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and
entitled to vote thereon, except as otherwise provided in these Articles.

     ARTICLE 6. Preemptive Rights and Appraisal Rights.
      A. Preemptive Rights. Except for preemptive rights approved by the Board of Directors pursuant to a resolution approved by a majority
of the directors then in office, no holder of the capital stock of the Corporation or series of stock or of options, warrants or other rights to
purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe
for any unissued capital stock of any class or series, or any unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for capital stock of any class or series or carrying any right to purchase stock of any class or series.

      B. Appraisal Rights. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under
Title 3, Subtitle 2 of the Maryland General Corporation Law (the ―MGCL‖) or any successor statute unless the Board of Directors, pursuant to
a resolution approved by a majority of the directors then in office, shall determine that such rights apply with respect to all or any classes or
series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares
would otherwise be entitled to exercise such rights.

      ARTICLE 7. Directors. The following provisions are made a part of these Articles for the management of the business and the conduct
of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and
stockholders:

      A. Management of the Corporation. The business and affairs of the Corporation shall be managed under the direction of the Board of
Directors. All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or as
reserved to the stockholders by law or by these Articles or the Bylaws of the Corporation.

      B. Number, Class and Terms of Directors; No Cumulative Voting. The number of directors constituting the Board of Directors of the
Corporation shall initially be five (5), which number may be increased or decreased in the manner provided in the Bylaws of the Corporation;
provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in
force. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the first class (―Class I‖) to expire at the conclusion of the first annual
meeting of stockholders, the term of office of the second class (―Class II‖) to expire at the conclusion of the annual meeting of stockholders one
year thereafter and the term of office of the third class (―Class III‖) to expire at the conclusion of the annual meeting of stockholders two years
thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of
stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with
each director to hold office until his or her successor shall have been duly elected and qualified.
      The names of the individuals who will serve as directors of the Corporation until their successors are elected and qualify are as follows:

                        Class I Directors:                                                  Term to Expire in
                          William G. Yanke                                                        2011
                          Joseph M. Solomon                                                       2011
                        Class II Directors:                                                 Term to Expire in
                          Edward J. Lally                                                         2012
                          Mary R. Craig                                                           2012
                        Class III Directors:                                                Term to Expire in
                          James E. Elliott                                                        2013

            Stockholders shall not be permitted to cumulate their votes in the election of directors.

      C. Vacancies. Any vacancies in the Board of Directors may be filled in the manner provided in the Bylaws of the Corporation.

      D. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 50% of the
voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (after
giving effect to the provisions of Article 5 hereof) voting together as a single class.

      E. Stockholder Proposals and Nominations of Directors. Advance notice of stockholder nominations for the election of directors and
of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in
the Bylaws of the Corporation. Stockholder proposals to be presented in connection with a special meeting of stockholders shall be presented
by the Corporation only to the extent required by Section 2-502 of the MGCL and the Bylaws of the Corporation.

      ARTICLE 8. Bylaws. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any
adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the
Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. In addition to any vote of the
holders of any class or series of stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80%
of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of
directors (after giving effect to the provisions of Article 5 hereof), voting together as a single class, shall be required for the adoption,
amendment or repeal of any provisions of the Bylaws of the Corporation by the stockholders.

       ARTICLE 9. Evaluation of Certain Offers. The Board of Directors, when evaluating (i) any offer of another Person (as defined below)
to (A) make a tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another
corporation or entity, or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or (ii) any other
actual or proposed transaction that would or may involve a change in control of the Corporation (whether by purchases of shares of stock or
any other securities of the Corporation in the open market, or otherwise, tender offer, merger, consolidation, share exchange, dissolution,
liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation or otherwise), may, in connection with the exercise
of its business judgment in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation
to the Corporation’s stockholders, give due consideration to all relevant factors, including, but not limited to: (A) the economic effect, both
immediate and long-term, upon the Corporation’s stockholders, including stockholders, if any, who do not participate in the transaction; (B) the
social and economic effect on the present and future employees, creditors and customers of, and others dealing with, the Corporation and its
subsidiaries and on the communities in which the Corporation and its
subsidiaries operate or are located; (C) whether the proposal is acceptable based on the historical, current or projected future operating results
or financial condition of the Corporation; (D) whether a more favorable price could be obtained for the Corporation’s stock or other securities
in the future; (E) the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as
they would affect the employees of the Corporation and its subsidiaries; (F) the future value of the stock or any other securities of the
Corporation or the other entity to be involved in the proposed transaction; (G) any antitrust or other legal and regulatory issues that are raised
by the proposal; (H) the business and historical, current or expected future financial condition or operating results of the other entity to be
involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be
incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed
transaction; and (I) the ability of the Corporation to fulfill its objectives as a financial institution holding company and on the ability of its
subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations. If
the Board of Directors determines that any proposed transaction of the type described in clause (i) or (ii) of the immediately preceding sentence
should be rejected, it may take any lawful action to defeat such transaction, including, but not limited to, any or all of the following: advising
stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints with governmental and
regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock,
other securities or granting options or rights with respect thereto; and obtaining a more favorable offer from another individual or entity. This
Article 9 does not create any implication concerning factors that may be considered by the Board of Directors regarding any proposed
transaction of the type described in clause (i) or (ii) of the first sentence of this Article 9.

      For purposes of this Article 9, a ―Person‖ shall include an individual, a group acting in concert, a corporation, a partnership, an
association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other
group or entity formed for the purpose of acquiring, holding or disposing of securities.

      ARTICLE 10. Indemnification, etc. of Directors and Officers.
       A. Indemnification. The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation
or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be
authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with
respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.

      B. Procedure. If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period
shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the
claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant
to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall
be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to
repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation
by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any
suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to
an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to
the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met
the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of
the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an
actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a
presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a
defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or
by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is
not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

      C. Non-Exclusivity. The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive
of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any agreement,
any vote of stockholders or the Board of Directors, or otherwise.

     D. Insurance. The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

      E. Miscellaneous. The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any
indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the
amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B
of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall
inure to the benefit of the indemnitee’s heirs, executors and administrators.

      Any repeal or modification of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of
such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this
Article 10 is in force.

      ARTICLE 11. Limitation of Liability. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its
stockholders for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in
money, property or services for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a
judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person’s
action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding;
or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers
and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the
MGCL, as so amended.

      Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation existing at the time of such repeal or modification.

      ARTICLE 12. Amendment of the Articles of Incorporation. The Corporation reserves the right to amend or repeal any provision
contained in these Articles in the manner prescribed by the MGCL, including any amendment altering the terms or contract rights, as expressly
set forth in these Articles, of any of the Corporation’s outstanding stock by classification, reclassification or otherwise, and no stockholder
approval shall be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights
conferred upon stockholders are granted subject to this reservation.

     The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number),
and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the
number of shares of stock of any class or series that the Corporation has authority to issue.
      No proposed amendment or repeal of any provision of these Articles shall be submitted to a stockholder vote unless the Board of
Directors shall have (1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for
consideration at either an annual or special meeting of the stockholders pursuant to a resolution approved by the Board of Directors. Any
proposed amendment or repeal of any provision of these Articles may be abandoned by the Board of Directors at any time before its effective
time upon the adoption of a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number).

       The amendment or repeal of any provision of these Articles shall be approved by at least two-thirds of all votes entitled to be cast by the
holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these
Articles), except that the proposed amendment or repeal of any provision of these Articles need only be approved by the vote of a majority of
all the votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect
to the provisions of Article 5 of these Articles) if the amendment or repeal of such provision is approved by the Board of Directors pursuant to
a resolution approved by at least two-thirds of the Whole Board (rounded up to the nearest whole number).

      Notwithstanding any other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by these Articles, the affirmative
vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to
vote generally in the election of directors (after giving effect to the provisions of Article 5), voting together as a single class, shall be required
to amend or repeal this Article 12, Section C, D or E of Article 5, Article 7, Article 8, Article 9, Article 10 or Article 11.

      ARTICLE 13. Name and Address of Incorporator. The name and mailing address of the sole incorporator are as follows:

                                                           Edward B. Crosland, Jr., Esq.
                                                       499 Capitol South St., S.W., Suite 600
                                                             Washington, D.C. 20003

                                                  [Remainder of Page Intentionally Left Blank]
     I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation under the laws of the State of Maryland, do
make, file and record this Charter, do certify that the facts herein stated are true, and, accordingly, have hereto set my hand this 30th day of
November, 2009.


                                                                                        Edward B. Crosland, Jr., Incorporator

     I hereby consent to my designation in this document as resident agent to this corporation.

                                                                                        THE CORPORATION TRUST INCORPORATED

                                                                                        By:
                          [LETTERHEAD OF JONES, WALKER, WAECHTER, POITEVENT, CARRÈRE &
                                                 DENÈGRE, L.L.P.]

                                                                                                                                   EXHIBIT 5.1

                                                                                                         February 4, 2010

Board of Directors
Fairmount Bancorp, Inc.
8216 Philadelphia Road
Baltimore, MD 21237

     Re: Registration Statement on Form S-1

Ladies and Gentlemen:

     We have acted as special counsel for Fairmount Bancorp, Inc., a Maryland corporation (the ―Company‖), in connection with the
Registration Statement on Form S-1 (the ―Registration Statement‖) initially filed by the Company on December 17, 2009 with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the ―Act‖), and the regulations promulgated thereunder.

      Pursuant to a Plan of Conversion adopted by the Board of Directors of Fairmount Bank (the ―Bank‖), the Registration Statement relates
to the proposed issuance and sale by the Company of up to 661,250 shares (the ―Offering Shares‖) of common stock, par value $0.01 per share,
of the Company (the ―Common Stock‖) in a subscription offering, a community offering and a syndicated community offering (the
―Offerings‖).

      In preparation of this opinion, we have examined originals or copies identified to our satisfaction of: (i) the Company’s charter; (ii) the
Company’s bylaws; (iii) the Registration Statement, including the prospectus contained therein and the exhibits thereto; (iv) certain resolutions
of the Board of Directors of the Company relating to the issuance of the Common Stock being registered under the Registration Statement; (v)
the Plan of Conversion; (vi) the Bank’s employee stock ownership plan (the ―ESOP‖) and the form of loan agreement between the Company
and the ESOP; and (vii) the form of stock certificate to represent shares of the Common Stock. We have also examined originals or copies of
such documents, corporate records, certificates of public officials and other instruments, and have conducted such other investigations of law
and fact, as we have deemed necessary or advisable for purposes of our opinion.
Board of Directors
Fairmount Bancorp, Inc.
February 4, 2010
Page 2

      In our examination, we have relied on the genuineness of all signatures, the authenticity of all documents and instruments submitted to us
as originals, and the conformity to the originals of all documents and instruments submitted to us a certified or conformed copies. In addition,
we have relied on the accuracy and completeness of all records, documents, instruments and materials made available to us by the Company.

      Our opinion is limited to the matters set forth herein, and we express no opinion other than as expressly set forth herein. In rendering the
opinions set forth below, we do not express any opinion concerning law other than the laws of the State of Maryland.

      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 Act and (ii) the conversion of the Bank will have become effective.

      Based upon and subject to the foregoing, it is our opinion that, upon the due adoption by the Board of Directors of the Company (or
authorized committee thereof) of a resolution fixing the number of Offering Shares to be sold in the Offerings, such Offering Shares, when
issued and sold in the manner described in the Registration Statement, will be validly issued, fully paid and nonassessable.

     We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the headings
―The Conversion and Offering-Material Income Tax Consequences‖ and ―Legal Matters‖ in the prospectus which is part of the Registration
Statement, as such may be amended or supplemented, or incorporated by reference in any Registration Statement covering additional shares of
Common Stock to be issued or sold under the Plan of Conversion that is filed pursuant to Rule 462(b) under the Act. In giving such consent,
we do not hereby admit that we are experts or are otherwise within the category of persons whose consent is required under Section 7 of the
Act or the rules or regulations of the Securities and Exchange Commission thereunder.

                                                                                        Very truly yours,

                                                                                        /s/ Jones, Walker, Waechter,
                                                                                             Poitevent, Carrère &
                                                                                             Denègre, LLP
                                                                                                                                      Exhibit 8.1

                                                  [LETTERHEAD OF JONES, WALKER,
                                                      WAECHTER, POITEVENT,
                                                     CARRÈRE & DENÈGRE, L.L.P]


                                                                February 4, 2010

Board of Directors
Fairmount Bank
8216 Philadelphia Road
Baltimore, MD 22137

Board of Directors
Fairmount Bancorp, Inc.
8216 Philadelphia Road
Baltimore, MD 22137

      Re:   Certain Federal Income Tax Consequences Relating to the Conversion of Fairmount Bank from a Federal Mutual Savings Bank to
            a Federal Stock Savings Bank

To the Members of the Boards of Directors:

      You have asked our opinion relating to the material United States Federal income tax consequences of the proposed conversion (the ―
Conversion ‖) of Fairmount Bank from a federally chartered mutual savings bank (the ― Bank ‖) to a federally chartered capital stock savings
bank (the ― Stock Bank ‖), pursuant to the Plan of Conversion of Fairmount Bank dated as of October 21, 2009 (the ― Plan of Conversion ‖). In
the Conversion, all of the Bank’s to-be-issued capital stock will be acquired by Fairmount Bancorp, Inc., a newly organized Maryland
corporation (the ― Holding Company ‖). All other capitalized terms used but not defined herein shall have the meanings assigned to them in the
Plan of Conversion.


                                                               BACKGROUND

      The Bank is a federally chartered mutual savings bank that is in the process of converting to a federally chartered stock savings bank. As
a federally chartered mutual savings association, the Bank has no authorized capital stock. Instead the Bank, in mutual form, has a unique
equity structure. A depositor in the Bank is entitled to payment of interest on his account balance as declared and paid by the Bank. A depositor
has no right to a distribution of any earnings of the Bank except for interest paid on his deposit account. However, a depositor has a right to
share, pro rata, with respect to the withdrawal value of his account, in any liquidation proceeds distributed in the event the Bank is liquidated.
All of the interests held by a depositor cease when such depositor closes his account with the Bank.
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
February 4, 2010
Page 2


                                                        PROPOSED TRANSACTIONS

      The Holding Company has been formed under the laws of the State of Maryland for the purpose of the proposed transactions described
herein, to engage in business as a savings and loan holding company and to hold all of the stock of the Stock Bank. The Holding Company is
offering for sale shares of its voting common stock (― Holding Company Stock ‖) upon completion of the mutual-to-stock conversion of the
Bank, to persons purchasing such shares as described in greater detail below.

     Subject to regulatory approval, the Plan of Conversion provides for the offer and sale of shares of Holding Company Stock in a
Subscription Offering pursuant to nontransferable subscription rights on the basis of the following descending preference categories to:
      (i)     Eligible Account Holders of the Bank,
      (ii)    the Bank’s Employee Plans,
      (iii)    Supplemental Eligible Account Holders of the Bank, and
      (iv) Other Members of the Bank,

all as described in the Plan of Conversion. If shares remain after all orders are filled in the preference categories described above, the Plan of
Conversion authorizes a Community Offering for the sale of shares not purchased under the preference categories, a Syndicated Community
Offering for the shares not sold in the Community Offering, and other arrangements for shares not sold in either the Community Offering or
Syndicated Community Offering, subject to purchase limits set forth in the Plan of Conversion (collectively, the Subscription Offering, the
Community Offering, the Syndicated Community Offering and the other arrangements are referred to as the ― Stock Offering ‖).

     Pursuant to the Plan of Conversion, all Holding Company Stock will be issued and sold at a uniform price per share. The estimated pro
forma market value will be determined by Feldman Financial Advisors, Inc., an independent appraiser. The conversion of the Bank from
mutual to stock form and the sale of newly issued shares of the stock of the Stock Bank to the Holding Company will be deemed effective
concurrently with the closing of the sale of Holding Company Stock.

      For purposes of this opinion, we have examined such documents and questions of law as we have considered necessary or appropriate
including, but not limited to, the Holding Company’s Registration Statement on Form S-1 relating to the proposed issuance of up
to          shares of common stock, par value $.01 per share, and Exhibits thereto, the Plan of Conversion, the Federal Stock Charter and
Bylaws of the Stock Bank, and the Articles of Incorporation and Bylaws of the Holding Company. In such examination, we have assumed and
have
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
February 4, 2010
Page 3

independently verified, the authenticity of all original documents, the accuracy of all copies, and the genuineness of all signatures.

       In issuing our opinion, we have relied on the fact that the Plan of Conversion has been duly and validly authorized and has been approved
and adopted by the board of directors of the Bank at a meeting duly called and held, that the Bank will comply with the terms and conditions of
the Plan of Conversion, and that the various representations and warranties which are provided to us , including those in the Officer’s
Certificate attached hereto as Exhibit A, are accurate, complete, true and correct. This opinion addresses only the specific material United
States federal income tax consequences of the transactions described herein, and we specifically express no opinion concerning tax matters
relating to the Plan of Conversion under state, local, foreign or other tax laws or other tax consequences that may result form the transactions
described herein.

       In issuing the opinion set forth below, we have relied solely on existing provisions of the Internal Revenue Code of 1986, as amended
(the ―Code‖), existing and proposed Treasury Regulations, and existing administrative rulings, notices and procedures, and court decisions.
Such laws, regulations, administrative rulings, notices, procedures and court decisions are subject to change at any time, possibly with
retroactive effect. If there is a change, including a change having retroactive effect, the opinions expressed herein would necessarily have to be
reevaluated in light of any such changes. Any such change could affect the continuing validity of the opinions set forth below. This opinion is
as of the date hereof, and we disclaim any obligation to advise you of any change in any matter considered herein after the date hereof.

      The opinions expressed herein are not binding on the Internal Revenue Service (―IRS‖), and there can be no assurance that the IRS will
not take a position contrary to any of the opinions expressed herein. The opinions expressed herein reflect what we regard to be the material
Federal income tax consequences of the transactions as described herein; nevertheless, they are opinions only and should not be taken as
assurance of the ultimate tax treatment. We emphasize that the outcome of litigation cannot be predicted with certainty and, although we have
attempted in good faith to opine as to the probable outcome of the merits of each tax issue with respect to which an opinion was requested,
there can be no assurance that our conclusions are correct or that they would be adopted by the IRS or a court.

     In rendering our opinion, we have made the following assumptions:
      1.    That the persons and entities identified in the Plan of Conversion will at all times comply with applicable state and Federal laws
            and the factual representations of the Bank.
      2.    That the activities of the persons and entities identified in the Plan will be conducted strictly in accordance with the Plan of
            Conversion.
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
February 4, 2010
Page 4

     3.    That the representations made in the Officer’s Certificate attached hereto as Exhibit A are accurate, complete, true and correct.
     4.    That the subscription rights to purchase shares of Holding Company Stock received by Eligible Account Holders, Supplemental
           Eligible Account Holders and Other Members have a fair market value of zero, which will be supported by a letter to be issued to
           you by Feldman Financial Advisors, Inc., an independent appraiser in connection with the Plan of Conversion. We understand that
           the subscription rights will be granted at no cost to the recipients, will be legally non-transferable and of short duration, and will
           provide the recipient with the right only to purchase shares of Holding Company Conversion Stock at the same price to be paid by
           members of the general public in any Community Offering. We also note that the IRS has not in the past reached a different
           conclusion with respect to the value of nontransferable subscription rights. If the subscription rights are subsequently found to have
           value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are
           exercised) and the Holding Company and/or the Stock Bank may be taxable on the distribution of the subscription rights.


                                                          OPINION OF COUNSEL

     Based upon and subject to the foregoing information, we render the following opinion.
     1.    The conversion of the Bank to a federally chartered stock savings bank will qualify as a tax-free reorganization within the meaning
           of Code Section 368(a)(1)(F).
     2.    The assets of the Bank will have the same basis in the hands of the Stock Bank as they had in the hands of the Bank immediately
           prior to the Conversion. The holding period of the Bank’s assets to be received by the Stock Bank will include the period during
           which the assets were held by the Bank prior to the Conversion. (Sections 362(b) and 1223(2) of the Code).
     3.    For purposes of Section 381 of the Code, the Stock Bank will be treated as if there had been no reorganization. Accordingly, the
           taxable year of the Bank will not end on the effective date of the Conversion merely because of the transfer of assets of the Bank to
           the Stock Bank, and the tax attributes of the Bank will be taken into account by the Stock Bank as if there had been no
           reorganization. (Treas. Reg. §1.381(b)-(1)(a)(2)).
     4.    The part of the taxable year of the Bank before the reorganization and the part of the taxable year of the Stock Bank after the
           reorganization will constitute a single tax year of the Stock Bank. See Rev. Rul. 57-276, 1957-1 C.B. 126.
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
February 4, 2010
Page 5

           Consequently, the Bank will not be required to file a federal income tax return for any portion of such taxable year solely by reason
           of the Conversion. Treas. Reg. §1.38(b)-1(a)(2).
     5.    The tax attributes of the Bank enumerated in Code Section 381(c) will be taken into account by the Stock Bank. Treas. Reg.
           § 1.381(b)-1(a)(2).
     6.    No gain or loss will be recognized by the account holders of the Bank upon the issuance to them of withdrawable deposit accounts
           in the Stock Bank in the same dollar amount and under the same terms as their deposit accounts in the Bank and no gain or loss
           will be recognized by Eligible Account Holders or Supplemental Eligible Account Holders upon receipt by them of an interest in
           the Liquidation Account of the Stock Bank, in exchange for their deemed ownership interests in the Bank. (Section 354(a) of the
           Code).
     7.    The basis of the account holders’ deposit accounts in the Stock Bank will be the same as the basis of their deposit accounts in the
           Bank surrendered in exchange therefore. The basis of each Eligible Account Holder’s and Supplemental Eligible Account Holder’s
           interests in the Liquidation Account of the Stock Bank will be zero, that being the cost of such property.
     8.    It more likely than not that the nontransferable subscription rights have no value. Accordingly, no gain or loss will be recognized
           by the Bank, Eligible Account Holders, Supplemental Eligible Account Holders or Other Members upon distribution to them of
           nontransferable subscription rights to purchase shares of Holding Company Conversion Stock, provided that the amount to be paid
           for such common stock is equal to its fair market value. (Rev. Rul. 56-572, 1956-2 C.B. 182).
     9.    No gain or loss will be recognized by the Holding Company upon receipt of money from the sale of Holding Company Stock.
           (Section 1032(a) of the Code).
     10.   No gain or loss will be recognized by the Stock Bank on the transfer of a portion of the offering proceeds by Holding Company to
           Stock Bank in exchange for Stock Bank shares. (Section 1032(a) of the Code).
     11.   It is more likely than not that the basis of the Holding Company Stock to its stockholders will be the purchase price thereof.
           (Section 1012 of the Code).
     12.   The holding period of the Holding Company Conversion Stock purchased pursuant to the exercise of nontransferable subscription
           rights will commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of the Code).
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
February 4, 2010
Page 6

                                                                  CONSENT

     We hereby consent to the filing of this opinion as an exhibit to the Registration Statement on Form S-1 (―Registration Statement‖) of the
Holding Company filed with the Securities and Exchange Commission with respect to the Conversion, and as an exhibit to the Form AC
Application for Conversion and Application H-(e)1-S filed with the Office of Thrift Supervision with respect to the Conversion, as applicable.
We also hereby consent to the references to this firm in the prospectus which is a part of the Registration Statement and the Notice.


                                                              USE OF OPINION

     We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under the heading
―Legal Matters‖ in the Prospectus, which is a part of the Registration Statement, as such may be amended or supplemented.

                                                                           Sincerely,

                                                                           /s/ Jones, Walker, Waechter, Poitevent, Carrère & Denègre, LLP
                                                                                                                                     Exhibit 8.2




Board of Directors
Fairmount Bank
8216 Philadelphia Road
Baltimore, MD 22137

and,

Fairmount Bancorp, Inc.
8216 Philadelphia Road
Baltimore, MD 22137

Re:    State Income Tax Opinion Relating to the Conversion of Fairmount Bank from a Federally-chartered Mutual Savings Bank to
       a Federally-chartered Stock Savings Bank

To the Members of the Boards of Directors:

            You have requested our opinion regarding the Maryland state income tax consequences of the proposed conversion of Fairmount
Bank (Bank) from a federally-chartered mutual savings bank to a federally-chartered stock savings bank (Converted Bank) and the acquisition
of the Bank’s capital stock by Fairmount Bancorp, Inc., a Maryland corporation (Holding Company), pursuant to a Plan of Conversion initially
adopted by the Board of Directors of the Bank on October 21, 2009 (Plan of Conversion). All capitalized terms used but not defined herein
shall have the meanings assigned to them in the Plan of Conversion.

             In connection with the opinions expressed below, we have examined and relied upon originals, or copies certified or otherwise
identified to our satisfaction, of the Plan of Conversion and of such corporate records of the parties to the conversion as we have deemed
appropriate. We have also relied upon, without independent verification, the representations of Fairmount Bank and Fairmount Bancorp, Inc.
We have assumed that such representations are true and that the parties to the conversion will act in accordance with the Plan of Conversion.

            Our opinion is limited solely to Maryland state income tax consequences and will not apply to any other taxes, jurisdictions,
transactions or issues.

           In rendering the opinion set-forth below, we have relied on the opinion of Jones, Walker, Waechter, Poitevent, Carrére & Denégre,
LLP related to the federal tax consequences of the proposed conversion (Federal Tax Opinion), without undertaking to verify the federal tax
consequences by independent investigation.

            Our opinion is subject to the truth and accuracy of certain representations made by the Bank to us and Jones, Walker, Waechter,
Poitevent, Carrére & Denégre, LLP and the consummation of the proposed conversion in accordance with the terms of the Plan of Conversion
and applicable state law.
Fairmount Bank
and,
Fairmount Bancorp, Inc.
Page 2 of 4

            Our opinion is based on currently existing provisions of the Annotated Code of Maryland and current administrative rulings and
court decisions there under. There can be no assurance that future legislative, judicial or administrative changes or interpretations will not
adversely affect the accuracy of our opinion or of the statements and conclusions set-forth herein. Any such changes or interpretations could be
applied retroactively and could affect the tax consequences of the proposed conversion. We are under no obligation to update our opinion for
such changes or interpretations. Furthermore, our opinion will not bind the Comptroller of Maryland and; therefore, the Comptroller of
Maryland is not precluded from asserting a contrary position.


                    OPINION OF JONES, WALKER, WAECHTER, POITEVENT, CARRERE & DENEGRE, LLP

          Walker, Waechter, Poitevent, Carrére & Denégre, LLP has provided an opinion that addresses the material federal income tax
consequences of the planned conversion and re-organization. The opinion, which relies upon standard factual representations given by the
Bank, concluded, as follows:
           1.      The conversion of the Bank to a federally chartered stock savings bank will qualify as a tax-free reorganization within the
                   meaning of Code Section 368(a)(1)(F).
           2.      The assets of the Bank will have the same basis in the hands of the Stock Bank as they had in the hands of the Bank
                   immediately prior to the Conversion. The holding period of the Bank’s assets to be received by the Stock Bank will include
                   the period during which the assets were held by the Bank prior to the Conversion. (Sections 362(b) and 1223(2) of the
                   Code).
           3.      For purposes of Section 381 of the Code, the Stock Bank will be treated as if there had been no reorganization. Accordingly,
                   the taxable year of the Bank will not end on the effective date of the Conversion merely because of the transfer of assets of
                   the Bank to the Stock Bank, and the tax attributes of the Bank will be taken into account by the Stock Bank as if there had
                   been no reorganization. (Treas. Reg. §1.381(b)-(1)(a)(2)).
           4.      The part of the taxable year of the Bank before the reorganization and the part of the taxable year of the Stock Bank after the
                   reorganization will constitute a single tax year of the Stock Bank. See Rev. Rul. 57-276, 1957-1 C.B. 126. Consequently,
                   the Bank will not be required to file a federal income tax return for any portion of such taxable year solely by reason of the
                   Conversion. Treas. Reg. §1.38(b)-1(a)(2).
           5.      The tax attributes of the Bank enumerated in Code Section 381(c) will be taken into account by the Stock Bank. Treas. Reg.
                   § 1.381(b)-1(a)(2).
           6.      No gain or loss will be recognized by the account holders of the Bank upon the issuance to them of withdrawable deposit
                   accounts in the Stock Bank in the same dollar amount and under the same terms as their deposit accounts in the Bank and no
                   gain or loss will be recognized by Eligible Account Holders or Supplemental Eligible Account Holders upon receipt by
                   them of an interest in the Liquidation Account of the Stock Bank, in exchange for their deemed ownership interests in the
                   Bank. (Section 354(a) of the Code).
Fairmount Bank
and,
Fairmount Bancorp, Inc.
Page 3 of 4

           7.     The basis of the account holders’ deposit accounts in the Stock Bank will be the same as the basis of their deposit accounts
                  in the Bank surrendered in exchange therefore. The basis of each Eligible Account Holder’s and Supplemental Eligible
                  Account Holder’s interests in the Liquidation Account of the Stock Bank will be zero, that being the cost of such property.
           8.     It more likely than not that the nontransferable subscription rights have no value. Accordingly, no gain or loss will be
                  recognized by the Bank, Eligible Account Holders, Supplemental Eligible Account Holders or Other Members upon
                  distribution to them of nontransferable subscription rights to purchase shares of Holding Company
                  Conversion Stock, provided that the amount to be paid for such common stock is equal to its fair market value. (Rev. Rul.
                  56-572, 1956-2 C.B. 182).
           9.     No gain or loss will be recognized by the Holding Company upon receipt of money from the sale of Holding Company
                  Stock. (Section 1032(a) of the Code).
           10.    No gain or loss will be recognized by the Stock Bank on the transfer of a portion of the offering proceeds by Holding
                  Company to Stock Bank in exchange for Stock Bank shares. (Section 1032(a) of the Code).
           11.    It is more likely than not that the basis of the Holding Company Stock to its stockholders will be the purchase price thereof.
                  (Section 1012 of the Code).
           12.    The holding period of the Holding Company Conversion Stock purchased pursuant to the exercise of nontransferable
                  subscription rights will commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of
                  the Code).


                        DISCUSSION RELATED TO MARYLAND STATE INCOME TAX CONSEQUENCES

            Title 10 of the Annotated Code of Maryland outlines the provisions for income tax in the State of Maryland. Income tax for
individuals and corporations is addressed in Subtitle 2 and Subtitle 3 of the Annotated Code of Maryland, respectively. The Maryland modified
income of a corporation is the corporation’s federal taxable income for the taxable year as determined under the Internal Revenue Code and as
adjusted under Title 10, Subtitle 3, Part II of the Annotated Code of Maryland. Accordingly, based upon the facts and representation stated
herein and the existing law, it is the opinion of Smith Elliott Kearns & Company, LLC regarding the Maryland state income tax consequences
of the planned conversion and re-organization that:
           1.     No gain or loss will be recognized by the Bank by reason of the conversion of the Bank from a mutual to a stock form of
                  organization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code.
           2.     No income tax will be imposed on account holders by reason of the conversion of the Bank from a mutual to a stock form of
                  organization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code.
Fairmount Bank
and,
Fairmount Bancorp, Inc.
Page 4 of 4

           3.      No gain or loss will be recognized by the Holding Company upon the sale of shares of common stock in the Offering
                   (Section 1032(a) of the Internal Revenue Code).
           4.      No income tax will be imposed on account holders of the Bank upon the issuance to them of accounts in the Converted
                   Bank immediately after the conversion, in the same dollar amounts and on the same terms and conditions as their accounts
                   at the Bank, plus interests in the liquidation account in the Converted Bank (Section 354(a) of the Internal Revenue Code).
           5.      No income tax will be imposed on eligible account holders, supplemental eligible account holders and other members upon
                   the issuance to them of Subscription Rights.
           6.      The holding period and tax basis of any stock involved in the planned conversion and reorganization will be the same as for
                   federal tax purposes.


                                                            LEGAL DISCLAIMER

            The opinions contained herein are rendered only with respect to the specific matters discussed herein and we express no opinion
with respect to any other legal federal, state or local tax aspect of these transactions. This opinion is not binding upon any tax authority,
including the Maryland Department of Revenue or any court, and no assurance can be given that a position contrary to that expressed herein
will not be assessed by a tax authority.

            However, all of the foregoing authorities are subject to change or modification which can be retroactive in effect and; therefore,
could also affect our opinions. We undertake no responsibility to update our opinions for any subsequent change or modification.


                                                                   CONSENT

            This opinion is given solely for the benefit of the Bank, the Holding Company, eligible account holders, supplemental eligible
account holders and other members described in the Plan of Conversion who will receive Subscription Rights and may not be relied upon by
any other party or entity otherwise referred to in any document without our express written consent. We hereby consent to the filing of this
opinion as an exhibit to the Application for Conversion filed with the Office of Thrift Supervision and to this opinion in the prospectus
included in the registration statement on Form S-1 under the headings ―Legal and Tax Opinions‖. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended.




Chambersburg, Pennsylvania
February 4, 2010
                                                                                                                                     Exhibit 10.2

                                                          FAIRMOUNT BANK
                                                       EMPLOYMENT AGREEMENT

      THIS AGREEMENT (the ―Agreement‖) entered into this          day of       , 2010 by and between Fairmount Bank located at 8216
Philadelphia Road, Baltimore, Maryland 21237 (the ―Bank‖), and Joseph M. Solomon (―Executive‖).

     WHEREAS , Executive and Bank entered into an agreement dated on March 31, 2008 (the ―Prior Agreement‖), pursuant to which
Executive serves as President and Chief Executive Officer of the Bank; and

     WHEREAS , the parties hereto desire to set forth the terms of a revised Agreement and the continuing employment relationship between
the Bank and Executive, and the Prior Agreement is hereby replaced in its entirety by this Agreement.

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

      1. Employment. During the term of this Agreement, which is effective as of the date of the conversion (the ―Conversion‖) of the Bank
from the mutual to stock form of organization (the ―Commencement Date‖), Executive shall serve in the capacity of President and Chief
Executive Officer of the Bank. Executive shall render such administrative and management services to the Bank as are currently rendered and
as are customarily performed by persons situated in a similar executive capacity. Executive shall promote the business of the Bank. Executive’s
other duties shall be such as the Board of Directors of the Bank (the ―Board of Directors‖ or ―Board‖) may from time to time reasonably direct,
including normal duties as an officer of the Bank.

      2. Service on the Board of Directors. During the term of this Agreement, Executive will continue to serve on the Board of Directors of
the Bank as a director. If at any time during the term of this Agreement Executive shall fail to be re-nominated to the Board of Directors other
than for reasons of Just Cause (as defined in Section 9(d) of this Agreement), Executive shall have ―Good Reason‖ (as defined in Section 9(e)
of this Agreement) to terminate his employment under this Agreement, and Executive shall have no further obligations under this Agreement.

      3. Base Compensation. The Bank agrees to pay or cause to be paid to Executive during the term of this Agreement (as hereinafter
defined in Section 7) an aggregate base salary at the rate of $125,580 per annum, payable in accordance with the customary payroll practices of
the Bank; provided, however, that the rate of Executive’s aggregate base salary shall be reviewed by the Board of Directors not less often than
annually, and Executive shall be entitled to receive annual increases at such percentage or in such an amount as the Board of Directors, in its
sole discretion, may decide. Fairmount Bancorp, Inc. (the ―Company‖) and the Bank shall apportion between them the aggregate base salary,
based upon the services rendered by Executive to the Company and the Bank.

     4. Discretionary Bonus. Executive shall be entitled to receive an annual bonus in an amount which is based on the bonus program
maintained by the Bank as of the date of this Agreement and shall be eligible to participate in any future bonus program adopted by the Bank in
an equitable manner. No other compensation provided for in this Agreement shall be deemed a substitute for Executive’s right to receive
bonuses when and as declared by the Board of Directors or as provided for by any plan or program of the Bank.

      5. Expenses. During the term of this Agreement, Executive shall be entitled to receive prompt reimbursement of all reasonable expenses
incurred (in accordance with the policies and procedures of the Bank) in performing services under this Agreement; provided, however , that
Executive properly accounts for expenses in accordance with the policies of the Bank.

     6. Employee Benefits.
      (a) Participation in Retirement and Executive Benefit Plans . Executive shall be entitled, while employed under the terms of this
Agreement, to receive all benefits under any tax-qualified or non-qualified employee benefit plan or arrangement in effect as of the date of this
Agreement or that the Bank implements at any time during the term of this Agreement. Executive shall be entitled to participate in such future
plans or arrangements on the same terms as other employees of the Bank or as established by the Bank for Executive or other selected
employees.
      (b) Fringe Benefits . Executive shall be entitled to receive any benefits under any fringe benefit plan or policy that is in effect as of the
date of this Agreement, or that the Bank implements at any time during the term of this Agreement, on the same terms as the Bank’s senior
management employees. Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future will be
deemed to be in lieu of base salary or other compensation to Executive under this Agreement.

     (c) Paid Leave Time . Executive shall be entitled to leave time in accordance with the standard policies or practices of the Bank for senior
executive officers, as in effect from time to time.

      7. Term of Agreement . Executive’s employment under this Agreement shall be deemed to have commenced as of the Commencement
Date and shall continue for a period of thirty-six (36) calendar months from the Commencement Date. Commencing on the first anniversary of
the Commencement Date and continuing on each anniversary thereafter (each an ―Anniversary Date‖), the disinterested members of the Board
of Directors of the Bank may extend the Agreement an additional year such that the remaining term of the Agreement shall be thirty-six
(36) months, unless Executive elects not to extend the term of this Agreement by giving written notice in accordance with Section 16 of this
Agreement. The Board of Directors of the Bank will review the Agreement and Executive’s performance annually for purposes of determining
whether to extend the Agreement and the rationale and results thereof shall be included in the minutes of the Board’s meeting. The Board of
Directors of the Bank shall give written notice to Executive as soon as possible after such review as to whether the Agreement is to be
extended; provided, however , that if the Board fails to conduct such review or if written notice of nonrenewal is provided to Executive, then in
such case the term of this Agreement shall become fixed and shall cease at the end of thirty-six (36) full calendar months following the
Anniversary Date.

      8. Loyalty; Noncompetition.
      (a) During the period of his employment hereunder and except for illnesses, reasonable vacation periods, and reasonable leaves of
absence, Executive shall devote all his full business time, attention, skill and efforts to the faithful performance of his duties hereunder;
provided, however , from time to time, that Executive may serve on the boards of directors of, and hold any other offices or positions in,
companies or organizations which will not present any conflict of interest with the Bank or any of its subsidiaries or affiliates, or unfavorably
affect the performance of Executive’s duties pursuant to this Agreement, or will not violate any applicable statute or regulation. ―Full business
time‖ is hereby defined as that amount of time usually devoted to like companies by similarly situated executive officers. During the term of his
employment under this Agreement, Executive shall not engage in any business or activity contrary to the business affairs or interests of the
Bank or be gainfully employed in any other position or job other than as provided above.

      (b) Executive shall not, during or after the term of this Agreement, disclose any knowledge of the past, present or contemplated business
of the Bank, or of any affiliate thereof, to any person for any reason or purpose. Notwithstanding the foregoing, Executive may disclose any
information required in writing by Federal bank regulatory agencies and may disclose to any person information regarding the Bank that is
otherwise publicly available or any knowledge of banking or financial concepts or ideas that are not solely and exclusively derived from the
business plans and activities of the Bank.

      (c) Nothing contained in this Section 8 shall be deemed to prevent or limit the Executive’s right to invest in the capital stock or other
securities of any business dissimilar from that of the Bank, or, solely as a passive or minority investor, in any business.

                                                                          2
     9. Termination.
     Executive’s employment under this Agreement shall be terminated upon any of the following occurrences:

      (a) Death . Executive’s employment under this Agreement shall terminate upon his death. Executive’s estate shall be entitled to receive
payments of base salary, payable in accordance with the regular payroll practices of the Bank, for sixty (60) days immediately following the
date of Executive’s death and any other compensation accrued as of the date of death.

       (b) Termination of Employment by the Board of Directors Without Just Cause or by the Executive for Good Reason . In the event that
(i) the Board of Directors terminates Executive’s employment without ―Just Cause‖ (as defined in Section 9(d)) or (ii) such employment is
terminated by the Executive for ―Good Reason‖ (as defined in Section 9(b)(iii), Executive shall be entitled to:
           (i)     His base salary for the remaining term of the Agreement, including any renewals or extensions thereof, at the current rate in
                   effect pursuant to Section 3 of this Agreement, plus the amount of the annual cash bonus earned in the calendar year
                   preceding the year of termination, and a cash equivalent amount equal to the additional retirement benefits under any
                   retirement program (whether tax-qualified or non-qualified) that Executive would have been entitled to had his employment
                   continued through the remaining term of the Agreement (with the amount of benefits determined by reference to the benefits
                   received by the Executive or accrued on his behalf under such programs during the twelve (12) months preceding his
                   termination).
           (ii)    Coverage under the Bank’s life insurance plans and non-taxable medical, health, and dental plans (each being a ―Welfare
                   Plan‖) in the same manner in which Executive received coverage on the last day of his employment with the Bank.
                   Executive and his covered dependents (if any) shall continue participating in such Welfare Plans, subject to the same
                   premium contributions (if any) on the part of Executive as were required immediately prior to his termination until the
                   earlier of (i) his death; (ii) his employment by another employer other than one of which he is the majority owner; or
                   (iii) three (3) years from his termination date.
           (iii)   For purposes of this Agreement, termination of Executive’s employment hereunder for ―Good Reason‖ shall be limited to
                   Executive’s voluntary termination of employment after the occurrence of any of the following events which have not been
                   consented to in advance by Executive in writing; provided that Executive has given written notice to the Bank within ninety
                   (90) days after the initial occurrence of such event and that the Bank has been given at least thirty (30) days to cure the
                   situation (but the Bank may waive its right to cure): (i) if Executive would be required to move his personal residence or
                   perform his principal executive functions more than thirty (30) miles from Executive’s primary office as of the
                   Commencement Date; (ii) if, in the organizational structure of the Bank, Executive would be required to report to a person
                   or persons other than the Board of Directors; (iii) if the Bank should fail to maintain Executive’s base compensation in
                   effect pursuant to Section 3 of this Agreement, or fail to maintain the existing employee benefit plans or arrangements in
                   which Executive participates as of the date of this Agreement, including any material fringe benefit, bonus plan and/or
                   retirement plan, except to the extent that such reduction in compensation or benefit programs is part of an overall adjustment
                   in compensation and benefits for all employees of the Bank and the Executive is otherwise compensated for such an overall
                   adjustment in an equitable manner; (iv) if Executive would be assigned duties and responsibilities other than those normally
                   associated with his position as referenced in Section 1 of this Agreement; (v) if Executive’s responsibilities or authority
                   have in any way been materially diminished or reduced other than for reasons of Just Cause; or (vi) if Executive is not
                   re-elected to the Board of Directors or appointed as Chairman of the Board other than for reasons of Just Cause.

                                                                       3
           (iv)    The sum due under Section 9(b)(i) shall be paid in one lump sum within thirty (30) calendar days after such termination.
                   Notwithstanding the foregoing, in the event Executive is a Specified Employee (within the meaning of Treasury Regulations
                   §1.409A-1(i)), then, to the extent necessary to avoid penalties under Code Section 409A, payment shall be withheld and
                   shall be paid to Executive on the first day of the seventh month following Executive’s termination of employment by the
                   Bank without Just Cause.
           (v)     For purposes of Section 9(b), termination of employment as used herein shall mean ―Separation from Service‖ as defined in
                   Code Section 409A and the Treasury Regulations promulgated thereunder.

     (c) Disability .
           (i)     Termination by the Bank of Executive’s employment based on ―Disability‖ shall occur if: (A) Executive is unable to engage
                   in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be
                   expected to result in death, or last for a continuous period of not less than twelve (12) months; (B) by reason of any
                   medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period
                   of not less than twelve (12) months; or (C) Executive is determined to be totally disabled by the Social Security
                   Administration. Executive shall be entitled to receive benefits under any short or long-term disability plan maintained by the
                   Bank.
           (ii)    The Bank shall pay Executive, as disability pay, a monthly payment equal to Executive’s monthly rate of base salary. These
                   disability payments shall commence within thirty (30) days of the date of Executive’s termination due to Disability and will
                   end on the earlier of (A) the date Executive returns to the full-time employment of the Bank in the same capacity as he was
                   employed prior to his termination for Disability and pursuant to an employment agreement between Executive and the
                   Bank; (B) the date Executive begins full-time employment with another employer; (C) the date Executive attains the normal
                   retirement age (as defined in the Bank’s defined contribution plan) or begins receiving benefits under any substitute
                   retirement plan adopted by the Bank; or (D) the date of Executive’s death. Notwithstanding any other provision to the
                   contrary, the Bank’s obligation for any payments required to be made under this Section 9(c) shall be reduced by any
                   proceeds received by Executive from disability income insurance or any other disability policy or plan maintained by the
                   Bank for Executive which was paid for by the Bank as partial satisfaction of its obligation under this Section 9(c).
           (iii)   The Bank shall cause to be continued life insurance and non-taxable medical and dental coverage substantially identical to
                   the coverage maintained by the Bank for Executive prior to his termination for Disability. This coverage shall cease upon
                   the earlier of (A) the date Executive returns to the full-time employment of the Bank, in the same capacity as he was
                   employed prior to his termination for Disability and pursuant to an employment agreement between Executive and the
                   Bank; (B) the date Executive begins full-time employment with another employer; (C) the date Executive attains the normal
                   retirement age or begins receiving benefits under the Bank’s retirement plan; or (D) the date of Executive’s death.
           (iv)    Notwithstanding the foregoing, there will be no reduction in the compensation otherwise payable to Executive during any
                   period during which Executive is incapable of performing his duties hereunder by reason of temporary disability.
      (d) Termination of Employment by the Board of Directors for Just Cause . In the event Executive’s employment is terminated for ―Just
Cause,‖ no continued payments or benefits shall be due under this Agreement. For purposes of this Agreement, termination for ―Just Cause‖
shall be defined as termination due to Executive’s personal dishonesty, incompetence, willful misconduct, breach of

                                                                       4
      fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation
      (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this
      Agreement Any determination of ―Just Cause‖ as defined by this Section 9(d) shall be determined by a majority vote of the entire
      membership of the Board of Directors at a meeting of such Board called and held for the purpose (after reasonable notice to
      Executive and an opportunity for Executive to be heard before the Board with counsel), of finding that in the good faith opinion of
      the Board, Executive committed the conduct described above and specifying the particulars thereof.
(e)   Voluntary Termination of Employment by Executive Other Than for Good Reason . The voluntary termination of employment by
      Executive during the term of this Agreement, other than for Good Reason, with the delivery of no less than sixty (60) days written
      notice to the Board of Directors, entitles Executive to receive only the base salary, vested rights, and all employee benefits up to
      Executive’s termination date.
(f)   Termination and Board Membership . To the extent Executive is a member of the board of directors of Fairmount Bancorp Inc. (the
      ―Company‖) or the Bank or any of their affiliates on the date of an involuntary termination of employment with the Company or
      the Bank or a termination of employment for Good Reason, Executive shall be deemed to have automatically resigned from all of
      the boards of directors immediately following such termination of employment with the Company or the Bank.
(g)   Termination and Release of Claims . Any payments to be made under this Agreement shall be contingent on Executive’s execution
      and non-revocation of a mutual release in a form acceptable to the Company and the Bank; provided, however, that if the Company
      or the Bank refuse to execute such mutual release, the Executive’s obligation to execute and not revoke the release as a
      precondition to receiving such severance benefits shall terminate. The mutual release agreement shall release the Company and the
      Bank from any and all claims and other actions by Executive and it shall also release the Executive from any and all claims and
      other actions by the Company and the Bank.

10. Change in Control.
(a)   For purposes of this Agreement, a Change in Control of the Company or the Bank shall be deemed to have occurred if and when:
      (i)     there occurs a change in control of the Company or the Bank within the meaning of the Home Owners Loan Act of 1933 or
              12 C.F.R. Part 574 as applied to the Company or the Bank as if it were a federally chartered institution;
      (ii)    as a result of, or in connection with, any merger or other business combination, sale of assets or contested election, wherein
              the persons who were non-employee directors of the Company or the Bank before such transaction or event cease to
              constitute a majority of the Board of Directors of the Company or the Bank or any successor to the Company or the Bank;
      (iii)   the Company or the Bank transfers substantially all of its assets to another corporation or entity which is not an affiliate of
              the Company or the Bank; or
      (iv)    the Company or the Bank is merged or consolidated with another corporation or entity and, as a result of such merger or
              consolidation, less than sixty percent (60%) of the equity interest in the surviving or resulting corporation is owned by the
              former shareholders or depositors of the Company or the Bank.

                                                                    5
      For purposes of Section 10 of this Agreement, a Change in Control shall not occur as a result of the Conversion. Upon the Conversion,
the resulting bank and holding company shall be subject to this Agreement and the obligations of the Bank set forth herein.
     (b)   If Executive’s employment is terminated for any reason other than for Just Cause within twelve (12) months following a Change in
           Control, Executive shall be entitled to receive the greater of the following:
           (i)    the amount of the payment and benefits specified in Section 9(b), or
           (ii)   the amount of the payment and benefits specified in Section 10(c).

      Such payment shall be made in a lump sum within thirty (30) days following Executive’s termination of employment. For purposes of
this Section 10, termination of employment as used herein shall mean ―Separation from Service‖ as defined in Code Section 409A and the
Treasury Regulations promulgated thereunder. Notwithstanding the foregoing, in the event Executive is a Specified Employee (within the
meaning of Treasury Regulations §1.409A-1(i)), then, to the extent necessary to avoid penalties under Code Section 409A, payment shall be
withheld and shall be paid to Executive on the first day of the seventh month following Executive’s termination of employment.
     (c)   For purposes of Section 10(b)(ii), the amount of payment and benefits shall be equal to:
           (i)    an amount equal to three (3) times his ―base amount,‖ as defined in Code Section 280G(b)(3), less one (1) dollar (―Code
                  § 280G Maximum‖); and
           (ii)   coverage under the Bank’s life insurance plan and non-taxable medical, health and dental plans (each being a ―Welfare
                  Plan‖) in the same manner in which Executive received coverage on the last day of his employment with the Bank.
                  Executive and his covered dependents (if any) shall continue participating in such Welfare Plans, subject to the same
                  premium contributions (if any) on the part of Executive as were required immediately prior to his termination until the
                  earlier of (i) his death; (ii) his employment by another employer other than one of which he is the majority owner; or
                  (iii) three (3) years from his termination date.
     (d)   Not later than ten (10) business days after a Change in Control, the Bank shall (i) establish a grantor trust (the ―Trust‖) designed in
           accordance with Revenue Procedure 92-64 and having a trustee independent of the Bank and the Company, (ii) deposit in said
           Trust an amount equal to the Code §280G Maximum, unless Executive has previously provided a written release of any claims
           under this Agreement, and (iii) provide the trustee of the Trust with a written direction to hold said amount and any investment
           return thereon in a segregated account for the benefit of Executive, and to follow the procedures set forth in the next paragraph as
           to the payment of such amounts from the Trust.
     (e)   During the 39-consecutive month period after a Change in Control, Executive may provide the trustee of the Trust with a written
           notice requesting that the trustee pay to Executive an amount designated in the notice as being payable pursuant to this Agreement.
           Within three (3) business days after receiving said notice, the trustee of the Trust shall pay such amount to Executive, and
           coincidentally shall provide the Bank or its successor with notice of such payment. Upon the earlier of the Trust’s final payment of
           all amounts due under the preceding paragraph or the date 39 months after the Change in Control, the trustee of the Trust shall pay
           to the Bank the entire balance remaining in the segregated account maintained for the benefit of Executive. Executive shall
           thereafter have no further interest in the Trust. Such notice shall not have the effect of changing the timing of any payment under
           this Agreement, for purposes of Section 409A.

                                                                        6
      11. Limitation of Benefits under Certain Circumstances.
      (a)   In no event shall the payments and benefits received by Executive exceed three times Executive’s average compensation over the
            past five years, in accordance with the OTS regulations.
      (b)   If the payments and benefits pursuant to Section 10 of this Agreement, either alone or together with other payments and benefits
            which the Executive has the right to receive from the Bank, would constitute a ―parachute payment‖ under Section 280G of the
            Code, the cash severance payable by the Bank pursuant to Section 10 shall be reduced by the amount, if any, which is the minimum
            amount necessary to result in no portion of the payments and benefits under Section 10 being non-deductible to the Bank pursuant
            to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The determination of any
            reduction in the payments and benefits shall be based upon the opinion of the Bank’s independent public accountants and paid for
            by the Bank. In the event that the Bank and/or the Executive do not agree with the opinion of such accountants, (i) the Bank shall
            pay to the Executive the maximum amount of payments and benefits as selected by the Executive, which such opinion indicates
            there is a high probability do not result in any of such payments and benefits being non-deductible to the Bank and subject to the
            imposition of the excise tax imposed under Section 4999 of the Code and (ii) the Bank may request, and the Executive shall have
            the right to demand that they request, a ruling from the IRS as to whether the disputed payments and benefits have such
            consequences. Any such request for a ruling from the IRS shall be promptly prepared and filed by the Bank, but in no event later
            than thirty (30) days from the date of the accountant’s opinion referred to above, and shall be subject to the Executive’s approval
            prior to filing, which shall not be unreasonably withheld. The Bank and the Executive agree to be bound by any ruling received
            from the IRS and to make appropriate payments to each other to reflect any such rulings, together with interest at the applicable
            federal rate.

      12. Successors and Assigns.
      (a)   This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire,
            directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Bank.
      (b)   Since the Bank is contracting for the unique and personal skills of Executive, Executive shall be precluded from assigning or
            delegating his rights or duties hereunder without first obtaining the written consent of the Bank.

     13. Amendments . No amendments or additions to this Agreement shall be binding upon the parties hereto unless made in writing and
signed by both parties, except as herein otherwise specifically provided.

     14. Applicable Law . This agreement shall be governed in all respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of Maryland, except to the extent that Federal law shall be deemed to apply.

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

      16. Notices . Any notices, requests, demands and other communications provided for or deemed necessary by this Agreement shall be
sufficient if set forth in writing and delivered in person or sent by registered or certified mail, postage prepaid, to, in the case of Executive, the
last address filed in writing by Executive with the Bank, or, in the case of the Bank, to the Bank at its main office to the attention of the Board
of Directors.

     17. Indemnification . The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a
standard directors’ and officers’ liability insurance policy at its expense, or in lieu thereof, shall indemnify Executive (and his heirs, executors
and administrators) to the fullest extent permitted

                                                                           7
under law and applicable regulation or under any existing indemnification agreement by and between Executive and the Bank against all
expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be
involved by reason of his having been a director or officer of the Bank (whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities). Such expenses and liabilities may include, but are not limited to, judgment, court costs and attorneys’
fees and the cost of reasonable settlements. The Bank shall pay such expenses and liabilities in advance of a final judicial decision (hereinafter
an ―advancement of expenses‖); provided, however, that, an advancement of expenses incurred by Executive in his capacity as a director or
executive officer of the Bank (and not in any other capacity in which service was or is rendered by Executive including, without limitation,
services to an employee benefit plan) shall be made only upon delivery to the Bank of an undertaking, by or on behalf of Executive, to repay all
amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that Executive
is not entitled to be indemnified for such expenses under this Section 17 or otherwise. Indemnification under this Section 17 shall be made in
accordance with 12 C.F.R. §545.121 or any successor thereto.

      18. Entire Agreement . This Agreement together with any understanding or modifications thereof as may be agreed to in writing by the
parties, shall constitute the entire agreement between the parties hereto.

     19. Required Regulatory Provisions.
     In the event any of the provisions of this Section 19 are in conflict with the terms of this Agreement, this Section 19 shall prevail.
      (a)   The Bank may terminate Executive’s employment at any time, but any termination by the Bank, other than Termination for Just
            Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the
            right to receive compensation or other benefits for any period after Termination for Just Cause as defined in Section 9(d)
            hereinabove.
      (b)   If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a
            notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s
            obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges
            in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while their
            contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.
      (c)   If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued
            under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank
            under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be
            affected.
      (d)   If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of
            the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the
            contracting parties.
      (e)   All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract
            is necessary for the continued operation of the institution: (i) by the Director of the OTS (or his designee) or the FDIC, at the time
            the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under authority contained in Section 13(c) of
            the Federal Deposit Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or his designee) at the time the Director
            of the OTS (or his designee) approves a supervisory merger to resolve problems related to the operations of the Bank or when the
            Bank is determined by the Director of the OTS to be in an unsafe or unsound condition. Any rights of the parties that have already
            vested, however, shall not be affected by such action.

                                                                        8
       (f)       Any payments made to Executive pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance
                 with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.

       20. Arbitration.
       (a)       Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration,
                 conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of
                 the Bank, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the
                 arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance
                 of his right to be paid until the date of termination during the pendency of any dispute or controversy arising under or in connection
                 with this Agreement.
       (b)       In the event any dispute or controversy arising under or in connection with Executive’s termination is resolved in favor of
                 Executive, whether by judgment, arbitration or settlement, Executive shall be entitled to the payment of all back-pay, including
                 salary, bonuses and any other cash compensation, fringe benefits and any compensation and benefits due Executive under this
                 Agreement.

      21. Payment of Costs and Legal Fees . All reasonable costs and legal fees paid or incurred by Executive pursuant to any dispute or
question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, if Executive is successful with respect to such
dispute or question of interpretation pursuant to a legal judgment, arbitration or settlement. Such reimbursements shall be paid to Executive
within two and one-half (2 1 / 2 ) months after the dispute is settled or resolved in Executive’s favor.

IN WITNESS WHEREOF , the parties have executed this Agreement on the latest date set forth below.

                                                                                       FAIRMOUNT BANK

             ,                                                                         By:
Date                                                                                         Chairman of the Board

             ,
Date                                                                                         Joseph M. Solomon

                                                                             9
                                                                                                                                   Exhibit 10.3

                                                      FAIRMOUNT BANCORP, INC.
                                                      EMPLOYMENT AGREEMENT

       THIS AGREEMENT (the ―Agreement‖) is made and entered into this        day of               , 2010, by and between Fairmount Bancorp,
Inc., a Maryland corporation (the ―Company‖), and Joseph M. Solomon (―Executive‖).


                                                               WITNESSETH

     WHEREAS , Executive is currently employed as President and Chief Executive Officer of Fairmount Bank (the ―Bank‖); and

     WHEREAS , the Company desires to assure itself of the continued availability of the Executive’s services as provided in this
Agreement; and

     WHEREAS , Executive is willing to serve the Company on the terms and conditions hereinafter set forth; and

     WHEREAS , Executive has previously entered into a separate employment agreement with the Bank.

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

      1. Employment. During the term of this Agreement, which is effective as of the date of the conversion (the ―Conversion‖) of the Bank
from the mutual to stock form of organization (the ―Commencement Date‖), Executive shall serve in the capacity of President and Chief
Executive Officer of the Company. Executive shall render such administrative and management services to the Company as are currently
rendered and as are customarily performed by persons situated in a similar executive capacity. Executive shall promote the business of the
Company. Executive’s other duties shall be such as the Board of Directors of the Company (the ―Board of Directors‖ or ―Board‖) may from
time to time reasonably direct, including normal duties as an executive officer of the Company.

      2. Service on the Board of Directors. During the term of this Agreement, Executive will continue to serve on the Board of Directors of
the Company as a director. If at any time during the term of this Agreement Executive shall fail to be re-nominated to the Board of Directors
other than for reasons of Just Cause (as defined in Section 9(d) of this Agreement), Executive shall have ―Good Reason‖ (as defined in
Section 9(b) of this Agreement) to terminate his employment under this Agreement, and Executive shall have no further obligations under this
Agreement.

       3. Base Compensation. The Company agrees to pay or cause to be paid to Executive during the term of this Agreement (as hereinafter
defined in Section 7) an aggregate base salary at the rate of $125,580 per annum, payable in accordance with the customary payroll practices of
the Company; provided, however , that the rate of Executive’s aggregate base salary shall be reviewed by the Board of Directors not less often
than annually, and Executive shall be entitled to receive annual increases at such percentage or in such an amount as the Board of Directors, in
its sole discretion, may decide. The Company and the Bank shall apportion between them the aggregate base salary, based upon the services
rendered by Executive to the Company and the Bank.

     4. Discretionary Bonus. Executive shall be entitled to receive an annual bonus in an amount which is based on any bonus program
maintained by the Company in an equitable manner. No other compensation provided for in this Agreement shall be deemed a substitute for
Executive’s right to receive bonuses when and as declared by the Board of Directors or as provided for by any plan or program of the
Company.

      5. Expenses. During the term of this Agreement, Executive shall be entitled to receive prompt reimbursement of all reasonable expenses
incurred (in accordance with the policies and procedures of the Company) in performing services under this Agreement; provided, however ,
that Executive properly accounts for expenses in accordance with the policies of the Company.
      6. Employee Benefits.
            (a) Participation in Retirement and Executive Benefit Plans . Executive shall be entitled, while employed under the terms of this
Agreement, to receive all benefits under any tax-qualified or non-qualified employee benefit plan or arrangement in effect as of the date of this
Agreement or that the Company implements at any time during the term of this Agreement. Executive shall be entitled to participate in such
future plans or arrangements on the same terms as other employees of the Company or as established by the Company for Executive or other
selected employees.

             (b) Fringe Benefits . Executive shall be entitled to receive any benefits under any fringe benefit plan or policy that is in effect as of
the date of this Agreement, or that the Company implements at any time during the term of this Agreement, on the same terms as the
Company’s senior management employees. Nothing paid to Executive under any plan or arrangement presently in effect or made available in
the future will be deemed to be in lieu of base salary or other compensation to Executive under this Agreement.

            (c) Paid Leave Time . Executive shall be entitled to leave time in accordance with the standard policies or practices of the Company
for senior executive officers, as in effect from time to time.

      7. Term of Agreement. Executive’s employment under this Agreement shall be deemed to have commenced as of the Commencement
Date and shall continue for a period of thirty-six (36) calendar months from the Commencement Date. Commencing on the first anniversary of
the Commencement Date and continuing on each anniversary thereafter (each an ―Anniversary Date‖), the disinterested members of the Board
of Directors of the Company may extend the Agreement an additional year such that the remaining term of the Agreement shall be thirty-six
(36) months, unless Executive elects not to extend the term of this Agreement by giving written notice in accordance with Section 15 of this
Agreement. The Board of Directors of the Company will review the Agreement and Executive’s performance annually for purposes of
determining whether to extend the Agreement and the rationale and results thereof shall be included in the minutes of the Board’s meeting. The
Board of Directors of the Company shall give written notice to Executive as soon as possible after such review as to whether the Agreement is
to be extended; provided, however , that if the Board fails to conduct such review or if written notice of nonrenewal is provided to Executive,
then in such case the term of this Agreement shall become fixed and shall cease at the end of thirty-six (36) full calendar months following the
Anniversary Date.

      8. Loyalty; Noncompetition.
             (a) During the period of his employment hereunder and except for illnesses, reasonable vacation periods, and reasonable leaves of
absence, Executive shall devote all his full business time, attention, skill and efforts to the faithful performance of his duties hereunder;
provided, however , from time to time, that Executive may serve on the boards of directors of, and hold any other offices or positions in,
companies or organizations which will not present any conflict of interest with the Company or any of its subsidiaries or affiliates, or
unfavorably affect the performance of Executive’s duties pursuant to this Agreement, or will not violate any applicable statute or regulation.
―Full business time‖ is hereby defined as that amount of time usually devoted to like companies by similarly situated executive officers. During
the term of his employment under this Agreement, Executive shall not engage in any business or activity contrary to the business affairs or
interests of the Bank or be gainfully employed in any other position or job other than as provided above.

            (b) Executive shall not, during or after the term of this Agreement, disclose any knowledge of the past, present or contemplated
business of the Company, or of any affiliate thereof, to any person for any reason or purpose. Notwithstanding the foregoing, Executive may
disclose any information required in writing by Federal bank regulatory agencies and may disclose to any person information regarding the
Company that is otherwise publicly available or any knowledge of banking or financial concepts or ideas that are not solely and exclusively
derived from the business plans and activities of the Company.

            (c) Nothing contained in this Section 8 shall be deemed to prevent or limit the Executive’s right to invest in the capital stock or
other securities of any business dissimilar from that of the Company, or, solely as a passive or minority investor, in any business.

                                                                           2
     9. Termination.
     Executive’s employment under this Agreement shall be terminated upon any of the following occurrences:

           (a) Death . Executive’s employment under this Agreement shall terminate upon his death. Executive’s estate shall be entitled to
receive payments of base salary, payable in accordance with the regular payroll practices of the Company, for sixty (60) days immediately
following the date of Executive’s death and any other compensation accrued as of the date of death.

             (b) Termination of Employment by the Board of Directors Without Just Cause or by the Executive for Good Reason . In the event
that (i) the Board of Directors terminates Executive’s employment without ―Just Cause‖ (as defined in Section 9(d)) or (ii) such employment is
terminated by the Executive for ―Good Reason‖ (as defined in Section 9(b)(iii), Executive shall be entitled to:
           (i)     His base salary for the remaining term of the Agreement, including any renewals or extensions thereof, at the current rate in
                   effect pursuant to Section 3 of this Agreement, plus the amount of the annual cash bonus earned in the calendar year
                   preceding the year of termination, and a cash equivalent amount equal to the additional retirement benefits under any
                   retirement program (whether tax-qualified or non-qualified) that Executive would have been entitled to had his employment
                   continued through the remaining term of the Agreement (with the amount of benefits determined by reference to the benefits
                   received by the Executive or accrued on his behalf under such programs during the twelve (12) months preceding his
                   termination).
           (ii)    Coverage under the Company’s life insurance plans and non-taxable medical, health, and dental plans (each being a
                   ―Welfare Plan‖) in the same manner in which Executive received coverage on the last day of his employment with the
                   Company. Executive and his covered dependents (if any) shall continue participating in such Welfare Plans, subject to the
                   same premium contributions (if any) on the part of Executive as were required immediately prior to his termination until the
                   earlier of (i) his death; (ii) his employment by another employer other than one of which he is the majority owner; or
                   (iii) three (3) years from his termination date.
           (iii)   For purposes of this Agreement, termination of Executive’s employment hereunder for ―Good Reason‖ shall be limited to
                   Executive’s voluntary termination of employment after the occurrence of any of the following events which have not been
                   consented to in advance by Executive in writing; provided that Executive has given written notice to the Company within
                   ninety (90) days after the initial occurrence of such event and that the Company has been given at least thirty (30) days to
                   cure the situation (but the Company may waive its right to cure): (i) if Executive would be required to move his personal
                   residence or perform his principal executive functions more than thirty (30) miles from Executive’s primary office as of the
                   Commencement Date; (ii) if, in the organizational structure of the Company, Executive would be required to report to a
                   person or persons other than the Board of Directors; (iii) if the Company should fail to maintain Executive’s base
                   compensation in effect pursuant to Section 3 of this Agreement, or fail to maintain the existing employee benefit plans or
                   arrangements in which Executive participates as of the date of this Agreement, including any material fringe benefit, bonus
                   plan and/or retirement plan, except to the extent that such reduction in compensation or benefit programs is part of an
                   overall adjustment in compensation and benefits for all employees of the Company and the Executive is otherwise
                   compensated for such an overall adjustment in an equitable manner; (iv) if Executive would be assigned duties and
                   responsibilities other than those normally associated with his position as referenced in Section 1 of this Agreement; (v) if
                   Executive’s responsibilities or authority have in any way been materially diminished or reduced other than for reasons of
                   Just Cause; or (vi) if Executive is not re-elected to the Board of Directors other than for reasons of Just Cause.

                                                                       3
           (iv)    The sum due under Section 9(b)(i) shall be paid in one lump sum within thirty (30) calendar days after such termination.
                   Notwithstanding the foregoing, in the event Executive is a Specified Employee (within the meaning of Treasury Regulations
                   §1.409A-1(i)), then, to the extent necessary to avoid penalties under Code Section 409A, payment shall be withheld and
                   shall be paid to Executive on the first day of the seventh month following Executive’s termination of employment by the
                   Company without Just Cause.
           (v)     For purposes of Section 9(b), termination of employment as used herein shall mean ―Separation from Service‖ as defined in
                   Code Section 409A and the Treasury Regulations promulgated thereunder.

           (c) Disability .
           (i)     Termination by the Company of Executive’s employment based on ―Disability‖ shall occur if: (A) Executive is unable to
                   engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can
                   be expected to result in death, or last for a continuous period of not less than twelve (12) months; (B) by reason of any
                   medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period
                   of not less than twelve (12) months; or (C) Executive is determined to be totally disabled by the Social Security
                   Administration. Executive shall be entitled to receive benefits under any short or long-term disability plan maintained by the
                   Company.
           (ii)    The Company shall pay Executive, as disability pay, a monthly payment equal to Executive’s monthly rate of base salary.
                   These disability payments shall commence within thirty (30) days of the date of Executive’s termination due to Disability
                   and will end on the earlier of (A) the date Executive returns to the full-time employment of the Company in the same
                   capacity as he was employed prior to his termination for Disability and pursuant to an employment agreement between
                   Executive and the Company; (B) the date Executive begins full-time employment with another employer; (C) the date
                   Executive attains the normal retirement age (as defined in the Company’s defined contribution plan) or begins receiving
                   benefits under any substitute retirement plan adopted by the Company; or (D) the date of Executive’s death.
                   Notwithstanding any other provision to the contrary, the Company’s obligation for any payments required to be made under
                   this Section 9(c) shall be reduced by any proceeds received by Executive from disability income insurance or any other
                   disability policy or plan maintained by the Company for Executive which was paid for by the Company as partial
                   satisfaction of its obligation under this Section 9(c).
           (iii)   The Company shall cause to be continued life insurance and non-taxable medical and dental coverage substantially identical
                   to the coverage maintained by the Company for Executive prior to his termination for Disability. This coverage shall cease
                   upon the earlier of (A) the date Executive returns to the full-time employment of the Company, in the same capacity as he
                   was employed prior to his termination for Disability and pursuant to an employment agreement between Executive and the
                   Company; (B) the date Executive begins full-time employment with another employer; (C) the date Executive attains the
                   normal retirement age or begins receiving benefits under the Company’s retirement plan; or (D) the date of Executive’s
                   death.
           (iv)    Notwithstanding the foregoing, there will be no reduction in the compensation otherwise payable to Executive during any
                   period during which Executive is incapable of performing his duties hereunder by reason of temporary disability.

           (d) Termination of Employment by the Board of Directors for Just Cause . In the event Executive’s employment is terminated for
―Just Cause,‖ no continued payments or benefits shall be due under this Agreement. For purposes of this Agreement, termination for ―Just
Cause‖ shall be defined as termination due to Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit,

                                                                       4
intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this Agreement Any determination of ―Just Cause‖ as defined by this
Section 9(d) shall be determined by a majority vote of the entire membership of the Board of Directors at a meeting of such Board called and
held for the purpose (after reasonable notice to Executive and an opportunity for Executive to be heard before the Board with counsel), of
finding that in the good faith opinion of the Board, Executive committed the conduct described above and specifying the particulars thereof.

           (e) Voluntary Termination of Employment by Executive Other Than for Good Reason . The voluntary termination of employment by
Executive during the term of this Agreement, other than for Good Reason, with the delivery of no less than sixty (60) days written notice to the
Board of Directors, entitles Executive to receive only the base salary, vested rights, and all employee benefits up to Executive’s termination
date.

            (f) Termination and Board Membership . To the extent Executive is a member of the board of directors of the Company or the Bank
or any of their affiliates on the date of an involuntary termination of employment with the Company or the Bank or a termination of
employment for Good Reason, Executive shall be deemed to have automatically resigned from all of the boards of directors immediately
following such termination of employment with the Company or the Bank.

            (g) Termination and Release of Claims . Any payments to be made under this Agreement shall be contingent on Executive’s
execution and non-revocation of a mutual release in a form acceptable to the Company and the Bank; provided, however, that if the Company
or the Bank refuse to execute such mutual release, the Executive’s obligation to execute and not revoke the release as a precondition to
receiving such severance benefits shall terminate. The mutual release agreement shall release the Company and the Bank from any and all
claims and other actions by Executive and it shall also release the Executive from any and all claims and other actions by the Company and the
Bank.

      10. Change in Control.
            (a) For purposes of this Agreement, a Change in Control of the Company or the Bank shall be deemed to have occurred if and
when:
            (i)     there occurs a change in control of the Company or the Bank within the meaning of the Home Owners Loan Act of 1933 or
                    12 C.F.R. Part 574 as applied to the Company or the Bank as if it were a federally chartered institution;
            (ii)    as a result of, or in connection with, any merger or other business combination, sale of assets or contested election, wherein
                    the persons who were non-employee directors of the Company or the Bank before such transaction or event cease to
                    constitute a majority of the Board of Directors of the Company or the Bank or any successor to the Company or the Bank;
            (iii)   the Company or the Bank transfers substantially all of its assets to another corporation or entity which is not an affiliate of
                    the Company or the Bank; or
            (iv)    the Company or the Bank is merged or consolidated with another corporation or entity and, as a result of such merger or
                    consolidation, less than sixty percent (60%) of the equity interest in the surviving or resulting corporation is owned by the
                    former shareholders or depositors of the Company or the Bank.

      For purposes of Section 10 of this Agreement, a Change in Control shall not occur as a result of the Conversion.

            (b) If Executive’s employment is terminated for any reason other than for Just Cause within twelve (12) months following a Change
in Control, Executive shall be entitled to receive the greater of the following:
            (i) the amount of the payment and benefits specified in Section 9(b), or

                                                                           5
           (ii) the amount of the payment and benefits specified in Section 10(c).

Such payment shall be made in a lump sum within thirty (30) days following Executive’s termination of employment. For purposes of this
Section 10, termination of employment as used herein shall mean ―Separation from Service‖ as defined in Code Section 409A and the Treasury
Regulations promulgated thereunder. Notwithstanding the foregoing, in the event Executive is a Specified Employee (within the meaning of
Treasury Regulations §1.409A-1(i)), then, to the extent necessary to avoid penalties under Code Section 409A, payment shall be withheld and
shall be paid to Executive on the first day of the seventh month following Executive’s termination of employment.

           (c) For purposes of Section 10(b)(ii), the amount of payment and benefits shall be equal to:
            (i)    an amount equal to three (3) times his ―base amount,‖ as defined in Code Section 280G(b)(3), less one (1) dollar; and
            (ii)   coverage under the Company’s or Bank’s life insurance plan and non-taxable medical, health and dental plans (each being a
                   ―Welfare Plan‖) in the same manner in which Executive received coverage on the last day of his employment with the
                   Company. Executive and his covered dependents (if any) shall continue participating in such Welfare Plans, subject to the
                   same premium contributions (if any) on the part of Executive as were required immediately prior to his termination until the
                   earlier of (i) his death; (ii) his employment by another employer other than one of which he is the majority owner; or
                   (iii) three (3) years from his termination date.

            (d) If Executive becomes liable, in any taxable year, for the payment of an excise tax under Code Section 4999 on account of any
payments to Executive pursuant to this Section 10, and the Company chooses not to contest the liability or has exhausted all administrative and
judicial appeals contesting the liability, the Company shall pay Executive (i) an amount equal to the excise tax for which Executive is liable
under Code Section 4999, (ii) the federal, state, and local income taxes, and interest if any, for which Executive is liable on account of the
payments pursuant to item (i), and (iii) any additional excise tax under Code Section 4999 and any federal, state and local income taxes for
which Executive is liable on account of payments made pursuant to items (i) and (ii).

             (e) This Section 10(e) applies if the amount of payments to Executive under Section 10(d) has not been determined with finality by
the exhaustion of administrative and judicial appeals. In such circumstances, the Company and Executive shall, as soon as practicable after the
event or series of events has occurred giving rise to the imposition of the excise tax, cooperate in determining the amount of Executive’s excise
tax liability for purposes of paying the estimated tax. Executive shall thereafter furnish to the Company or its successor a copy of each tax
return which reflects a liability for an excise tax under Code Section 4999 at least 20 days before the date on which such return is required to be
filed with the Internal Revenue Service. The liability reflected on such return shall be dispositive for the purposes hereof, unless, within 15
days after such notice is given, the Company furnishes Executive with a letter of the auditors or tax advisor selected by the Company indicating
a different liability or that the matter is not free from doubt under the applicable laws and regulations and that Executive may, in such auditor’s
or advisor’s opinion, cogently take a different position, which shall be set forth I the letter with respect to the payments in question. Such letter
shall be addressed to Executive and state that he is entitled to rely thereon. If the Company furnish such a letter to Executive, the position
reflected in such letter shall be dispositive for purposes of this Agreement, except as provided in Section 10(f) below.

            (f) Notwithstanding anything in this Agreement to the contrary, if Executive’s liability for the excise tax under Code Section 4999
for a taxable year is subsequently determined to be less than the amount paid by the Company pursuant to Section 10(e), Executive shall repay
the Company at the time that the amount of such excise tax and excise tax payments attributable to the reduction (plus interest on the amount of
such repayment at the rate provided on Code Section 1274(b)(2)(B) and if Executive’s liability for the excise tax under Code Section 4999
Code for a taxable year is subsequently determined to exceed the amount paid by the Company pursuant to Section 10, the Company shall
make an additional payment of income and excise taxes in the amount of such excess, as well as the amount of any penalty and interest
assessed with respect thereto at the time that the amount of such excess and any penalty and interest is finally determined.

                                                                          6
             (g) Not later than ten (10) business days after a Change in Control, the Bank shall (i) establish a grantor trust (the ―Trust‖) designed
in accordance with Revenue Procedure 92-64 and having a trustee independent of the Company and Fairmount Bank, (ii) deposit in said Trust
an amount equal to the Code §280G Maximum, unless Executive has previously provided a written release of any claims under this Agreement,
and (iii) provide the trustee of the Trust with a written direction to hold said amount and any investment return thereon in a segregated account
for the benefit of Executive, and to follow the procedures set forth in the next paragraph as to the payment of such amounts from the Trust.

            (h) During the 39-consecutive month period after a Change in Control, Executive may provide the trustee of the Trust with a written
notice requesting that the trustee pay to Executive an amount designated in the notice as being payable pursuant to this Agreement. Within
three (3) business days after receiving said notice, the trustee of the Trust shall pay such amount to Executive, and coincidentally shall provide
the Company or its successor with notice of such payment. Upon the earlier of the Trust’s final payment of all amounts due under the preceding
paragraph or the date 39 months after the Change in Control, the trustee of the Trust shall pay to the Company the entire balance remaining in
the segregated account maintained for the benefit of Executive. Executive shall thereafter have no further interest in the Trust. Such notice shall
not have the effect of changing the timing of any payment under this Agreement, for purposes of Section 409A.

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

            (b) Since the Company is contracting for the unique and personal skills of Executive, Executive shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written consent of the Company.

     12. Amendments. No amendments or additions to this Agreement shall be binding upon the parties hereto unless made in writing and
signed by both parties, except as herein otherwise specifically provided.

     13. Applicable Law. This agreement shall be governed in all respects, whether as to validity, construction, capacity, performance or
otherwise, by the laws of the State of Maryland, except to the extent that Federal law shall be deemed to apply.

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

      15. Notices. Any notices, requests, demands and other communications provided for or deemed necessary by this Agreement shall be
sufficient if set forth in writing and delivered in person or sent by registered or certified mail, postage prepaid, to, in the case of Executive, the
last address filed in writing by Executive with the Company, or, in the case of the Company, to the Company at its main office to the attention
of the Board of Directors.

      16. Indemnification. The Company shall provide Executive (including his heirs, executors and administrators) with coverage under a
standard directors’ and officers’ liability insurance policy at its expense, or in lieu thereof, shall indemnify Executive (and his heirs, executors
and administrators) to the fullest extent permitted under law and applicable regulation or under any existing indemnification agreement by and
between Executive and the Company against all expenses and liabilities reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Company (whether or not he
continues to be a director or officer at the time of incurring such expenses or liabilities). Such expenses and liabilities may include, but are not
limited to, judgment, court costs and attorneys’

                                                                           7
fees and the cost of reasonable settlements. The Company shall pay such expenses and liabilities in advance of a final judicial decision
(hereinafter an ―advancement of expenses‖); provided, however, that, an advancement of expenses incurred by Executive in his capacity as a
director or executive officer of the Company (and not in any other capacity in which service was or is rendered by Executive including, without
limitation, services to an employee benefit plan) shall be made only upon delivery to the Company of an undertaking, by or on behalf of
Executive, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to
appeal that Executive is not entitled to be indemnified for such expenses under this Section 16 or otherwise. Indemnification under this
Section 16 shall be made in accordance with 12 C.F.R. §545.121 or any successor thereto.

      17. Entire Agreement. This Agreement together with any understanding or modifications thereof as may be agreed to in writing by the
parties, shall constitute the entire agreement between the parties hereto.

      18. Source of Payments. Notwithstanding any provision in this Agreement to the contrary, to the extent payments and benefits, as
provided for under this Agreement, are paid or received by Executive under the employment agreement in effect between Executive and the
Bank, the payments and benefits paid by the Bank will be subtracted from any amount or benefit due simultaneously to Executive under similar
provisions of this Agreement. Payments will be allocated in proportion to the level of activity and the time expended by Executive on activities
related to the Company and the Bank, respectively, as determined by the Company and the Bank.

     19. Required Regulatory Provisions.
            (a) The Company may terminate Executive’s employment at any time, but any termination by the Company, other than Termination
for Just Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right
to receive compensation or other benefits for any period after Termination for Just Cause as defined in Section 9(d) hereinabove.

           (b) Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 12 U.S.C. Section 1828(k), FDIC regulation 12
C.F.R. Part 359, Golden Parachute and Indemnification Payments.

     20. Arbitration.
            (a) Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of the
Company, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s
award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid
until the date of termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

           (b) In the event any dispute or controversy arising under or in connection with Executive’s termination is resolved in favor of
Executive, whether by judgment, arbitration or settlement, Executive shall be entitled to the payment of all back-pay, including salary, bonuses
and any other cash compensation, fringe benefits and any compensation and benefits due Executive under this Agreement.

      21. Payment of Costs and Legal Fees. All reasonable costs and legal fees paid or incurred by Executive pursuant to any dispute or
question of interpretation relating to this Agreement shall be paid or reimbursed by the Company, if Executive is successful with respect to
such dispute or question of interpretation pursuant to a legal judgment, arbitration or settlement. Such reimbursements shall be paid to
Executive within two (2) months after the dispute is settled or resolved in Executive’s favor.

                                                                         8
       IN WITNESS WHEREOF, the parties have executed this Agreement on the latest date set forth below.

                                                                            FAIRMOUNT BANCORP, INC.
                                                                            (in organization)

                                                                            By:
Date                                                                              Chairman of the Board


Date                                                                              Joseph M. Solomon

                                                                   9
                                                                                                                                 EXHIBIT 10.4

                                                      FAIRMOUNT BANCORP, INC.
                                                          FAIRMOUNT BANK



                                                  Change in Control Severance Agreement



     THIS Change in Control Severance Agreement (the ―Agreement‖) is dated effective as of the (Enter Date)* (the ―Effective Date‖), by
and between (Employee Name) (the ―Employee‖), Fairmount Bank (the ―Bank‖), and Fairmount Bancorp, Inc. (the ―Holding Company‖).

     WHEREAS , the Employee is employed by the Bank and will also provide services to the Holding Company;

      WHEREAS , the Bank and the Holding Company deem it to be in their respective best interests to enter into the Agreement as an
additional incentive to the Employee; and

     WHEREAS , the parties desire by this writing to set forth their understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Holding Company.

     NOW, THEREFORE , the undersigned parties agree as follows:

     1. Defined Terms . When used anywhere in this Agreement, the following terms shall have the meaning set forth herein.

     (a) ―Board‖ shall mean the Board of Directors of the Employer.

       (b) ―Change in Control‖ shall mean (i) a change in control of the Holding Company, of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (―Exchange
Act‖) or any successor thereto, whether or not any security of the Holding Company is registered under Exchange Act; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if any ―person‖ (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the ―beneficial owner‖ (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, or securities of
the Holding Company representing 25% or more of the combined voting power of the Holding Company then outstanding securities;
(ii) during any period of two consecutive years, individuals (the ―Continuing Directors‖) who at the beginning of such period constitute the
Board of Directors (the ―Existing Board‖) of the Holding Company cease for any reason to constitute at least two-thirds thereof, provided that
any individual whose election or nomination for election as a member of the Existing Board was approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be

* Date of conversion to stock form of origination.
considered a Continuing Director unless his or her initial assumption of office occurs as a result of an actual or threatened contest with respect
to the election or removal of directors or other actual or threatened solicitation of proxies by or on behalf of someone other than a Continuing
Director; or (iii) the acquisition of ownership, holding or power to vote more than 25% of the voting stock of the Bank by any person other than
the Holding Company.

      (c) ―Code‖ shall mean the Internal Revenue Code of 1986, as amended from time to time, and as interpreted through applicable rulings
and regulations in effect from time to time.

    (d) ―Code §280G Maximum‖ shall mean the product of 2.99 and the Employee’s ―base amount‖ within the meaning of Code
§280G(b)(3).

     (e) ―Date of Termination‖ shall mean the date Employee has a ―separation from service‖ as defined in Treasury Regulation
§1.409A-1(h)(1).

     (f) ―Disability‖ shall mean termination of the Employee’s employment because of any physical or mental impairment which qualifies the
Employee for disability benefits under the applicable long-term disability plan maintained by the Employers or, if no such plan applies, which
would qualify the Employee for disability benefits under the Federal Social Security System.

     (g) ―Employer‖ means the Holding Company or the Bank, whichever employs the Employee.

      (h) ―Good Reason‖ shall mean (i) without the Employee’s express written consent: the assignment to the Employee, by the Employer, of
any duties which are materially inconsistent with the Employee’s positions, duties, responsibilities and status with the Employer immediately
prior to a Change in Control, or a material change or diminution in the Employee’s reporting responsibilities, titles or offices as an employee
and as in effect immediately prior to such a Change in Control, or any removal of the Employee from or any failure to re-elect the Employee to
any of such responsibilities, titles or offices, except in connection with the termination of the Employee’s employment for Just Cause or
Disability or as a result of the Employee’s death or by the Employee other than for Good Reason; (ii) without the Employee’s express written
consent, a reduction by the Employer in the Employee’s base salary as in effect on the date of the Change in Control or as the same may be
increased from time to time thereafter or a reduction in the package of fringe benefits provided to the Employee; (iii) any purported termination
of the Employee’s employment for Just Cause or Disability which is not effected pursuant to a Notice of Termination satisfying the
requirements hereof ;(iv) the failure by the Bank or the Holding Company to obtain the assumption of and agreement to perform this
Agreement by any successor as contemplated in Section 8 hereto; (v) requirement that the Employee principally perform all services at location
more than 30 miles from such location on the Effective Date. For purposes of this Section 1(h), any good faith determination of ―Good Reason‖
made by the Employee shall create a rebuttable presumption that ―Good Reason‖ exists. Anything in this Agreement to the contrary
notwithstanding, a termination by the Employee for any reason during the 30-day period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement.

                                                                        2
      (i) ―Just Cause‖ shall mean, in the good faith determination of the Board, the Employee’s personal dishonesty, incompetence in the
performance of duties, willful violation of any law, rule, regulation (other than traffic violations or similar offenses) or final cease-and-desist
order, or material breach of this Agreement.

       No act or failure to act, on the Employee’s part shall be considered ―willful‖ unless it is done, or omitted to be done, by him in bad faith
or without reasonable belief that his action or omission was in the Employer’s best interests. Any act, or failure to act, based upon authority
given pursuant to a resolution of the Board or instructions of the Chief Executive Officer or a senior officer of the Employer or the advice of
counsel for the Employer shall be conclusively presumed to be in good faith and in the Employer’s best interests. The cessation of Employee’s
employment shall not be deemed to be for Just Cause unless and until there shall have been delivered to him a copy of a resolution duly
adopted by the vote of not less than three-quarters of the entire membership of the Board at a meeting called and held for such purpose (after
reasonable notice is provided to the Employee and he is given an opportunity, together with counsel, to be heard before the Board), finding
that, in the Board’s good faith opinion, the Employee is guilty of the conduct described in the preceding paragraph, and specifying the
particulars thereof in detail.

      (j) ―Notice of Termination‖ shall mean any purported termination by the Employer for Just Cause or Disability or by the Employee for
Good Reason shall be communicated by written ―Notice of Termination‖ to the other party hereto. For purposes of this Agreement, a ―Notice
of Termination‖ shall mean a notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provision so
indicated, (iii) specifies a date of termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Employer’s termination of Employee’s employment for Just Cause, and (iv) is given in the
manner specified in this Agreement.

      (k) ―Protected Period‖ shall mean the period that begins on the date three months before a Change in Control and ends on the later of the
third annual anniversary of the Change in Control or the expiration date of this Agreement; except that if the Employee’s employment with the
Employer is terminated prior to the first day of this period at the request of a third party who has taken steps reasonably calculated to effect a
Change in Control or otherwise in connection with or anticipation of a Change in Control, then the Protected Period shall commence on the
date immediately prior to the date of such termination.

      (l) ―Section 409A‖ shall mean Section 409A of the Internal Revenue Code of 1986, as amended, and all regulations and guidance issued
thereunder.

      (m) ―Separation from Service‖ shall have the meaning provided in Section 409A.

      (n) ―Specified Employee‖ shall have the meaning provided in Section 409A.

       2. Trigger Events . The Employee shall be entitled to collect the severance benefits set forth in Section 3 of this Agreement in the event
that (i) the Employee voluntarily terminates

                                                                          3
employment within 90 days of an event that both occurs during the Protected Period and constitutes Good Reason, (ii) the Employer or its
successor(s) in interest terminate the Employee’s employment for any reason other than Just Cause during the Protected Period, or (iii) the
Employee voluntarily terminates employment for any reason other than Just Cause within 30 days after a Change in Control; provided that any
such termination constitutes a Separation from Service.

     3. Amount of Severance Benefit .

    (a) If the Employee becomes entitled to collect severance benefits pursuant to Section 2 hereof, the Employee shall receive from the
Employer a severance benefit equal to * .

       (b) The amount payable under this Section 3(a) shall be paid in one lump sum in cash ten days following the Date of Termination, except
that if the Employee is a Specified Employee it shall be paid in cash on the first business day that is more than six months following the Date of
Termination.

       (c) In addition, for 39 months following termination, the Employer will maintain in full force and effect for the continued benefit of the
Employee and his dependents each employee’s medical and life benefit plan (as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended) in which the Employee was entitled to participate immediately prior to the date of his termination, unless an
essentially equivalent benefit is provided by another source. If the terms of any employee medical and life benefit plan of the Employer or
applicable laws do not permit continued participation by the Employee, the Employer will arrange to provide to the Employee a benefit
substantially similar to, and no less favorable than, the benefit he was entitled to receive under such plan at the end of the period of coverage.
The right of Employee to continued coverage under the health and medical insurance plans of the Employer pursuant to Section 4980B of the
Code shall commence upon the expiration of such period. Notwithstanding this subparagraph (c), if the Employee is a Specified Employee, and
if any benefits provided to the Employee under this subparagraph (c) are taxable to the Employee, then, with the exception of medical
insurance benefits, the value of the aggregate amount of such taxable benefits provided to the Employee and paid for by the Employer pursuant
to this subparagraph (c) during the six month period following the Date of Termination shall be limited to the amount specified by Code
§402(g)(1)(B) for the year of the Date of Termination (e.g. $15,500 in 2008). Employee shall pay the cost of any benefits that exceed the
amount specified in the prior sentence during the six month period following the Date of Termination, but shall be reimbursed by the Employer
for such payments during the seventh month after the Date of Termination.

     (d) If the Employee becomes liable, in any taxable year, for the payment of an excise tax under Section 4999 of the Code on account of
any payments to the Employee pursuant to this Section 3, and the Employer chooses not to contest the liability or have exhausted all
administrative and judicial appeals contesting the liability, the Employer shall pay the Employee (i) an amount equal to the excise tax for which
the Employee is liable under Section 4999 of the Code, (ii) the federal, state, and local income taxes, and interest if any, for which the
Employee is liable on account of the payments pursuant to item (i), and (iii) any additional excise tax under Section 4999 of the

* Severance benefit not to exceed 12 months base salary of the Employee.

                                                                        4
Code and any federal, state and local income taxes for which the Employee is liable on account of payments made pursuant to items (i) and (ii).
Such payment shall be made as soon as feasible and in all cases no later than the end of the calendar year following the year in which the
applicable taxes were remitted to the applicable taxing authority.

       (e) This subsection 5(e) applies if the amount of payments to the Employee under subsection 5(d) has not been determined with finality
by the exhaustion of administrative and judicial appeals. In such circumstances, the Employer and the Employee shall, as soon as practicable
after the event or series of events has occurred giving rise to the imposition of the excise tax, cooperate in determining the amount of the
Employee’s excise tax liability for purposes of paying the estimated tax. The Employee shall thereafter furnish to the Employer or their
successors a copy of each tax return which reflects a liability for an excise tax under Section 4999 of the Code at least 20 days before the date
on which such return is required to be filed with the IRS. The liability reflected on such return shall be dispositive for the purposes hereof
unless, within 15 days after such notice is given, the Employer furnishes the Employee with a letter of the auditors or tax advisor selected by
the Employer indicating a different liability or that the matter is not free from doubt under the applicable laws and regulations and that the
Employee may, in such auditor’s or advisor’s opinion, cogently take a different position, which shall be set forth in the letter with respect to the
payments in question. Such letter shall be addressed to the Employee and state that he is entitled to rely thereon. If the Employer furnishes such
a letter to the Employee, the position reflected in such letter shall be dispositive for purposes of this Agreement, except as provided in
subsection 5(f) below. Any payment to reimburse taxes paid by the Employee shall be made as soon as feasible and in all cases no later than
the end of the calendar year following the calendar year in which the applicable taxes were remitted to the applicable taxing authority.

       (f) Notwithstanding anything in this Agreement to the contrary, if the Employee’s liability for the excise tax under Section 4999 of the
Code for a taxable year is subsequently determined to be less than the amount paid by the Employer pursuant to subsection 5(e), the Employee
shall repay the Employer at the time that the amount of such excise tax liability is finally determined, the portion of such income and excise tax
payments attributable to the reduction (plus interest on the amount of such repayment at the rate provided on Section 1274(b)(2)(B) of the
code) and if the Employee’s liability for the excise tax under Section 4999 of the Code for a taxable year is subsequently determined to exceed
the amount paid by the Employer pursuant to Section 3(d), the Employer shall make an additional payment of income and excise taxes in the
amount of such excess, as well as the amount of any penalty and interest assessed with respect thereto at the time that the amount of such
excess and any penalty and interest is finally determined, such additional payment by the Employer to be made as soon as feasible and in all
cases no later than the end of the calendar year following the year in which the applicable taxes were remitted to the applicable taxing
authority.

     4. Funding of Grantor Trust upon Change in Control .

     (a) Not later than ten business days after a Change in Control, the Employer shall (i) establish a grantor trust (the ―Trust‖) designed in
accordance with Revenue Procedure 92-64 and

                                                                         5
having a trustee independent of the Bank and the Holding Company, (ii) deposit in said Trust an amount equal to the Code §280G Maximum,
unless the Employee has previously provided a written release of any claims under this Agreement, and (iii) provide the trustee of the Trust
with a written direction to hold said amount and any investment return thereon in a segregated account for the benefit of the Employee, and to
follow the procedures set forth in the next paragraph as to the payment of such amounts from the Trust.

      (b) During the 39-consecutive month period after a Change in Control, the Employee may provide the trustee of the Trust with a written
notice requesting that the trustee pay to the Employee an amount designated in the notice as being payable pursuant to this Agreement. Within
three business days after receiving said notice, the trustee of the Trust shall pay such amount to the Employee, and coincidentally shall provide
the Employer or its successor with notice of such payment. Upon the earlier of the Trust’s final payment of all amounts due under the
preceding paragraph or the date 39 months after the Change in Control, the trustee of the Trust shall pay to the Employer the entire balance
remaining in the segregated account maintained for the benefit of the Employee. The Employee shall thereafter have no further interest in the
Trust. The notice provided pursuant to this subsection 4(b) shall not have the effect of changing the timing of any payment under this
Agreement, for purposes of Section 409A.

      5. Term of the Agreement . This Agreement shall remain in effect for the period commencing on the Effective Date and ending on the
earlier of (i) the date thirty-six months after the Effective Date, and (ii) the date on which the Employee terminates employment with the
Employer; provided that the Employee’s rights hereunder shall continue following the termination of this employment with the Employer under
any of the circumstances described in Section 2 hereof. Additionally, on each annual anniversary date from the Effective Date, the term of this
Agreement shall be extended for an additional one-year period beyond the then effective expiration date, unless the Board of Directors of the
Employer has notified the Employee in writing that this Agreement shall not be extended.

     6. Termination or Suspension Under Federal Law .

      (a) If the Employee is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an order
issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (―FDIA‖) (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations of the
Employer and the Holding Company under this Agreement shall terminate, as of the effective date of the order, but the vested rights of the
parties shall not be affected.

     (b) If the Employer is in default (as defined in Section 3(x)(1) of FDIA), all obligations of the Employer under this Agreement shall
terminate as of the date of default; however, this Paragraph shall not affect the vested rights of the parties.

       (c) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Employer’s affairs, the Employer’s obligations under this Agreement shall be suspended
as of the date of such service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer shall reinstate
(in whole or in part) any of its obligations which were suspended.