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FAIRMOUNT BANCORP, S-1 Filing

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                                     As filed with the Securities and Exchange Commission on December 17, 2009
                                                                                                             Registration No. 333-




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


                                                                         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                                                Being applied for
              (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

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

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration 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.
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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            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 14.
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                                                            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.
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Table of Contents

                                        TABLE OF CONTENTS

                                                                                        Page
SUMMARY                                                                                   1
RISK FACTORS                                                                             14
SELECTED FINANCIAL AND OTHER DATA                                                        24
FORWARD-LOOKING STATEMENTS                                                               26
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING                                      27
OUR POLICY REGARDING DIVIDENDS                                                           28
MARKET FOR THE COMMON STOCK                                                              29
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE                                   30
CAPITALIZATION                                                                           31
PRO FORMA DATA                                                                           32
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    35
BUSINESS OF FAIRMOUNT BANCORP, INC.                                                      45
BUSINESS OF FAIRMOUNT BANK                                                               46
SUPERVISION AND REGULATION                                                               64
TAXATION                                                                                 71
MANAGEMENT                                                                               72
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS                                        79
THE CONVERSION AND OFFERING                                                              79
RESTRICTIONS ON ACQUISITION OF FAIRMOUNT BANCORP, INC.                                   94
DESCRIPTION OF CAPITAL STOCK                                                             97
TRANSFER AGENT                                                                           98
EXPERTS                                                                                  98
LEGAL MATTERS                                                                            98
WHERE YOU CAN FIND ADDITIONAL INFORMATION                                                99
INDEX TO FINANCIAL STATEMENTS OF FAIRMOUNT BANK

                                                i
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                                                                  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 stocks 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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        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           , .
          •    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,                    , 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. 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 earnings, capital, asset size, loan concentration, and market area. 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.

        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.

        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.


                                                                       6
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       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 appreciation 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.

                                                                                                                 Price Performance from Initial
                                                                                                                         Trading Date
                                                                                                                                                  Through
                                                                                                                                                  November
                                                                                                                  % Change                         30, 2009
                                                             Conversion                   Gross          1            1              1
   Company                                                     Date           Exchange   Proceeds      day          week           month
                                                                                                (In millions)
   Territorial Bancorp, Inc. (TBNK)                                           NASD
                                                               07/13/09        AQ        $ 122.3       49.9 %         47.2 %        48.0 %            69.8 %
   St. Joseph Bancorp, Inc. (SJBA)                             02/02/09        OTC           3.8        0.0            0.0           0.0               0.0
   Hibernia Homestead Bancorp, Inc. (HIBE)                     01/28/09        OTC          11.1        0.0            5.0           5.0              37.5
   First Savings Financial Group, Inc. (FSFG)                                 NASD
                                                               10/07/08        AQ            24.3       (1.0 )         (4.0 )        (8.0 )            3.5
   Home Bancorp, Inc. (HBCP)                                                  NASD
                                                               10/03/08        AQ            89.3      14.9             3.5           3.1             23.3
   Cape Bancorp, Inc. (CBNJ)*                                                 NASD
                                                               02/01/08        AQ            78.2        0.5            0.1          (2.0 )          (29.2 )
   Danvers Bancorp, Inc. (DNBK)                                               NASD
                                                               01/10/08        AQ          171.9        (2.6 )         (2.2 )         2.6             35.1
   Average                                                                                   71.6        8.8            7.1           7.0             20.0
   Median                                                                                    78.2        0.0            0.1           2.6             23.3

  *      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.

        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 .

  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


                                                                          7
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  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.

        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
                                                               Number of Shares to be Granted or          Benefit
                                                                          Purchased                        Plans            Value of Grants (1)
                                                                                            As a
                                                                                         Percentage
                                                               At           At          of Common                           At              At
                                                            Minimum     Maximum           Stock to                       Minimum         Maximum
                                                               of           of          be Issued in                        of              of
                                                            Offering     Offering            the                         Offering        Offering
                                                             Range        Range         Offering (2)                      Range           Range
   Employee stock ownership plan                              34,000         46,000             8.00 %        — %      $ 340,000       $ 460,000
   Stock recognition and retention plan                       17,000         23,000             4.00 %       3.85 %      170,000         230,000
   Stock option plan                                          42,500         57,500            10.00 %       9.09 %      170,850         231,150
   Total                                                      93,500      126,500              22.00 %      12.28 %    $ 680,850       $ 921,150



  (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


                                                                         8
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         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

        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 .

  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.


                                                                                9
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        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 : 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.

        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.


                                                                        10
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  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.

  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 : p.m., Eastern time, on                 , 2010. You may submit your stock order form by mail using the stock order return
  envelope provided, by overnight courier to the indicated address on the order form, or by hand delivery to our Stock Information Center,
  located at 8216 Philadelphia Road, Baltimore, Maryland. Once submitted, your order will be irrevocable unless the offering is terminated
  or 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.


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

        We cannot assure you that we will pay dividends, or that, if paid, we will not reduce or eliminate dividends in the future.


                                                                         12
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  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, or visit the Stock Information Center located at 8216 Philadelphia Road, Baltimore, Maryland
  21237. 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.


                                                                        13
Table of Contents

                                                                 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. At September 30, 2009, $45,261,000,
or 89.83% of Fairmount Bank’s total loan portfolio, consisted of fixed-rate mortgage loans. 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. At September 30, 2009, the fair value of Fairmount
Bank’s available-for-sale investment securities totaled $3,328,000. Unrealized gains, net of taxes, on these available-for-sale securities totaled
$63,000 at September 30, 2009 and are reported as a separate component of equity. Decreases in the fair value of securities available for sale in
future periods would have an adverse effect on our equity.

      Fairmount Bank’s liabilities are comprised in large part of certificates of deposit, which totaled $32,850,000, or 71.67% of total deposits,
at September 30, 2009. Certificates of deposit have specified terms to maturity, and generally reprice more slowly than deposit accounts
without a stated maturity.

     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.

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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. Joseph M. Solomon, Fairmount Bank’s President and
Chief Executive Officer, has extensive experience in the areas of commercial real estate and construction lending. Additionally, we intend to
hire experienced lending personnel post conversion.

       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. At September 30, 2009, $17,484,000, or 34.70% of Fairmount Bank’s loan
portfolio consisted of this type of mortgage loan. 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

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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.

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 .44% of total loans at September 30, 2009,
and 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.

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      Specifically, the Federal Deposit Insurance Corporation Quarterly Banking Profile has reported that noncurrent assets plus other real
estate owned as a percentage of assets for Federal Deposit Insurance Corporation insured financial institutions rose to 2.77% as of June 30,
2009, compared to 0.95% as of December 31, 2007. For the six months ended June 30, 2009, the Federal Deposit Insurance Corporation
Quarterly Banking Profile has reported that annualized return on average assets was 0.04% for Federal Deposit Insurance Corporation insured
financial institutions compared to 0.81% for the year ended December 31, 2007. The NASDAQ Bank Index declined 38.4% between
December 31, 2007 and June 30, 2009. At September 30, 2009, Fairmount Bank’s noncurrent assets plus other real estate owned as a
percentage of average assets was .84%, and its return on average assets was .74% for the fiscal year ended September 30, 2009.

      Continued negative developments in the financial industry and the domestic and international credit markets, may significantly affect the
markets in which we do business, the markets for and value of Fairmount Bank’s loans and investments, and our ongoing operations, costs and
profitability. Further, continued declines in the stock market in general, or for the capital stock of financial institutions and their holding
companies, could affect our stock performance.

The current economic recession could result in increases in Fairmount Bank’s level of non-performing loans and/or reduce demand for
its products and services, which would lead to lower revenue, higher loan losses and lower earnings.
      Our business activities and earnings are affected by general business conditions in the United States and in our primary market area.
These conditions include short-term and long-term interest rates, inflation, unemployment levels, monetary supply, consumer confidence and
spending, fluctuations in both debt and equity capital markets and the strength of the economy in the United States generally and in Fairmount
Bank’s primary market area in particular. The current economic recession has also had a negative impact on our primary market area. Based on
published statistics, 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. In addition, 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 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.

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      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 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.‖

      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

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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.

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. We believe that the new headquarters will enable us to better serve the
community, since Fairmount Bank now has a full complement of retail services, including a drive through facility and an automated teller
machine, or ATM, and the space necessary for additional personnel.

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                                                         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
shareholders 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.

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.‖

      Publicly traded stocks, including stocks of financial institutions, have recently experienced substantial market price volatility. In a few
recent transactions, shares of common stock issued by newly converted savings institutions or mutual holding companies have traded below the
price at which the shares were sold in the offerings conducted by those companies.

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

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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 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.‖

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.

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      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.

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

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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 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.

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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.

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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.

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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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                                   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;
        •    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, no decision has been made 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, 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 shareholders. 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 reserves 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
                                                                                     425,000              500,000            575,000                  661,250
                                                                                     Shares                Shares            Shares                  Shares (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:
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.
(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

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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, and its available-for-sale
portion of the portfolio, at fair value, was $3,328,000.

      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.

      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 $26,586,000 at September 30, 2008, to $32,850,000 at September 30,
2009.

     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.

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     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, and an increase in accumulated other comprehensive income of $153,000 due primarily 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 . The provision for loan losses increased $132,000, or 264.00%, to $182,000 for the year ended
September 30, 2009, from $50,000 for the year ended September 20, 2008, due to a specific reserve of $51,000 established against a land
development loan, an increase in loan volume and uncertainty regarding 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

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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.

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.

       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.

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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 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 (purchases) proceeds of 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 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

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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 December 2007, a new accounting pronouncement was issued related to business combinations (ASC 805 Business Combinations).
The pronouncement significantly changed the financial accounting and reporting of business combination transactions. ASC 805 establishes
principles for how an acquirer recognizes and measures the identifiable assets acquired, liabilities assume, and any noncontrolling interest in
the acquiree; recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and determines
what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
The pronouncement is effective for acquisition dates on or after the beginning of an entity’s first year that begins after December 15, 2008.
Fairmount Bank does not expect the implementation of the pronouncement to have a material impact on its financial statements, at this time.

      In April 2009, a new accounting pronouncement was issued regarding accounting for assets acquired and liabilities assumed in a business
combination that arise from contingencies (ASC 805 Business Combinations). The pronouncement amends and clarifies prior business
combination guidance to address application issues on initial recognition and measurement, subsequent measurement and accounting, and
disclosure of assets and liabilities arising from contingencies in business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December 15, 2008. Fairmount Bank does not expect the adoption of this
pronouncement to have a material impact on its financial statements.

       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.

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      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.

      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, new accounting pronouncement was issued that amended prior consolidation guidance (ASC 810 Consolidation). The
pronouncement improves financial reporting by enterprises involved with variable interest entities. The pronouncement is effective for interim
and annual periods beginning after November 15, 2009. Early adoption is prohibited. 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, a new accounting pronouncement was issued regarding Accounting for own-share lending arrangements in contemplation
of convertible debt issuance or other financing (ASC 470 Debt). The pronouncement clarifies how an entity should account for an own-share
lending arrangement that is entered into in contemplation of a convertible debt offering. The pronouncement is effective for arrangements
entered into on or after June 15, 2009. Early adoption is prohibited. Fairmount Bank does not expect the adoption of EITF Issue No. 09-1 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 FASB issued Accounting Standards Update No. 2009-15 (ASU 2009-15), ―Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance or Other Financing.‖ ASU 2009-15

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amends Subtopic 470-20 to expand accounting and reporting guidance for own-share lending arrangements issued in contemplation of
convertible debt issuance. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009 and interim periods within those
fiscal years for arrangements outstanding as of the beginning of those fiscal years. Fairmount Bank does not expect the adoption of ASU
2009-15 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 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

                                                                       48
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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

                                                                         50
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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 reserve 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 totalling $116,000 was considered impaired based on a fair market
value appraisal for which an allowance/specific reserve 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 is currently under contract, and settlement is expected before 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 September 30, 2009, Fairmount
Bank had $95,000 in foreclosed real estate, and it is currently under contract.

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

                                                                        55
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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)
Certificates of deposit:                                                                        $     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 and principal financial 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                  Bonus           Compensation                   Total
Joseph M. Solomon                                             2009      $ 125,129 (1)           $ 29,428          $         1,352 (2)      $ 155,909
     President and Chief Executive Officer

(1)    Includes director fees of $7,150.
(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 base salary under the employment agreements is $125,580. 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 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.

      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.

      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

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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 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 or money order, these funds must be available in the account(s) and 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.

     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
     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, or visit the Stock Information Center, located at 8216 Philadelphia Road, Baltimore,
Maryland 21237. The Stock Information Center will be closed weekends and bank holidays.

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              , and               , , 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              , and             , , respectively, bears to the balance of all deposit accounts in
Fairmount Bank on such dates.

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      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 association will qualify as a tax-free reorganization within
             the meaning of Section 368(a)(1)(F) of the Internal Revenue Code.
      2.     Neither Fairmount Bancorp, Inc., nor Fairmount Bank will recognize any gain or loss upon the transfer of a portion of the offering
             proceeds from Fairmount Bancorp, Inc. to Fairmount Bank in exchange for shares of common stock of Fairmount Bank. (Sections
             361 and 1032(a) of the Internal Revenue Code).
      3.     No gain or loss will be recognized by the account holders of the Fairmount Bank upon the issuance to them of withdrawable
             deposit accounts in Fairmount Bank, in its stock form, in the same dollar amount and under the same terms as their deposit
             accounts in Fairmount Bank, in its mutual form, 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 Fairmount Bank, in its
             stock form, in exchange for their deemed ownership interests in Fairmount Bank, in its mutual form. (Section 354(a) of the Internal
             Revenue Code).
      4.     The basis of the account holders’ deposit accounts in Fairmount Bank, in its stock form, will be the same as the basis of their
             deposit accounts in Fairmount Bank, in its mutual form, surrendered in exchange therefore. The basis of each Eligible Account
             Holder’s and Supplemental Eligible Account Holder’s interests in the Liquidation Account of Fairmount Bank, in its stock form,
             will be zero, that being the cost of such property.
      5.     It is more likely than not that the nontransferable subscription rights have no value, based on the fact that these rights are acquired
             by the recipients without cost, are nontransferable and of short duration, and afford the recipients the right only to purchase the
             common stock at a price equal to its estimated fair market value, which will be the same price as the subscription price for the
             shares of common stock in the offering. Accordingly, no gain or loss will be recognized by Eligible Account Holders,
             Supplemental Eligible Account Holders or Other Members upon distribution to them of nontransferable subscription rights to
             purchase shares of Fairmount Bancorp, Inc. common stock, provided that the amount to be paid for Fairmount Bancorp, Inc.
             common stock is equal to the fair market value of Fairmount Bancorp, Inc. common stock.
      6.     It is more likely than not that the basis of the shares of Fairmount Bancorp, Inc. common stock purchased in the offering will be the
             purchase price. The holding period of the Fairmount Bancorp, Inc. 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.
      7.     No gain or loss will be recognized by Fairmount Bancorp, Inc. on the receipt of money in exchange for shares of Fairmount
             Bancorp, Inc. common stock sold in the offering.

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      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.


                                 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.

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      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 80% 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 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

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―—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.

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.

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      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.

      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.

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      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.


                                                                 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.

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                                         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-1
Financial Statements
     Balance Sheets                                                    F-2
     Statements of Income                                              F-3
     Statements of Changes in Equity                                   F-4
     Statements of Cash Flows                                          F-5
     Notes to Financial Statements                                     F-6
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.

                                                                                                        /s/ Smith Elliott Kearns & Company, LLC

Chambersburg, Pennsylvania
December 2, 2009

                                                                        F-1
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                                                                                           234,184          230,365
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

         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-2
Table of Contents

                                                              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
                                                                                                                      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 )             —
                                                                                                                      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
                                                                                                                       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
                                                                                                                      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-3
Table of Contents

                                                              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-4
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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                     —
The notes to financial statements are an integral part of these statements.

                                   F-5
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                                                   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 a method which approximates 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-6
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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-7
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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 )


      Effective June 1, 2009, the Bank transferred three securities 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.

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.

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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                                                    $    3,214,830         $ 117,065          $        (4,377 )         $       3,327,518
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                                                         3,693,115                28,805             (21,108 )                  3,700,812
State and Municipal Securities                                                        473,699                   —               (15,629 )                    458,070
                                                                               $    7,164,897         $      30,323      $     (176,493 )          $       7,018,727


      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         Fair     Unrealized                            Unrealized
                                                                        Fair Value        Losses            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


                                                                         F-9
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                                                           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.

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                                                            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.

                                                                        F-10
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     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.

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

                                                                       F-11
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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


      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
                    Net charge-offs                                                           (65,121 )                 (26,162 )
                    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.

                                                                      F-12
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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.

      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                                               $       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:

                                                                                           2009                        2008
                    Cost
                           Land                                                       $     772,751            $        756,403
                           Construction in progress                                             —                       163,402
                           Buildings and land improvements                                2,015,534                     198,494
                           Furniture, fixtures, and equipment                               315,854                     156,922
                    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.

                                                                     F-13
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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


     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


      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.

                                                                       F-14
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      Since the Bank has not implemented recently issued provisions for accounting for uncertain tax positions, 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.

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


     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.

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.

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

                                                                        F-15
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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.

      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

                                                                        F-16
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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 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

                                                                         F-17
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     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.

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.
        •    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.

                                                                       F-18
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      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-19
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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.
Table of Contents

                                     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
Table of Contents

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
Table of Contents

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           Form of Agency Agreement between Fairmount Bancorp, Inc. and Stifel Nicolaus.*
    2             Plan of Conversion
    3.1           Articles of Incorporation of Fairmount Bancorp, Inc.
    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           Form of Federal Tax Opinion of Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P.
    8.2           Form of 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
10.3              Form of Employment Agreement between Fairmount Bancorp, Inc. and Joseph M. Solomon
10.4              Form of Change in Control Agreement with Jodi L. Beal and Lisa A. Cuddy
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)
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 and Certification Form*
99.6              Business Plan Agreement with RP Financial, LC.
99.7              Records Processing Services Agreement between Stifel Nicolaus and Fairmount Bank.

*          To be filed by Amendment.

        (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.

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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.

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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 December 17, 2009.

                                                                                        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                    December 17, 2009
                          Joseph M. Solomon                  (Principal Executive Officer)

                    /S/     J ODI L. B EAL                   Vice President, Chief Financial Officer and Treasurer              December 17, 2009
                             Jodi L. Beal                    (Principal Financial and Accounting Officer)

              /S/     W ILLIAM G. Y ANKE                     Chairman of the Board                                              December 17, 2009
                           William G. Yanke


               /S/        J AMES E. E LLIOTT                 Director                                                           December 17, 2009
                            James E. Elliott


              /S/     E DWARD J. L ALLY                      Director and Secretary                                             December 17, 2009
                            Edward J. Lally


                /S/       M ARY R. C RAIG                    Director                                                           December 17, 2009
                            Mary R. Craig

                                                                        II-6
                                                                                                                                   EXHIBIT 1.1

                                                               CONFIDENTIAL

August 19, 2009

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
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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;
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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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            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
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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. 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. 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 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.
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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.

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
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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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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              , 2009

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 2

       PLAN OF CONVERSION

               OF

         FAIRMOUNT BANK

FROM MUTUAL TO STOCK ORGANIZATION
                                     TABLE OF CONTENTS

1.    INTRODUCTION                                                                           1
2.    DEFINITIONS                                                                            1
3.    PROCEDURES FOR CONVERSION                                                              4
4.    HOLDING COMPANY APPLICATIONS AND APPROVALS                                             5
5.    SALE OF SUBSCRIPTION SHARES                                                            6
6.    PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES                                       6
7.    RETENTION OF OFFERING PROCEEDS BY THE HOLDING COMPANY                                  7
8.    SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)                       7
9.    SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)                                7
10.   SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)          8
11.   SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)                                 8
12.   COMMUNITY OFFERING                                                                     8
13.   SYNDICATED COMMUNITY OFFERING                                                          9
14.   LIMITATION ON PURCHASES                                                                9
15.   PAYMENT FOR SUBSCRIPTION SHARES                                                       10
16.   MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS                          11
17.   UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT                       11
18.   RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES                                     12
19.   ESTABLISHMENT OF LIQUIDATION ACCOUNT                                                  12
20.   VOTING RIGHTS OF STOCKHOLDERS                                                         13
21.   RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION                                      13
22.   REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION   13
23.   TRANSFER OF DEPOSIT ACCOUNTS                                                          14
24.   REGISTRATION AND MARKETING                                                            14
25.   TAX RULINGS OR OPINIONS                                                               14
26.   STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS                                         14
27.   RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY                               14
28.   PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK                                          15
29.   CONSUMMATION OF CONVERSION AND EFFECTIVE DATE                                         15
30.   EXPENSES OF CONVERSION                                                                15
31.   AMENDMENT OR TERMINATION OF PLAN                                                      15
32.   CONDITIONS TO CONVERSION                                                              16
33.   INTERPRETATION                                                                        16

                                             (i)
                                                          PLAN OF CONVERSION OF
                                                             FAIRMOUNT BANK

INTRODUCTION
      This Plan of Conversion (this ―Plan‖) provides for the conversion of Fairmount Bank, a federal mutual savings association that is
headquartered in Baltimore, Maryland (the ―Bank‖), into the capital stock form of organization. A new stock holding company (the ―Holding
Company‖) will be established as part of the Conversion and will issue Common Stock in the Conversion. The purpose of the Conversion is to
convert the Bank to the capital stock form of organization and to raise capital in the Offering. The Holding Company will offer its Common
Stock in the Offering upon the terms and conditions set forth herein. The subscription rights granted to Participants in the Subscription Offering
are set forth in Sections 8 through 11 hereof. All sales of Common Stock in the Community Offering or the Syndicated Community Offering
will be at the sole discretion of the Board of Directors of the Bank and the Holding Company. The Conversion will have no impact on
depositors, borrowers or customers of the Bank. After the Conversion, the Bank’s insured deposits will continue to be insured by the FDIC to
the extent provided by applicable law.

      This Plan has been approved by the Board of Directors of the Bank. This Plan also must be approved by a majority of the total number of
outstanding votes entitled to be cast by Voting Members of the Bank at a Special Meeting of Members to be called for that purpose. The OTS
must approve this Plan before it is presented to Voting Members for their approval.

2. DEFINITIONS
      For the purposes of this Plan, the following terms have the following respective meanings:

      Account Holder – Any Person holding a Deposit Account in the Bank.

      Acting in Concert – The term Acting in Concert means (i) knowing participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express agreement; or (ii) a combination or pooling of 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. 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 that 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 stock held by the trustee and stock held by the plan will be aggregated.

      Affiliate – Any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with another Person.

      Appraised Value Range – The range of the estimated consolidated pro forma market value of the Holding Company, which shall also be
equal to the estimated pro forma market value of the total number of Subscription Shares to be issued in the Conversion, as determined by the
Independent Appraiser prior to the Subscription Offering and as it may be amended from time to time thereafter. The maximum and minimum
of the Appraised Value Range may vary as much as 15% above and 15% below, respectively, the midpoint of the Appraised Value Range.

      Associate – The term Associate when used to indicate a relationship with any person, means (i) any corporation or organization (other
than the Holding Company, the Bank or a majority-owned subsidiary of the Bank) if the person is a senior officer or partner or beneficially
owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization, (ii) any trust or other estate, if the
person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate except that for the purposes of
this Plan relating to subscriptions in the Offering and the sale of Subscription Shares following the Conversion, a
person who has a substantial beneficial interest in any Non-Tax-Qualified Employee Stock Benefit Plan or any Tax-Qualified Employee Stock
Benefit Plan, or who is a trustee or fiduciary of such plan, is not an associate of such plan, and except that, for purposes of aggregating total
shares that may be held by Officers and Directors, the term ―Associate‖ does not include any Tax-Qualified Employee Stock Benefit Plan, and
(iii) any person who is related by blood or marriage to such person and who lives in the same home as such person or who is a Director or
Officer of the Bank or the Holding Company, or any of their parents or subsidiaries.

     Bank – Fairmount Bank, located in Baltimore, Maryland.

     Common Stock – The common stock, par value $0.01 per share, of the Holding Company.

     Community – The Maryland counties of Baltimore and Harford and the City of Baltimore.

     Community Offering – The offering for sale to certain members of the general public directly by the Holding Company of shares not
subscribed for in the Subscription Offering.

      Control – (including the terms ―controlling,‖ ―controlled by,‖ and ―under common control with‖) means the direct or indirect power to
direct or exercise a controlling influence over the management or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

      Conversion – The conversion of the Bank to stock form pursuant to this Plan, and all steps incident or necessary thereto, including the
Offering.

       Deposit Account – Any withdrawable account, including, without limitation, savings, time, demand, NOW accounts, money market,
certificate and passbook accounts.

     Director – A member of the Board of Directors of the Bank or the Holding Company, as appropriate in the context.

     Eligible Account Holder – Any Person holding a Qualifying Deposit on the Eligibility Record Date for purposes of determining
subscription rights and establishing subaccount balances in the Liquidation Account.

     Eligibility Record Date – The date for determining Eligible Account Holders of the Bank, which is September 30, 2008.

     Employees – All Persons who are employed by the Bank or the Holding Company.

    Employee Plans – Any one or more Tax-Qualified Employee Stock Benefit Plans of the Bank or the Holding Company, including any
ESOP and 401(k) Plan.

     ESOP – The Bank’s Employee Stock Ownership Plan and related trust.

     FDIC – The Federal Deposit Insurance Corporation.

     Holding Company – Fairmount Bancorp, Inc. the corporation formed for the purpose of acquiring all of the shares of capital stock of the
Bank in connection with the Conversion, which shall be incorporated in Maryland, or such other state as shall be designated by the Board of
Directors. Shares of Common Stock of the Holding Company will be issued in the Conversion to Participants and others in the Offering.

      Independent Appraiser – The appraiser retained by the Holding Company and the Bank to prepare an appraisal of the pro forma market
value of the Subscription Shares.

     Liquidation Account – The interest in the Bank received by Eligible Account Holders and Supplemental Eligible Account Holders in
exchange for their interest in the Bank in connection with the Conversion.

                                                                        2
     Member – Any Person or entity that qualifies as a member of the Bank pursuant to its charter and bylaws.

     Offering – The offering and issuance, pursuant to this Plan, of Common Stock in a Subscription Offering, Community Offering or
Syndicated Community Offering, as the case may be.

      Offering Range – The range of the number of shares of Common Stock offered for sale in the Offering. The Offering Range shall be
equal to the Appraised Value Range divided by the Subscription Price.

      Officer – An executive officer of the Bank or the Holding Company, as appropriate in the context, which includes the Chief Executive
Officer, President, Vice Presidents in charge of principal business functions, Secretary and Treasurer and any Person performing functions
similar to those performed by the foregoing persons.

      Order Form – Any form (together with any cover letter and acknowledgment) sent to any Participant or Person containing, among other
things, a description of the alternatives available to such Person under this Plan and by which any such Person may make elections regarding
subscriptions for Subscription Shares.

     Other Member – Any Person holding a Deposit Account on the Voting Record Date who is not an Eligible Account Holder or
Supplemental Eligible Account Holder.

     OTS – The Office of Thrift Supervision, a division of the United States Department of Treasury.

     Participant – Any Eligible Account Holder, Employee Plan, Supplemental Eligible Account Holder, or Other Member.

     Person – An individual, a corporation, a partnership, an association, a joint-stock company, a limited liability company, a trust, an
unincorporated organization, or a government or political subdivision of a government.

     Plan – This Plan of Conversion of the Bank as it exists on the date hereof and as it may hereafter be amended in accordance with its
terms.

     Prospectus – The one or more documents used in offering the Subscription Shares.

      Qualifying Deposit – The aggregate balance of all Deposit Accounts in the Bank of (i) an Eligible Account Holder at the close of
business on the Eligibility Record Date, provided such aggregate balance is not less than $50, and (ii) a Supplemental Eligible Account Holder
at the close of business on the Supplemental Eligibility Record Date, provided such aggregate balance is not less than $50.

      Resident – Any Person who occupies a dwelling within the Community, 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 such presence within the Community is something other than merely transitory in nature. To the extent the person is a
corporation or other business entity, the principal place of business or headquarters shall be in the Community. To the extent a Person is a
personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans,
circumstances of the trustee shall be examined for purposes of this definition. The Bank may utilize deposit or loan records or such other
evidence provided to it to make a determination as to whether a Person is a resident. In all cases, however, such a determination shall be in the
sole discretion of the Bank.

     SEC – The Securities and Exchange Commission.

      Special Meeting of Members – The special meeting of Voting Members and any adjournments thereof held to consider and vote upon
this Plan.

     Subscription Offering – The offering of Subscription Shares to Participants.

                                                                        3
      Subscription Price – The price per Subscription Share to be paid by Participants and others in the Offering. The Subscription Price will
be determined by the Board of Directors of the Holding Company and fixed prior to the commencement of the Subscription Offering.

     Subscription Shares – Shares of Common Stock offered for sale in the Offering.

      Supplemental Eligible Account Holder – Any Person, other than Directors and Officers of the Bank and the Holding Company and
their Associates (except as otherwise permitted by the OTS), holding a Qualifying Deposit on the Supplemental Eligibility Record Date, who is
not an Eligible Account Holder.

      Supplemental Eligibility Record Date – The date for determining Supplemental Eligible Account Holders, which shall be the last day
of the calendar quarter preceding OTS approval of the application for conversion.

     Syndicated Community Offering – The offering of Subscription Shares, at the sole discretion of the Holding Company, following the
Subscription and Community Offerings through a syndicate of broker-dealers.

      Tax-Qualified Employee Stock Benefit Plan – Any defined benefit plan or defined contribution plan, such as an employee stock
ownership plan, stock bonus plan, profit-sharing plan or other plan, which, with its related trust, meets the requirements to be ―qualified‖ under
Section 401 of the Internal Revenue Code of 1986, as amended. The Bank may make scheduled discretionary contributions to a tax-qualified
employee stock benefit plan, provided such contributions do not cause the Bank to fail to meet its regulatory capital requirements. A
―Non-Tax-Qualified Employee Stock Benefit Plan‖ is any defined benefit plan or defined contribution plan that is not so qualified.

     Voting Member – Any Person who at the close of business on the Voting Record Date is entitled to vote as a Member of the Bank
pursuant to its charter and bylaws.

     Voting Record Date – The date fixed by the Directors for determining eligibility to vote at the Special Meeting of Members.

3. PROCEDURES FOR CONVERSION
       A. After approval of this Plan by the Board of Directors of the Bank, this Plan together with all other requisite material shall be submitted
to the OTS for approval. Notice of the adoption of this Plan by the Board of Directors of the Bank and the submission of this Plan to the OTS
for approval will be published in a newspaper having general circulation in each community in which an office of the Bank is located, and
copies of this Plan will be made available at each office of the Bank for inspection by depositors. The Bank also will publish a notice of the
filing with the OTS of an application to convert in accordance with the provisions of this Plan.

      B. Promptly following approval by the OTS, this Plan will be submitted to a vote of the Voting Members at the Special Meeting of
Members. The Bank will mail to all Voting Members, at their last known address appearing on the records of the Bank as of the Voting Record
Date, a proxy statement in either long or summary form describing this Plan, which will be submitted to a vote of Voting Members at the
Special Meeting of Members. The Holding Company also will mail to all Participants either a Prospectus and Order Form for the purchase of
Subscription Shares or a letter informing them of their right to receive a Prospectus and Order Form and a postage-prepaid card to request such
materials, subject to other provisions of this Plan. In addition, all Voting Members will receive, or be given the opportunity to request by either
returning a postage-prepaid card which may be distributed with the proxy statement or by phone call or letter addressed to the Bank’s
Secretary, a copy of this Plan. Upon approval of this Plan by a majority of the total number of votes entitled to be cast by Voting Members, the
Holding Company and the Bank will take all other necessary steps pursuant to applicable laws and regulations to consummate the Conversion
and the Offering. The Conversion must be completed within 24 months of the approval of this Plan by Voting Members, unless a longer time
period is permitted by governing laws and regulations.

                                                                         4
       C. The Conversion will be effected as follows, or in any other manner that is consistent with the purposes of this Plan and applicable laws
and regulations: (1) the Bank will convert its charter to the federal stock savings bank charter, which authorizes the issuance of capital stock;
(2) the Holding Company will purchase all of the capital stock issued by the Bank in connection with its conversion from mutual to stock form,
for at least 50% of the net proceeds of the Offering; and (3) the Holding Company will issue the Common Stock in the Offering as provided in
this Plan. Each of the steps set forth below shall be deemed to occur in such order as is necessary to consummate the Conversion pursuant to
this Plan, the intent of the Board of Directors of the Holding Company and the Board of Directors of the Bank, and applicable federal and state
regulations and policy. Approval of this Plan by Voting Members also shall constitute approval of each of the transactions necessary to
implement this Plan.

       The Board of Directors of the Bank may determine for any reason at any time prior to the issuance of the Subscription Shares not to
utilize a holding company form of organization in the Conversion. If the Board of Directors determines not to complete the Conversion
utilizing a holding company form of organization, the stock of the Bank will be issued and sold in accordance with this Plan. In such case, the
Holding Company’s registration statement will be withdrawn from the SEC, the Bank will take steps necessary to complete the Conversion,
including filing any necessary documents with the OTS and will issue and sell the Subscription Shares in accordance with this Plan. In such
event, any subscriptions or orders received for Subscription Shares of the Holding Company shall be deemed to be subscriptions or orders for
common stock of the Bank, and the Bank shall take such steps as permitted or required by the OTS, the Secretary and the SEC.

     D. The Holding Company shall register the issuance of the Subscription Shares with the SEC and any appropriate state securities
authorities.

      E. Upon completion of the Conversion, the legal existence of the Bank shall not terminate but the stock Bank shall be a continuation of
the entity of the mutual Bank and all property of the mutual Bank, including its right, title and interest in and to all property of whatever kind
and nature, whether real, personal, or mixed, and things, and chooses in action, and every right, privilege, interest and asset of every
conceivable value or benefit then existing or pertaining to it, or which would inure to it, immediately by operation of law and without the
necessity of any conveyance or transfer and without any further act or deed shall vest in the stock Bank. The stock Bank shall have, hold, and
enjoy the same in its own right as fully and to the same extent as the same was possessed, held and enjoyed by the mutual Bank. The stock
Bank at the time and the taking effect of the Conversion shall continue to have and succeed to all the rights, obligations and relations of the
mutual Bank. All pending actions and other judicial or administrative proceedings to which the Bank was a party shall not be discontinued by
reason of the Conversion, but may be prosecuted to final judgment or order in the same manner as if the Conversion had not been made and the
stock Bank resulting from the Conversion may continue the actions in its name notwithstanding the Conversion. Upon completion of the
Conversion, each Person having a Deposit Account at the Bank prior to the Conversion will continue to have a Deposit Account, without
further payment therefore, in the same amount and subject to the same terms and conditions (except for Liquidation Rights) as in effect prior to
the Conversion. All of the Bank’s insured Deposit Accounts will continue to be insured by the FDIC to the extent provided by applicable law.

    F. The home office and branch offices, if any, of the Bank shall be unaffected by the Conversion. The executive offices of the Holding
Company shall be located at the current offices of the Bank.

4. HOLDING COMPANY APPLICATIONS AND APPROVALS
      The Boards of Directors of the Holding Company and the Bank will take all necessary steps to convert the Bank to stock form, form the
Holding Company and complete the Offering. The Holding Company shall make timely applications to the OTS and filings with the SEC for
any requisite regulatory approvals to complete the Conversion.

                                                                        5
5. SALE OF SUBSCRIPTION SHARES
      The Subscription Shares will be offered simultaneously in the Subscription Offering to the Participants in the respective priorities set
forth in this Plan. The Subscription Offering may begin as early as the mailing of the proxy statement for the Special Meeting of Members. The
Common Stock will not be insured by the FDIC. The Bank will not extend credit to any Person to purchase shares of Common Stock.

      Any shares of Common Stock for which subscriptions have not been received in the Subscription Offering may be issued in the
Community Offering. The Subscription Offering may begin prior to the Special Meeting of Members and, in that event, the Community
Offering also may begin prior to the Special Meeting of Members. The offer and sale of Common Stock prior to the Special Meeting of
Members, however, is subject to the approval of this Plan by Voting Members.

      Shares of Common Stock remaining after the Subscription Offering, and the Community Offering should one be conducted, may be sold
in a Syndicated Community Offering or in any manner that will achieve the widest distribution of the Common Stock. The Syndicated
Community Offering may be conducted in addition to, or instead of, a Community Offering. The issuance of Common Stock in any
Subscription Offering and any Community Offering will be consummated simultaneously on the date the sale of Common Stock in the
Syndicated Community Offering is consummated and only if the required minimum number of shares of Common Stock has been issued and
sold.

6. PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES
      The total number of shares, or a range thereof, of Subscription Shares to be offered for sale in the Offering will be determined jointly by
the Boards of Directors of the Bank and the Holding Company immediately prior to the commencement of the Subscription and Community
Offerings, and will be based on the Appraised Value Range and the Subscription Price. The Offering Range will be equal to the Appraised
Value Range divided by the Subscription Price. The estimated pro forma consolidated market value of the Holding Company will be subject to
adjustment within the Appraised Value Range if necessitated by market or financial conditions, with the receipt of any required approvals of
the OTS, and the maximum of the Appraised Value Range may be increased by up to 15% subsequent to the commencement of the
Subscription Offering to reflect changes in market and financial conditions or demand for the shares. The number of Subscription Shares issued
in the Offering will be equal to the estimated pro forma consolidated market value of the Holding Company, as may be amended, divided by
the Subscription Price.

      In the event that the Subscription Price multiplied by the number of Subscription Shares subscribed for in the Offering is below the
minimum of the Appraised Value Range, or materially above the maximum of the Appraised Value Range, a resolicitation of subscribers may
be required, provided that up to a 15% increase above the maximum of the Appraised Value Range will not be deemed material so as to require
a resolicitation. Any such resolicitation shall be effected in such manner and within such time as the Bank and the Holding Company shall
establish, if all required regulatory approvals are obtained.

      Notwithstanding the foregoing, Subscription Shares will not be issued unless, prior to the consummation of the Offering, the Independent
Appraiser confirms to the Bank, the Holding Company, and the OTS, that, to the best knowledge of the Independent Appraiser, nothing of a
material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the
number of Subscription Shares issued in the Offering multiplied by the Subscription Price is incompatible with its estimate of the aggregate
consolidated pro forma market value of the Holding Company. If such confirmation is not received, the Holding Company may cancel the
Offering, extend the Offering and establish a new Subscription Price and/or Appraised Value Range, or take such other action as the OTS may
permit.

     The Common Stock to be issued in the Offering shall be fully paid and non-assessable.

                                                                        6
7. RETENTION OF OFFERING PROCEEDS BY THE HOLDING COMPANY
      The Holding Company may retain up to 50% of the proceeds of the Offering. The Offering proceeds will provide additional capital to the
Holding Company and the Bank for future growth of the Bank’s assets, products and services in a highly competitive and regulated financial
services environment and would facilitate the continued expansion through acquisitions of financial service organizations, continued
diversification into other related businesses and for other business and investment purposes, including the possible payment of dividends and
possible future repurchases of the Common Stock as permitted by applicable federal and state regulations and policy. Following the
Conversion, the Bank may distribute additional capital to the Holding Company from time to time, subject to the OTS regulations governing
capital distributions.

8. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)
      A. Each Eligible Account Holder shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the
greater of 15,000 shares of Common Stock, 0.10% of the total number of shares of Common Stock issued in the Offering, or fifteen times
(15) the product (rounded down to the next whole number) obtained by multiplying the number of Subscription Shares offered in the Offering
by a fraction of which the numerator is the amount of the Eligible Account Holder’s Qualifying Deposit and the denominator is the total
amount of Qualifying Deposits of all Eligible Account Holders, in each case on the Eligibility Record Date, subject to the provisions of
Section 14.

       B. In the event that Eligible Account Holders exercise subscription rights for a number of Subscription Shares in excess of the total
number of such shares eligible for subscription, the Subscription Shares shall be allocated among the subscribing Eligible Account Holders so
as to permit each subscribing Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation of
Subscription Shares equal to the lesser of 100 shares or the number of shares for which such Eligible Account Holder has subscribed. Any
remaining shares will be allocated among the subscribing Eligible Account Holders whose subscriptions remain unsatisfied in the proportion
that the amount of the Qualifying Deposit of each Eligible Account Holder whose subscription remains unsatisfied bears to the total amount of
the Qualifying Deposits of all Eligible Account Holders whose subscriptions remain unsatisfied. If the amount so allocated exceeds the amount
subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those
Eligible Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated.

      C. Subscription rights as Eligible Account Holders received by Directors and Officers and their Associates that are based on deposits
made by such persons during the 12 months preceding the Eligibility Record Date shall be subordinated to the subscription rights of all other
Eligible Account Holders.

9. SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)
      The Employee Plans of the Holding Company and the Bank shall have subscription rights to purchase in the aggregate up to 10% of the
Subscription Shares issued in the Offering, including any Subscription Shares to be issued as a result of an increase in the maximum of the
Offering Range after commencement of the Subscription Offering and prior to completion of the Offering. Consistent with applicable laws and
regulations and practices and policies, the Employee Plans may use funds contributed by the Holding Company or the Bank and/or borrowed
from an independent financial institution to exercise such subscription rights, and the Holding Company and the Bank may make scheduled
discretionary contributions thereto, provided that such contributions do not cause the Holding Company or the Bank to fail to meet any
applicable regulatory capital requirements. The Employee Plans shall not be deemed to be Associates or Affiliates of or Persons Acting in
Concert with any Director or Officer of the Holding Company or the Bank. If the final valuation exceeds the maximum of the Appraised Value
Range, up to 10% of the Subscription Shares issued in the Offering may be sold to the Employee Plans notwithstanding any oversubscription
by Eligible Account Holders. Alternatively, if permitted by the OTS, the Employee Plans may purchase all or a portion of such shares in the
open market.

                                                                       7
10. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)
      A. Each Supplemental Eligible Account Holder shall have nontransferable subscription rights to subscribe for in the Subscription
Offering up to the greater of 15,000 shares of Common Stock, 0.10% of the total number of shares of Common Stock issued in the Offering, or
fifteen times (15) the product (rounded down to the next whole number) obtained by multiplying the number of Subscription Shares offered in
the Offering by a fraction of which the numerator is the amount of the Supplemental Eligible Account Holder’s Qualifying Deposit and the
denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in each case on the Supplemental
Eligibility Record Date, subject to the availability of sufficient shares after filling in full all subscription orders of the Eligible Account Holders
and Employee Plans and to the purchase limitations specified in Section 14.

      B. In the event that Supplemental Eligible Account Holders exercise subscription rights for a number of Subscription Shares in excess of
the total number of such shares eligible for subscription, the Subscription Shares shall be allocated among the subscribing Supplemental
Eligible Account Holders so as to permit each such subscribing Supplemental Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation of Subscription Shares equal to the lesser of 100 shares or the number of shares
for which each such Supplemental Eligible Account Holder has subscribed. Any remaining shares will be allocated among the subscribing
Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the amount of the Qualifying Deposit of
each such Supplemental Eligible Account Holder bears to the total amount of the Qualifying Deposits of all Supplemental Eligible Account
Holders whose subscriptions remain unsatisfied. If the amount so allocated exceeds the amount subscribed for by any one or more
Supplemental Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Supplemental Eligible
Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated.

11. SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)
      A. Each Other Member shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of
15,000 shares of Common Stock or 0.10% of the total number of shares of Common Stock issued in the Offering, subject to the availability of
sufficient shares after filling in full all subscription orders of Eligible Account Holders, Employee Plans and Supplemental Eligible Account
Holders and to the purchase limitations specified in Section 14.

      B. In the event that such Other Members subscribe for a number of Subscription Shares which, when added to the Subscription Shares
subscribed for by the Eligible Account Holders, Employee Plans and Supplemental Eligible Account Holders, is in excess of the total number
of Subscription Shares to be issued, the available shares will be allocated to Other Members so as to permit each such subscribing Other
Member, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation of Subscription Shares equal to the
lesser of 100 shares or the number of shares for which each such Other Member has subscribed. Any remaining shares will be allocated among
the subscribing Other Members whose subscriptions remain unsatisfied in the proportion that the amount of the subscription of each such Other
Member bears to the total amount of the subscriptions of all Other Members whose subscriptions remain unsatisfied.

12. COMMUNITY OFFERING
      Shares for which subscriptions have not been received in the Subscription Offering may be issued and sold in the Community Offering
through a direct community marketing program that may use a broker, dealer, consultant or investment banking firm experienced and expert in
the sale of savings institutions securities. Such entities may be compensated on a fixed fee basis or on a commission basis, or a combination
thereof. In the event orders for Common Stock in the Community Offering exceed the number of shares available for sale, shares may be
allocated (to the extent shares remain available) first to cover orders of natural persons residing in the Community, and thereafter to cover
orders of other members of the general public, so that each Person in such category of the Community Offering may receive the lesser of 100
shares or the number of shares they ordered. Shares will then be allocated on an equal number of shares basis per order. The Holding Company
shall use its best efforts consistent

                                                                           8
with this Plan to distribute Common Stock sold in the Community Offering in such a manner as to promote the widest distribution practicable
of such stock. The Holding Company reserves the right to reject any or all orders in whole or in part, which are received in the Community
Offering. Any Person may purchase up to 15,000 shares of Common Stock in the Community Offering, subject to the purchase limitations
specified in Section 14.

13. SYNDICATED COMMUNITY OFFERING
      If feasible, the Board of Directors may determine to offer Subscription Shares not issued in the Subscription Offering or the Community
Offering in a Syndicated Community, subject to such terms, conditions and procedures as may be determined by the Holding Company, in a
manner that will achieve the widest distribution of the Common Stock, subject to the right of the Holding Company to accept or reject in whole
or in part any subscriptions in the Syndicated Community Offering. In the Syndicated Community Offering, any Person may purchase up to
15,000 shares of Common Stock, subject to the purchase limitations specified in Section 14.

      Provided that the Subscription Offering has begun, the Holding Company may begin the Syndicated Community Offering at any time,
provided that the completion of the offer and sale of the Common Stock will be conditioned upon the approval of this Plan by Voting
Members. If the Syndicated Community Offering does not begin pursuant to the provisions of the preceding sentence, such offering will begin
as soon as practicable following the date upon which the Subscription and Community Offerings terminate.

      If for any reason a Syndicated Community Offering of shares of Common Stock not sold in the Subscription and Community Offerings
cannot be effected, or in the event that any insignificant residue of shares of Common Stock is not sold in the Subscription and Community
Offerings or in the Syndicated Community, if possible, the Holding Company will make other arrangements for the disposition of unsubscribed
shares aggregating at least the minimum of the Offering Range. Such other purchase arrangements will be subject to receipt of any required
approval of the OTS.

14. LIMITATION ON PURCHASES
     The following limitations shall apply to all purchases and issuances of Subscription Shares:

       A. The maximum number of shares of Common Stock that may be subscribed for and purchased in all categories in the Offering by any
Person or Participant or group is 15,000 shares. The maximum number of shares of Common Stock that may be subscribed for or purchased in
all categories in the Offering by any Person or Participant together with any Associate or group of Persons Acting in Concert is 15,000 shares,
except that the Employee Plans may subscribe for up to 10% of the Common Stock issued in the Offering (including shares issued in the event
of an increase in the maximum of the Offering Range of 15%). Notwithstanding any provision hereof to the contrary, but subject to the right of
the Board of Directors to decrease or increase the purchase limitations in this Plan pursuant to this Section 14, in the event 15,000 shares
exceeds 5.0% of the shares of Common Stock issued in the Offering, the 15,000 share purchase limitation will be reduced to equal 5.0% of the
shares of Common Stock issued in the Offering.

     B. The maximum number of shares of Common Stock that may be issued to or purchased in all categories of the Offering by Officers and
Directors and their Associates in the aggregate, shall not exceed 34% of the shares of Common Stock issued in the Offering.

      C. A minimum of 25 shares of Common Stock must be purchased by each Person or Participant purchasing shares in the Offering to the
extent those shares are available; provided, however , that in the event the minimum number of shares of Common Stock purchased times the
price per share exceeds $500, then such minimum purchase requirement shall be reduced to such number of shares which when multiplied by
the price per share shall not exceed $500, as determined by the Board.

      If the number of shares of Common Stock otherwise allocable pursuant to Sections 8 through 13, inclusive, to any Person or that Person’s
Associates would be in excess of the maximum number of shares permitted as set forth above, the number of shares of Common Stock
allocated to each such Person shall be reduced to the lowest limitation applicable to that Person, and then the number of shares allocated to
each group consisting of a Person and that Person’s Associates shall be reduced so that the aggregate allocation to that Person and his or her
Associates complies with the above limits.

                                                                       9
       Depending upon market or financial conditions, the Board of Directors of the Holding Company, with the receipt of any required
approvals of the OTS and without further approval of Voting Members, may decrease or increase the purchase limitations in this Plan, provided
that the maximum purchase limitations may not be increased to a percentage in excess of 5.0% of the shares issued in the Offering except as
provided below. If the Holding Company increases the maximum purchase limitations, the Holding Company is only required to resolicit
Persons who subscribed for the maximum purchase amount in the Subscription Offering and may, in the sole discretion of the Holding
Company, resolicit certain other large subscribers. In the event that the maximum purchase limitation is increased to 5.0% of the shares issued
in the Offering, such limitation may be further increased to 9.99%, provided that orders for Common Stock exceeding 5.0% of the shares of
Common Stock issued in the Offering shall not exceed in the aggregate 10.0% of the total shares of Common Stock issued in the Offering.
Requests to purchase additional Subscription Shares in the event that the purchase limitation is so increased will be determined by the Board of
Directors of the Holding Company in its sole discretion.

      In the event of an increase in the total number of shares offered in the Offering due to an increase in the maximum of the Offering Range
of up to 15% (the ―Adjusted Maximum‖), the additional shares may be used to fill the Employee Plans orders and then may be allocated in
accordance with the priorities set forth in this Plan.

     For purposes of this Section 14, the Directors, Officers and Employees of the Bank and the Holding Company shall not be deemed to be
Associates or a group affiliated with each other or otherwise Acting in Concert solely as a result of their being Directors of the Bank or the
Holding Company.

     Each Person purchasing Common Stock in the Offering shall be deemed to confirm that such purchase does not conflict with the above
purchase limitations contained in this Plan.

15. PAYMENT FOR SUBSCRIPTION SHARES
      All payments for Common Stock subscribed for in the Subscription Offering and Community Offering must be delivered in full to the
Bank or Holding Company, together with a properly completed and executed Order Form, on or prior to the expiration date of the Offering;
provided, however , that if the Employee Plans subscribe for shares in the Subscription Offering, such plans will not be required to pay for the
shares at the time they subscribe but rather may pay for such shares of Common Stock subscribed for by such plans at the Subscription Price
upon consummation of the Offering.

      Payment for Common Stock subscribed for shall be made by personal check, money order or bank draft. Alternatively, subscribers in the
Subscription and Community Offerings may pay for the shares for which they have subscribed by authorizing the Bank on the Order Form to
make a withdrawal from the designated types of Deposit Accounts at the Bank in an amount equal to the aggregate Subscription Price of such
shares. Such authorized withdrawal shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate
account, and the remaining balance does not meet the applicable minimum balance requirement, the certificate shall be canceled at the time of
withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will
remain in the subscriber’s Deposit Account but may not be used by the subscriber during the Subscription and Community Offerings.
Thereafter, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the
Subscription Price per share. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given
effect. Funds received by check, money order or bank draft will be held in a segregated account at the Bank or, at the Bank’s discretion, at
another insured depository institution. Interest on funds received by check, money order or bank draft will be paid by the Bank at not less than
the passbook rate. Such interest will be paid from the date payment is processed by the Bank until consummation or termination of the
Offering. If for any reason the Offering is not consummated, all payments made by subscribers in the Subscription and Community Offerings
will be refunded to them with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling
the authorization for withdrawal. The Bank is prohibited by regulation from knowingly making any loans or granting any lines of credit for the
purchase of stock in the Offering, and therefore, will not do so.

                                                                       10
16. MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS
      As soon as practicable after the Prospectus prepared by the Holding Company and the Bank has been declared effective by the SEC,
Order Forms will be distributed to the Eligible Account Holders, Employee Plans, Supplemental Eligible Account Holders and Other Members
at their last known addresses appearing on the records of the Bank as of the Voting Record Date for the purpose of subscribing for shares of
Common Stock in the Subscription Offering and will be made available for use by those Persons to whom a Prospectus is delivered.

     Each Order Form will be preceded or accompanied by a prospectus describing the Holding Company, the Bank, the Common Stock and
the Offering. Each Order Form will contain, among other things, the following:

      A. A specified date by which all Order Forms must be received by the Bank or the Holding Company, which date shall be not less than
20 days, nor more than 45 days, following the date on which the Order Forms are mailed by the Holding Company, and which date will
constitute the termination of the Subscription Offering unless extended;

     B. The Subscription Price per share for shares of Common Stock to be sold in the Offering;

     C. A description of the minimum and maximum number of Subscription Shares that may be subscribed for pursuant to the exercise of
subscription rights or otherwise purchased in the Subscription and Community Offering;

      D. Instructions as to how the recipient of the Order Form is to indicate thereon the number of Subscription Shares for which such person
elects to subscribe and the available alternative methods of payment therefore;

     E. An acknowledgment that the recipient of the Order Form has received a final copy of the Prospectus prior to execution of the Order
Form;

      F. A statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can
only be exercised by delivering to the Holding Company within the subscription period such properly completed and executed Order Form,
together with payment in the full amount of the aggregate purchase price as specified in the Order Form for the shares of Common Stock for
which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the Order Form that the Bank withdraw said amount
from the subscriber’s Deposit Account at the Bank); and

      G. A statement to the effect that the executed Order Form, once received by the Holding Company, may not be modified or amended by
the subscriber without the consent of the Holding Company.

     Notwithstanding the above, the Holding Company reserves the right in its sole discretion to accept or reject orders received on
photocopied or facsimiled order forms.

17. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT
      In the event Order Forms (a) are not delivered by the United States Postal Service, (b) are not received back by the Holding Company or
are received by the Holding Company after the expiration date specified thereon, (c) are defectively filled out or executed, (d) are not
accompanied by the full required payment, unless waived by the Holding Company, for the shares of Common Stock subscribed for (including
cases in which deposit accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are
not mailed pursuant to a ―no mail‖ order placed in effect by the account holder, the subscription rights of the Person to whom such rights have
been granted will lapse as though such Person failed to return the completed Order Form within the time period specified thereon; provided,
however , that the Holding Company may, but will not be

                                                                        11
required to, waive any immaterial irregularity on any Order Form or require the submission of corrected Order Forms or the remittance of full
payment for subscribed shares by such date as the Holding Company may specify. The interpretation of the Holding Company of terms and
conditions of this Plan and of the Order Forms will be final, subject to the authority of the OTS.

18. RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES
       The Holding Company will make reasonable efforts to comply with the securities laws of all States in the United States in which Persons
entitled to subscribe for shares of Common Stock pursuant to this Plan reside. However, no such Person will be issued subscription rights or be
permitted to purchase shares of Common Stock in the Subscription Offering if such Person resides in a foreign country; or 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
this Plan 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 the Holding Company under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or
otherwise qualify its securities for sale in such state; and (C) such registration or qualification would be impracticable for reasons of cost or
otherwise.

19. ESTABLISHMENT OF LIQUIDATION ACCOUNT
      The Bank shall establish at the time of the Conversion, a Liquidation Account in an amount equal to the Bank’s total equity as reflected in
the latest statement of financial condition contained in the final Prospectus used in the Offering. Following the Conversion, the Liquidation
Account will be maintained by the Bank for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders who
continue to maintain their Deposit Accounts at the Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with
respect to his Deposit Account, hold a related inchoate interest in a portion of the Liquidation Account balance, in relation to his Deposit
Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date, respectively, or to such balance as it may be
subsequently reduced, as hereinafter provided.

      In the unlikely event of a complete liquidation of the Bank (and only in such event), following all liquidation payments to creditors
(including those to Account Holders to the extent of their Deposit Accounts) each Eligible Account Holder and Supplemental Eligible Account
Holder shall be entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the then adjusted subaccount
balance for his Deposit Account then held, before any liquidation distribution may be made to any holders of the Bank’s capital stock. No
merger, consolidation, purchase of bulk assets with assumption of Deposit Accounts and other liabilities, or similar transactions with an
FDIC-insured institution, in which the Bank is not the surviving institution, shall be deemed to be a complete liquidation for this purpose. In
such transactions, the Liquidation Account shall be assumed by the surviving institution.

      The initial subaccount balance for a Deposit Account held by an Eligible Account Holder and Supplemental Eligible Account Holder
shall be determined by multiplying the opening balance in the Liquidation Account by a fraction, the numerator of which is the amount of the
Qualifying Deposits of such Account Holder and the denominator of which is the total amount of all Qualifying Deposits of all Eligible
Account Holders and Supplemental Eligible Account Holders. For Deposit Accounts in existence at both the Eligibility Record Date and the
Supplemental Eligibility Record Date, separate initial subaccount balances shall be determined on the basis of the Qualifying Deposits in such
Deposit Account on each such record date. Such initial subaccount balance shall not be increased, but shall be subject to downward adjustment
as described below.

      If, at the close of business on any September 30 annual closing date, commencing on or after the effective date of the Conversion, the
deposit balance in the Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder is less than the lesser of (i) the
balance in the Deposit Account at the close of business on any other annual closing date subsequent to the Eligibility Record Date or
Supplemental Eligibility Record Date, or (ii) the amount of the Qualifying Deposit in such Deposit Account as of the Eligibility Record Date or
Supplemental Eligibility Record Date, the subaccount balance for such Deposit Account shall be adjusted by reducing such subaccount balance
in an amount proportionate to the reduction in such deposit balance. In the event of such downward adjustment, the subaccount balance shall
not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Deposit Account. If any such
Deposit Account is closed, the related subaccount shall be reduced to zero.

                                                                       12
      The creation and maintenance of the Liquidation Account shall not operate to restrict the use or application of any of the equity accounts
of the Bank, except that the Bank shall not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would
cause its equity to be reduced below (i) the amount required for the Liquidation Account; or (ii) the regulatory capital requirements of the
Bank.

20. VOTING RIGHTS OF STOCKHOLDERS
      Following consummation of the Conversion, the holders of the voting capital stock of the Holding Company shall have the exclusive
voting rights with respect to the Holding Company.

21. RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION
      A. All shares of Common Stock purchased by Directors or Officers of the Holding Company or the Bank in the Offering shall be subject
to the restriction that, except as provided in this Section 21 or as may be approved by the OTS, no interest in such shares may be sold or
otherwise disposed of for value for a period of one year following the date of purchase in the Offering.

     B. The restriction on disposition of Subscription Shares set forth above in this Section 21 shall not apply to the following:

     (1) Any exchange of such shares in connection with a merger or acquisition involving the Bank or the Holding Company, as the case may
be, which has been approved by the appropriate federal regulatory agency; and

     (2) Any disposition of such shares following the death of the person to whom such shares were initially sold under the terms of this Plan.

      C. With respect to all Subscription Shares subject to restrictions on resale or subsequent disposition, each of the following provisions
shall apply:

       (1) Each certificate representing shares restricted by this section shall bear a legend prominently stamped on its face giving notice of the
restriction;

       (2) Instructions shall be issued to the stock transfer agent for the Holding Company not to recognize or effect any transfer of any
certificate or record of ownership of any such shares in violation of the restriction on transfer; and

      (3) Any shares of capital stock of the Holding Company issued with respect to a stock dividend, stock split, or otherwise with respect to
ownership of outstanding Subscription Shares subject to the restriction on transfer hereunder shall be subject to the same restriction as is
applicable to such Subscription Shares.

22. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION
      For a period of three years following the Conversion, no Officer, Director or their Associates shall purchase, without the prior written
approval of the OTS, any outstanding shares of Common Stock except from a broker-dealer registered with the SEC. This provision shall not
apply to negotiated transactions involving more than 1% of the outstanding shares of Common Stock, the exercise of any options pursuant to a
stock option plan or purchases of Common Stock made by or held by any Tax-Qualified Employee Stock Benefit Plan or Non-Tax-Qualified
Employee Stock Benefit Plan of the Bank or the Holding Company (including the Employee Plans) which may be attributable to any Officer or
Director. As used herein, the term ―negotiated transaction‖ means a transaction in which the securities are offered and the terms and
arrangements relating to any sale are arrived at through direct communications between the seller or any person acting on its behalf and the
purchaser or his investment representative. The term ―investment representative‖ shall mean a professional investment advisor acting as agent
for the purchaser and independent of the seller and not acting on behalf of the seller in connection with the transaction.

                                                                         13
23. TRANSFER OF DEPOSIT ACCOUNTS
      Each person holding a Deposit Account at the Bank at the time of Conversion shall retain an identical Deposit Account at the Bank
following Conversion in the same amount and subject to the same terms and conditions (except as to voting and liquidation rights).

24. REGISTRATION AND MARKETING
      Within the time period required by applicable laws and regulations, the Holding Company will register the securities issued in connection
with the Offering pursuant to the Securities Exchange Act of 1934 and will not deregister such securities for a period of at least three years
thereafter, except that the requirement that registration be maintained for three years may be fulfilled by any successor to the Holding
Company. In addition, the Holding Company will use its best efforts to encourage and assist a market maker to establish and maintain a market
for the Common Stock and to list those securities on a national or regional securities exchange or the Nasdaq Stock Market.

25. TAX RULINGS OR OPINIONS
      Consummation of the Conversion is expressly conditioned upon prior receipt by the Bank of either a ruling or an opinion of counsel with
respect to federal tax laws, and either a ruling, an opinion of counsel, or a letter of advice from their tax advisor with respect to applicable state
tax laws, to the effect that consummation of the transactions contemplated by the Conversion and this Plan will not result in a taxable
reorganization under the provisions of the applicable codes or otherwise result in any adverse tax consequences to the Holding Company or the
Bank, or to the account holders receiving subscription rights before or after the Conversion, except in each case to the extent, if any, that
subscription rights are deemed to have value on the date such rights are issued.

26. STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS
      A. The Holding Company and the Bank are authorized to adopt Tax-Qualified Employee Stock Benefit Plans in connection with the
Offering, including without limitation, an ESOP. Existing as well as any newly created Tax-Qualified Employee Stock Benefit Plans may
purchase shares of Common Stock in the Offering, to the extent permitted by the terms of such benefit plans and this Plan.

      B. The Holding Company and the Bank are authorized to enter into employment agreements with their executive officers.

    C. The Holding Company and the Bank are authorized to adopt stock option plans, restricted stock grant plans and other
Non-Tax-Qualified Employee Stock Benefit Plans, provided that such plans conform to any applicable requirements of federal regulations.

27. RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY
      A. (1) The charter of the Bank may contain a provision stipulating that no person, except the Holding Company, for a period of five years
following the closing date of the Offering, may directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10% of
any class of an equity security of the Bank, without the prior written approval of the OTS. Such charter may also provide that for a period of
five years following the closing date of the Conversion, shares beneficially owned in violation of the above-described charter provision shall
not be entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matter submitted to stockholders
for a vote. In addition, special meetings of the stockholders relating to changes in control or amendment of the charter may only be called by
the Board of Directors, and stockholders shall not be permitted to cumulate their votes for the election of Directors.

                                                                          14
      (2) For a period of three years from the date of consummation of the Conversion, no person, other than the Holding Company, may
directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of an equity security of the Bank
without the prior written consent of the OTS.

      B. The Articles of Incorporation of the Holding Company may contain a provision stipulating that in no event shall any record owner of
any outstanding shares of Common Stock who beneficially owns in excess of 10% of such outstanding shares be entitled or permitted to any
vote with respect to any shares held in excess of 10%. In addition, the Articles of Incorporation and Bylaws of the Holding Company may
contain provisions that prohibit cumulative voting for the election of directors and provide for staggered terms of the directors, limitations on
the calling of special meetings, a fair price provision for certain business combinations and certain notice requirements.

      C. For the purposes of this section:

            (1) The term ―person‖ includes an individual, a firm, a corporation or other entity;

            (2) The term ―offer‖ includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation
for tenders of, a security or interest in a security for value;

            (3) The term ―acquire‖ includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise;
and

            (4) The term ―security‖ includes non-transferable subscription rights issued pursuant to a plan of conversion as well as a ―security‖
as defined in 15 U.S.C. § 77b(a)1.

28. PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK
     A. The Holding Company shall comply with any applicable regulation in the repurchase of any shares of its capital stock following
consummation of the Conversion.

      B. The Bank shall not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its
regulatory capital to be reduced below (i) the amount required for the liquidation account, or (ii) the federal or state regulatory capital
requirements.

29. CONSUMMATION OF CONVERSION AND EFFECTIVE DATE
      The Effective Date of the Conversion shall be the date of the closing of the sale of all shares of the Common Stock after all requisite
regulatory and Voting Member approvals have been obtained, all applicable waiting periods have expired, and sufficient subscriptions and
orders for Subscription Shares have been received. The closing of the sale of all shares of Common Stock sold in the Offering shall occur
simultaneously on the effective date of the closing.

30. EXPENSES OF CONVERSION
     The Bank and the Holding Company may retain and pay for the services of legal, financial and other advisors to assist in connection with
any or all aspects of the Conversion, including the Offering, and such parties shall use their best efforts to assure that such expenses are
reasonable.

31. AMENDMENT OR TERMINATION OF PLAN
      If deemed necessary or desirable, this Plan may be substantively amended as a result of comments from the OTS or otherwise at any time
prior to solicitation of proxies from Voting Members to vote on this Plan by the Board of Directors of the Bank, and at any time thereafter by
the Board of Directors of the Bank with the concurrence of the OTS. Any amendment to this Plan made after approval by Voting Members
with the approval of the OTS shall not require further approval by Voting Members unless otherwise required by the OTS. The Board of
Directors of the Bank may terminate this Plan at any time prior to the Special Meeting of Members to vote on this Plan, and at any time
thereafter with the concurrence of the OTS.

                                                                          15
      By adopting this Plan, Voting Members of the Bank authorize the Board of Directors of the Bank to amend or terminate this Plan under
the circumstances set forth in this Section 31.

32. CONDITIONS TO CONVERSION
     Consummation of the Conversion pursuant to this Plan is expressly conditioned upon the following:
     A. Prior receipt by the Bank of rulings of the United States Internal Revenue Service and the state taxing authorities, or opinions of
counsel or tax advisers as described in Section 25;

     B. The issuance of the Subscription Shares offered in the Offering; and

     C. The completion of the Conversion within the time period specified in Section 3.

33. INTERPRETATION
     All interpretations of this Plan and application of its provisions to particular circumstances by a majority of the Board of Directors of the
Bank shall be final, subject to the authority of the OTS.

Dated: October 21, 2009.

                                                                        16
                                                                                                                                       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 80% 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:
                                                                                                                                        Exhibit 3.2

                                                        FAIRMOUNT BANCORP, INC.

                                                                    BYLAWS

                                                                 ARTICLE I
                                                               STOCKHOLDERS

Section 1. Annual Meeting.
     The Corporation shall hold an annual meeting of its stockholders to elect directors and to transact any other business within its powers, at
such place, on such date during the month of January, and at such time as the Board of Directors shall fix. Failure to hold an annual meeting
does not invalidate the Corporation’s existence or affect any otherwise valid corporate act.

Section 2. Special Meetings.
       Special meetings of stockholders of the Corporation may be called by the President or by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors
(hereinafter the ―Whole Board‖). Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the
written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting. Such written request shall
state the purpose or purposes of the meeting and the matters proposed to be acted upon at the meeting, and shall be delivered at the principal
office of the Corporation addressed to the President or the Secretary. The Secretary shall inform the stockholders who make the request of the
reasonably estimated cost of preparing and mailing a notice of the meeting and, upon payment of these costs to the Corporation, notify each
stockholder entitled to notice of the meeting. The Board of Directors shall have the sole power to fix (1) the record date for determining
stockholders entitled to request a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to
vote at the special meeting and (2) the date, time and place of the special meeting and the means of remote communication, if any, by which
stockholders and proxy holders may be considered present in person and may vote at the special meeting.

Section 3. Notice of Meetings; Adjournment.
       Not less than ten (10) nor more than ninety (90) days before each stockholders’ meeting, the Secretary shall give notice of the meeting in
writing or by electronic transmission to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice of the
meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders and proxy
holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting or notice of the purpose is
required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the
stockholder’s usual place of business, mailed to the stockholder at his or her address as it appears on the records of the Corporation, or
transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which the stockholder receives
electronic transmissions. If the Corporation has received a request from a stockholder that notice not be sent by electronic transmission, the
Corporation may not provide notice to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who
is entitled to notice waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission
which is filed with the records of the stockholders’ meetings, or is present at the meeting in person or by proxy.

      A meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a
date not more than one hundred twenty (120) days after the original record date. At any adjourned meeting, any business may be transacted that
might have been transacted at the original meeting.
     As used in these Bylaws, the term ―electronic transmission‖ shall have the meaning given to such term by Section 1-101(k-1) of the
Maryland General Corporation Law (the ―MGCL‖) or any successor provision.

Section 4. Quorum.
      At any meeting of the stockholders, the holders of at least a majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy (after giving effect to the provisions of Article 5.D of the Articles of Incorporation of the Corporation), shall
constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law. Unless the
Articles of the Corporation provide otherwise, where a separate vote by a class or classes is required, a majority of the shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.

      If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock who are
present at the meeting, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date or
time.

Section 5. Organization and Conduct of Business.
     The Chairman of the Board of the Corporation or Chief Executive Officer, or in his or her absence, the President, or in his or her absence,
such other person as may be designated by a majority of the Whole Board, shall call to order any meeting of the stockholders and act as
chairman of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairman appoints. The
chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of
the manner of voting and the conduct of discussion as seem to him or her in order.

Section 6. Advance Notice Provisions for Business to be Transacted at Annual Meetings and Elections of Directors.
      (a) At any annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) as
specified in the Corporation’s notice of the meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any stockholder of the
Corporation who (1) is a stockholder of record on the date of giving the notice provided for in this Section 6(a) and on the record date for the
determination of stockholders entitled to vote at such annual meeting, and (2) complies with the notice procedures set forth in this Section 6(a).
For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the immediately preceding sentence,
the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must otherwise be a
proper matter for action by stockholders.

      To be timely, a stockholder’s notice must be delivered or mailed to and received by the Secretary at the principal executive office of the
Corporation by not later than the close of business on the 90 th day prior to the anniversary date of the date of the proxy statement relating to the
preceding year’s annual meeting and not earlier than the close of business on the 120 th day prior to the anniversary date of the date of the proxy
statement relating to the preceding year’s annual meeting; provided, however, that in the event the annual meeting is the first annual meeting of
stockholders of the Corporation, notice by the stockholder to be timely must be so received by not later than the close of business on the 90 th
day prior to the date of the annual meeting of stockholders of the Corporation, and not earlier than the close of business on the 120 th day prior
to the date of the annual meeting of stockholders of the Corporation; provided, further, that in the event that the date of the annual meeting is
advanced by more than 20 days, or delayed by more than 60 days, from the anniversary date of the preceding year’s annual meeting, notice by
the stockholder to be timely must be so received not later than the close of business on the 90 th day prior to the date of such annual meeting and
not earlier than the close of business on the 120 th day prior to the date of such annual meeting. No adjournment or postponement of a meeting
of stockholders shall commence a new period for the giving of notice hereunder.

                                                                         2
       A stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting:
(i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the
annual meeting; (ii) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on
whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and
any material interest of such stockholder in such business; and (v) a representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.

      Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except
in accordance with the provisions of this Section 6(a). The officer of the Corporation or other person presiding over the annual meeting shall, if
the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the
provisions of this Section 6(a) and, if he or she should so determine, he or she shall so declare to the meeting and any such business so
determined to be not properly brought before the meeting shall not be transacted.

      At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant
to the Corporation’s notice of the meeting.

      (b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the
Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at
which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who (1) is
a stockholder of record on the date of giving the notice provided for in this Section 6(b) and on the record date for the determination of
stockholders entitled to vote at such meeting, and (2) complies with the notice procedures set forth in this Section 6(b). Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the Corporation.
To be timely, a stockholder’s notice shall be delivered or mailed to and received by the Secretary at the principal executive office of the
Corporation by not later than the close of business on the 90 th day prior to the anniversary date of the date of the proxy statement relating to the
preceding year’s annual meeting and not earlier than the close of business on the 120 th day prior to the anniversary date of the date of the proxy
statement relating to the preceding year’s annual meeting; provided, however, that in the event the annual meeting is the first annual meeting of
stockholders of the Corporation notice by the stockholder to be timely must be so received by not later than the close of business on the 90 th
day prior to the date of the annual meeting of stockholders of the Corporation, and not earlier than the close of business on the 120 th day prior
to the date of the annual meeting of stockholders of its Corporation; provided, further, that in the event that the date of the annual meeting is
advanced by more than 20 days, or delayed by more than 60 days, from the anniversary date of the preceding year’s annual meeting, notice by
the stockholder to be timely must be so received not later than the close of business on the 90 th day prior to the date of such annual meeting and
not earlier than the close of business on the 120 th day prior to the date of such annual meeting.

      A stockholder’s notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a
director, all information relating to such person that would indicate such person’s qualification under Article 2, Section 12, including an
affidavit that such person would not be disqualified under the provisions of Section 12(b) and such information relating to such person that is
required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the ―Exchange Act‖), or any successor rule or regulation; and (b) as
to the stockholder giving the notice: (i) the name and address of such stockholder as they appear on the Corporation’s books and of the
beneficial owner, if any, on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or
understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy
at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that would be required to
be disclosed in a proxy statement or other filings

                                                                         3
required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or
any successor rule or regulation. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee
and to serve as a director if elected. No person shall be eligible for election as a director of the Corporation unless nominated in accordance
with the provisions of this Section 6(b). The officer of the Corporation or other person presiding at the meeting shall, if the facts so warrant,
determine that a nomination was not made in accordance with such provisions and, if he or she should so determine, he or she shall so declare
to the meeting and the defective nomination shall be disregarded.

      (c) For purposes of subsections (a) and (b) of this Section 6, the term ―public announcement‖ shall mean disclosure (i) in a press release
reported by a nationally recognized news service, (ii) in a document publicly filed or furnished by the Corporation with the U.S. Securities and
Exchange Commission or (iii) on a website maintained by the Corporation.

Section 7. Proxies and Voting.
      Unless the Articles of the Corporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each
outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however,
a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, directors shall be
determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Articles of the Corporation, all other
matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.

      A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing
authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the
writing or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature. A
stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization for the person to
act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the
person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. The authorization may be
transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means. Unless a proxy provides
otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or
qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as
long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the
proxy or another general interest in the Corporation or its assets or liabilities.

Section 8. Consent of Stockholders in Lieu of Meeting.
       Except as provided in the following sentence, any action required or permitted to be taken at a meeting of stockholders may be taken
without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each stockholder
entitled to vote on the matter and is filed in paper or electronic format with the records of stockholder meetings. Unless the Articles of the
Corporation require otherwise, the holders of any class of the Corporation’s stock other than common stock entitled to vote generally in the
election of directors, may take action or consent to any action by delivering a consent in writing or by electronic transmission of the
stockholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of
the stockholders if the Corporation gives notice of the action so taken to each stockholder not later than ten days after the effective time of the
action.

Section 9. Conduct of Voting
      The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more persons as inspectors of election, to act at
the meeting or any adjournment thereof and make a written report thereof, in accordance with applicable law. At all meetings of stockholders,
the proxies and ballots shall be received, and all

                                                                         4
questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided or
determined by the inspector of election. All voting, including on the election of directors but excepting where otherwise required by law, may
be by a voice vote; provided, however, that upon demand therefore by a stockholder entitled to vote or his or her proxy or the chairman of the
meeting, a written vote shall be taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or
proxy voting and such other information as may be required under the procedure established for the meeting. Every vote taken by ballot shall
be counted by an inspector or inspectors appointed by the chairman of the meeting. No candidate for election as a director at a meeting shall
serve as an inspector at such meeting.

Section 10. Control Share Acquisition Act.
     Notwithstanding any other provision of the Articles of the Corporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any
successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This Section 10 may be repealed, in
whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section 3-701(d) of the MGCL, or any
successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share
Acquisition (as defined in Section 3-701(d) of the MGCL, or any successor provision).


                                                               ARTICLE II
                                                           BOARD OF DIRECTORS

Section 1. General Powers, Number and Term of Office.
      The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of
the Corporation shall, by virtue of the Corporation’s election made hereby to be governed by Section 3-804(b) of the MGCL, be fixed from
time to time exclusively by vote of the Board of Directors; 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 Board of Directors shall annually elect a Chairman of the Board from among
its members and shall designate the Chairman of the Board or his designee to preside at its meetings.

       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 to expire at the first annual meeting of stockholders, the
term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to
expire at 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, commencing with the first annual meeting, 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.

Section 2. Vacancies and Newly Created Directorships.
       By virtue of the Corporation’s election made hereby to be subject to Section 3-804(c) of the MGCL, any vacancies in the Board of
Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by
the affirmative vote of two-thirds of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any
director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and
until a successor is elected and qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of
any incumbent director.

                                                                         5
Section 3. Regular Meetings.
      Regular meetings of the Board of Directors shall be held at such place or places or by means of remote communication, on such date or
dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each
regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 4. Special Meetings.
      Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest
whole number), the Chairman of the Board, or by the President and shall be held at such place or by means of remote communication, on such
date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each
director who has not waived notice by mailing and post-marking written notice not less than five days before the meeting, or by facsimile or
other electronic transmission of the same not less than 72 hours before the meeting. Any director may waive notice of any special meeting,
either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission that is filed with the records of the
meeting. Attendance of a director at a special meeting shall constitute a waiver of notice of such meeting, except where the director attends the
meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted nor the purpose of any special meeting of the Board of Directors need be
specified in the notice of such meeting. Any special meeting of the Board of Directors may adjourn from time to time to reconvene at the same
or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 5. Quorum.
      At any meeting of the Board of Directors, a majority of the authorized number of directors then constituting the Board shall constitute a
quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place,
date, or time, without further notice or waiver thereof.

Section 6. Participation in Meetings By Conference Telephone.
      Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a
conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at such meeting.

Section 7. Conduct of Business.
      At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time
determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws,
the Corporation’s Articles or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous consent which
sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and filed in paper or electronic
form with the minutes of proceedings of the Board of Directors.

                                                                        6
Section 8. Powers.
      All powers of the Corporation may be exercised by or under the authority of the Board of Directors except as conferred on or reserved to
the stockholders by law or by the Corporation’s Articles or these Bylaws. Consistent with the foregoing, the Board of Directors shall have,
among other powers, the unqualified power:
       (i)      To declare dividends from time to time in accordance with law;
       (ii)     To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;
       (iii)    To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind,
                negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;
       (iv)     To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any
                officer upon any other person for the time being;
       (v)      To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and
                agents;
       (vi)     To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers,
                employees and agents of the Corporation and its subsidiaries as it may determine;
       (vii)    To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of
                the Corporation and its subsidiaries as it may determine; and
       (viii)    To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation’s business
                 and affairs.

Section 9. Compensation of Directors.
      Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as
directors, including, without limitation, their services as members of committees of the Board of Directors.

Section 10. Resignation.
     Any director may resign at any time by giving written notice of such resignation to the President or the Secretary at the principal office of
the Corporation. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.

Section 11. Presumption of Assent.
       A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall
be presumed to have assented to such action unless such director announces his dissent at the meeting and (a) such director’s dissent is entered
in the minutes of the meeting, (b) such director files his written dissent to such action with the secretary of the meeting before the adjournment
thereof, or (c) such director forwards his written dissent within 24 hours after the meeting is adjourned, by certified mail, return receipt
requested, bearing a postmark from the United States Postal Service, to the secretary of the meeting or the Secretary of the Corporation. Such
right to dissent shall not apply to a director who voted in favor of such action or failed to make his dissent known at the meeting.

                                                                         7
Section 12. Qualifications
      (a) Each Director shall be a stockholder of the Corporation. No person may be eligible for nomination, election, re-election, appointment
or reappointment to the Board unless such person is under the age of 75 at the time of such nomination, election, re-election, appointment or
reappointment; provided, however, that this restriction shall not apply to any person serving on the Board of the Corporation on the date of the
consummation of the conversion of Midwest Federal Savings and Loan Association of St. Joseph from mutual to stock form.

      (b) No person shall be eligible for nomination, election or appointment to the Board of Directors: (i) if such person has been the subject of
supervisory action by a financial regulatory agency that resulted in a cease and desist order or an agreement or other written statement subject
to public disclosure under 12 U.S.C. §1818(u), or any successor provision; (ii) if such person has been convicted of a crime involving
dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; (iii) if such person
is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime; and (iv) unless
such person has been, for a period of at least one year immediately before his or her nomination or appointment, a resident of the State of
Maryland. No person may serve on the Board of Directors and at the same time be a director or officer of another savings bank, savings and
loan association, co-operative bank, credit union, trust company, bank holding company or banking association (in each case whether chartered
by a state, the federal government or any other jurisdiction) that engages in business activities in the same market area as the Corporation or
any of its subsidiaries. No person shall be eligible for election or appointment to the Board of Directors if such person is the nominee or
representative of a company, as that term is defined in Section 10 of the Home Owners’ Loan Act or any successor provision, of which any
director, partner, trustee or stockholder controlling more than 10% of any class of voting stock would not be eligible for election to the Board
of Directors under this Section 12. No person shall be eligible for election to the Board of Directors if such person is the nominee or
representative of a person or group, or of a group acting in concert (as defined in 12 C.F.R. Section 574.4(d)), that includes a person who is
ineligible for election to the Board of Directors under this Section 12. The Board of Directors shall have the power to construe and apply the
provisions of this Section 12 and to make all determinations necessary or desirable to implement such provisions, including but not limited to
determinations as to whether a person is a nominee or representative of a person, a company or a group, whether a person or company is
included in a group, and whether a person is the nominee or representative of a group acting in concert.

Section 13. Attendance at Board Meetings.
     The Board of Directors shall have the right to remove any director from the board upon a director’s unexcused absence of three
consecutive regularly scheduled meetings of the board of directors.


                                                                 ARTICLE III
                                                                COMMITTEES

Section 1. Committees of the Board of Directors.
      (a) General Provisions. The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee,
a Governance/Nominating Committee, and such other committees as the Board of Directors deems necessary or desirable. The membership of
the Audit Committee, the Compensation Committee and the Governance/Nominating Committee shall consist of independent directors to the
extent required by the applicable rules of the Securities and Exchange Commission or the NASDAQ Stock Market. The Board of Directors
may delegate to any committee so appointed any of the powers and authorities of the Board of Directors to the fullest extent permitted by the
MGCL and any other applicable law.

                                                                        8
     (b) Composition. Each committee shall be composed of one or more Directors or any other number of members specified in these
Bylaws. The Chairman of the Board may recommend committees, committee memberships, and committee chairmanships to the Board of
Directors. The Board of Directors shall have the power at any time to appoint the chairman and the members of any committee, change the
membership of any committee, to fill all vacancies on committees, to designate alternate members to replace or act in the place of any absent or
disqualified member of a committee, or to dissolve any committee.

      (c) Governance/Nominating Committee. The Governance/Nominating Committee, if appointed, shall consist of not less than three
members who meet the applicable independence requirements referenced in Section 1.(a), above and shall have authority: (i) to review any
nominations for election to the Board of Directors made by a stockholder of the Corporation pursuant to Article I, Section 6 of these Bylaws in
order to determine compliance with such Bylaw provision; and (ii) to recommend to the Board of Directors nominees for election to the Board
of Directors to replace those Directors whose terms expire at the annual meeting of stockholders next ensuing. No Director shall participate in
the deliberations or vote in the meeting of the Governance/Nominating Committee at which he or she has been or is seeking to be proposed as a
nominee.

      (d) Issuance of Stock. If the Board of Directors has given general authorization for the issuance of stock providing for or establishing a
method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance with
that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of
stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or
permitted to be established or authorized by the Board of Directors. Any committee so designated may exercise the power and authority of the
Board of Directors if the resolution that designated the committee or a supplemental resolution of the Board of Directors shall so provide.

Section 2. Conduct of Business.
      Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except
as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the
members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a
quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a
meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee
and filed in paper or electronic form with the minutes of the proceedings of such committee. The members of any committee may conduct any
meeting thereof by conference telephone or other communications equipment in accordance with the provisions of Section 6 of Article II.


                                                                   ARTICLE IV
                                                                    OFFICERS

Section 1. Generally.
     (a) The Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairman of the Board,
Chief Executive Officer, President, one or more Vice Presidents, a Secretary and a Chief Financial Officer/Treasurer and from time to time
may choose such other officers as it may deem proper. Any number of offices may be held by the same person, except that no person may
concurrently serve as both President and Vice President of the Corporation.

      (b) The term of office of all officers shall be until the next annual election of officers and until their respective successors are chosen, but
any officer may be removed from office at any time by the affirmative vote of a majority of the authorized number of directors then
constituting the Board of Directors.

                                                                          9
      (c) All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred
by the Board of Directors or by any committee thereof.

Section 2. Chairman of the Board of Directors.
       The Chairman of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to
the office of Chairman of the Board or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock
certificates, contracts and other instruments of the Corporation that are authorized.

Section 3. Chief Executive Officer.
     The Chief Executive Officer, subject to the control of the Board of Directors, shall serve in general executive capacity and have general
power over the management and oversight of the administration and operation of the Corporation’s business and general supervisory power and
authority over its policies and affairs. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors and of any
committee thereof are carried into effect.

Section 4. President.
      The President shall perform the duties of the Chief Executive Officer in the Chief Executive Officer’s absence or during his or her
disability to act. In addition, the President shall perform the duties and exercise the powers usually incident to their respective office and/or
such other duties and powers as may be properly assigned to the President from time to time by the Board of Directors, the Chairman of the
Board or the Chief Executive Officer.

Section 5. Vice President.
      The Vice President or Vice Presidents (including Executive Vice Presidents or other levels of Vice President designated by the Board of
Directors), if any, shall perform the duties of the Chief Executive Officer in the absence of both the Chief Executive Officer and the President,
or during their disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident to their
respective office and/or such other duties and powers as may be properly assigned to the Vice Presidents from time to time by the Board of
Directors, the Chairman of the Board or the Chief Executive Officer.

Section 6. Secretary.
     The Secretary or an Assistant Secretary shall issue notices of meetings, shall keep their minutes, shall have charge of the seal and the
corporate books, shall perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties
and powers as are properly assigned thereto by the Board of Directors, the Chairman of the Board or the Chief Executive Officer.

Section 7. Chief Financial Officer/Treasurer.
      The Chief Financial Officer/Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities
of any division of the Corporation that has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books of
account. The funds of the Corporation shall be deposited in the name of the Corporation by the Chief Financial Officer/Treasurer with such
banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Chief Financial Officer/Treasurer
shall sign or countersign such instruments as require his or her signature, shall perform all such duties and have all such powers as are usually
incident to such office and/or such other duties and powers as are properly assigned to him or her by the Board of Directors, the Chairman of
the Board or the Chief Executive Officer, and may be required to give bond for the faithful performance of his or her duties in such sum and
with such surety as may be required by the Board of Directors.

                                                                         10
Section 8. Other Officers.
     The Board of Directors may designate and fill such other offices in its discretion and the persons holding such other offices shall have
such powers and shall perform such duties as the Board of Directors or Chief Executive Officer may from time to time assign.

Section 9. Action with Respect to Securities of Other Corporations
      Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the
President, a Vice-President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such
resolution.


                                                                   ARTICLE V
                                                                    STOCK

Section 1. Certificates of Stock.
       The Board of Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the
Corporation. For certificated stock, each stockholder is entitled to certificates which represent and certify the shares of stock he or she holds in
the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to
whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any
restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is
authorized to issue, of the differences in the relative rights and preferences between the shares of each series of preferred stock which the
Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and
preferences of subsequent series of preferred stock or (b) a statement which provides in substance that the Corporation will furnish a full
statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to the
Corporation’s transfer agent. Upon the issuance of uncertificated shares of capital stock, the Corporation shall send the stockholder a written
statement of the same information required above on stock certificates. Each stock certificate shall be in such form, not inconsistent with law or
with the Corporation’s Articles, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by
resolution of the Board of Directors. Each stock certificate shall be signed by the Chairman of the Board, the President, or a Vice-President,
and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the
actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is
valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the
stock represented by it is fully paid.

Section 2. Transfers of Stock.
      Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of
these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is
issued therefore.

Section 3. Record Dates or Closing of Transfer Books.
     The Board of Directors may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated
period for the purpose of making any proper determination with respect to stockholders,

                                                                        11
including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record
date may not be prior to the close of business on the day the record date is fixed nor, subject to Section 3 of Article I, more than 90 days before
the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than 20 days;
and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten days before the date of the
meeting. Any shares of the Corporation’s own stock acquired by the Corporation between the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the
record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting.

Section 4. Lost, Stolen or Destroyed Certificates.
      The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate in place of one which is
alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation.
In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give a bond, with sufficient
surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the
Board of Directors or such officer or officers may refuse to issue such new certificate without the order of a court having jurisdiction over the
matter.

Section 5. Stock Ledger.
      The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock
of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a
reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer
agent for the particular class of stock or, if none, at the principal executive office of the Corporation.

Section 6. Regulations.
     The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of
Directors may establish.


                                                                 ARTICLE VI
                                                               MISCELLANEOUS

Section 1. Facsimile Signatures.
      In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 2. Corporate Seal.
      The Board of Directors may provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary.
The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its
corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word
―(seal)‖ adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.

Section 3. Books and Records.
      The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its
stockholders and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records
of the Corporation may be in written form or in any

                                                                         12
other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form
but may be maintained in the form of a reproduction. The original or a certified copy of these Bylaws shall be kept at the principal office of the
Corporation.

Section 4. Reliance upon Books, Reports and Records.
      Each director, each member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall,
in the performance of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good
faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the
Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters
which such director, committee member, officer or agent reasonably believes are within such other person’s professional or expert competence
and who has been selected with reasonable care by or on behalf of the Corporation.

Section 5. Fiscal Year.
     The fiscal year of the Corporation shall be September 30, unless otherwise fixed by the Board of Directors.

Section 6. Time Periods.
      In applying any provision of these Bylaws that requires that an act be done or not be done a specified number of days prior to an event or
that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act
shall be excluded and the day of the event shall be included.

Section 7. Checks, Drafts, Etc.
      All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation,
shall be signed by any officer, employee or agent of the Corporation that is authorized by the Board of Directors.

Section 8. Mail.
     Any notice or other document that is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.

Section 9. Contracts and Agreements.
     To the extent permitted by applicable law, and except as otherwise prescribed by the Articles or these Bylaws, the Board of Directors
may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in
the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer.


                                                                 ARTICLE VII
                                                                AMENDMENTS

     These Bylaws may be adopted, amended or repealed as provided in the Articles of the Corporation.

                                                                        13
                                                                                                                                       Exhibit 4

                               INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND


      No.                                               FAIRMOUNT BANCORP, INC.                                                        Shares


                                                  FULLY PAID AND NON-ASSESSABLE
                                                     PAR VALUE $0.01 PER SHARE

                                                                                                        CUSIP:
                                                                                                THE SHARES REPRESENTED BY THIS
                                                                                                  CERTIFICATE ARE SUBJECT TO
                                                                                                 RESTRICTIONS, SEE REVERSE SIDE

THIS CERTIFIES that                                                                                                               is the owner of

                                                       SHARES OF COMMON STOCK
                                                                   of
                                                         Fairmount Bancorp, Inc.
                                                          a Maryland corporation

      The shares evidenced by this certificate are transferable only on the books of Fairmount Bancorp, Inc. by the holder hereof, in person or
by attorney, upon surrender of this certificate properly endorsed. The capital stock evidenced hereby is not an account of an insurable type and
is not insured by the Federal Deposit Insurance Corporation or any other Federal or state governmental agency.

     IN WITNESS WHEREOF, Fairmount Bancorp, Inc. has caused this certificate to be executed by the facsimile signatures of its duly
authorized officers and has caused a facsimile of its seal to be hereunto affixed.

B                                                                                B
y                                                                   [SEAL]       y
     EDWARD J. LALLY                                                                   JOSEPH M. SOLOMON
     CORPORATE SECRETARY                                                               PRESIDENT AND CHIEF EXECUTIVE OFFICER
      The Board of Directors of Fairmount Bancorp, Inc. (the ―Company‖) is authorized by resolution or resolutions, from time to time
adopted, to provide for the issuance of more than one class of stock, including preferred stock in series, and to fix and state the voting powers,
designations, preferences, limitations and restrictions thereof. The Company will furnish to any stockholder upon request and without charge a
full description of each class of stock and any series thereof.

      The shares evidenced by this certificate are subject to a limitation contained in the Articles of Incorporation to the effect that in no event
shall any record owner of any outstanding common stock which is beneficially owned, directly or indirectly, by a person who beneficially owns
in excess of 10% of the outstanding shares of common stock (the ―Limit‖) be entitled or permitted to any vote in respect of shares held in
excess of the Limit.

      The shares represented by this certificate may not be cumulatively voted on any matter. The Articles of Incorporation require that, with
limited exceptions, no amendment, addition, alteration, change or repeal of the Articles of Incorporation shall be made, unless such is first
approved by the Board of Directors of the Company and approved by the stockholders by a majority of the total shares entitled to vote, or in
certain circumstances approved by the affirmative vote of up to eighty percent (80%) of the shares entitled to vote.

       The following abbreviations when used in the inscription on the face of this certificate shall be construed as though they were written out
in full according to applicable laws or regulations.

     TEN COM          -as tenants in common                              UNIF GIFT MIN ACT                              Custodian
                                                                                                    (Cust)                                 (Minor)
     TEN ENT          -as tenants by the entireties
                                                                                                    Under Uniform Gifts to Minors Act
     JT TEN           -as joint tenants with right
                       of survivorship and not as
                       tenants in common                                                                                  (State)

Additional abbreviations may also be used though not in the above list

For value received,                                                    hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER




                                (please print or typewrite name and address including postal zip code of assignee)




                                                                                                                                Shares of the
Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
                                                                                                                   Attorney to transfer the said
shares on the books of the within named corporation with full power of substitution in the premises.

Dated,

In the presence of                                                                                  Signature:


NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME OF THE STOCKHOLDER(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR
ANY CHANGE WHATSOEVER
                          [LETTERHEAD OF JONES, WALKER, WAECHTER, POITEVENT, CARRÈRE &
                                                 DENÈGRE, L.L.P.]

                                                                                                                                   EXHIBIT 5.1

                                                                                                        December 17, 2009

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.
December 17, 2009
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

                                                                          , 2009

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 (also referred to as the ―Bank‖) to a federally chartered
capital stock savings bank (also referred to as 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 (hereinafter ―Fairmount Bancorp‖ or 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.
        , 2009
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 Conversion 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 Conversion 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 Conversion 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 Conversion 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 independently
verified, the authenticity of all original documents, the accuracy of all copies, and the genuineness of all signatures.
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
        , 2009
Page 3

      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 are accurate, complete, true and correct.
Accordingly, we express no opinion concerning the effect, if any, of variations from the foregoing. 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.

       In rendering our opinion, we have assumed 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. In addition, we have assumed that the activities of the persons and
entities identified in the Plan will be conducted strictly in accordance with the Plan of Conversion. Any variations may affect the opinions we
are rendering. For purposes of this opinion, we are relying on the factual representations provided to us by the Bank, which are incorporated
herein by reference.

      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.
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
        , 2009
Page 4

                                                         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.    No gain or loss will be recognized by the Holding Company or the Stock Bank on the transfer of a portion of the offering proceeds
           from Holding Company to Stock Bank in exchange for the Stock Bank shares or by Holding Company upon receipt of money from
           the sale of Holding Company Conversion Stock. (Section 1032(a) of the Code).
     3.    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).
     4.    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).
     5.    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.
     6.    It more likely than not that the nontransferable subscription rights have no value. Accordingly, no gain or loss will be recognized
           by 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).
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
        , 2009
Page 5

      7.    It is more likely than not that the basis of the Holding Company Conversion Stock to its stockholders will be the purchase price
            thereof. (Section 1012 of the Code). 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).
      8.    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)).
      9.    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).
      10.   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).

       Our opinion regarding the subscription rights above is predicated on the representation that no person shall receive any payment, whether
in money or property, in lieu of the issuance of subscription rights, and on the position that the subscription rights to purchase shares of
Holding Company Conversion Stock received by Eligible Account Holders, Supplemental Eligible Account Holders and Other Members have
a fair market value of zero. 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.
Boards of Directors
Fairmount Bank
Fairmount Bancorp, Inc.
        , 2009
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 and Tax Opinions‖ in the Prospectus, which is a part of the Registration Statement, as such may be amended or supplemented.

                                                                                       Sincerely,

                                                                                       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

     Jones, 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)(l)(F).
      2.    No gain or loss will be recognized by the Holding Company or the Stock Bank on the transfer of a portion of the offering proceeds
            from Holding Company to Stock Bank in exchange for the Stock Bank shares or by Holding Company upon receipt of money from
            the sale of Holding Company Conversion Stock. (Section 1032(a) of the Code).
      3.    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)
      4.    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).
      5.    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.
Fairmount Bank
and,
Fairmount Bancorp, Inc.
Page 3 of 4

     6.    It is more likely than not that the nontransferable subscription rights have no value. Accordingly, no gain or loss will be recognized
           by 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).
     7.    It is more likely than not that the basis of the Holding Company Conversion Stock to its stockholders will be the purchase price
           thereof. (Section 1012 of the Code). 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).
     8.    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)).
     9.    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-l 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)-l (a)(2).
     10.   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).


                        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.

                                                                                                         /s/Smith Elliott Kearns & Company, LLC

Chambersburg, Pennsylvania
December 9, 2009
                                                                                                                                     Exhibit 10.1

                                                 FAIRMOUNT FEDERAL SAVINGS BANK
                                                     EMPLOYMENT AGREEMENT

     THE AGREEMENT entered into as of the 31st day of March, 2008, by and between Fairmount Federal Savings Bank (the ―Bank‖), and
Joseph M. Solomon (the ―Employee‖), effective as of the above date (the ―Effective Date‖).

      WHEREAS, the Employee has heretofore been employed by the Bank as its President and Chief Executive Officer and is experienced in
all phases of the business of the Bank; and

    WHEREAS, the Board of Directors of the Bank believes it is in the best interests of the Bank to enter into this Agreement with the
Employee in order to assure continuity of management of the Bank and to reinforce and encourage the continued attention and dedication of the
Employee to his assigned duties; and

     WHEREAS, the parties desire to set forth the continuing employment relationship of the Bank and the Employee:

     NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereby agree as follows:

     1. Defined Terms
     When used anywhere in this Agreement, the following terms shall have the meanings set forth herein.

             (a) ― Change in Control ‖ shall mean any one of the following events subsequent to the date hereof: (i) the acquisition of ownership,
holding or power to vote more than 25% of the voting power of the Bank or of a holding company for the Bank, (ii) the acquisition of the
ability to control the election of a majority of the directors of the Bank or a holding company therefore, (iii) the acquisition of a controlling
influence over the management or policies of the Bank by any person or by persons acting as a ―group‖ (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934), or (iv) during any period of two consecutive years, individuals (the ―Continuing Directors ‖ ) who at the
beginning of such period constitute the Board of Directors of the Bank (the ―Existing Board‖) cease for any reason to constitute at least
two-thirds thereof; provided, however, 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 considered a Continuing Director. Notwithstanding
the foregoing, in the case of (i), (ii) and (iii) hereof, (a) the conversion of the Bank from the mutual to stock form of organization in which the
Employee shall continue to be employed as President and Chief Executive Officer of the Bank, and (b) the acquisition of ownership or control
of the Bank by a holding company formed for such purpose by the Bank, and of which the Employee shall be employed as President and Chief
Executive Officer, shall not constitute a Change in Control. For purposes of this paragraph only, the term ―person ‖ refers to an individual or a
corporation, partnership, trust, Bank, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity
not specifically listed herein. The decision of the Bank’s non-employee directors as to whether or not a Change in Control has occurred shall be
conclusive and binding.
            (b) ― 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.

           (c) ― Code §280G Maximum ‖ shall mean the product of 2.99 and the Employee’s ―base amount‖ as defined in Code § 28OG(b)(3).

            (d) ― Good Reason ‖ shall mean termination of employment by the Employee based on: (i) without the Employee’s express written
consent, a material reduction by the Bank of the Employee’s base compensation as the same may be increased from time to time; (ii) without
the Employee’s express written consent, a material diminution in the Employee’s authority, duties or responsibilities; (iii) a material diminution
in the authority, duties or responsibilities of the supervisor to whom the Employee is required to report; (iv) the principal executive office of the
Bank is relocated more than 30 miles from its present location, or the Bank requires the Employee to be based anywhere other than an area in
which the Bank’s principal executive office is located, except for reasonably required travel on behalf of the business of the Bank; or (v) the
failure by the Bank to obtain the assumption of and agreement to perform this Agreement by any successor as contemplated in Section 16(a)
hereof. The Employee must provide written notice to the Bank or its successor of the existence of such condition. The Bank shall have 30 days
after receipt of such notice to remedy the condition and, if remedied, the Employee shall not be entitled to be paid the benefits described in
Section 12 in connection with the Employee’s termination of employment.

             (e) ― Just Cause ‖ shall mean, in the good faith determination of the Board, the Employee’s personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this
Agreement. The Employee shall have no right to receive compensation or other benefits for any period after termination for Just Cause. No act,
or failure to act, on the Employee’s part shall be considered ―willful‖ unless he has acted, or failed to act, with an absence of good faith and
without a reasonable belief that his action or failure to act was in the best interest of the Bank.

           (f) ― Trust ‖ shall mean a grantor trust that is designed in accordance with Revenue Procedure 92-64 issued by the Internal Revenue
Service and has a trustee independent of the Bank.

      2. Employment . During the term of this Agreement, the Bank agrees to continue to employ the Employee, and the Employee agrees to
continue to serve, as the President and Chief Executive Officer of the Bank. The Employee shall render such administrative and management
services for the Bank as are currently tendered and as are customarily performed by persons situated in a similar executive capacity. The
Employee shall also promote, by entertainment or otherwise, as and to the extent permitted by law, the business of the Bank. The Employee’s
other duties shall be such as the Board may from time to time reasonably direct, including normal duties as an officer of the Bank.

                                                                         2
      3. Base Compensation . The Bank agrees to pay the Employee during the term of this Agreement a salary at the rate of $115,000 per
annum, payable in cash not less frequently than monthly. The Board shall review, not less often than annually, the rate of the Employee’s
salary, and in its sole discretion may decide to increase his salary. Notwithstanding the foregoing, following a Change in Control, the Board
shall continue to review annually the rate of the Employee’s salary, and shall increase said rate of salary by a percentage that is not less than the
average annual percentage increase in salary that the Employee received over the three calendar years immediately preceding the year in which
the Change in Control occurs.

       4. Discretionary Bonuses . The Employee shall participate in an equitable manner with all other senior management employees of the
Bank in discretionary bonuses that the Board may award from time to time to the Bank’s senior management employees. No other
compensation provided for in this Agreement shall be deemed a substitute for the Employee’s right to participate in such discretionary bonuses.
Notwithstanding the foregoing, following a Change in Control, the Employee shall receive discretionary bonuses that are made no less
frequently than, and in annual amounts not less than, the average annual discretionary bonuses paid to the Employee during each of the three
calendar years immediately preceding the year in which such Change in Control occurs. The Employee must remain employed at the end of the
fiscal year to be eligible to receive a bonus for such year. Any bonus hereunder shall be paid no later than December 15 of the fiscal year
following the end of the fiscal year for which it is earned.

     5. Participation in Plans; Expenses; Indemnification
             (a) Participation in Retirement, Medical and Other Plans . During the term of this Agreement, the Employee shall be eligible to
participate in any plan that the Bank maintains for the benefit of its employees that relates to (i) pension, profit-sharing or other retirement
benefits, (ii) medical insurance or the reimbursement of medical or dependant care expenses, or (iii) other group benefits, including disability
and life insurance plans. The Bank will not, without the Employee’s prior written consent, make any changes in such plans, arrangements or
perquisites that would adversely affect the Employee’s rights or benefits thereunder as in existence as of the Effective Date.

            (b) Employee Benefit Plans; Expenses . The Employee shall be eligible to participate in any fringe benefits that are or may become
available to the Bank’s senior management employees, including any incentive compensation plans, and any other benefits which are
commensurate with the responsibilities and functions to be performed by the Employee under this Agreement. Nothing paid to the Employee
under any such plan shall be deemed to be in lieu of the base and other compensation to which the Employee is entitled under this Agreement.
In addition, the Employee shall be reimbursed for all reasonable out-of-pocket travel or other business expenses that he shall incur in
connection with his services under this Agreement upon substantiation of such expenses in accordance with the policies of the Bank.

           (c) Liability Insurance; Indemnification . The Bank shall provide the Employee (including his heirs, executors and administrators)
with coverage under a standard directors’ and officers’ liability insurance policy at the Bank’s expense, or in lieu thereof, shall indemnify the
Employee (and his heirs, executors and administrators) to the fullest extent permitted under Federal law against all expenses and liabilities
reasonably incurred by him in

                                                                         3
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; such expenses and liabilities to include, but not to be limited to, judgments, court costs and attorneys’ fees and the cost of
reasonable settlements, and such settlements to be approved by the Board; provided, however, that such indemnification shall not extend to
matters as to which the Employee is finally adjudged to be liable for willful misconduct or gross negligence in the performance of his duties as
a director or officer of the Bank.

      6. Term . The Bank hereby employs the Employee, and the Employee hereby accepts such employment under this Agreement, for the
period commencing on the Effective Date and ending 36 months thereafter (or such earlier date as is determined in accordance with Section 10
hereof). Additionally, on each annual anniversary date from the Effective Date, this Agreement and the Employee’s term of employment may
be extended for an additional one-year period beyond the then-effective expiration date; provided, however, that the Board determines in a duly
adopted resolution that the performance of the Employee has met the Board’s requirements and standards, and that this Agreement shall be
extended. Only those members of the Board who have no personal interest in this Employment Agreement shall discuss and vote on the
approval and subsequent review of this Agreement. By written notice, the Board will inform the Employee as soon as possible after the Board’s
annual review whether the Board has determined to extend the term of this Agreement.

     7. Loyalty; Noncompetition
             (a) During the period of his employment hereunder and except for illnesses, reasonable vacation periods, and reasonable leaves of
absence, the Employee 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 the Employee 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 the Employee ’ 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, the Employee 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) The Employee 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, the Employee 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 7 shall be deemed to prevent or limit the Employee ’ 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.

                                                                         4
     8. Standards . The Employee shall perform his duties under this Agreement in accordance with such reasonable standards as the Board
may establish from time to time. The Bank will provide Employee with the working facilities and staff customary for similar executives and
necessary for him to perform his duties.

     9. Vacation and Sick Leave
      At such reasonable times as the Board shall in its discretion permit, the Employee shall be entitled, without loss of pay, to absent himself
voluntarily from the performance of his employment under this Agreement, all such voluntary absences to count as vacation time, provided
that:

          (a) The Employee shall be entitled to an annual vacation in accordance with the policies that the Board periodically establishes for
senior management employees of the Bank.

            (b) The Employee shall not receive any additional compensation from the Bank on account of his failure to take a vacation or sick
leave, and the Employee shall not accumulate unused vacation or sick leave from one fiscal year to the next, except in either case to the extent
authorized by the Board.

            (c) In addition to the aforesaid paid vacations, the Employee shall be entitled without loss of pay, to absent himself voluntarily from
the performance of his employment with the Bank for such additional periods of time and for such valid and legitimate reasons as the Board
may in its discretion determine. Further, the Board may grant to the Employee a leave or leaves of absence, with or without pay, at such time or
times and upon such terms and conditions as the Board in its discretion may determine.

           (d) In addition, the Employee shall be entitled to an annual sick leave benefit established by the Board.

      10. Termination and Termination Pay . Subject to Section 12 hereof, the Employee’s employment hereunder may be terminated under the
following circumstances:

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

            (b) Retirement . The Employee’s employment under this Agreement may terminate in accordance with the Bank ’ s retirement
policy or in accordance with any retirement arrangement established with the Employee’s consent with respect to the Employee. Upon
termination of the Employee upon retirement under such policy or arrangement, the Employee shall be entitled to all benefits under any
retirement plan of the Bank and other plans to which the Employee is a party.

                                                                         5
           (c) Disability .
                     (1) The Bank may terminate the Employee’s employment after having established the Employee ’ s Disability. For purposes
of this Agreement, ―Disability ‖ means a physical or mental infirmity that impairs the Employee’s ability to substantially perform his duties
under this Agreement and that results in the Employee ’ s becoming eligible for long-term disability benefits under the Bank’s long-term
disability plan (or, if the Bank has no such plan in effect, that impairs the Employee’s ability to substantially perform his duties under this
Agreement for a period of 180 consecutive days). The Employee shall be entitled to the compensation and benefits provided for under this
Agreement for (i) any period during the term of this Agreement and prior to the establishment of the Employee’s Disability during which the
Employee is unable to work due to the physical or mental infirmity, or (ii) any period of Disability prior to the Employee’s termination of
employment pursuant to this Section 10(c); provided, however, that any benefits paid pursuant to the Bank’s long-term disability plan will
continue as provided in such plan. Payments to the Employee under the Bank’s long-term disability plan shall be deducted from the
compensation and benefits provided for under this Agreement.

                   (2) During any period in which the Employee shall receive disability benefits and to the extent that the Employee shall be
physically and mentally able to do so, he shall furnish such information, assistance and documents so as to assist in the continued ongoing
business of the Bank and, if able, shall make himself available to the Bank to undertake reasonable assignments consistent with his prior
position and his physical and mental health. The Bank shall pay all reasonable expenses incident to the performance of any assignment given to
the Employee during the disability period.

            (d) Just Cause . The Board may, by written notice to the Employee pursuant to Section 13, terminate his employment at any time,
for Just Cause. The Employee shall have no night to receive compensation or other benefits for any period after termination for Just Cause.

           (e) Without Just Cause; Constructive Discharge .
                    (1) The Board may, by written notice to the Employee pursuant to Section 13, immediately terminate his employment at any
time for a reason other than Just Cause, in which event the Employee shall be entitled to receive the following payments in a lump sum within
10 days of effectiveness of termination of employment: (i) the greater of (A) the salary provided pursuant to Section 3 hereof, up to the
expiration date of this Agreement including any renewal term (the ―Expiration Date‖), or (B) the severance benefit provided for in
Section 12(b), and (ii) an amount equal to the cost to the Employee of obtaining all health, life, disability and other benefits in which the
Employee would have been eligible to participate through the Expiration Date based upon benefit levels substantially equal to those that the
Bank provided for the Employee at the date of termination of employment. Such payments shall not be reduced in the event the Employee
obtains other employment following termination of his employment with the Bank.

                 (2) The Employee shall be entitled to receive the payments payable under subsection 10(e)(1) hereof in the event that the
Employee voluntarily terminates employment by resignation upon 30 days prior written notice given within 60 days of an event that constitutes
Good Reason. Notwithstanding the preceding sentence, in the event of a continuing

                                                                       6
breach of this Agreement by the Bank, the Employee, after giving due notice of an event that constitutes Good Reason within the required time
period, shall not waive any of his rights under this Section 10(e) by virtue of the fact that the Employee has submitted his resignation but has
remained in the employ of the Bank and is engaged in good faith discussions to resolve any occurrence of an event constituting Good Reason.

           (f) Termination or Suspension Under Federal Law
                    (1) If the Employee is removed and/or permanently prohibited from participating in the conduct of the Bank’s
affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (the ―FDIA‖) (12 U.S.C. §§
1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement shall terminate, as of the effective date of the order, but
vested rights of the parties shall not be affected.

                    (2) If the Bank is in default (as defined in Section 3(x)(1) of the EDIA), all obligations under this Agreement shall terminate
as of the date of default; however, this paragraph shall not affect the vested rights of the parties.

                    (3) All obligations under this Agreement shall terminate, except to the extent that continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the Director of the Office of Thrift Supervision (―Director of OTS‖), or his or her
designee, at the time that the Federal Deposit Insurance Corporation (―FDIC ‖ ) enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 13(c) of the FDIA; or (ii) by the Director of the OTS, or his or her designee, at the time that
the Director of the OTS, or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the
Bank is determined by the Director of the OTS to be in an unsafe or unsound condition. Such action shall not affect any vested rights of the
parties.

                      (4) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. § 1818(e)(3) or (g)(1)) suspends and/or
temporarily prohibits the Employee from participating in the conduct of the Bank ’ s affairs, the Bank’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 Bank may
in its discretion (i) pay the Employee all or part of the compensation withheld while its contract obligations were suspended, and (ii) reinstate
(in whole or in part) any of its obligations which were suspended.

           (g) Voluntary Termination by Employee . Subject to Section 12 hereof, the Employee may voluntarily terminate employment with
the Bank during the term of this Agreement, upon at least 60 days ’ prior written notice to the Board, in which event the Employee shall receive
only his compensation, vested rights and employee benefits up to the date of his termination (unless such termination occurs pursuant to
Section 10(e)(2) hereof or, within the Protected Period, Section 12(a) hereof, in which event the benefits and compensation provided for in
Sections 10(e) or 12(b), as applicable, shall apply).

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

                                                                         7
     12. Change in Control
          (a) Trigger Events . The Employee shall be entitled to collect the severance benefits set forth in Section 12(b) in the event that the
Employee terminates employment for Good Reason in connection with or within 12 months after any Change in Control of the Bank or any
holding company for the Bank.

             (b) Amount of Severance Benefit . If the Employee becomes entitled to collect severance benefits pursuant to Section 12(a), the
Bank shall pay the Employee a severance benefit equal to the difference between the Code § 280G Maximum and the sum of any other ―
parachute payments ‖ as defined under Code § 280G(b)(2) received by the Employee on account of the Change in Control. Such payment shall
be made upon the effectiveness of the termination of employment. In the event that the Employee and the Bank jointly agree that the Employee
has collected an amount exceeding the Code § 280G Maximum, the parties may agree in writing that such excess shall be treated as a loan ab
initio that the Employee shall repay to the Bank, on terms and conditions mutually agreeable to the parties, together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the Code.

             (c) Funding of Grantor Trust Upon Change in Contro l. Not later than 10 business days after a Change in Control, the Bank shall
(i) deposit in a 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 (ii) 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 until notified by the Bank that the Employee’s employment has terminated
under circumstances that entitle Employee to a payment under this Agreement, and to follow the instructions of the Bank as to such payment of
such amounts from the Trust. Upon the earlier of the Trust’s final payment of all amounts due under the following paragraph or the date 15
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 the Employee. The Employee shall thereafter have no further interest in the Trust.

      Upon the earlier of (i) any payment from the Trust to the Employee, or (ii) the date 12 months after the date on which the Bank makes the
deposit referred to in the first paragraph of this Section 12(c), the trustee of the Trust shall pay to the Bank 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 pursuant to
this Agreement.

            (d) Limitation by Section 18(k) of the FDIA . Notwithstanding anything herein to the contrary, any payments made to the Employee
pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with section 18(k) of the FDIA (12 U.S.C.
§ 1828(k)) and any regulations promulgated thereunder.

     13. Notice
            (a) Any purported termination by the Bank or the Employee shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a ―Notice of Termination‖ shall mean a written notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee’s employment under such provision.

                                                                         8
           (b) ―Date of Termination ‖ shall mean the date specified in the Notice of Termination. In the case of a termination for Just Cause,
such date shall be not less than 30 days from the date the Notice of Termination is received by the Employee.

             (c) If, within 30 days after any Notice of Termination is given, the party receiving such Notice notifies the other party that a dispute
exists concerning the termination (except upon the occurrence of a Change in Control and upon a voluntary termination by the Employee, in
which case the date of termination shall be the date specified in the Notice), the Date of Termination shall be the date on which the dispute is
finally determined (i) by mutual written agreement of the parties, (ii) by a binding arbitration award, or (iii) by a final judgment, order or decree
of a court of competent jurisdiction (the time for appeal having expired and no appeal having been perfected); provided, however, that the Date
of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Bank shall continue to pay the
Employee his full compensation in effect when the notice giving rise to the dispute was given and continue the Employee in all compensation,
benefit, retirement, and insurance plans in which he was participating when the notice of dispute was given, until the dispute is resolved;
provided, however, that such dispute is resolved within nine months after the Date of Termination specified in the Notice of Termination. If
such dispute is not resolved within such nine-month period, the Bank shall not be obligated pending final resolution of the dispute to pay the
Employee compensation and other amounts after nine months from the Date of Termination specified in the Notice of Termination. Amounts
paid under this Section 13 are in addition to all amounts due under this Agreement, and shall not be offset against or reduce any other amounts
due under this Agreement.

       14. Reimbursement of Employee for Enforcement Proceedings . In the event that any dispute arises between the Employee and the Bank
as to the terms or interpretation of this Agreement, whether instituted by formal legal proceedings or otherwise, including any action that the
Employee takes to defend against any action taken by the Bank, the Employee shall be reimbursed for all costs and expenses, including
reasonable attorneys’ fees, arising from such dispute, proceedings or actions; provided, however, that the Employee obtains either a written
settlement or a final judgment by a court of competent jurisdiction substantially in his favor. Such reimbursement shall be paid within 10 days
of Employee’s furnishing to the Bank written evidence, which may be in the form, among other things, of a cancelled check or receipt, of any
costs or expenses incurred by the Employee.

      15. Federal Income Tax Withholding . The Bank may withhold all federal and state income or other taxes from any benefit payable under
this Agreement as shall be required pursuant to any law or government regulation or ruling.

     16. Successors and Assigns
           (a) Bank . The Bank shall require any successor or assignee of the Bank that shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or

                                                                         9
substantially all of the assets or stock of the Bank expressly and unconditionally to assume and agree to perform the Bank’s obligations under
this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had
taken place. This Agreement shall not be otherwise assignable by the Bank.

             (b) Employee . Since the Bank is contracting for the unique and personal skills of the Employee, the Employee shall be precluded
from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Bank; provided, however, that
nothing in this paragraph shall preclude (i) the Employee from designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors, administrators, or other legal representatives of the Employee or his estate from assigning any rights hereunder to
the person or persons entitled thereunto.

           (c) Attachment . Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process
or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.

     17. Amendments . No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties,
except as herein otherwise specifically provided.

      18. Waiver . No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific
term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically
waived,

      19. 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.

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

      21. Entire Agreement . This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto and shall supersede any prior agreement between the parties.

      22. Section 409A . The severance payments provided in this Agreement are intended to qualify as short-term deferrals under
Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance thereunder.

                                                                        10
     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first hereinabove written.

ATTEST:                                                                    FAIRMOUNT FEDERAL SAVINGS BANK

                                                                           By:
Secretary

WITNESS:                                                                   EMPLOYEE


                                                                           Joseph M. Solomon

                                                                 11
                                                                                                                                     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 Executive during the term of this Agreement (as hereinafter defined in Section 7) a 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 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.

     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 Fairmount Bancorp, Inc., (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 Executive during the term of this Agreement (as hereinafter defined in Section 7) a
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 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.

     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   % of the Code §280G Maximum.

       (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

                                                                        4
Section 4999 of the 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 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

                                                                         5
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.

                                                                        6
       7. Expense Reimbursement . In the event that any dispute arises between the Employee and the Employer or the Holding Company as to
the terms or interpretation of this Agreement, whether instituted by formal legal proceedings or otherwise, including any action that the
Employee takes to enforce the terms of this Agreement or to defend against any action taken by the Employer or the Holding Company, they
shall reimburse the Employee for all costs and expenses, including reasonable attorneys’ fees, arising from such dispute, proceedings or
actions. Such reimbursement shall be paid within ten days of Employee’s furnishing to the Employer written evidence, which may be in the
form, among other things, of a cancelled check or receipt, of any costs or expenses incurred by the Employee. Employee must submit such
evidence no later than six months after the end of the calendar year in which the costs and expenses were incurred, and the costs and expenses
will be reimbursed to the Employee as soon as feasible after submission of written evidence of the expense, but in all cases no later than the
end of the calendar year following the calendar year in which the costs and expenses were incurred.

     8. Successors and Assigns .
      (a) This Agreement shall not be assignable by the Bank or the Holding Company, provided that this Agreement shall inure to the benefit
of and be binding upon any corporate or other successor of the Bank or the Holding Company which shall acquire, directly or indirectly, by
merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Bank or the Holding Company.

      (b) Since the Employer is contracting for the unique and personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written consent of the Employer; provided, however that nothing in this
paragraph shall preclude (i) the Employee from designating a beneficiary to receive any benefit payable hereunder upon his death, or (ii) the
executors, administrators, or other legal representatives of the Employee or his estate from assigning any rights hereunder to the person or
person entitled thereunto.

     9. Amendments . No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties,
except as herein otherwise specifically provided.

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

      11. 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.

      12. Entire Agreement . This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.

                                                                       7
      13. Interpretation . If any provision in this Agreement is capable of being interpreted in more than one manner, to the extent feasible, the
provision shall be interpreted in a manner that does not result in an excise tax under Section 409A.

     14. No Acceleration . Except as provided under the terms of this Agreement or as otherwise allowed under Section 409A, there shall be
no acceleration of any payment due to the Employee pursuant to this Agreement.

      15. Reimbursements or In-Kind Benefits . In accordance with Section 409A, the amount of expenses eligible for reimbursement, or
in-kind benefits provided, during a taxable year of the Employee shall not affect the expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other taxable year of the Employee. All reimbursements will be made on or before the last day of the year following the
year in which the expense was incurred. The right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another
benefit.

                                                                         8
     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first hereinabove written.

                                                                        FAIRMOUNT BANK

                                                                        By:
Witness                                                                                           Joseph M. Solomon
                                                                                                  President and CEO



Witness                                                                                               Employee

      IN CONSIDERATION of the Employee’s provision of valuable services for the Bank and the Employee’s past, present, or future
services for the Holding Company, IT IS AGREED by the Holding Company that it shall be jointly and severally liable for the Bank’s
obligations under this Agreement (determined without regard for Section 6 of the Agreement).

                                                                        FAIRMOUNT BANCORP, INC.

                                                                        By
                                                                                                 Joseph M. Solomon
                                                                                                 President and CEO

                                                                    9
                                 Exhibit 10.5

   FAIRMOUNT BANCORP, INC.

EMPLOYEE STOCK OWNERSHIP PLAN

  (adopted effective   , 2010)
                                                   FAIRMOUNT BANCORP, INC.

                                              EMPLOYEE STOCK OWNERSHIP PLAN

     This Fairmount Bancorp, Inc. Employee Stock Ownership Plan (the ―Plan‖) has been executed on the date set forth below, by Fairmount
Bancorp, Inc., (―Company‖), a Maryland corporation and the holding company for Fairmount Bank, a federally chartered stock savings bank.


                                                        WITNESSETH THAT:

     WHEREAS , the board of directors of the Company has resolved to adopt an employee stock ownership plan for eligible employees of
the Company and subsidiaries of the Company, if any, in accordance with the terms and conditions set forth herein;

      NOW, THEREFORE , the Company hereby adopts the following Plan setting forth the terms and conditions pertaining to contributions
by the Employer and the payment of benefits to Participants and Beneficiaries.

      IN WITNESS WHEREOF , the Company has adopted this Plan and caused this instrument to be executed by its duly authorized officer
on the date set forth below.

                                                                           FAIRMOUNT BANCORP, INC.


Date                                                                       President and Chief Executive Officer

                                                                    1
                                                        Table of Contents

                                                                            Page
Section 1.   Plan Identity                                                    1
       1.1   Name                                                             1
       1.2   Purpose                                                          1
       1.3   Effective Date                                                   1
       1.4   Fiscal Period                                                    1
       1.5   Single Plan for All Employers                                    1
       1.6   Interpretation of Provisions                                     1
Section 2.   Definitions                                                      1
Section 3.   Eligibility for Participation                                    9
       3.1   Initial Eligibility                                              9
       3.2   Definition of Eligibility Year                                   9
       3.3   Terminated Employees                                             9
       3.4   Certain Employees Ineligible                                     9
       3.5   Participation and Reparticipation                               10
       3.6   Omission of Eligible Employee                                   10
       3.7   Inclusion of Ineligible Employee                                10
       3.8   Treatment of Qualified Military Service                         10
Section 4.   Contributions and Credits                                       11
       4.1   Discretionary Contributions                                     11
       4.2   Contributions for Stock Obligations                             11
       4.3   Conditions as to Contributions                                  12
       4.4   Rollover Contributions                                          12
Section 5.   Limitations on Contributions and Allocations                    12
       5.1   Limitation on Annual Additions                                  12
       5.2   Effect of Limitations                                           14
       5.3   Limitations as to Certain Participants                          14
       5.4   Erroneous Allocations                                           15
Section 6.   Trust Fund and Its Investment                                   15
       6.1   Creation of Trust Fund                                          15
       6.2   Stock Fund and Investment Fund                                  15
       6.3   Acquisition of Stock                                            15
       6.4   Participants’ Option to Diversify                               16
       6.5   Post-Service Termination Investments                            17
Section 7.   Voting Rights and Dividends on Stock                            17
       7.1   Voting and Tendering of Stock                                   17
       7.2   Application of Dividends                                        18
Section 8.   Adjustments to Accounts                                         19

                                                                i
       8.1     ESOP Allocations                                                  19
       8.2     Charges to Accounts                                               20
       8.3     Stock Fund Account                                                20
       8.4     Investment Fund Account                                           21
       8.5     Adjustment to Value of Trust Fund                                 21
       8.6     Participant Statements                                            21
Section 9.     Vesting of Participants’ Interests                                22
       9.1     Vesting in Accounts                                               22
       9.2     Computation of Vesting Years                                      22
       9.3     Full Vesting Upon Certain Events                                  23
       9.4     Full Vesting Upon Plan Termination                                24
       9.5     Forfeiture, Repayment, and Restoral                               24
       9.6     Accounting for Forfeitures                                        25
       9.7     Vesting and Nonforfeitability                                     25
Section 10.    Payment of Benefits                                               25
       10.1    Benefits for Participants                                         25
       10.2    Time for Distribution                                             26
       10.3    Marital Status                                                    31
       10.4    Delay in Benefit Determination                                    31
       10.5    Accounting for Benefit Payments                                   31
       10.6    Options to Receive Stock                                          31
       10.7    Restrictions on Disposition of Stock                              32
       10.8    Continuing Loan Provisions; Creations of Protections and Rights   32
       10.9    Direct Rollover of Eligible Distribution                          32
       10.10   Waiver of 30-Day Period After Notice of Distribution              33
Section 11.    Rules Governing Benefit Claims and Review of Appeals              34
       11.1    Claim for Benefits                                                34
       11.2    Notification by Committee                                         34
       11.3    Claims Review Procedure                                           34
Section 12.    The Committee and its Functions                                   35
       12.1    Authority of Committee                                            35
       12.2    Identity of Committee                                             35
       12.3    Duties of Committee                                               35
       12.4    Valuation of Stock                                                36
       12.5    Compliance with ERISA                                             36
       12.6    Action by Committee                                               36
       12.7    Execution of Documents                                            36
       12.8    Adoption of Rules                                                 36
       12.9    Responsibilities to Participants                                  36
       12.10   Alternative Payees in Event of Incapacity                         36
       12.11   Indemnification by Employers                                      37
       12.12   Nonparticipation by Interested Member                             37
Section 13.    Adoption, Amendment, or Termination of the Plan                   37

                                                                 ii
       13.1    Adoption of Plan by Other Employers                                         37
       13.2    Plan Adoption Subject to Qualification                                      37
       13.3    Right to Amend or Terminate                                                 37
Section 14.    Miscellaneous Provisions                                                    38
       14.1    Plan Creates No Employment Rights                                           38
       14.2    Nonassignability of Benefits                                                38
       14.3    Nonassignability of Benefits                                                38
       14.4    Treatment of Expenses                                                       38
       14.5    Number and Gender                                                           39
       14.6    Nondiversion of Assets                                                      39
       14.7    Separability of Provisions                                                  39
       14.8    Service of Process                                                          39
       14.9    Governing State Law                                                         39
       14.10   Employer Contributions Conditioned on Deductibility                         39
       14.11   Unclaimed Accounts                                                          39
       14.12   Qualified Domestic Relations Order                                          40
       14.13   Use of Electronic Media to Provide Notices and Make Participant Elections   40
Section 15.    Top-Heavy Provisions                                                        41
       15.1    Top-Heavy Plan                                                              41
       15.2    Definitions                                                                 41
       15.3    Top-Heavy Rules of Application                                              42
       15.4    Minimum Contributions                                                       43
       15.5    Top-Heavy Provisions Control in Top-Heavy Plan                              43

                                                                  iii
                                                      FAIRMOUNT BANCORP, INC.

                                                EMPLOYEE STOCK OWNERSHIP PLAN

Section 1. Plan Identity.
     1.1 Name . The name of this Plan is ―Fairmount Bancorp, Inc. Employee Stock Ownership Plan.‖

      1.2 Purpose . The purpose of this Plan is to describe the terms and conditions under which contributions made pursuant to the Plan will
be credited and paid to Participants and Beneficiaries.

     1.3 Effective Date . The Effective Date of this Plan is                , 2010.

     1.4 Fiscal Period . This Plan shall be operated on the basis of the calendar year for the purpose of keeping the Plan’s books and records
and distributing or filing any reports or returns required by law. [Confirm – 401(k) is on calendar year but bank is on 9/30 fiscal year]

      1.5 Single Plan for All Employers . This Plan shall be treated as a single plan with respect to all participating Employers for the purpose
of crediting contributions and forfeitures and distributing benefits, determining whether there has been any termination of Service, and applying
the limitations set forth in Section 5.

       1.6 Interpretation of Provisions . The Employers intend this Plan and the Trust Agreement to be a qualified stock bonus plan under
Section 401(a) of the Code and an employee stock ownership plan within the meaning of Section 407(d)(6) of ERISA and Section 4975(e)(7)
of the Code. The Plan is intended to have its assets invested primarily in qualifying employer securities of one or more Employers within the
meaning of Section 407(d)(3) of ERISA, and to satisfy any requirement under ERISA or the Code applicable to such a plan. Accordingly, the
Plan and Trust Agreement shall be interpreted and applied in a manner consistent with this intent and shall be administered at all times and in
all respects in a nondiscriminatory manner.

Section 2. Definitions .
      The following capitalized words and phrases shall have the meanings specified when used in this Plan and in the Trust Agreement, unless
the context clearly indicates otherwise:

     “Account” means a Participant’s interest in the assets accumulated under this Plan as expressed in terms of a separate account balance
which is periodically adjust