As filed with the Securities and Exchange Commission on October 31, 2006
                                                     Registration No. 333-137294

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              AMENDMENT NO. TWO TO
                                    FORM S-1
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                               MSB Financial Corp.
           Millington Savings Bank 401(k) Savings and Profit Sharing Plan
           --------------------------------------------------------------
           (Exact names of registrants as specified in their charters)

          United States                     6035                34-1981437
----------------------------          -----------------       ----------------
(State or other jurisdiction          (Primary SIC No.)       (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                 1902 Long Hill Road, Millington, NJ 07946-0417
                                 (908) 647-4000
--------------------------------------------------------------------------------
          (Address and telephone number of principal executive offices)

           Mr. Gary T. Jolliffe, President and Chief Executive Officer
                 1902 Long Hill Road, Millington, NJ 07946-0417
                                  (908)647-4000
--------------------------------------------------------------------------------
            (Name, address and telephone number of agent for service)

                  Please send copies of all communications to:

                             Samuel J. Malizia, Esq.
                           Tiffany A. Hasselman, Esq.
                            MALIZIA SPIDI & FISCH, PC
                             901 New York Ave., N.W.
                                 Suite 210 East
                             Washington, D.C. 20001
                                 (202) 434-4660

        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. [X]

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

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




PROSPECTUS SUPPLEMENT

                             Participation Interest
                             in up to 280,148 shares
                               of common stock of
                               MSB FINANCIAL CORP.

         Millington Savings Bank 401(K) Savings and Profit Sharing Plan

         This prospectus supplement is being provided to employees of Millington
Savings Bank who are participants in the Millington  Savings Bank 401(k) Savings
and Profit  Sharing Plan  (referred  to in this  prospectus  supplement  as "the
Plan").  This supplement  relates to the election by Plan  participants to use a
portion of the funds in their Plan  accounts to invest in shares of common stock
of MSB Financial Corp.

         MSB  Financial  Corp.  is offering  for sale shares of its common stock
that will represent 45% of its outstanding  common stock upon completion of this
offering.  The remaining 55% of MSB Financial Corp.'s  outstanding  common stock
upon completion of this offering will be held by MSB Financial,  MHC, the mutual
holding company parent of MSB Financial Corp. Plan  participants  may direct the
Plan trustee to use up to 99% of their current account balances to subscribe for
and  purchase  shares  of MSB  Financial  Corp.  common  stock  through  the MSB
Financial  Corp.  Stock  Fund.  Based upon the value of the Plan's  assets as of
November 7, 2006, the trustee may purchase up to 280,148 shares of MSB Financial
Corp. common stock, assuming a purchase price of $10.00 per share.

         If you direct the trustee to invest plan funds in MSB  Financial  Corp.
common stock after the initial public offering, the trustee will purchase shares
for your account in open market transactions, and the price paid for such shares
will be the market price at the time of the purchase,  which may be more or less
than the initial public offering price of $10.00 per share.

         The prospectus dated November 13, 2006 of MSB Financial Corp., which we
have  attached to this  prospectus  supplement,  includes  detailed  information
regarding the Stock Offering, and the financial condition, results of operations
and business of Millington.  This  prospectus  supplement  provides  information
regarding  the 401(k)  Savings  and Profit  Sharing  Plan.  You should read this
prospectus  supplement  together  with the  prospectus  and keep both for future
reference.

         Please refer to "Risk Factors" beginning on page __ in the prospectus.

         Neither the  Securities and Exchange  Commission,  the Office of Thrift
Supervision,  the Federal Deposit Insurance Corporation,  nor any other state or
federal agency or any state securities  commission,  has approved or disapproved
these securities. Any representation to the contrary is a criminal offense.

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

          The date of this prospectus supplement is November 13, 2006.



         This  prospectus  supplement may be used only in connection with offers
and sales by MSB  Financial  Corp.  of interests or shares of common stock under
the Plan to employees of Millington Savings Bank. No one may use this prospectus
supplement  to reoffer or resell  interests or shares of common  stock  acquired
through the Plan.

         You should rely only on the  information  contained in this  prospectus
supplement and the attached prospectus. We have not authorized anyone to provide
you with information that is different.

         This  prospectus  supplement  does not  constitute  an offer to sell or
solicitation of an offer to buy any securities in any jurisdiction to any person
to  whom  it is  unlawful  to  make  such  an  offer  or  solicitation  in  that
jurisdiction.  Neither  the  delivery  of  this  prospectus  supplement  and the
prospectus nor any sale of common stock shall under any circumstances imply that
there has been no change in the affairs of Millington or the Plan since the date
of  this  prospectus  supplement,  or that  the  information  contained  in this
prospectus  supplement  or  incorporated  by reference is correct as of any time
after the date of this prospectus supplement.



                                TABLE OF CONTENTS



                                                                                       
THE OFFERING..................................................................................1
    Securities Offered........................................................................1
    Election to Purchase MSB Financial Corp. Common Stock in the Stock Offering...............2
    Value of Participation Interests..........................................................2
    Method of Directing Transfer..............................................................2
    Time for Directing Transfer...............................................................2
    Irrevocability of Transfer Direction......................................................2
    Purchase Price of MSB Financial Corp. Common Stock........................................3
    Direction to Purchase the Stock After the Stock Offering..................................3
    Nature of a Participant's Interest in MSB Financial Corp. Common Stock....................3
    Voting and Tender Rights of MSB Financial Corp. Common Stock..............................4

DESCRIPTION OF THE 401(k) SAVINGS AND PROFIT SHARING PLAN.....................................4
    Introduction..............................................................................4
    Eligibility and Participation.............................................................5
    Contributions Under the Plan..............................................................5
    Limitations on Contributions..............................................................5
    Investment of Contributions...............................................................7
    Benefits Under the Plan...................................................................12
    Withdrawals and Distributions From the Plan...............................................12

ADMINISTRATION OF THE 401(k) SAVINGS AND PROFIT SHARING PLAN..................................14
    Trustees..................................................................................14
    Reports to Plan Participants..............................................................14
    Plan Administrator........................................................................14
    Amendment and Termination.................................................................14
    Merger, Consolidation or Transfer.........................................................15
    Federal Income Tax Consequences...........................................................15
    Restrictions on Resale....................................................................17
    SEC Reporting and Short-Swing Profit Liability............................................17

LEGAL OPINION.................................................................................18




                                  THE OFFERING

Securities Offered

         The securities  offered in connection with this  prospectus  supplement
are  participation  interests in the Millington  Savings Bank 401(k) Savings and
Profit  Sharing Plan  (referred to here as the "Plan").  The  interests  offered
under this prospectus  supplement are conditioned on the completion of the Stock
Offering of MSB Financial  Corp.  Assuming a purchase price of $10.00 per share,
the trustee for the Plan may acquire up to 280,148 shares of MSB Financial Corp.
common stock for the MSB Financial Corp. Stock Fund. Certain subscription rights
and purchase  limitations  also govern your  investment in MSB  Financial  Corp.
Stock Fund in  connection  with the Stock  Offering.  See "Persons Who May Order
Stock In The Offering" and "Purchase  Limitations" in the prospectus attached to
this prospectus supplement for further discussion of the subscription rights and
purchase limitations.

         This prospectus supplement contains information regarding the Plan. The
attached  prospectus contains  information  regarding the Stock Offering and the
financial  condition,  results of  operations  and business of  Millington.  The
address of the principal  executive  office of  Millington  Savings Bank is 1902
Long Hill Road, Millington, New Jersey 07946. The telephone number of Millington
Savings Bank is (908) 647-3030.

Election To Purchase MSB Financial Corp. Common Stock In The Stock Offering

         In connection with the Stock Offering of MSB Financial  Corp.,  you may
direct  the  trustee  of the  Plan to  transfer  all or part of the  funds  that
represent your current beneficial interest in the assets of the Plan to purchase
MSB Financial Corp. common stock through the MSB Financial Corp. Stock Fund. The
Plan trustee will  subscribe  for MSB Financial  Corp.  common stock offered for
sale in connection with the Stock Offering in accordance with each participant's
direction. If there is not enough common stock in the Stock Offering to fill all
subscriptions, the common stock will be apportioned and the trustee for the Plan
may not be able to purchase  all of the common  stock you  requested.  In such a
case, if you elect,  the trustee will purchase shares in the open market on your
behalf,  after the Stock Offering,  to fulfill your initial request. The trustee
may make such purchases at prices higher than the initial public offering price.

         All plan participants are eligible to direct a transfer of funds to the
MSB Financial  Corp.  Stock Fund.  However,  transfer  directions are subject to
subscription rights and purchase priorities.  Your order for shares in the Stock
Offering will be filled based on your subscription  rights.  MSB Financial Corp.
has granted rights to subscribe for shares of MSB Financial  Corp.  common stock
to the following  persons in the following  order of priority:  (1) persons with
$50 or more on deposit at  Millington  Savings  Bank as of June 30, 2005 and (2)
persons with $50 or more on deposit at  Millington  Savings Bank as of September
30, 2006. If you fall into one of the above  subscription  offering  categories,
you have subscription  rights to purchase shares of common stock in the offering
and you may use funds in the Plan account to pay for your  purchase of shares of
MSB Financial Corp.  common stock.  You also will be permitted to direct ongoing
purchases of the stock

                                       1



under the plan after the initial  offering.  See  "Direction  to Purchase  Stock
After the Initial Offering."

Value Of Participation Interests

         As of  November  7, 2006,  the  market  value of the assets of the Plan
equaled  approximately  $2,801,487.  The plan  administrator  has informed  each
participant  of the value of his or her  beneficial  interest  in the Plan as of
November 7, 2006. The value of Plan assets represents past contributions made to
the Plan on your behalf,  plus or minus earnings or losses on the contributions,
less previous withdrawals and loans.

Method Of Directing Transfer

         The last two pages of this prospectus supplement contain a form for you
to direct a transfer of current  Plan assets to the MSB  Financial  Corp.  Stock
Fund (the "Investment Form"). If you wish to transfer any portion, up to 99%, in
multiples of not less than 1%, of your beneficial  interest in the assets of the
Plan to the MSB Financial  Corp.  Stock Fund, you should complete the Investment
Form. If you do not wish to make such an election at this time,  you do not need
to take any action.  The minimum  investment in MSB Financial  Corp.  Stock Fund
during the initial  public  offering is  $250.00.  There is no minimum  level of
investment  after the initial offering for investment in the MSB Financial Corp.
Stock Fund.

Time For Directing Transfer

         You must submit your direction to transfer amounts to the MSB Financial
Corp.  Stock Fund in connection  with the Stock Offering by the deadline of noon
on  __________,  2006.  You  should  return  the  Investment  Form to Mary  Jean
Piorkowski.  After the  initial  offering,  you will still be able to direct the
investment of your account under the plan for in the MSB Financial  Corp.  Stock
Fund and in other investment alternatives.

Irrevocability Of Transfer Direction

You cannot change your direction to transfer amounts credited to your account in
the Plan to the MSB Financial  Corp.  Stock Fund prior to the  completion of the
Stock  Offering.  Following  the closing of the Stock  Offering  and the initial
purchase of shares in the MSB Financial  Corp.  Stock Fund,  you may change your
investment directions, in accordance with the terms of the Plan.

Purchase Price of MSB Financial Corp. Common Stock

         The trustee will use the funds  transferred to the MSB Financial  Corp.
Stock Fund to purchase shares of MSB Financial  Corp.  common stock in the Stock
Offering.  The trustee will pay the same price for shares of MSB Financial Corp.
common stock as all other  persons who purchase  shares of MSB  Financial  Corp.
common  stock  in the  offering.  IF  THERE IS NOT  ENOUGH  COMMON  STOCK IN THE
OFFERING TO

                                       2



FILL ALL SUBSCRIPTIONS, THE COMMON STOCK WILL BE APPORTIONED AND THE TRUSTEE FOR
THE PLAN MAY NOT BE ABLE TO PURCHASE ALL OF THE COMMON STOCK YOU  REQUESTED.  IF
YOU ELECT,  THE TRUSTEE  WILL  PURCHASE  SHARES ON YOUR  BEHALF  AFTER THE STOCK
OFFERING IN THE OPEN MARKET,  TO FULFILL YOUR INITIAL  REQUEST.  THE TRUSTEE MAY
MAKE SUCH PURCHASES AT PRICES HIGHER OR LOWER THAN THE $10.00 OFFERING PRICE.

Direction To Purchase MSB Financial Corp. Common Stock After the Offering

         Following  completion of the stock  offering,  you will be permitted to
direct that a certain  percentage of your interest in the trust fund (up to 99%)
be  transferred  to the MSB  Financial  Corp.  Stock  Fund and  invested  in MSB
Financial Corp.  common stock, or to the other  investment funds available under
the  plan.  Alternatively,  you may  direct  that a certain  percentage  of your
interest in the MSB Financial Corp.  Stock Fund be transferred to the trust fund
to be invested in the other  investment  funds  available in accordance with the
terms of the plan. You can direct future  contributions  made to the plan by you
or on  your  behalf  to be  invested  in the MSB  Financial  Corp.  Stock  Fund.
Following  your initial  election,  the  allocation  of your interest in the MSB
Financial Corp. may be changed by contacting your Human Resources representative
for the appropriate form to complete and fax to (317) 285-1728.

Nature Of A Participant's Interest In MSB Financial Corp. Common Stock

         The Plan trustee  will hold MSB  Financial  Corp.  common stock in your
name on behalf of the Plan.  The  trustee  will  credit  shares of common  stock
acquired  at your  direction  to your  account  under the Plan.  Therefore,  the
investment designations of other Plan participants should not affect earnings on
your Plan account.

         Your account assets  directed for investment in the MSB Financial Corp.
Stock Fund account after the initial  offering  shall be invested by the trustee
to  purchase  shares  of  MSB  Financial  Corp.  common  stock  in  open  market
transactions.  The price paid by the  trustee  for  shares of the MSB  Financial
Corp.  common  stock in the  initial  offering,  or  otherwise,  will not exceed
"adequate  consideration" as defined in Section 3(18) of the Employee Retirement
Income Security Act of 1974, as amended, or "ERISA".

Voting And Tender Rights Of MSB Financial Corp. Common Stock

         The  trustee   generally   will  exercise   voting  and  tender  rights
attributable to all MSB Financial  Corp.  common stock held by the MSB Financial
Corp.  Stock  Fund,  as  directed  by  participants  with  interests  in the MSB
Financial  Corp.  Stock Fund. With respect to each matter as to which holders of
MSB  Financial  Corp.  common  stock have a right to vote,  you will have voting
instruction rights that reflect your proportionate interest in the MSB Financial
Corp. Stock Fund. The number of shares of MSB Financial Corp.  common stock held
in the MSB Financial Corp.  Stock Fund voted for and against each matter will be
proportionate to the number of voting instruction rights exercised.  If there is
a tender  offer for MSB  Financial  Corp.  common  stock,  the Plan  allots each
participant

                                       3



a number of tender instruction rights reflecting the participant's proportionate
interest in the MSB Financial Corp.  Stock Fund. The percentage of shares of MSB
Financial  Corp.  common stock held in the MSB Financial  Corp.  Stock Fund that
will be  tendered  will be the same as the  percentage  of the  total  number of
tender  instruction rights exercised in favor of the tender offer. The remaining
shares of MSB Financial Corp. common stock held in the MSB Financial Corp. Stock
Fund will not be tendered.  The Plan  provides that  participants  will exercise
their voting  instruction rights and tender instruction rights on a confidential
basis.

         The  Trustee  shall vote and, if  applicable,  tender the shares of MSB
Financial  Corp.  stock  allocated to the accounts of  participants  for whom no
timely instructions have been received in the same proportion as those shares of
MSB Financial Corp. stock for which instructions were timely received.

                             DESCRIPTION OF THE PLAN

Introduction

         Effective  January  1,  1997,   Millington  Savings  Bank  adopted  the
Millington  Savings Bank Plan.  Millington Savings Bank amended and restated the
plan as the  Millington  Savings  Bank Plan  effective  as of  January  1, 1997.
Millington  Savings  Bank and  amended  and  restated  the plan in its  entirety
effective  as of November 1, 2006 to allow  Employer  Securities  up to 99% of a
participant's account balance as directed by the participant.

         Millington  Savings Bank intends for the Plan to comply, in form and in
operation,  with all  applicable  provisions  of the  Internal  Revenue Code and
ERISA.  Millington  Savings  Bank may  change  the Plan from time to time in the
future to ensure continued  compliance with these laws.  Millington Savings Bank
may also  amend  the Plan from time to time in the  future  to add,  modify,  or
eliminate certain features of the plan, as it sees fit. Federal law provides you
with various  rights and  protections  as a  participant  in the Plan,  which is
governed by ERISA.  However,  the Pension Benefit Guaranty  Corporation does not
guarantee your benefits under the Plan.

         The  following  portions of this  prospectus  supplement  summarize the
material provisions of the Plan.  Millington Savings Bank qualifies this summary
in its entirety by reference to the full text of the Plan,  as amended.  You may
obtain  copies of the full Plan  document,  and any  amendments  to the plan, by
sending a request to Mary Jean Piorkowski at Millington Savings Bank. You should
carefully read the entire Plan document,  as amended,  to understand your rights
and obligations under the Plan.

Eligibility And Participation

         Salaried employees who have attained age 21 and have completed one year
of  service  may  participate  in the Plan as of the first  day of the  calendar
quarter after they have completed such requirement.

                                       4



         As of September 6, 2006, 36 of the 36 employees of  Millington  Savings
Bank participated in the Plan.

Contributions Under The Plan

         Employee Before-Tax Contributions.  Subject to certain IRS limitations,
the Plan permits each  participant to make before-tax  contributions to the Plan
each  payroll  period  of  between  1%  and  80% of  the  participant's  salary.
Participants  may change their rate of before-tax  contributions by submitting a
form prior to each calendar quarter.

         Matching Contributions.  The Plan provides that Millington Savings Bank
will make matching  contributions on behalf of each participant  equal to 50% of
the  participant's  compensation,  up to a  maximum  of  6.0%  of  compensation.
Millington Savings Bank makes matching contributions only for those participants
who make  before-tax  contributions  to the Plan. If a participant  stops making
before-tax  contributions  to the Plan,  Millington  Savings Bank will cease its
matching contributions on the participant's behalf.

         Rollover  Contributions.  Millington  Savings Bank allows employees who
receive a distribution from a previous employer's tax-qualified employee benefit
plan to deposit that distribution into a Rollover Contribution account under the
Plan, provided the rollover contribution satisfies IRS requirements.

Limitations On Contributions

         Limitation On Employee Salary Deferrals.  Although the Plan permits you
to defer up to 80% of your  compensation,  by law your total deferrals under the
Plan,  together with similar plans,  may not exceed $15,000 for 2006.  Employees
who are age 50 and over may also make  additional,  "catch-up"  contributions to
the plan,  up to a maximum  of $5,000 for 2006.  The  Internal  Revenue  Service
periodically  increases  these  limitations.  A  participant  who exceeds  these
limitations must include any excess deferrals in gross income for federal income
tax purposes in the year of  deferral.  In addition,  the  participant  must pay
federal income taxes on any excess deferrals when distributed by the Plan to the
participant,  unless the plan  distributes the excess  deferrals and any related
income no later than the first  April 15th  following  the close of the  taxable
year in which the participant  made the excess  deferrals.  Any income on excess
deferrals  distributed  before  such date is  treated,  for  federal  income tax
purposes,  as earned and received by the  participant in the taxable year of the
distribution.

         Limitation  On  Annual  Additions  And  Benefits.  As  required  by the
Internal  Revenue Code, the Plan provides that the total amount of contributions
and forfeitures  (annual  additions)  credited to a participant  during any year
under all defined  contribution  plans of Millington Savings Bank (including the
Millington Savings Bank Employee Stock Ownership Plan) may not exceed the lesser
of 100% of the participant's annual compensation or $44,000 for 2006.

         Limitation  On Plan  Contributions  For Highly  Compensated  Employees.
Special  provisions of the Internal  Revenue Code limit the amount of before-tax
and matching

                                       5



contributions  that  may be made to the  Plan in any year on  behalf  of  highly
compensated  employees,  in relation to the amount of  before-tax  and  matching
contributions  made  by  or  on  behalf  of  all  other  employees  eligible  to
participate in the Plan. If before-tax and matching  contributions  exceed these
limitations, the plan must adjust the contribution levels for highly compensated
employees.

         In general, a highly compensated employee includes any employee who (1)
was a five percent owner of the sponsoring  employer at any time during the year
or the preceding year, or (2) had  compensation for the preceding year in excess
of $100,000  and, if the  sponsoring  employer so elects,  was in the top 20% of
employees by compensation for such year. The preceding dollar amount applies for
2006, and may be adjusted periodically by the IRS.

         Top-Heavy  Plan  Requirements.  If the Plan is a Top-Heavy Plan for any
calendar year,  Millington  Savings Bank may be required to make certain minimum
contributions to the Plan on behalf of non-key employees.  In general,  the Plan
will be treated as a "Top-Heavy  Plan" for any calendar  year if, as of the last
day of the preceding calendar year, the aggregate balance of the accounts of Key
Employees  exceeds 60% of the aggregate balance of the accounts of all employees
under the plan. A Key Employee is generally any employee who, at any time during
the calendar year or any of the four preceding years, is:

(1)  an officer of  Millington  Savings Bank whose annual  compensation  exceeds
     $140,000;

(2)  a 5% owner of the  employer,  meaning an employee  who owns more than 5% of
     the  outstanding  stock of MSB  Financial  Corp.,  or who owns  stock  that
     possesses more than 5% of the total  combined  voting power of all stock of
     MSB Financial Corp.; or

(3)  a 1% owner of the  employer,  meaning an employee  who owns more than 1% of
     the  outstanding  stock of MSB  Financial  Corp.,  or who owns  stock  that
     possesses more than 1% of the total  combined  voting power of all stock of
     MSB Financial Corp., AND whose annual compensation exceeds $150,000.

The foregoing dollar amounts are for 2006.

                           INVESTMENT OF CONTRIBUTIONS

         A trust holds all amounts credited to participants'  accounts under the
Plan.  Through a group annuity  contract  issued to the Trust by American United
Life Insurance Company, the Plan offers the following investment options:

Russell  Lifepoints  Conservative  Strategy  Fund seeks  high  levels of current
income and, secondarily,  capital appreciation. The fund is a fund of funds that
invests  in other  Russell  funds.  It  pursues  its  investment  objectives  by
investing  in  these  underlying   Russell  funds.   Diversified   Equity  Fund,
Quantitative Equity Fund,  International Securities Fund, Real Estate Securities
Fund, Short-term Bond Fund and Emerging

                                       6



Markets Fund.

Russell Lifepoints  Moderate Strategy Fund seeks long-term capital  appreciation
and high levels of current  income.  The fund is a fund of funds that invests in
other Russell funds. It pursues its investment  objectives by investing in these
underlying  Russell funds:  Diversified Equity Fund,  Quantitative  Equity Fund,
International  Securities  Fund,  Short-term Bond Fund,  Real Estate  Securities
Fund, and Emerging Markets Fund.

Russell  Lifepoints  Balanced  Strategy  Fund seeks  moderate  levels of current
income  and  long-term  capital  appreciation.  The fund is a fund of funds that
invests  in other  Russell  funds.  It  pursues  its  investment  objectives  by
investing in these underlying  Russell funds:  Diversified  Equity Fund, Special
Growth  Fund,   Quantitative   Equity  Fund,   International   Securities  Fund,
Diversified Bond Fund, MultiStrategy Bond Fund, Real Estate Securities Fund, and
the Emerging Markets Fund.

Russell  LifePoints Growth Strategy Fund seeks long-term  capital  appreciation.
The fund is a fund of funds that invests in other Russell funds.  It pursues its
investment   objectives  by  investing  in  these   underlying   Russell  funds:
Diversified  Equity  Fund,  Special  Growth  Fund,   Quantitative  Equity  Fund,
International  Securities  Fund, Real Estate  Securities  Fund, and the Emerging
Markets Funds.

Russell   Lifepoints   Equity  Growth  Strategy  Fund  seeks  long-term  capital
appreciation.  The fund is a fund of funds that invests in other Russell  funds.
It pursues its  investment  objectives by investing in these  underlying  funds:
Russell Diversified Equity fund, Special Growth Fund,  Quantitative Equity Fund,
International  Securities  Fund, Real Estate  Securities  Fund, and the Emerging
Markets Fund.

AmCent  Inflation  Adjusted  Bond Fund seeks  total  return.  The fund  normally
invests 80% of assets in  inflation-adjusted  securities  that are backed by the
full  faith and  credit of the U.S.  government.  These  issues  are  indexed or
otherwise  structured  by  the  U.S.  Treasury  to  provide  protection  against
inflation.  It may  invest  up to 20% of  assets  in  securities  that  are  not
inflation-adjusted   and  are   issued   by   U.S.   government   agencies   and
government-sponsored  organizations.  The fund maintains no maturity or duration
restrictions.

PIMCO High Yield Fund seeks to achieve its  investment  objective  by  investing
under normal circumstances,  a majority of its assets in a diversified portfolio
of high yield  securities  rated below  investment grade but rated at least B by
Moody's or S&P, or, if unrated, determined by PIMCO to be of comparable quality.
The  remainder of the Fund's  assets may be invested in  investment  grade fixed
income instruments.  The average portfolio duration of this Fund normally varies
within a two- to six-year  time frame  based on PIMCO's  forecast  for  interest
rates.  The  Fund  may  invest  a  portion  of its  assets  in  euro-denominated
securities of foreign issuers.

Allianz OpCap Value Fund seeks to achieve its  investment  objective by normally
investing a majority  of its assets in common  stocks of  companies  with market
capitalizations  of  more  than  $5  million  at  the  time  of  investment  and
below-average valuations whose business fundamentals are expected to improve. To
achieve income,

                                       7



the  Fund   invests  a  portion  of  its  assets  in   income-producing   (e.g.,
dividend-paying) common stocks.

Neuberger Berman Partners Fund seeks growth of capital. To pursue this goal, the
Fund invests mainly in common stocks of mid- to large capitalization  companies.
The  fund  seeks  to  reduce  risk by  diversifying  among  many  companies  and
industries.  The manager looks for well-managed companies whose stock prices are
undervalued.

SSgA S&P 500 Flagship Fund  purchases  each security in the same  capitalization
weight as it appears in the S&P 500 Index.  Replication results in low turnover,
accurate tracking and low costs.  SSgA's approach is to buy and hold securities,
trading only when there is a change to the  composition  of the S&P 500 Index or
when cash flow  activity  occurs.  To provide  100% equity  exposure,  this Fund
maintains a small (generally less than 5%) position in unleveraged S&P 500 stock
index futures contracts. Futures enable better tracking of S&P 500 Index returns
and allow for greater liquidity.

T.  Rowe  Price  Growth  Stock  Fund  invests  primarily  in  common  stocks  of
well-established growth companies.  The fund manager focuses on companies having
one or more of the following characteristics: 1) Superior growth in earnings and
cash flow,  2)  Ability  to  sustain  earnings  momentum  even  during  economic
slowdowns  and/or  3) Occupy a  lucrative  niche in the  economy  and is able to
expand even during times of slow economic growth.

Lord Abbett Mid-Cap Value Fund seeks capital  appreciation  through investments,
primarily in equity securities,  which the Advisor believes to be undervalued in
the marketplace.  To pursue this goal, the Fund normally invests at least 80% of
its net assets,  plus the amount of any borrowings for investment  purposes,  in
equity securities of mid-sized companies,  those with a market capitalization of
roughly $500 million to $10 billion, at the time of purchase.  Equity securities
in  which  the  Fund  may  invest  include  common  stocks,  convertible  bonds,
convertible  preferred stocks,  warrants and similar  instruments.  In selecting
investments,  the Fund,  using a value  approach,  tries to  identify  stocks of
companies that have the potential for significant  market  appreciation,  due to
growing  recognition of improvement in their  financial  results,  or increasing
anticipation of such improvement.

Dreyfus Premier Structured Midcap Fund seeks long-term capital growth. To pursue
this goal, the fund normally invests at least 80% of its assets in the stocks of
companies  included in the S&P 400 Midcap  Index or the Russell  Midcap Index at
the time of purchase.  The Fund's stock  investments  may include common stocks,
preferred  stocks  and  convertible  securities  of U.S.  and  foreign  issuers,
including those purchased in initial public offerings.

SSgA S&P  MidCap  400 Index  Strategy  Fund  uses a  replication  process.  Each
security is purchased for the Strategy in the same  capitalization  weight as it
appears  in the S&P  MidCap 400  Index.  Replication  results  in low  turnover,
accurate  tracking and low costs.  The  approach is to buy and hold  securities,
trading  only  when  there is a change to the  composition  of the Index or when
there is a change to the  composition  of the  Index or when cash flow  activity
occurs in the Strategy. To provide 100% equity exposure,  the

                                       8



Strategy  maintains a small (generally less than 5%) position in unleveraged S&P
MidCap 400 stock index futures contracts.

AmCent Vista Fund seeks long-term capital growth.  The fund invests primarily in
companies  that  management  believes  will  increase  in value over time.  This
strategy  looks for companies  with earnings and revenues that are growing at an
accelerating  pace. It normally  invests in companies that are  medium-sized and
smaller at the time of purchase, although it may purchase companies of any size.
The fund typically  invests in common stocks.  It may also purchase domestic and
foreign  preferred  stocks,  non-leveraged  stock index  futures  contracts  and
options, notes, bonds and debt securities.  It will generally limit the purchase
of debt securities to investment-grade obligations,  except for convertible debt
securities, which may be rated below investment grade.

Dreyfus  Premier Small Cap Value Fund seeks  investment  returns  (consisting of
capital  appreciation and income) that are consistently  superior to the Russell
2000 Value Index. To pursue its goal, the Fund normally  invests at least 80% of
its assets in stocks of small U.S.  companies.  The adviser  uses a  disciplined
process that combines computer  modeling  techniques,  fundamental  analysis and
risk  management  to select  undervalued  stocks for the Fund.  The portfolio is
constructed so that its sector weightings and risk  characteristics  and similar
to those of the Russell 2000 Value.

Lord Abbett  Small-Cap Blend Fund seeks long term growth of capital by investing
primarily in stocks of small  companies.  The Fund normally invests at least 80%
of its net assets, plus the amount of any borrowings for investment purposes, in
equity  securities of small  companies.  A small company is defined as a company
having a market capitalization at the time purchase that falls within the market
capitalization  range of  companies  in the Russell  2000  Index,  a widely used
benchmark for a small-cap stock performance.

SSgA  Russell  2000  Index  Strategy  Fund  employs a  replication  approach  to
construct a fund whose  returns  closely  track those of the Russell 2000 Index.
Replication  results in low  turnover,  accurate  tracking  and low  costs.  The
strategy  employed is to buy and hold  securities,  trading only when there is a
change to the  composition of the Index or when cash flow activity occurs in the
Strategy.  To provide 100% exposure to the equity  market and increase  tracking
accuracy,  the Strategy may hold Russell 2000 Index futures contracts in lieu of
cash (no more than 5% of the holdings are futures).

Fidelity Advisor Small Cap Fund normally invests primarily in common stocks. The
Fund normally  invests at least 80% of assets in  securities  of companies  with
small  market  capitalizations  (those  with market  capitalizations  similar to
companies  in the  Russell  2000  Index or the  Standard & Poor's  SmallCap  600
Index). The Fund invests in either "growth stocks or "value" Stocks or both. The
Fund invests in domestic and foreign issuers.

SSgA MSCI EAFE  Index  Strategy  Fund  consists  of  almost  1,000  stocks in 21
countries outside of North and South America,  and represents  approximately 85%
of the total market capitalization in those countries.  The SSgA Daily MSCI EAFE
Index Strategy Fund invests in three country/regional funds, which together make
up the MSCI

                                       9



EAE Index. Those funds include Europe,  Japan, and Pacific Basin ex-Japan.  This
approach  allows  investors  to gain  daily  exposure  to EAFE as a whole or any
combination of the three component parts.

Templeton  Growth Fund,  under normal market  conditions,  invests mainly in the
equity securities of companies located anywhere in the world, including emerging
markets.  In addition to the fund's main  investments,  depending  upon  current
market  conditions,  the Fund may  invest up to 25% of its total  assets in debt
securities,  and the fund  may use  various  derivative  strategies  seeking  to
protect its assets.

American  Century Real Estate  management  team invests in common stocks of real
estate investment trusts (REITs), which own income-producing  properties such as
offices, industrial properties, shopping centers regional malls, outlet centers,
apartments,  manufactured homes, lodging/resorts,  self storage, and diversified
properties.

AUL Fixed Interest Account is an interest-earning  investment option,  backed by
AUL's general account  assets.  AUL guarantees that interest will be credited at
the higher of the rate guaranteed in the group annuity  contract and the current
rate  declared  by it.  AUL may  change  the  initial  interest  rate for future
contributions.  New contributions are guaranteed to earn the applicable  initial
interest  rate for at least a one-year  time period from the date  contributions
are made. Changes in the initial interest rate or in the interest rate for prior
contributions will also be effective for at least one year. In no event will the
interest rate ever be below the rate  guaranteed in the group annuity  contract.
AUL bears the investment risk for the AUL Fixed Interest  Account values and for
paying interest.

                                       10



         The annual percentage return (net of fees) for the prior three years on
the funds offered as investment choices under the Plan was:



------------------------------------------------------------------------------------------
                                                   2005           2004            2003
------------------------------------------------------------------------------------------
                                                                   
Russell Lifepoints Conservative                    2.33           3.93             N/A
------------------------------------------------------------------------------------------
Russell Lifepoints Moderate                        4.03           7.12             N/A
------------------------------------------------------------------------------------------
Russell Lifepoints Balanced                        6.32          10.94             N/A
------------------------------------------------------------------------------------------
Russell Lifepoints Growth Strategy                 7.85          13.32             N/A
------------------------------------------------------------------------------------------
Russell Lifepoints Equity Growth Strategy          9.53          15.70             N/A
------------------------------------------------------------------------------------------
AmCent Inflation Adjusted Bond                     1.86           7.41             N/A
------------------------------------------------------------------------------------------
PIMCO High Yield                                   1.97           8.57           22.74
------------------------------------------------------------------------------------------
Allianz OpCap Value                                2.27          16.69           43.36
------------------------------------------------------------------------------------------
Neuberger Berman Partners                         17.33          18.39             N/A
------------------------------------------------------------------------------------------
SSgA S&P 500Flagship                               4.07           9.99           27.65
------------------------------------------------------------------------------------------
T. Rowe Price Growth Stock                         5.81           9.47           29.37
------------------------------------------------------------------------------------------
Lord Abbett Mid-Cap Value                          7.82          23.69             N/A
------------------------------------------------------------------------------------------
Dreyfus Premier Structured Midcap                  9.55          18.84             N/A
------------------------------------------------------------------------------------------
SSgA S&P MidCap 400 Index Strategy                11.70          15.36           33.54
------------------------------------------------------------------------------------------
AmCent Vista                                       8.36          15.25             N/A
------------------------------------------------------------------------------------------
Dreyfus Premier Small Cap Value                    2.55          24.80             N/A
------------------------------------------------------------------------------------------
Lord Abbett Small-Cap Blend                       12.61          20.36             N/A
------------------------------------------------------------------------------------------
SSgA Russell 2000 Index Strategy                   3.99          17.28           44.07
------------------------------------------------------------------------------------------
Fidelity Advisor Small Cap                         7.00          23.24           37.75
------------------------------------------------------------------------------------------
SSgA MSCI EAFE Index Strategy                     12.64          19.18           34.25
------------------------------------------------------------------------------------------
Templeton Growth                                   7.69          16.47           32.30
------------------------------------------------------------------------------------------
AmCent Real Estate                                15.47          34.93           38.40
------------------------------------------------------------------------------------------
AUL Fixed Interest Account                         3.30           3.30            4.05
------------------------------------------------------------------------------------------


         The Plan now offers the MSB Financial Corp. Stock Fund as an additional
choice to the investment  alternatives  described above. The MSB Financial Corp.
Stock  Fund  invests  primarily  in the  common  stock  of MSB  Financial  Corp.
Participants in the Plan may direct the trustee to invest any portion, up to 99%
of their Plan account balances in the MSB Financial Corp. Stock Fund.

         The MSB  Financial  Corp.  Stock Fund  consists of  investments  in the
common stock of MSB  Financial  Corp.  made on the  effective  date of the Stock
Offering. Each Participant's  proportionate undivided beneficial interest in the
MSB  Financial  Corp.  Stock Fund is measured by units.  The daily unit value is
calculated by  determining  the market value of the common stock held and adding
to that any cash held by the  trustee.  This total will be divided by the number
of units  outstanding  to determine  the unit value of the MSB  Financial  Corp.
Stock Fund.

         Upon payment of a cash  dividend,  the trustee will  determine the unit
value prior to  distributing  the dividend.  The trustee may use the dividend to
purchase  shares of MSB Financial Corp.  Common Stock.  The Trustee will, to the
extent  practicable,  use amounts held in the MSB Financial Corp.  Stock Fund to
purchase  shares of the common  stock.  Pending  investment in the common stock,
assets  held in the MSB  Financial  Corp.  Stock  Fund  will be  placed  in bank
deposits and other short-term investments.

                                       11



         As of  the  date  of  this  prospectus  supplement,  no  shares  of MSB
Financial Corp.  common stock have been issued or are outstanding,  and there is
no established market for MSB Financial Corp. common stock.  Accordingly,  there
is no record of the  historical  performance  of the MSB Financial  Corp.  Stock
Fund.  Performance of the MSB Financial Corp.  Stock Fund depends on a number of
factors,  including the financial  condition and profitability of Millington and
general stock market conditions.

         Once you have  submitted  your  Investment  Form,  you may not make any
transfers  until after the  completion  of the Stock  Offering.  After the Stock
Offering,  the  allocation  of your  interest in the Employer  Stock Fund may be
changed by contacting  your Human Resources  representative  for the appropriate
form to complete and fax to (317) 285-1728.

Benefits Under The Plan

         Vesting.  All  participants  are  100%  vested  in  their  contribution
accounts  under the Plan and in any  income  earned on their  investments.  This
means that participants have a non-forfeitable  right to their contributions and
any  earnings  on  those  amounts  at  all  times.  You  vest  in  our  matching
contributions according to the following schedule:

                                Vesting Schedule
                                ----------------
Period of Service                                                      Percent
Recognized for vesting purposes:                                       vested:
--------------------------------                                       -------

Less than 2 years                                                          0%
2 year but less than 3                                                    20%
3 years but less than 4                                                   40%
4 years but less than 5                                                   60%
5 years but less than 6                                                   80%
                                                                         ---
6 years or more                                                          100%
                                                                         ===


                   WITHDRAWALS AND DISTRIBUTIONS FROM THE PLAN

         Withdrawals   Before   Termination  Of  Employment.   You  may  receive
in-service  distributions from the Plan under limited  circumstances in the form
of non-hardship withdrawals after age 65 and hardship withdrawals and loans.

         Participants  age 65 or over  may  withdraw  the  net  value  of  their
accounts.

         In  order to  qualify  for a  hardship  withdrawal,  you  must  have an
immediate  and  substantial  need to meet  certain  expenses  and  have no other
reasonably  available resources to meet the financial need. If you qualify for a
hardship  distribution,  the trustee will make the distribution  proportionately
from the investment funds in which you have invested your account balances.

                                       12



         Distribution  Upon  Retirement  Or  Disability.  The  standard  form of
benefit upon  retirement or disability  is a lump sum payment.  However,  if the
value of a participant's accounts under the Plan exceeds $5,000, the participant
may elect to defer the lump sum payment until after retirement. However, the IRS
requires that participants  receive at least a portion of their plan accounts by
the April 1st of the calendar  year  following  the calendar  year in which they
retire (or terminate  service due to a disability) or the calendar year in which
they  reach  age 70 1/2.  Participants  may also  choose  to roll  over all or a
portion of their plan accounts to an Individual  Retirement Account (IRA), or to
another employer's qualified plan, if the other employer's plan permits rollover
contributions.  If your Plan accounts  total $1,000 or less,  you will receive a
lump sum payment as soon as administratively  possible after your termination of
employment.  For  amounts  over  $1,000 and up to $5,000,  if you fail to either
receive the  distribution  directly  or have it rolled over to an IRA,  then the
distribution  will  be  paid  in a  direct  rollover  to an IRA  established  by
Millington Savings Bank.

         Distribution  Upon Death. A participant's  designated  beneficiary will
receive  the full  value of a  participant's  accounts  under  the Plan upon the
participant's  death. If the participant did not make a valid election regarding
the form of payment  prior to death,  the  beneficiary  will  receive a lump sum
payment as soon as  administratively  possible.  If the participant made a valid
payment  election,  or was  otherwise  scheduled to receive a deferred  lump sum
payment,  the beneficiary will generally  receive a lump sum payment on the date
elected by the participant. Under certain circumstances, however, payment may be
made on an earlier date.

         Distribution  Upon  Termination  For Any  Other  Reason.  If your  Plan
accounts  total  $1,000 or less,  you will receive a lump sum payment as soon as
administratively  possible after your termination of employment. If the value of
your Plan accounts  exceeds $5,000,  you will receive a lump sum payment on your
normal retirement date. However,  after completion of the proper paperwork,  you
may  elect to  receive  the value of your  vested  Plan  accounts  in a lump sum
payment  prior to your normal  retirement  date.  You may also  request that the
trustee  transfer the value of your accounts to an IRA or to another  employer's
qualified plan, if the other employer's plan permits rollover contributions. For
amounts  over  $1,000  and up to  $5,000,  if you  fail to  either  receive  the
distribution  directly or have it rolled over to an IRA,  then the  distribution
will be paid in a direct  rollover to an IRA  established by Millington  Savings
Bank.

         Nonalienation  Of Benefits.  Except with respect to federal  income tax
withholding,  and as provided for under a qualified  domestic  relations  order,
benefits  payable  under  the  Plan  will  not  be  subject  in  any  manner  to
anticipation,  alienation,  sale,  transfer,  assignment,  pledge,  encumbrance,
charge,  garnishment,  execution,  or  levy of any  kind,  either  voluntary  or
involuntary,  and any attempt to anticipate,  alienate, sell, transfer,  assign,
pledge, encumber,  charge or otherwise dispose of any rights to benefits payable
under the Plan will be void.

APPLICABLE FEDERAL TAX LAW REQUIRES THE PLAN TO IMPOSE SUBSTANTIAL  RESTRICTIONS
ON YOUR RIGHT TO WITHDRAW AMOUNTS HELD UNDER THE PLAN BEFORE YOUR TERMINATION OF
EMPLOYMENT

                                       13



WITH  MILLINGTON  SAVINGS  BANK.  FEDERAL  LAW MAY ALSO  IMPOSE AN EXCISE TAX ON
WITHDRAWALS  FROM THE PLAN BEFORE YOU ATTAIN 59 1/2 YEARS OF AGE,  REGARDLESS OF
WHETHER THE WITHDRAWAL  OCCURS DURING YOUR EMPLOYMENT  WITH  MILLINGTON  SAVINGS
BANK OR AFTER TERMINATION OF EMPLOYMENT.

                           ADMINISTRATION OF THE PLAN

Trustee

         The trustee of the Plan is the named fiduciary of the Plan for purposes
of ERISA. The board of directors of Millington Savings Bank appoints the trustee
to serve at its pleasure. The board of directors has appointed Gary T. Jolliffe,
Albert N. Olsen and Fred Rossi as trustee of the Plan.

         The trustee  receives,  holds and invests the contributions to the Plan
in trust and distributes  them to participants  and  beneficiaries in accordance
with the terms of the Plan and the  directions  of the plan  administrator.  The
trustee is responsible for the investment of the trust assets.

Reports To Plan Participants

         The plan administrator furnishes participants quarterly statements that
show the balance in their accounts as of the statement date,  contributions made
to their accounts during that period and any additional  adjustments required to
reflect earnings or losses.

Plan Administrator

         Millington  Savings Bank currently acts as plan  administrator  for the
Plan. The plan  administrator  handles the following  administrative  functions:
interpreting  the  provisions  of the plan,  prescribing  procedures  for filing
applications for benefits, preparing and distributing information explaining the
plan,  maintaining  plan records,  books of account and all other data necessary
for the proper  administration of the plan, preparing and filing all returns and
reports  required  by the U.S.  Department  of Labor and the IRS and  making all
required disclosures to participants, beneficiaries and others under ERISA.

Amendment And Termination

         Millington  Savings  Bank  expects to continue  the Plan  indefinitely.
Nevertheless,  Millington  Savings Bank may  terminate  the Plan at any time. If
Millington  Savings Bank  terminates  the Plan in whole or in part, all affected
participants  become  fully  vested  in  their  accounts,  regardless  of  other
provisions of the Plan. Millington Savings Bank reserves the right to make, from
time to time,  changes  which do not cause any part of the trust to be used for,
or diverted to, any purpose other than the exclusive  benefit of participants or
their  beneficiaries.  Millington Savings Bank may amend the plan,  however,  as
necessary or  desirable,  in order to comply with ERISA or the Internal

                                       14



Revenue Code.

Merger, Consolidation Or Transfer

         If the Plan merges or  consolidates  with another plan or transfers the
trust  assets  to  another  plan,  and  either  the  Plan or the  other  plan is
subsequently   terminated,   the  Plan  requires  that  you  receive  a  benefit
immediately  after the merger,  consolidation  or  transfer  that would equal or
exceed the benefit you would have been  entitled to receive  immediately  before
the merger, consolidation or transfer, if the Plan had terminated at that time.

Federal Income Tax Consequences

         The following  summarizes only briefly the material  federal income tax
aspects  of the Plan.  You should  not rely on this  summary  as a  complete  or
definitive  description of the material  federal income tax  consequences of the
Plan.  Statutory  provisions  change,  as do their  interpretations,  and  their
application may vary in individual circumstances.  Finally, applicable state and
local  income tax laws may have  different  tax  consequences  than the  federal
income  tax  laws.  YOU  SHOULD  CONSULT  A TAX  ADVISOR  WITH  RESPECT  TO  ANY
TRANSACTION INVOLVING THE PLAN, INCLUDING ANY DISTRIBUTION FROM THE PLAN.

         As a "tax-qualified retirement plan," the Internal Revenue Code affords
the Plan certain tax advantages, including the following:

(1)  The sponsoring  employer may take an immediate tax deduction for the amount
     contributed to the plan each year;

(2)  participants  pay no  current  income  tax on  amounts  contributed  by the
     employer on their behalf; and

(3)  earnings of the plan are  tax-deferred,  thereby  permitting  the  tax-free
     accumulation of income and gains on investments.

         Millington  Savings  Bank  administers  the  Plan to  comply  with  the
  requirements of the Internal Revenue Code as of the applicable  effective date
  of any change in the law. If Millington Savings Bank should receive an adverse
  determination  letter from the IRS regarding the Plan's tax exempt status, all
  participants would generally  recognize income equal to their vested interests
  in the Plan,  the  participants  would not be  permitted  to transfer  amounts
  distributed from the Plan to an IRA or to another  qualified  retirement plan,
  and Millington  Savings Bank would be denied  certain tax deductions  taken in
  connection with the Plan.

Lump Sum  Distribution.  A  distribution  from the Plan to a participant  or the
beneficiary of a participant  qualifies as a lump sum distribution if it is made
within one taxable year, on account of the  participant's  death,  disability or
separation  from  service,  or after the  participant  attains  age 59 1/2;  and
consists of the  balance  credited  to the  participant  under

                                       15



this plan and all other profit sharing plans,  if any,  maintained by Millington
Savings  Bank.  The  portion of any lump sum  distribution  included  in taxable
income for federal income tax purposes consists of the entire amount of the lump
sum distribution,  less the amount of after-tax  contributions,  if any, made to
any other  profit-sharing  plans  maintained by Millington  Savings Bank, if the
distribution includes those amounts.

MSB Financial Corp.  Common Stock Included In Lump Sum  Distribution.  If a lump
sum  distribution  includes MSB Financial Corp.  common stock,  the distribution
generally is taxed in the manner  described  above.  The total taxable amount is
reduced,  however,  by the  amount  of any net  unrealized  appreciation  on MSB
Financial Corp.  common stock; that is, the excess of the value of MSB Financial
Corp.  common stock at the time of the distribution over the cost or other basis
of the  securities  to the trust.  The tax basis of MSB Financial  Corp.  common
stock, for purposes of computing gain or loss on a subsequent  sale,  equals the
value of MSB Financial Corp. common stock at the time of distribution,  less the
amount of net unrealized  appreciation.  Any gain on a subsequent  sale or other
taxable  disposition of MSB Financial  Corp.  common stock, to the extent of the
net unrealized  appreciation at the time of distribution,  is long-term  capital
gain,  regardless of how long you hold the MSB Financial Corp.  common stock, or
the "holding period." Any gain on a subsequent sale or other taxable disposition
of MSB Financial  Corp.  common stock that exceeds the amount of net  unrealized
appreciation upon distribution is considered long-term capital gain,  regardless
of  the  holding  period.  Any  gain  on a  subsequent  sale  or  other  taxable
disposition of MSB Financial  Corp.  common stock that exceeds the amount of net
unrealized  appreciation  at the  time  of  distribution  is  considered  either
short-term or long-term  capital gain,  depending upon the length of the holding
period.  The recipient of a distribution  may elect to include the amount of any
net unrealized appreciation in the total taxable amount of the distribution,  to
the extent allowed under IRS regulations.

WE HAVE PROVIDED YOU WITH A BRIEF DESCRIPTION OF THE MATERIAL FEDERAL INCOME TAX
ASPECTS OF THE PLAN THAT ARE  GENERALLY  APPLICABLE  UNDER THE INTERNAL  REVENUE
CODE.  WE DO  NOT  INTEND  THIS  DESCRIPTION  TO  BE A  COMPLETE  OR  DEFINITIVE
DESCRIPTION  OF THE  FEDERAL  INCOME TAX  CONSEQUENCES  OF  PARTICIPATING  IN OR
RECEIVING  DISTRIBUTIONS  FROM THE PLAN.  ACCORDINGLY,  YOU SHOULD CONSULT A TAX
ADVISOR   CONCERNING  THE  FEDERAL,   STATE  AND  LOCAL  TAX   CONSEQUENCES   OF
PARTICIPATING IN AND RECEIVING DISTRIBUTIONS FROM THE PLAN.

                                       16



Restrictions On Resale

         Any "affiliate" of MSB Financial  Corp.  under Rules 144 and 405 of the
Securities Act of 1933, as amended,  who receives a distribution of common stock
under the Plan,  may reoffer or resell  such  shares  only under a  registration
statement  filed under the  Securities  Act of 1933,  as amended,  assuming  the
availability  of a  registration  statement,  or under  Rule  144 or some  other
exemption from these registration requirements.  An "affiliate" of MSB Financial
Corp. is someone who directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, MSB Financial Corp.
Generally,  a director,  principal officer or major shareholder of a corporation
is deemed to be an "affiliate" of that corporation.

         Any person who may be an "affiliate" of MSB Financial Corp. may wish to
consult with counsel before transferring any common stock they own. In addition,
participants  should consult with counsel regarding the applicability to them of
Section  16 of the  Securities  Exchange  Act of 1934,  as  amended,  which  may
restrict the sale of MSB Financial Corp. common stock acquired under the Plan or
other sales of MSB Financial Corp. common stock.

         Persons who are NOT deemed to be "affiliates" of MSB Financial Corp. at
the time of resale may resell  freely any shares of MSB Financial  Corp.  common
stock distributed to them under the Plan, either publicly or privately,  without
regard  to  the  registration  and  prospectus  delivery   requirements  of  the
Securities  Act of 1933, as amended,  or compliance  with the  restrictions  and
conditions  contained in the  exemptions  available  under federal law. A person
deemed an  "affiliate" of MSB Financial  Corp. at the time of a proposed  resale
may  publicly  resell  common  stock only  under a  "reoffer"  prospectus  or in
accordance  with the  restrictions  and conditions  contained in Rule 144 of the
Securities Act of 1933, as amended,  or some other exemption from  registration,
and may not use this prospectus in connection with any such resale.  In general,
Rule 144  restricts  the amount of common stock which an affiliate  may publicly
resell in any three-month  period to the greater of one percent of MSB Financial
Corp.  common  stock then  outstanding  or the  average  weekly  trading  volume
reported on the Nasdaq Stock Market  during the four  calendar  weeks before the
sale.  Affiliates may sell only through brokers without solicitation and only at
a time when MSB Financial Corp. is current in filing all required  reports under
the Securities Exchange Act of 1934, as amended.

SEC Reporting And Short-Swing Profit Liability

         Section 16 of the Securities Exchange Act of 1934, as amended,  imposes
reporting  and  liability  requirements  on officers,  directors and persons who
beneficially own more than ten percent of public companies such as MSB Financial
Corp. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the filing of reports of  beneficial  ownership.  Within ten days of  becoming a
person  required to file reports  under Section  16(a),  such person must file a
Form 3 reporting initial  beneficial  ownership with the Securities and Exchange
Commission.  Such  persons  must also  report  periodically  certain  changes in
beneficial  ownership involving the allocation or reallocation of assets held in
their Plan accounts, either on a Form 4 within two days after

                                       17



a  transaction,  or  annually  on a Form 5 within  45 days  after the close of a
company's fiscal year.

         In addition to the  reporting  requirements  described  above,  Section
16(b) of the  Securities  Exchange  Act of 1934,  as amended,  provides  for the
recovery by MSB Financial  Corp. of profits  realized from the purchase and sale
or sale and  purchase of its common  stock  within any  six-month  period by any
officer,  director or person who beneficially  owns more than ten percent of the
common stock.

         The SEC has adopted rules that exempt many  transactions  involving the
Plan from the  "short-swing"  profit recovery  provisions of Section 16(b).  The
exemptions generally involve restrictions upon the timing of elections to buy or
sell employer securities for the accounts of any officer, director or person who
beneficially owns more than ten percent of the common stock.

         Except for distributions of the common stock due to death,  disability,
retirement,  termination of employment or under a qualified  domestic  relations
order,  persons who are subject to Section 16(b) may be required,  under limited
circumstances  involving  the  purchase of common stock within six months of the
distribution,  to hold the shares of common stock  distributed from the Plan for
six months after the distribution date.

                                  LEGAL OPINION

         The validity of the issuance of the common stock of MSB Financial Corp.
will be passed upon by Malizia Spidi & Fisch, PC, Washington, D.C. Malizia Spidi
& Fisch,  PC acted as special counsel for MSB Financial Corp. in connection with
the Stock Offering of MSB Financial Corp.

                                       18



                                 INVESTMENT FORM

Name of Plan: Millington Savings Bank  401(k) Savings and Profit Sharing Plan
Participant:  _____________________________________________________
Social Security Number:    __________________

1.   INSTRUCTIONS.  In connection  with the offering to the public of the common
stock of MSB Financial Corp. (the "Stock Offering"), the Millington Savings Bank
401(k)  Savings and Profit  Sharing Plan (the "Plan") has been amended to permit
participants  to direct  their  current  account  balances  for  their  elective
deferrals,  employer matching contributions,  employer profit sharing, Qualified
Non-Elective  Contribution  Account,  and  rollovers  into a new  fund:  the MSB
Financial  Corp.  Stock  Fund  ("Employer  Stock  Fund").  The  percentage  of a
participant's  account  transferred at the direction of the participant into the
Employer  Stock  Fund will be used to  purchase  shares  of Common  Stock of MSB
Financial Corp. ("Common Stock").

     To  direct  a  transfer  of all or a part  of the  funds  credited  to your
accounts to the Employer Stock Fund, you should complete and file this form with
the Human Resources Department no later than 3 days prior to the expiration date
of the stock offering. A representative for the Plan Administrator will retain a
copy of this  form and  return a copy to you.  If you  need  any  assistance  in
completing this form,  please contact Mary Jean Piorkowski at  908-647-4000.  If
you do not complete and return this form to the Human  Resources  Department  by
noon on  ___________,  2006,  the funds credited to your accounts under the Plan
will  continue  to  be  invested  in  accordance  with  your  prior   investment
directions,  or in  accordance  with  the  terms  of the  Plan if no  investment
directions have been provided.

2.   INVESTMENT DIRECTIONS.  I hereby authorize the Plan Administrator to direct
the Trustees to invest the following amounts  (prorated by contribution  source)
of their elective deferrals,  employer matching  contributions,  employer profit
sharing,  Qualified  Non-Elective  Contribution  Account,  and  rollovers in the
Employer Stock Fund.



Russell Lifepoints Conservative                                $_______
Russell Lifepoints Moderate                                    $_______
Russell Lifepoints Balanced                                    $_______
Russell Lifepoints Growth Strategy                             $_______
Russell Lifepoints Equity Growth Strategy                      $_______
AmCent Inflation Adjusted Bond                                 $_______
PIMCO High Yield                                               $_______
Allianz OpCap Value                                            $_______
Neuberger Berman Partners                                      $_______
SSgA S&P 500Flagship                                           $_______
T. Rowe Price Growth Stock                                     $_______
Lord Abbett Mid-Cap Value                                      $_______
Dreyfus Premier Structured Midcap                              $_______
SSgA S&P MidCap 400 Index Strategy                             $_______

                                       19



AmCent Vista                                                   $_______
Dreyfus Premier Small Cap Value                                $_______
Lord Abbett Small-Cap Blend                                    $_______
SSgA Russell 2000 Index Strategy                               $_______
Fidelity Advisor Small Cap                                     $_______
SSgA MSCI EAFE Index Strategy                                  $_______
Templeton Growth                                               $_______
AmCent Real Estate                                             $_______
AUL Fixed Interest Account                                     $_______

NOTE: The total percentage of directed investments, above for each fund, may not
     exceed 99%.

     If  there  is  not  enough  Common  Stock in the stock  offering to fill my
subscription  pursuant to the investment directions above, I hereby instruct the
Plan  Trustee to purchase  shares of Common  Stock in the open market  after the
Stock  Offering  to the extent  necessary  to fulfill my  investment  directions
indicated  on this form.  I  understand  that if I do not direct the  Trustee by
checking the box below,  the excess funds will be invested in the same manner as
new deposits have been directed.

[ ]  Yes, I  direct  the  Trustee  to  purchase  stock in the  open  market,  if
necessary.

3.   PURCHASER INFORMATION.  The ability of participants in the Plan to purchase
Common Stock in the Stock Offering and to direct their current account  balances
into the  Employer  Stock  Fund is based  upon  the  participant's  subscription
rights. Please indicate your status.

[ ]  Check  here if you had  $50.00  or more  in your  account  with  Millington
     Savings Bank Plan as of June 30, 2005.

[ ]  Check  here if you had  $50.00  or more  in your  account  with  Millington
     Savings Bank Plan as of September 30, 2006 (but not as of June 30, 2005).

4.   ACKNOWLEDGMENT OF PARTICIPANT. I understand that this Investment Form shall
be subject to all of the terms and conditions of the Plan. I acknowledge  that I
have received a copy of the Prospectus and the Prospectus Supplement.


____________________________________________               _____________________
Signature of Participant                                   Date


________________________________________________________________________________

ACKNOWLEDGMENT OF RECEIPT BY ADMINISTRATOR. This Investment Form was received by
the Plan Administrator and will become effective on the date noted below.

By: ________________________________________               _____________________
                                                           Date

                                       20



THE PARTICIPATION  INTERESTS  REPRESENTED BY THE COMMON STOCK OFFERED HEREBY ARE
NOT  DEPOSIT  ACCOUNTS  AND ARE NOT  INSURED BY THE BANK  INSURANCE  FUND OR THE
SAVINGS ASSOCIATION  INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER  GOVERNMENT  AGENCY AND ARE NOT GUARANTEED BY MSB FINANCIAL  CORP.,
MSB FINANCIAL, MHC OR MILLINGTON SAVINGS BANK. THE COMMON STOCK IS SUBJECT TO AN
INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL INVESTED.

MINIMUM STOCK PURCHASE IS  $    250.00
MAXIMUM STOCK PURCHASE IS  $200,000.00

PLEASE COMPLETE AND RETURN TO MARY JEAN PIORKOWSKI AT MILLINGTON SAVINGS BANK BY
NOON ON _____________, 2006.


                                       21



PROSPECTUS
                               MSB FINANCIAL CORP.
                  (Holding Company for Millington Savings Bank)

      Up to 2,199,375 Shares of Common Stock (Subject to Increase to up to
                               2,529,281 Shares)

         MSB  Financial  Corp.  is offering  for sale shares of its common stock
that will represent 45% of its outstanding  common stock upon completion of this
offering.  The remaining 55% of MSB Financial Corp.'s  outstanding  common stock
upon completion of this offering will be held by MSB Financial,  MHC, the mutual
holding  company parent of MSB Financial  Corp. Upon completion of the offering,
MSB  Financial   Corp.  will  have  between   3,612,500  and  4,887,500   shares
outstanding, including shares that will be held by MSB Financial, MHC. The total
number of shares of MSB Financial Corp. common stock outstanding upon completion
of the  offering  is subject to an  independent  appraisal  that must be updated
before the offering can be completed and may be increased to an adjusted maximum
of 5,620,625  shares without  resoliciting  subscribers.  The shares sold in the
offering would, in that case, total 2,529,281 shares.

         The  offering is expected to expire at 12:00  noon,  Eastern  time,  on
December ___,  2006. We may extend this  expiration  date without  notice to you
until _________,  2007, unless the Office of Thrift Supervision approves a later
date.

         Keefe, Bruyette & Woods, Inc. will use its best efforts to assist us in
our selling  efforts,  but is not  required to purchase  any of the common stock
that is being offered for sale. Purchasers will not pay a commission to purchase
shares of common stock in the offering.  All shares being sold are being offered
at a price of $10.00 per share.  The offering will not be completed if we do not
sell a minimum of  1,625,625  shares.  We have  applied to have our common stock
listed for trading on the Nasdaq Global Market under the symbol "MSBF."

         The  minimum  purchase  is  25  shares.  Once  submitted,   orders  are
irrevocable  unless the offering is  terminated or extended  beyond  __________,
2007. If the offering is extended beyond __________, 2007, subscribers will have
the  right to  modify or  rescind  their  purchase  orders.  We will hold  funds
received with orders in a deposit account that we have established at Millington
Savings Bank for that sole  purpose.  We may decide  during the offering also to
hold  funds  received  with  orders  in a deposit  account  at  another  insured
depository  institution.  In  either  case,  we will pay  interest  on all funds
received at a rate equal to Millington  Savings Bank's regular  passbook savings
rate. If we do terminate the offering,  we will promptly  return your funds with
interest.  If we extend the offering beyond __________,  2007, you will be given
an opportunity to confirm,  modify or rescind your order,  and if an affirmative
response is not received, we will promptly return your funds with interest.

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



                                                  OFFERING SUMMARY
                                               Price Per Share: $10.00
                                                                                                             Maximum,
                                                      Minimum           Midpoint           Maximum        as adjusted
                                                      -------           --------           -------        -----------
                                                                                            
Number of shares.........................           1,625,625          1,912,500         2,199,375          2,529,281
Gross proceeds...........................         $16,256,250        $19,125,000       $21,993,750        $25,292,810
Estimated offering expenses(1)...........            $713,000           $740,000          $766,000           $796,000
Estimated net proceeds...................         $15,543,250        $18,385,000       $21,227,750        $24,496,810
Estimated net proceeds per share.........               $9.56              $9.61             $9.65              $9.69


--------------
(1)  See  Plan of  Distribution  and  Marketing  Arrangements  on page ___ for a
     description of the  underwriting  commission paid by MSB Financial Corp. in
     connection with 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
governmental agency.

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

  For assistance, please contact our Stock Information Center at (___) ___-____

                             Keefe, Bruyette & Woods

                The date of this prospectus is November __, 2006.



                                  TABLE OF CONTENTS

                                                                           Page
                                                                           ----

Summary........................................................................
Risk Factors...................................................................
A Warning About Forward-Looking Statements.....................................
Use of Proceeds................................................................
Our Policy Regarding Dividends.................................................
Market for the Stock...........................................................
Capitalization.................................................................
Pro Forma Data.................................................................
Historical and Pro Forma Capital Compliance....................................
Recent Developments............................................................
Selected Financial and Other Data..............................................
Management's Discussion and Analysis
     of Financial Condition and Results of Operations..........................
Business of MSB Financial, MHC.................................................
Business of MSB Financial Corp.................................................
Business of Millington Savings Bank............................................
Regulation.....................................................................
Taxation.......................................................................
Management.....................................................................
The Offering...................................................................
Restrictions on Acquisition of MSB Financial Corp..............................
Description of Capital Stock...................................................
Legal and Tax Opinions.........................................................
Experts........................................................................
Change in Independent Auditor..................................................
Registration Requirements......................................................
Where You Can Find Additional Information......................................
Index to Consolidated Financial Statements.....................................



--------------------------------------------------------------------------------

                                     SUMMARY

This summary  highlights  selected  information  from this  document and may not
contain  all the  information  that is  important  to you.  To  understand  this
offering fully,  you should read this entire document  carefully,  including the
consolidated  financial  statements and the notes to the consolidated  financial
statements beginning on page F-1 of this document. Throughout this document, the
terms "we",  "us" or "our" refer to MSB Financial  Corp.  or Millington  Savings
Bank, or both, as the context indicates.

MSB Financial, MHC
MSB Financial Corp.
Millington Savings Bank

         MSB Financial Corp. is a federally-chartered corporation that holds all
of the capital stock of Millington  Savings Bank, a state chartered savings bank
founded in 1911. Currently, 100% of the outstanding stock of MSB Financial Corp.
is held by MSB Financial,  MHC, a  federally-chartered  mutual holding  company.
Upon completion of this offering,  55% of the outstanding stock of MSB Financial
Corp.  will be  held  by MSB  Financial,  MHC  and  45%  will be held by  public
stockholders.

         Millington Savings Bank offers a full range of traditional  deposit and
lending services, including one-to-four family mortgage loans, home equity loans
and  lines  of  credit,   commercial  real  estate  loans,  construction  loans,
commercial  loans and lines of credit and consumer loans,  including auto loans,
personal loans and account  loans.  Millington  Savings Bank currently  operates
from its main  office in Morris  County,  New Jersey plus three  branch  offices
located  in  Somerset  County,  New  Jersey.  MSB  Financial  Corp.'s  principal
executive offices are at Millington  Savings Bank's main office,  1902 Long Hill
Road,  Millington,  New Jersey  07946-0417.  The phone number at that address is
(908)   647-4000.    Millington    Savings   Bank   maintains   a   website   at
www.millingtonsb.com.

         This  chart  shows  our  current   corporate   structure  (before  this
offering).


--------------------------------------------------------------------------------
                               MSB Financial, MHC
--------------------------------------------------------------------------------
                                        | 100%
--------------------------------------------------------------------------------
                               MSB Financial Corp.
--------------------------------------------------------------------------------
                                        | 100%
--------------------------------------------------------------------------------
                             Millington Savings Bank
--------------------------------------------------------------------------------

       This chart shows our new corporate structure (after this offering).


-----------------------------                      -----------------------------
     MSB Financial, MHC                                   Minority Public
                                                           Stockholders
-----------------------------                      -----------------------------
              | 55%                                     | 45%
--------------------------------------------------------------------------------
                               MSB Financial Corp.
--------------------------------------------------------------------------------
                                        | 100%
--------------------------------------------------------------------------------
                             Millington Savings Bank
--------------------------------------------------------------------------------

                                        1

--------------------------------------------------------------------------------



--------------------------------------------------------------------------------

Purpose of the Offering

         The primary  reason for our  decision to sell stock is to increase  our
capital  to  support   future   growth  and  enable  us  to  continue  to  be  a
well-capitalized  institution.  We opened our first branch office in 1998. Total
assets have grown by $101.3  million since June 30, 2002 to reach $270.2 million
at June 30, 2006, a 60% increase.  We currently operate from our main office and
three branch  offices.  A new branch  office is underway and expected to open in
late 2007.

         Selling stock will also mean that Millington Savings Bank's depositors,
employees,  management  and  directors  will have an  opportunity  to acquire an
equity ownership  interest in us and thereby obtain an economic  interest in our
future  operations.  In addition,  we intend to utilize stock benefit plans as a
means of attracting and retaining qualified and experienced officers,  directors
and employees.

Use of Proceeds

         Millington  Savings Bank will receive 50% of the net proceeds  from the
offering  as a capital  contribution  and will use those  proceeds  for  general
business purposes. In particular, the Bank intends to reduce its borrowings. The
Bank has had strong loan  originations in recent years and has used Federal Home
Loan Bank borrowings to supplement  deposits as a funding source for its lending
activities.  Between June 30, 2002 and June 30, 2006,  total loans grew by $99.7
million to $224.4 million, an 80% increase, while deposits grew by $40.8 million
to $194.8 million,  a 26.5% increase.  Borrowings at June 30, 2006 totaled $54.2
million and included $18.5 million and $23.0 million of overnight line of credit
and 30 day  borrowings,  respectively,  which may be reduced  without  incurring
prepayment penalties. We had no borrowings at June 30, 2002 or 2003.

         The  offering  proceeds  may  also  be  used to  finance  the  possible
acquisition  of  other  financial   institutions  or  branches,  if  appropriate
opportunities  arise.  We do not,  however,  have  any  current  understandings,
agreements or arrangements in connection with branching or  acquisitions,  other
than the  already in progress  new branch  office in  Bernardsville,  New Jersey
which is expected to open in late 2007.


         We will lend a  portion  of the  offering  proceeds  to the  Millington
Savings Bank Employee  Stock  Ownership Plan to enable it to buy up to 8% of the
shares  sold in the  offering.  The  balance of the  offering  proceeds  will be
retained by MSB  Financial  Corp.  and  deposited  with or loaned to  Millington
Savings  Bank,  providing  the Bank with  funds to support  the  Bank's  lending
activities.  This will enable the Bank to reduce its  outstanding  Federal  Home
Loan Bank borrowings.  MSB Financial Corp. may also use the offering proceeds it
retains for general corporate  purposes,  including  repurchasing  shares of its
common  stock,  paying  cash  dividends  or  supporting  acquisitions  of  other
financial institutions, branches or financial services companies.


Conduct of the Offering

         We have granted  rights to subscribe for shares of MSB Financial  Corp.
common stock in the following order of priority:

o    Priority 1 - depositors of Millington Savings Bank at the close of business
     on June 30, 2005 with deposits of at least $50.00.


o        Priority 2 - the Millington Savings Bank Employee Stock Ownership Plan.


o    Priority 3 - depositors of Millington Savings Bank at the close of business
     on September 30, 2006 with deposits of at least $50.00.

                                        2

--------------------------------------------------------------------------------



--------------------------------------------------------------------------------

o    Priority 4 - depositors of Millington Savings Bank at the close of business
     on October 31, 2006.

         Please note: Subscription rights are not transferable, and persons with
subscription  rights may not  subscribe  for shares for the benefit of any other
person.  If you violate this  prohibition,  you may lose your rights to purchase
shares and may face criminal prosecution and/or other sanctions.

         If we receive  subscriptions  for a number of shares  that  exceeds the
maximum of the offering  range,  we may be unable to fill, or may only partially
fill,  your order.  Shares will be  allocated in order of the  priorities  shown
above pursuant to a formula  outlined in the plan of stock  issuance  adopted by
our board of directors.

         We are offering for sale a minimum of 1,625,625 shares and a maximum of
2,199,375  shares.  The independent  appraisal that we used to set the number of
shares being offered must be updated before we can complete the stock  offering,
and this could result the number of shares being  increased to up to an adjusted
maximum of  2,529,281  shares.  We may sell that  number of shares  without  any
notice to you. If the updated independent  appraisal is higher than the adjusted
maximum,  we will be  required  to return  all  subscribers'  funds to them with
interest.


         If we sell  between  the  maximum and the  adjusted  maximum  number of
shares,  the Millington Savings Bank Employee Stock Ownership Plan will have the
first priority  right to purchase the  additional  shares to the extent that its
subscription  has not  previously  been  filled.  Any shares  remaining  will be
allocated in the order of the priorities described above. See The Stock Offering
-  Subscription  Offering  and  Subscription  Rights  for a  description  of the
allocation procedure.

         We may  offer  shares  not  sold in the  subscription  offering  to the
general public in a community offering.  In the community offering, we will give
a preference  first to natural  persons and trusts of natural persons who reside
in Morris and Somerset  Counties,  New Jersey (the counties in which  Millington
Savings Bank has offices),  and second to other residents of New Jersey,  and to
the  general  public  after  that.  This  part  of  the  offering  may  commence
concurrently  with the  subscription  offering  or any time  thereafter  and may
terminate at any time without notice but no later than ___________, 2007, unless
extended.


         Shares  not  sold in the  subscription  or  community  offering  may be
offered for sale in a syndicated community offering,  which would be an offering
to the  general  public on a best  efforts  basis  managed by Keefe,  Bruyette &
Woods. This part of the offering may terminate at any time without notice but no
later than ___________, 2007, unless extended.

         We have the right to  reject  any  orders  for  stock  received  in the
community offering and syndicated community offering.

Deadline for Ordering Stock

         The subscription  offering will expire at 12:00 noon,  Eastern time, on
December __, 2006. We may extend this  expiration date without notice to you for
up to  45  days,  until  ____________,  2007.  Once  submitted,  your  order  is
irrevocable  unless the offering is extended  beyond  __________,  2007.  We may
request  permission from the Office of Thrift Supervision to extend the offering
beyond  __________,  2007,  but in no event may the offering be extended  beyond
____________, 2008. If the offering is extended beyond __________, 2007, we will
notify each subscriber and subscribers will have the right to confirm, modify or
rescind their  subscriptions.  If an  affirmative  response is not  received,  a
subscriber's  subscription  will be  canceled  and funds will be  returned  with
interest.

                                        3

--------------------------------------------------------------------------------



--------------------------------------------------------------------------------

         We may cancel the offering at any time prior to  completion.  If we do,
orders for common stock  already  submitted  will be canceled  and  subscribers'
funds will be returned with interest.

Purchase Limitations

         Limitations  on the purchase of stock in the offering  have been set by
the plan of stock issuance adopted by our Board of Directors.  These limitations
include the following:

o    The minimum purchase is 25 shares.

o    The maximum number of shares of stock that any  individual (or  individuals
     through a single account) may purchase is 20,000 shares.

o    The  maximum  number of shares of stock that any  individual  may  purchase
     together with any associate or group of persons acting in concert is 25,000
     shares.

         If  determined  to be necessary or desirable by the Board of Directors,
the  plan may be  amended  by a  two-thirds  vote of the  full  Board,  with the
concurrence  of the  Office of Thrift  Supervision.  Thus,  we may  increase  or
decrease the purchase limitations.  In the event the maximum purchase limitation
is  increased,  persons  who  subscribed  for the maximum  will be notified  and
permitted to increase their subscription.

Procedure for Ordering Stock

         If you want to place an order  for  shares  in the  offering,  you must
complete  an  original  stock  order form and send it to us  together  with full
payment.  You must sign the  certification  that is on the  reverse  side of the
stock order form.  We must  receive  your stock order form before the end of the
subscription offering or the end of the community offering, as appropriate. Once
we receive your order,  you cannot  cancel or change it without our consent.  We
may, in our sole discretion, reject orders received in the community offering or
syndicated  community  offering  either  in whole or in part.  If your  order is
rejected in part, you cannot cancel the remainder of your order.

         To ensure that we properly identify your subscription  rights, you must
provide on your stock order form all of the  information  requested  for each of
your deposit  accounts as of the eligibility  dates (June 30, 2005 and September
30, 2006). If you fail to do so, your subscription may be reduced or rejected if
the offering is oversubscribed.

         You may pay for shares in the  subscription  offering or the  community
offering in any of the following ways:

o    In cash,  if  delivered in person.  If you choose to pay by cash,  you must
     deliver the stock order and certification form and payment in person to any
     branch  office of  Millington  Savings Bank and it will be exchanged  for a
     bank check or money order. Please do not send cash in the mail.

o    By check or money order made payable to MSB Financial Corp.,

o    By authorizing  withdrawal  from an account at Millington  Savings Bank. To
     use funds in a Millington Savings Bank IRA account,  you must transfer your
     account to an unaffiliated  institution or broker. Please contact the stock
     information center as soon as possible for assistance.

         We will hold funds  received  with orders in a deposit  account that we
have established at Millington Savings Bank for that sole purpose. We may decide
during the offering also to hold funds received with orders in a deposit account
at another insured depository institution. In either case,

                                        4

--------------------------------------------------------------------------------



--------------------------------------------------------------------------------

we will pay interest on all funds received at a rate equal to Millington Savings
Bank's regular  passbook  savings rate from the date we receive your funds until
the offering is completed or terminated.

         All funds  authorized  for  withdrawal  from deposit  accounts with us,
including  certificates  of  deposit,  will  continue  to earn  interest  at the
applicable  account  or  certificate  of  deposit  rate  until the  offering  is
completed  or  terminated.  However,  if,  as a result  of a  withdrawal  from a
certificate of deposit, the balance falls below the minimum balance requirement,
the  remaining  funds will be  transferred  to a savings  account  and will earn
interest at our regular passbook savings rate. There will be no early withdrawal
penalty for withdrawals from certificates of deposit used to pay for stock.

Proposed Stock Purchases by Management

         Our  directors  and  executive   officers  and  their  associates  have
indicated  that they intend to purchase  approximately  132,000 shares of common
stock in the  offering.  If  1,912,500  shares  are sold  (the  midpoint  of the
offering range),  their anticipated  purchases would represent 3.1% of the total
shares outstanding after the offering, including shares issued to MSB Financial,
MHC.

Our Estimated Pro Forma Value

         The independent appraisal by RP Financial, LC, dated as of September 1,
2006  established  the estimated  pro forma market value of MSB Financial  Corp.
This  appraisal was based on our  financial  condition and results of operations
and considered  the effect of the  additional  capital to be raised in the stock
offering  as  well as the  effect  of the  stock  benefit  plans  we  expect  to
implement.

         RP Financial has estimated  that as of September 1, 2006, the pro forma
market value of MSB Financial Corp.  ranged from a minimum of $38.3 million to a
maximum of $51.8  million.  This valuation is based on the full pro forma market
value of MSB  Financial  Corp. as though 100% of the stock was being sold to the
public.  The Board of Directors  considered our present level of capital and our
business plans and determined that shares representing 45% of the full valuation
should be offered for sale.


         Peer Group Analysis.  The appraisal  incorporated an analysis of a peer
group of 10 publicly  traded mutual holding  companies that RP Financial  deemed
comparable  to us. The companies in the peer group range in asset size from $100
million to $600 million and have market capitalizations ranging from $12 million
to $75  million.  RP  Financial  examined  how we  compare  to the peer group on
various  bases,   including  earnings   prospects,   market  area,   management,
acquisition  activity  in the  state of New  Jersey,  stock  market  conditions,
subscription  interest,  liquidity and dividend  policy.  RP Financial also took
into account  that this type of offering is typically  priced at a discount on a
price-to-book  basis to publicly  traded  companies due to relatively  high post
offering  equity  ratios,  expected  low  returns  on  equity,  and  uncertainty
regarding the degree of success to be achieved in effectively  deploying capital
raised in the offering,  particularly in the current  interest rate  environment
characterized by a relatively flat yield curve.


         Pricing Ratios on a Fully Converted Basis.  Shown below are the average
and median price to earnings  multiple and price to book value ratio of the peer
group companies and our price to earnings multiple and price to book value ratio
at the minimum,  midpoint,  maximum and adjusted maximum of our pro forma market
value as estimated by the  appraisal.  These pricing  ratios are calculated on a
fully-  converted  basis,  as though we had sold the full  amount  (100%) of our
estimated pro forma market value

                                        5

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--------------------------------------------------------------------------------

instead of only 45% of that value.  The  pricing  ratios for the peer group have
also been  adjusted  to assume  that they were fully  public,  with all of their
outstanding shares held by public stockholders.



                                                       Price-to-earnings  Price-to-book
                                                            multiple       value ratio
                                                            --------       -----------
                                                                      
Pricing ratios for peer group
on a fully-converted basis
--------------------------

    Average..........................................        27.0x            93.6%
    Median...........................................        27.4x            92.3%


Pro forma pricing ratios for MSB Financial Corp.
on a fully-converted basis
--------------------------
    Minimum..........................................         20.6             71.8
    Midpoint.........................................         23.4             76.3
    Maximum..........................................         26.0             80.0
    Maximum, as adjusted.............................         28.8             83.4


         The  independent  appraisal  is  not  necessarily   indicative  of  the
post-stock offering trading value. Do not assume or expect that the valuation of
MSB Financial Corp. as indicated above means that the common stock will trade at
or above the $10.00 purchase price after the stock offering is completed.

         Aftermarket Performance of Other Mutual Holding Company Offerings.  The
following  table  presents  information  for all mutual  holding  companies that
completed  a minority  stock  offering  during the period  from  January 1, 2005
through September 1,2006.  The table presents the average percentage stock price
appreciation from the initial trading date to the dates presented in the table.

         This  table is not  intended  to  indicate  how our stock may  perform.
Furthermore,  this table presents only short-term price  performance and may not
be indicative of the longer-term stock price performance of these companies. The
increase in any particular  company's stock price is subject to various factors,
including,  but not  limited to, the amount of  proceeds a company  raises,  the
company's  historical and anticipated  operating results, the nature and quality
of the  company's  assets,  the  company's  market  area,  and  the  quality  of
management and  management's  ability to deploy  proceeds (such as through loans
and  investments,  the  acquisition  of other  financial  institutions  or other
businesses, the payment of dividends and common stock repurchases). In addition,
stock  prices may be affected by general  market and  economic  conditions,  the
interest rate environment,  the market for financial  institutions and merger or
takeover  transactions,  the presence of  professional  and other  investors who
purchase stock on speculation,  as well as other unforeseeable events not in the
control of management.  Before you make an investment  decision,  we urge you to
carefully read this prospectus,  including, but not limited to, the Risk Factors
beginning on page ___.

                                        6

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                               MHC Offerings Between January 1, 2005 and September 1, 2006
               -----------------------------------------------------------------------------------------------
                                                                   Price Performance from Initial Trading Date
                                                           ------------------------------------------------------------
                                            Closing                                                        Through
Transaction                                  Date          1 Day          1 Week        1 Month       September 1, 2006
-----------                                  ----          -----          ------        -------       -----------------
                                                                                           
Georgetown Bancorp, Inc.                   01/06/05         2.0%          -0.5%           0.5%              -4.5%
BV Financial, Inc.                         01/14/05        -6.5%          -5.0%          -0.7%              -5.5%
Home Federal Bancorp, Inc. of LA           01/21/05        -1.0%           0.5%          -0.8%               5.0%
Kearny Financial Corp.                     02/24/05        13.9%          15.0%          11.3%              48.9%
Kentucky First Federal Bancorp             03/03/05         7.9%          12.0%          12.4%               2.2%
Prudential Bancorp, Inc.                   03/30/05        -1.5%          -6.5%         -12.5%              33.5%
Brooklyn Federal Bancorp, Inc.             04/06/05        -0.5%          -1.0%          -5.0%              22.5%
FedFirst Financial Corp.                   04/07/05        -6.6%          -9.3%         -14.5%               2.0%
Rockville Financial, Inc.                  05/23/05         4.8%          10.5%          20.0%              47.0%
North Penn Bancorp, Inc.                   06/02/05        10.0%           2.5%           1.5%              17.0%
Colonial Bankshares, Inc.                  06/30/05         6.0%           9.9%           7.5%              26.7%
Heritage Financial Group                   06/30/05         7.5%           7.5%           9.3%              41.0%
United Financial Bancorp, Inc.             07/13/05        17.5%          16.0%          17.0%              32.1%
Ottowa Savings Bancorp, Inc.               07/14/05         4.0%           5.0%           7.0%              15.4%
Wauwatosa Holdings, Inc.                   10/05/05        12.5%           7.3%           9.5%              76.8%
Investors Bancorp, Inc.                    10/12/05         0.2%           1.0%           5.2%              43.5%
Equitable Financial Corp.                  11/09/05         0.0%          -5.0%          -5.5%              -7.5%
Greenville Federal Fin. Corp.              01/05/06         3.8%           2.5%           0.0%              -2.0%
Magyar Bancorp, Inc.                       01/24/06         6.5%           5.5%           6.0%              19.2%
United Community Bancorp                   03/31/06         8.0%           7.0%           5.5%               6.5%
Lake Shore Bancorp, Inc.                   04/04/06         7.0%           4.8%           1.5%               8.5%
Mutual Federal Bancorp, Inc.               04/06/06        11.3%          10.0%          14.0%              10.0%
Northeast Community Bancorp Inc.           07/06/06        10.0%          12.8%          12.0%              13.0%
Seneca-Cayuga Bancorp Inc.                 07/11/06         0.0%          -4.0%          -6.0%              -4.8%
Roma Financial Corp.                       07/12/06        41.0%          42.4%          46.6%              52.3%

                Average                                     6.3%           5.6%           5.7%              20.0%
                Median                                      6.0%           5.0%           5.5%              15.4%


         While stock prices of similar institutions have, on average,  increased
for the limited period presented, there can be no assurance that our stock price
will appreciate the same amount,  if at all. There also can be no assurance that
our stock price will not trade below $10.00 per share.

Conditions to Completing the Offering

         We cannot complete the offering unless:

o    we sell at least 1,625,625 shares, the minimum of the offering range; and

o    we  receive  the final  approval  of the  Office of Thrift  Supervision  to
     complete the offering.

                                        7

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--------------------------------------------------------------------------------

Market for MSB Financial Corp.'s Common Stock

         We applied to have our common  stock  listed for  trading on the Nasdaq
Global Market under the symbol "MSBF." Keefe, Bruyette & Woods currently intends
to become a market maker in the common  stock,  but it is under no obligation to
do so. We cannot assure you that other market makers will be obtained or that an
active and liquid  trading market for the shares of common stock will develop or
if developed, will be maintained. After our common stock begins trading, you may
contact a stock broker to buy or sell shares.

Dividends

         We have not yet established a dividend policy, and we have not yet made
plans as to the amount or timing of cash dividends that MSB Financial  Corp. may
pay after the offering.  The timing,  amount and frequency of dividends  will be
determined by the Board of Directors. There are also restrictions on our ability
to pay dividends. See Our Policy Regarding Dividends.

         If we pay  dividends to  stockholders  of MSB  Financial  Corp.,  it is
anticipated  that dividends  payable to MSB Financial,  MHC would be waived.  We
must  receive  the  non-objection  of the  Office of Thrift  Supervision  of any
dividend  waiver by MSB  Financial,  MHC. See  Regulation  -  Regulation  of MSB
Financial Corp.

Restrictions on the  Acquisition of MSB Financial  Corp. and Millington  Savings
Bank

         Federal regulations, as well as provisions contained in the charter and
bylaws of MSB Financial Corp. and Millington Savings Bank,  restrict the ability
of any person, firm or entity to acquire MSB Financial Corp., Millington Savings
Bank, or their capital stock. These restrictions  include the requirement that a
potential  acquirer of common stock  obtain the prior  approval of the Office of
Thrift  Supervision before acquiring in excess of 10% of the voting stock of MSB
Financial Corp. or Millington  Savings Bank. Because a majority of the shares of
outstanding  common stock of MSB Financial Corp. must be owned by MSB Financial,
MHC, any  acquisition of MSB Financial  Corp. must be approved by MSB Financial,
MHC, and MSB Financial, MHC would not be required to pursue or approve a sale of
MSB  Financial  Corp.  even if such  sale  were  favored  by a  majority  of MSB
Financial   Corp.'s  public   stockholders.   Additionally,   Office  of  Thrift
Supervision  regulations  prohibit  anyone from  acquiring  more than 10% of MSB
Financial  Corp.'s  common  stock  for a period  of three  years  following  the
offering, unless such prohibition is waived by the Office of Thrift Supervision.
The  current  policy of the  Office of Thrift  Supervision  is not to waive this
prohibition.

         Additionally,  certain  provisions within MSB Financial Corp.'s charter
and bylaws limit the rights of stockholders and may deter potential takeovers or
make it more  difficult  and expensive to pursue a change in control or takeover
attempt that our Board of Directors  opposes.  As a result,  you may not have an
opportunity to  participate in such a transaction,  and the trading price of our
stock may not rise to the level of other  institutions  that are more vulnerable
to hostile takeovers. Such provisions include:

          o    the election of directors to staggered three-year terms;
          o    provisions restricting stockholders from calling special meetings
               of stockholders;
          o    the absence of cumulative  voting by stockholders in elections of
               directors;
          o    advance notice  requirements for stockholder  nominations and new
               business; and
          o    the limitation of the voting rights of a single stockholder to no
               more than 10% of the then- outstanding  shares,  including shares
               held by MSB  Financial,  MHC, for a period of five years from the
               date this stock offering is completed.

                                        8

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--------------------------------------------------------------------------------

Tax Effects of the Offering

         The  minority  stock  offering  will not be a taxable  transaction  for
purposes of federal or state income taxes for MSB Financial,  MHC, MSB Financial
Corp., Millington Savings Bank or persons eligible to subscribe for stock in the
offering. See Material Federal and State Tax Consequences of the Offering.

Stock Benefit Plans


         In order to align our employees' and directors' interests closer to our
stockholders'  interests,  we will establish  certain benefit plans that use our
stock as  compensation.  The Millington  Savings Bank Employee  Stock  Ownership
Plan, for the benefit of employees  eligible to participate in the plan, intends
to  purchase 8% of the shares  sold in the  offering.  We also intend to adopt a
stock option plan and a restricted  stock plan for the benefit of directors  and
officers no sooner than six months after the offering. Officers,  directors, and
employees  will not be  required  to pay  cash for  shares  received  under  the
Millington  Savings Bank Employee Stock  Ownership Plan or shares received under
the  restricted  stock plan,  but will be required to pay the exercise  price to
exercise  stock  options.  The  exercise  price for the options will be at least
equal to the market price of our common stock on the date of grant.


         The stock  benefit  plans will  result in  additional  annual  employee
compensation and benefit expenses which will reduce our earnings.  See Pro Forma
Data.  Additionally,  the implementation of the stock option plan and restricted
stock plan may dilute your  ownership  interest in MSB Financial  Corp. if newly
issued  shares  are  used to fund  stock  options  and  awards  made  under  the
restricted stock plan instead of outstanding shares purchased in the open market
by MSB Financial Corp.

         The  following  table  presents  information,  at the  midpoint  of the
offering range,  regarding the number of shares and options  expected to be made
available under the stock benefit plans.  The value of the share awards is based
on $10.00 per  share;  however,  this does not mean you should  assume the stock
will trade at or above $10.00 per share.  It could trade below $10.00 per share.
The  value  of  the  option  grants  was  determined  using  the   Black-Scholes
option-pricing  formula.  See Pro Forma  Data.  Ultimately,  the value of awards
under the stock  benefit  plans will depend on the actual  trading  price of our
stock at a particular time, which depends on numerous factors, some of which are
out of our control.


                                       At the Midpoint of the Offering Range
                                       -------------------------------------
                                                     Number      Percentage of
                                     Estimated     of Shares/    Total Shares
                                       Value        Options       Outstanding
                                       -----        -------       -----------

Employee Stock Ownership Plan....   $1,530,000       153,000          3.6%
Restricted stock.................     $833,000        83,300          1.96%
Stock options....................     $847,577       208,250          4.9%

         If we  implement  the  restricted  stock  plan  within  one year of the
offering and Millington  Savings  Bank's  tangible  capital  following the stock
offering is less than 10%,  then the number of shares that may be awarded  under
the restricted  stock plan will be reduced and may not exceed 1.47% of the total
shares  outstanding  rather than the 1.96% shown in the table above.  If, at our
discretion, we further reduce the restricted stock plan to 1.3%, we may keep the
number of shares in the employee stock  ownership plan at 3.6%. If we reduce the
restricted stock plan to only 1.47% of the outstanding shares, however, then the
employee stock ownership plan would also be reduced, to 3.4%.


                                        9

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--------------------------------------------------------------------------------

         See  Management  - Stock  Benefit  Plans  and Pro  Forma  Data for more
information about the stock benefit plans.

Possible Conversion of MSB Financial, MHC to Stock Form

         In the future,  MSB Financial,  MHC may convert from the mutual holding
company form of  organization,  wherein a majority of the  outstanding  stock is
held by the mutual  holding  company,  to a corporation  with 100% of its shares
held by public  stockholders.  This type of conversion  transaction  is commonly
known as a "second-step conversion." The Board of Directors has no current plans
to undertake a second-step conversion transaction.

Risk Factors

         This  investment  entails  various risks including the possible loss of
principal. You may not be able to sell the stock at or above the $10.00 offering
price. You should carefully read the information under Risk Factors beginning on
page ___.

Stock Information Center

         For assistance,  please contact the stock  information  center at (___)
___-____.  The stock information center's hours of operation are generally __:__
a.m. to__:__ p.m.,  Eastern time,  Monday through Friday.  The stock information
center is closed on weekends and holidays.

                                       10

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                                  RISK FACTORS

         In  addition  to the other  information  in this  document,  you should
consider carefully the following risk factors in evaluating an investment in our
common stock.

We realize income primarily from the difference between interest earned on loans
and  investments  and interest paid on deposits and  borrowings,  and changes in
interest  rates may  adversely  affect  our net  interest  rate  spread  and net
interest margin, which could hurt our earnings.

         We derive our income mainly from the difference or "spread" between the
interest  earned on loans,  securities and other  interest-earning  assets,  and
interest paid on deposits, borrowings and other interest-bearing liabilities. In
general,  the larger the spread, the more we earn. When market rates of interest
change,  the  interest  we receive on our assets and the  interest we pay on our
liabilities  will  fluctuate.  This can cause  decreases  in our  spread and can
adversely affect our income.

         Several  years ago  market  interest  rates  were at  historically  low
levels.  However,  between  June 2004 and June 2006,  the U.S.  Federal  Reserve
steadily  increased  its target  federal funds rate,  raising it 17 times,  from
1.00% to 5.25%.  While  the  federal  funds  rate and  other  short-term  market
interest rates, which we use as a guide to our deposit pricing,  have increased,
intermediate-  and long-term  market interest rates,  which we use as a guide to
our  loan  pricing,  have  not  increased  proportionately.  This  has  led to a
"flattening" of the market yield curve,  which has even  "inverted"  recently as
short-term  rates have exceeded  long-term rates over an  intermediate  maturity
horizon.  The relatively  flat yield curve has hurt our net interest rate spread
and net interest  margin  because the interest rates we pay on our deposits have
repriced  upwards  faster than the interest  rates that we earn on our loans and
investments.  As of June 30,  2006,  we had $76.5  million  in  certificates  of
deposit that will mature within one year. If the yield curve remains flat, these
deposits are expected to reprice upwards faster than loans and investments.

         Interest  rates also affect how much money we lend.  For example,  when
interest rates rise, the cost of borrowing  increases and loan originations tend
to decrease. In addition,  changes in interest rates can affect the average life
of loans and  investment  securities.  A reduction in interest  rates  generally
results in increased  prepayments of loans and  mortgage-backed  securities,  as
borrowers  refinance  their debt in order to reduce their  borrowing  cost. This
causes  reinvestment  risk,  because  we  generally  are not  able  to  reinvest
prepayments  at rates that are  comparable to the rates we earned on the prepaid
loans or  securities.  Changes in market  interest  rates  could also reduce the
value of our financial assets. If we are unsuccessful in managing the effects of
changes in interest  rates,  our  financial  condition and results of operations
could suffer.

If we are not  successful  in our  efforts to attract and retain  deposits,  our
liquidity, growth and profitability could be hurt.

         Deposits  are our  primary  source  of funds  to  support  our  lending
activities.  Our loan originations,  however,  have in recent years exceeded our
deposits,  which  has  resulted  in a loans  to  deposits  ratio  of 115% and an
increase in borrowings from $0 at June 30, 2003 to $54.2 million in Federal Home
Loan Bank advances at June 30, 2006. Our collateralized borrowing limit with the
Federal  Home Loan Bank at June 30,  2006 was $56.2  million.  In  addition to a
limit on their  availability,  borrowings are generally a more expensive funding
source than deposits.

         We have  expanded  our  branch  network  in an effort to  increase  our
deposits,  emphasizing  core deposits in  particular,  but there is no guarantee
that this strategy will succeed. At June 30, 2006, $112.0

                                       11



million or 57.5% of our total deposits were in  certificates  of deposit.  As of
June 30, 2006,  $76.5  million of our  certificates  of deposit are scheduled to
mature  within  one  year.  This   represents   39.3%  of  our  total  deposits.
Furthermore,  "jumbo" certificates of $100,000 or more are considered to be more
volatile  than smaller  certificate  accounts,  and as of June 30,  2006,  $37.2
million or 19.1% of our total deposits were jumbo certificates.

         The  inflow  of  certificates  of  deposit  and the  retention  of such
deposits upon maturity are  significantly  influenced by general  interest rates
and money market conditions, making certificates of deposit traditionally a more
volatile source of funding than core deposits. Our liquidity could be reduced if
a significant  amount of certificates of deposit  maturing within a short period
of time were not  renewed.  To the extent that such  deposits do not remain with
us, they may need to be replaced with  borrowings  which could increase our cost
of funds and  negatively  impact our net interest  rate spread and our financial
condition.

A portion  of our total  loan  portfolio  consists  of  commercial  real  estate
mortgage loans,  commercial  loans and  construction  loans.  The repayment risk
related  to  these  types of loans is  considered  to be  greater  than the risk
related to one- to four-family residential loans.

         At June  30,  2006,  our  loan  portfolio  included  $23.6  million  of
commercial  real estate  mortgage  loans,  $5.5 million of commercial  loans and
$23.3 million of  construction  loans,  in aggregate  representing  23.3% of our
total loan  portfolio.  Unlike single family or one-to-four  family  residential
mortgage loans,  which generally are made on the basis of the borrower's ability
to make repayment  from his or her  employment  and other income,  and which are
secured by real property with values that tend to be more easily  ascertainable,
commercial  loans  typically are made on the basis of the borrower's  ability to
make repayment from the cash flow of the borrowers' business,  which may include
rental  income.   The  repayment  of  construction  loans  for  residential  and
commercial  land  acquisition and  development,  including loans to builders and
developers,  is dependent,  in part, on the success of the ultimate construction
project. In addition, commercial real estate mortgages and construction loans to
builders and developers generally result in larger balances to single borrowers,
or related groups of borrowers, than one- to four-family loans.

         In addition,  the growth in these loan categories in recent years means
that a large portion of this portfolio is unseasoned.  Relatively new loans that
are  "unseasoned,"  are considered to pose a potentially  greater repayment risk
than more mature loans because they generally do not have  sufficient  repayment
history to indicate the likelihood of repayment in accordance with their terms.

Strong   competition   within  our   market   area  may  limit  our  growth  and
profitability.

         Competition  in the  banking  and  financial  services  industry in New
Jersey is intense.  Many of our competitors have substantially greater resources
and  lending  limits  than we do and  offer  services  that we do not or  cannot
provide. Price competition for loans might result in us originating fewer loans,
or earning less on our loans, and price competition for deposits might result in
a decrease in our total deposits or higher rates on our deposits.

Our  business  is  geographically  concentrated  in central  New  Jersey,  and a
downturn in  conditions  in our market area could have an adverse  impact on our
profitability.

         A substantial  amount of our loans are to individuals and businesses in
central  New Jersey.  Any  decline in the  economy of this market  could have an
adverse  impact  on our  earnings.  Adverse  economic  changes  may also  have a
negative  effect on the ability of our  borrowers to make timely  repayments  of
their loans.  Additionally,  because we have a significant amount of real estate
loans, decreases in local real estate

                                       12



values could  adversely  affect the value of property used as collateral.  If we
are required to liquidate a significant  amount of collateral during a period of
reduced real estate  values to satisfy the debt,  our earnings and capital could
be adversely affected.

If we experience  loan losses in excess of our  allowance,  our earnings will be
adversely affected.

         The risk of credit  losses on loans  varies with,  among other  things,
general economic  conditions,  the type of loan being made, the creditworthiness
of the borrower  over the term of the loan and, in the case of a  collateralized
loan, the value and  marketability  of the  collateral for the loan.  Management
maintains an  allowance  for loan losses based upon  historical  experience,  an
evaluation of economic  conditions and regular reviews of delinquencies and loan
portfolio quality. If management's  assumptions and judgments about the ultimate
collectibility of the loan portfolio prove to be incorrect and the allowance for
loan losses is  inadequate to absorb future losses or if we are required to make
material  additions  to  the  allowance,  our  earnings  and  capital  could  be
significantly  and adversely  affected.  As of June 30, 2006,  our allowance for
loan losses was $921,000 which  represented  0.41% of total loans and 127.39% of
non-performing loans.

After this  offering,  our return on equity will be low.  This could  negatively
impact the price of our stock.

         The net proceeds  from the  offering  will  substantially  increase our
equity capital.  It will take a significant  period of time to prudently  invest
this capital.  For the year ended June 30, 2006,  our return on average  equity,
which is the ratio of our earnings  divided by our average equity  capital,  was
7.31%.  On a pro forma basis assuming that  2,199,375  (the maximum)  shares had
been sold at the  beginning of the year,  our return on pro forma equity for the
year ended June 30, 2006 would have been approximately  4.18%. Because the stock
market values a company based in part on its return on equity, our low return on
equity relative to our peer group could  negatively  affect the trading price of
our stock. See Pro Forma Data.

Additional  public company and stock employee  compensation and benefit expenses
following the offering will negatively impact our profitability.

         Following the offering,  our non-interest expense is likely to increase
as a result of the  financial  accounting,  legal and various  other  additional
non-interest  expenses  usually  associated  with operating as a public company,
particularly as a result of the requirements of the Sarbanes-Oxley Act of 2002.


         We also will recognize  additional  annual  employee  compensation  and
benefit  expenses  stemming from the shares  granted to employees,  officers and
directors  under new  benefit  plans,  including  the  Millington  Savings  Bank
Employee  Stock  Ownership  Plan. We cannot predict the actual amount of the new
stock-related  compensation and benefit expenses because  applicable  accounting
standards  require  that they be based on the fair market value of the shares of
common  stock at specific  points in the future;  however,  we expect them to be
material.  Based on  numerous  assumptions  as set forth  under  Pro Forma  Data
beginning  at page  ___,  if  1,912,500  shares  are sold in the  offering  (the
midpoint of the offering  range),  these stock  benefit plan  expenses for a one
year period are estimated on a pro forma basis to be approximately $341,000, net
of tax.



                                       13



The  implementation  of  stock-based  benefit  plans may dilute  your  ownership
interest in MSB Financial Corp.

         We intend to adopt a stock  option  plan and a  restricted  stock  plan
following the stock  offering.  These stock benefit plans will be funded through
either open market  purchases  or from the issuance of  authorized  but unissued
shares.  Stockholders  would experience a reduction in ownership interest in the
event newly issued  shares are used to fund stock  options and awards made under
the  restricted  stock plan. The use of newly issued shares of stock to fund the
restricted  stock plan instead of open market  purchases would dilute the voting
interests  of existing  stockholders  by  approximately  1.9%.  The use of newly
issued  shares of stock to fund  exercises  of options  granted  under the stock
option plan instead of open market  purchases would dilute the voting  interests
of existing stockholders by approximately 4.7%.

Provisions  in our charter and bylaws  limiting the rights of  stockholders  may
deter potential takeovers and may reduce the trading price of our stock.

         Provisions  in our  charter  and  bylaws  may  make  it  difficult  and
expensive  to pursue a change in control or takeover  attempt  that our Board of
Directors  opposes.  As a result, you may not have an opportunity to participate
in such a  transaction,  and the trading  price of our stock may not rise to the
level of other institutions that are more vulnerable to hostile takeovers.  Such
provisions include:

          o    the election of directors to staggered three-year terms;
          o    provisions restricting stockholders from calling special meetings
               of stockholders;
          o    the absence of cumulative  voting by stockholders in elections of
               directors;
          o    advance notice  requirements for stockholder  nominations and new
               business; and
          o    a provision that limits the voting rights of a single stockholder
               to no more  than 10% of the  then-outstanding  shares,  including
               shares  held by MSB  Financial,  MHC,  for a period of five years
               from the date this stock offering is completed.

Persons who purchase  stock in the offering will own a minority of MSB Financial
Corp.'s  common stock and will not be able to exercise  voting control over most
matters put to a vote of  stockholders,  including  any proposal  regarding  the
acquisition of MSB Financial Corp.

         MSB  Financial,  MHC (the  MHC) will own 55% of MSB  Financial  Corp.'s
common  stock after the  offering.  The MHC's Board of Directors is comprised of
the same persons as MSB Financial  Corp.'s Board of Directors and will generally
be able to exercise voting control over matters put to a vote of stockholders of
MSB Financial  Corp.,  such as a vote on a sale or merger of MSB Financial Corp.
or other  transaction  in which  stockholders  could receive a premium for their
shares and the election of directors of MSB Financial Corp.

Our stock price may decline when trading commences.

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

                                       14



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

         We are subject to extensive regulation,  supervision and examination by
the New  Jersey  Department  of  Banking  and  Insurance,  the  Office of Thrift
Supervision and the Federal Deposit Insurance  Corporation.  Such regulation and
supervision  govern  the  activities  in which an  institution  and its  holding
companies  may engage  and are  intended  primarily  for the  protection  of the
insurance fund and depositors.  Regulatory authorities have extensive discretion
in connection with their supervisory and enforcement  activities,  including the
imposition   of   restrictions   on  the  operation  of  an   institution,   the
classification of assets by the institution and the adequacy of an institution's
allowance for loan losses. Any change in such regulation and oversight,  whether
in the form of regulatory policy, regulations, or legislation, including changes
in the regulations  governing  mutual holding  companies,  could have a material
impact on us and our operations.

                   A WARNING ABOUT FORWARD-LOOKING STATEMENTS

         This  prospectus  contains  forward-looking  statements,  which  can be
identified  by the use of words such as  "believes,"  "expects,"  "anticipates,"
"estimates" or similar expressions. Forward-looking statements include:

o    statements of our goals, intentions and expectations;

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

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

o    estimates of our risks and future costs and benefits.

         These  forward-looking  statements are subject to significant risks and
uncertainties.  Actual results may differ materially from those  contemplated by
the forward-looking statements due to, among others, the following factors:

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

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

o    our  ability to enter into new  markets  and/or  expand  product  offerings
     successfully and take advantage of growth opportunities;

o    increased competitive pressures among financial services companies;

o    changes in consumer spending, borrowing and savings habits;

o    legislative or regulatory changes that adversely affect our business;

o    adverse changes in the securities markets;

o    our ability to successfully manage our growth; and

                                       15



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

         Any of the  forward-looking  statements that we make in this prospectus
and in other  public  statements  we make may  turn out to be wrong  because  of
inaccurate  assumptions we might make, because of the factors  illustrated above
or  because  of  other  factors  that  we  cannot  foresee.   Consequently,   no
forward-looking statement can be guaranteed.

                                 USE OF PROCEEDS

         We are conducting  this stock offering  principally to raise capital to
support our  anticipated  future growth.  The actual net proceeds will depend on
the expenses incurred by us in connection with the offering and the total number
of shares of stock  issued in the  offering,  which  depends on the  independent
valuation and market  considerations.  Although the actual net proceeds from the
sale of the common stock cannot be  determined  until the offering is completed,
we  estimate  that net  proceeds  from the sale of common  stock will be between
$15.5 million and $21.2 million,  or $24.5 million at the adjusted maximum.  The
net proceeds may vary significantly because total expenses of the stock offering
may be significantly more or less than those estimated. Payments for shares made
through  withdrawals from existing  deposit accounts at Millington  Savings Bank
will not result in the receipt of new funds for  investment but will result in a
reduction of Millington  Savings Bank's  deposits and interest  expense as funds
are transferred from interest- bearing certificates or other deposit accounts.

         MSB  Financial  Corp.  intends to use  proceeds  from the  offering  as
follows:



                                                                                                                     MAXIMUM,
                                      MINIMUM                   MIDPOINT                    MAXIMUM                  As Adjusted
                                      -------                   --------                    -------                  -----------
                                            Percent                    Percent                    Percent                   Percent
                                             of Net                     of Net                     of Net                    of Net
                                Amount      Proceeds       Amount      Proceeds       Amount      Proceeds       Amount    Proceeds
                                ------      --------       ------      --------       ------      --------       ------    --------
                                                                      (Dollars in thousands)
                                                                                                     

Estimated net proceeds........ $15,543                    $18,385                    $21,228                    $24,497
   Less:
Investment in the Bank........   7,772        50.0%         9,193        50.0%        10,614        50.0%        12,249       50.0%
Loan to the Employee
     Stock Ownership Plan.....   1,301         8.4%         1,530         8.3%         1,760         8.3%         2,023        8.3%
                               -------                    -------                    -------                    -------
Proceeds retained by
   MSB Financial Corp......... $ 6,470        41.6%       $ 7,662        41.7%       $ 8,854        41.7%       $10,225       41.7%
                               =======                    =======                    =======                    =======



         Millington  Savings Bank will receive 50% of the net proceeds  from the
offering  as a capital  contribution  and will use those  proceeds  for  general
business purposes. In particular, the Bank intends to reduce its borrowings. The
Bank has had strong loan  originations in recent years and has used Federal Home
Loan Bank borrowings to supplement  deposits as a funding source for its lending
activities.  Between June 30, 2002 and June 30, 2006,  total loans grew by $99.7
million  to  $224.4  million,  an 80%  increase,  while  deposits  grew by $40.8
million,  a 26.5%  increase and borrowings  grew from $0 to $54.2  million.  The
majority of borrowings at June 30, 2006 were short term borrowings, which may be
reduced without incurring prepayment penalties.

         The  offering  proceeds  may  also  be  used to  finance  the  possible
acquisition  of  other  financial   institutions  or  branches,  if  appropriate
opportunities  arise.  We do not,  however,  have  any  current

                                       16



understandings,  agreements  or  arrangements  in connection  with  branching or
acquisitions,   other  than  the  already  in  progress  new  branch  office  in
Bernardsville,  New Jersey  which is expected to open in late 2007.  We estimate
that the total land,  construction  and equipment  costs incurred in opening the
Bernardsville office will reach approximately $5.4 million.


         We will lend a  portion  of the  offering  proceeds  to the  Millington
Savings Bank Employee  Stock  Ownership Plan to enable it to buy up to 8% of the
shares sold in the offering.  If it does not buy the full amount of its intended
common stock purchase in the offering, it may purchase shares of common stock in
the open market after the stock  offering.  If the purchase  price of the common
stock is higher  than $10 per share,  the amount of  proceeds  required  for the
purchase by the  Millington  Savings Bank  Employee  Stock  Ownership  Plan will
increase.


         The balance of the offering  proceeds will be retained by MSB Financial
Corp. and deposited with or loaned to Millington  Savings Bank,  providing funds
to support the Bank's  lending  activities.  This will enable the Bank to reduce
its outstanding Federal Home Loan Bank borrowings.  MSB Financial Corp. may also
use the offering proceeds it retains for general corporate  purposes,  including
repurchasing  shares of its common  stock,  paying cash  dividends or supporting
acquisitions of other  financial  institutions,  branches or financial  services
companies.

                         OUR POLICY REGARDING DIVIDENDS

         We have not yet  determined  what our  dividend  policy will be, and we
have no plans or  understandings  as to the  amount or timing of cash  dividends
that MSB Financial  Corp.  may pay after the offering.  Future  declarations  of
dividends  by the  Board  of  Directors  will  depend  on a number  of  factors,
including  investment  opportunities,  growth objectives,  financial  condition,
profitability,  tax  considerations,  minimum capital  requirements,  regulatory
limitations,  stock market characteristics and general economic conditions.  The
timing, frequency and amount of dividends will be determined by the Board. There
can be no assurance that dividends will in fact be paid on the stock or that, if
paid, dividends will not be reduced or eliminated in future periods.

         MSB Financial  Corp.'s  ability to pay dividends may also depend on the
receipt of dividends from Millington Savings Bank, which is subject to a variety
of  regulatory  limitations  on the  payment  of  dividends.  See  Regulation  -
Regulation of Millington Savings Bank - Dividend and Other Capital  Distribution
Limitations.  Furthermore,  as a condition  to the Office of Thrift  Supervision
giving its  authorization to conduct the stock offering,  we have agreed that we
will not initiate any action within one year of completion of the stock offering
involving  the  payment  of a  special  distribution  or return  of  capital  to
stockholders of MSB Financial Corp.

         If MSB  Financial  Corp.  pays  dividends  to its  stockholders,  it is
anticipated  that dividends  payable to MSB Financial,  MHC would be waived.  We
must notify the Office of Thrift  Supervision of any proposed dividend waiver by
MSB Financial,  MHC. The Office of Thrift  Supervision  reviews  dividend waiver
notices on a case-by-case  basis,  and, in general,  does not object to any such
waiver  if:  (i) the  waiver  would  not be  detrimental  to the safe and  sound
operations of the  subsidiary  savings  association  and (ii) the mutual holding
company's board of directors determines that such waiver is consistent with such
directors' fiduciary duties to the mutual holding company's member.

                                       17



                              MARKET FOR THE STOCK

         There is not, at this time, any market for MSB Financial Corp.'s stock.
We have applied to have our common stock listed for trading on the Nasdaq Global
Market under the symbol "MSBF."  Keefe,  Bruyette & Woods has advised us that it
intends to make a market in our common stock  following the offering,  but it is
under no obligation to do so.

         The development of an active trading market depends on the existence of
willing buyers and sellers,  the presence of which is not within our control, or
that of any market  maker.  The number of active buyers and sellers of our stock
at any particular time may be limited. Under such circumstances,  you could have
difficulty  selling your shares of common  stock.  We cannot  assure you that an
active and liquid trading market for the shares of common stock will develop or,
if developed,  will be  maintained.  Nor can we assure you that, if you purchase
shares of common stock in the offering, you will be able to sell them at a price
equal to or above $10.00 per share.

                                 CAPITALIZATION

         Set forth below is the historical capitalization as of June 30, 2006 of
MSB Financial Corp. and the pro forma  capitalization  of MSB Financial Corp. as
of June 30, 2006 after giving effect to the offering and to the  assumptions set
forth under Pro Forma Data.



                                                                               Pro Forma Capitalization at June 30, 2006
                                                                    ---------------------------------------------------------------
                                                       MSB                                                               Maximum,
                                                    Financial          Minimum        Midpoint          Maximum        as adjusted
                                                      Corp.           1,625,625       1,912,500        2,199,375        2,529,281
                                                  Historical, at     shares sold     shares sold      shares sold      shares sold
                                                     June 30,         at $10.00       at $10.00        at $10.00        at $10.00
                                                       2006           per share       per share        per share      per share(1)
                                                      --------        --------        --------         --------          --------
                                                                                   (In thousands)
                                                                                                        
Deposits(2).....................................      $194,755        $194,755        $194,755         $194,755          $194,755
Borrowed funds..................................        54,181          54,181          54,181           54,181            54,181
                                                      --------        --------        --------         --------          --------
Total deposits and borrowed funds...............      $248,936        $248,936        $248,936         $248,936          $248,936
                                                      ========        ========        ========         ========          ========
Stockholders' equity:
  Preferred stock, no par value, 5,000,000
    shares authorized; none to be issued........             -               -               -                -                 -
  Common stock, $0.10 par value,
    10,000,000 shares authorized, assuming
    shares outstanding as shown(3)(4)(5)........             1             361             425              489               562
Additional paid-in capital(3)(4)(5).............           199          15,382          18,160           20,939            24,135
Retained earnings...............................        19,291          19,291          19,291           19,291            19,291
Less:

  Common stock acquired by
    the Millington Savings Bank
    Employee Stock Ownership Plan(6)............             -          (1,301)         (1,530)          (1,760)           (2,023)
  Common stock acquired by the restricted
    stock plan(7)...............................             -            (708)           (833)            (958)           (1,102)
                                                       -------         -------         -------          -------           -------
Total stockholders' equity......................       $19,491         $33,026         $35,513          $38,001           $40,863
                                                       =======         =======         =======          =======           =======



---------------
(1)  As  adjusted  to give  effect to an  increase  in the number of shares sold
     which could occur due to an increase  in the  independent  valuation  and a
     commensurate increase in the offering range of up to 15% to reflect changes
     in market and financial conditions.

                                       18



(2)  Does not reflect  withdrawals  from  deposit  accounts  for the purchase of
     stock in the offering.  Any withdrawals  would reduce pro forma deposits by
     an amount equal to the withdrawals.

(3)  Pro  forma  data  includes  shares to be held by MSB  Financial,  MHC after
     completion of the stock offering. MSB Financial,  MHC is currently the sole
     stockholder of MSB Financial  Corp. and holds 10,000 shares of common stock
     of MSB Financial Corp. Upon completion of the offering, MSB Financial,  MHC
     will hold 55% of the total shares of MSB Financial Corp. to be outstanding.

(4)  No effect  has been given to the  issuance  of  additional  shares of stock
     pursuant  to any stock  option  plan that may be adopted  by MSB  Financial
     Corp. and presented for approval by the stockholders after the offering. An
     amount  equal to 4.9% of the total number of shares  outstanding  after the
     offering,  including  shares held by MSB Financial,  MHC, would be reserved
     for  issuance  upon the  exercise of options to be granted  under the stock
     option plan  following the stock  offering.  See Management - Stock Benefit
     Plans - Stock Option Plan.

(5)  The historical  additional  paid-in  capital amount  represents the initial
     capitalization  of the mid-tier  holding company upon its formation in 2004
     ($200,000 was received by MSB Financial  Corp. for the 10,000 shares issued
     to MSB Financial,  MHC). The pro forma  additional  paid-in capital amounts
     include  this initial  $200,000  capitalization.  The pro forma  additional
     paid-in capital amounts represent the net offering  proceeds,  less the par
     value of all shares  outstanding upon completion of the offering  including
     the shares that will be held by MSB Financial, MHC.


(6)      Assumes that 8% of the shares sold in the offering will be purchased by
         the Millington Savings Bank Employee Stock Ownership Plan, and that the
         funds used to acquire  those shares will be borrowed from MSB Financial
         Corp.,  concurrent with the offering.  For an estimate of the impact of
         the loan on  earnings,  see Pro Forma  Data.  Millington  Savings  Bank
         intends to make scheduled discretionary contributions to the Millington
         Savings Bank Employee Stock  Ownership Plan  sufficient to enable it to
         service and repay its debt over a ten year period. The amount of shares
         to be acquired by the Millington  Savings Bank Employee Stock Ownership
         Plan  is  reflected  as  a  reduction  of  stockholders'   equity.  See
         Management - Stock Benefit Plans - Employee  Stock  Ownership  Plan. If
         the Millington  Savings Bank Employee Stock Ownership Plan is unable to
         purchase stock in the stock offering due to an  oversubscription in the
         offering by eligible  account  holders having first  priority,  and the
         purchase  price in the open market is greater than the original  $10.00
         price  per  share,   there  will  be  a   corresponding   reduction  in
         stockholders'  equity.  See The  Offering  -  Subscription  Offering  -
         Subscription Rights.


(7)  Assumes  that an  amount  equal to  1.96% of the  total  number  of  shares
     outstanding  after the offering,  including  shares held by MSB  Financial,
     MHC,  is  purchased  by the  restricted  stock  plan  following  the  stock
     offering.  The stock purchased by the restricted stock plan is reflected as
     a reduction of  stockholders'  equity.  See footnote (2) to the table under
     Pro Forma Data.

                                 PRO FORMA DATA

         The net proceeds to MSB Financial  Corp. are currently  estimated to be
between $15.5 million and $21.2 million ($24.5 million at the adjusted maximum),
based on the following assumptions:

o    shares  sold  in the  offering  will be sold  in  either  the  subscription
     offering  or the  community  offering,  with  no  shares  being  sold  in a
     syndicated community offering;


o        an amount equal to the cost of  purchasing 8% of the shares sold in the
         offering will be loaned to the  Millington  Savings Bank Employee Stock
         Ownership  Plan to fund its  purchase at an assumed  purchase  price of
         $10.00 per share;


o    expenses  of the  offering,  including  the fees  and  expenses  of  Keefe,
     Bruyette & Woods, are estimated to be between approximately $713,000 at the
     minimum and $766,000 at the maximum ($796,000 at the adjusted maximum); and

                                       19



         The actual net proceeds from the sale of the stock, however,  cannot be
determined until the offering is completed.

         The following  table sets forth MSB Financial  Corp.'s  historical  net
income and  stockholders'  equity prior to the offering and pro forma net income
and stockholders' equity giving effect to the offering. In preparing this table,
we have made the following assumptions:

o    Pro forma earnings have been calculated assuming the stock had been sold at
     the  beginning of the period and the net  proceeds had been  invested at an
     average yield of 5.21% for the year ended June 30, 2006, which approximates
     the yield on a one-year U.S. Treasury bill on June 30, 2006. The yield on a
     one-year  U.S.  Treasury  bill,  rather than an  arithmetic  average of the
     average  yield on  interest-earning  assets  and the  average  rate paid on
     deposits,  has been used to  estimate  income on net  proceeds  because  we
     believe  that the  one-year  U.S.  Treasury  bill  rate is a more  accurate
     estimate  of the  rate  that  would be  obtained  on an  investment  of net
     proceeds from the  offering.  The pro forma  after-tax  yield (based upon a
     40.0% tax rate) on the net  proceeds  is  assumed  to be 3.13% for the year
     ended June 30, 2006.


o    We assumed that 8.0% of the shares sold in the offering  were  purchased in
     the offering by the Millington  Savings Bank Employee Stock  Ownership Plan
     at a price of $10.00 per share  using  funds  borrowed  from MSB  Financial
     Corp.   We  assumed  that   Millington   Savings  Bank  would  make  annual
     contributions to the Millington  Savings Bank Employee Stock Ownership Plan
     in an amount at least equal to the  principal and interest  requirement  of
     the loan. We have assumed a 10-year  amortization  period for the loan. The
     stock acquired by the Millington Savings Bank Employee Stock Ownership Plan
     is reflected as a reduction of stockholders' equity. See Management - Stock
     Benefit Plans - Employee Stock Ownership Plan.


o    We assumed that 8.0% of the shares sold in the offering  were  purchased in
     the offering by Millington  Savings Bank's employee stock ownership plan at
     a price of $10.00 per share using funds  borrowed from MSB Financial  Corp.
     We assumed that Millington Savings Bank would make annual  contributions to
     the  plan in an  amount  at  least  equal  to the  principal  and  interest
     requirement of the loan. We have assumed a 10-year  amortization period for
     the loan.  The stock  acquired  by the  employee  stock  ownership  plan is
     reflected as a reduction of  stockholders'  equity.  See Management - Stock
     Benefit Plans - Employee Stock Ownership Plan.

o    We assumed that the stock option plan had been approved by  stockholders of
     MSB Financial  Corp.  and that MSB Financial  Corp. had reserved for future
     issuance  upon the  exercise  of options  to be  granted  under the plan an
     amount  of stock  equal to 4.9% of the total  number of shares  outstanding
     after the offering, including shares held by MSB Financial, MHC. We assumed
     that  options for all shares  reserved  under the plan were granted to plan
     participants  at the  beginning  of the period and that 30% of the  options
     granted were non-qualified options for income tax purposes. We assumed that
     the  options  would  vest at a rate of 20% per year  and that  compensation
     expense  would be  recognized  on a  straight-line  basis  over the  5-year
     vesting period. See Management - Stock Benefit Plans - Stock Option Plan.

o    We assumed that the restricted stock plan had been approved by stockholders
     of MSB Financial  Corp. and that the restricted  stock plan had acquired an
     amount of stock  equal to 1.96% of the total  number of shares  outstanding
     after the offering,  including  shares held by MSB  Financial,  MHC, at the
     beginning of the periods presented through open market purchases at a price
     of $10.00 per share using funds contributed to the restricted stock plan by
     Millington  Savings  Bank. We assumed that all shares held by the plan were
     granted to plan  participants  at the  beginning  of the  period,  that the
     shares would vest at a rate of 20% per year and that  compensation  expense
     will be recognized on a straight-line basis over the 5-year vesting period.
     See Management - Stock Benefit Plans - Restricted Stock Plan.

o    An  effective  tax rate of 40% is used in  calculating  the  pro-forma  net
     income.

                                       20



o    We did not include any withdrawals from deposit accounts to purchase shares
     in the offering.


o        Historical  and pro forma per share  amounts  have been  calculated  by
         dividing  historical  and pro forma amounts by the indicated  number of
         shares of stock, as adjusted in the pro forma net earnings per share to
         give effect to the  purchase of shares by the  Millington  Savings Bank
         Employee Stock Ownership Plan.


o    Pro forma stockholders' equity amounts have been calculated as if the stock
     had been sold on June 30,  2006 and no effect has been given to the assumed
     earnings effect of the transaction.

         The  following  pro forma data  relies on the  assumptions  we outlined
above,  and this data does not  represent  the fair  market  value of the common
stock,  the current value of assets or liabilities,  or the amount of money that
would be distributed to stockholders if MSB Financial Corp. were liquidated. The
pro forma data does not predict how much we will earn in the future.  You should
not use the following information to predict future results of operations.

         The following  table  summarizes  historical  and pro forma data of MSB
Financial  Corp. at or for the year ended June 30, 2006 based on the assumptions
set forth above and in the notes to the tables and should not be used as a basis
for projections of market value of the stock  following the stock offering.  Pro
forma  stockholders'  equity per share does not take into  account the impact of
the bad debt reserve if MSB Financial Corp. were liquidated.

                                       21





                                                                                                 Pro Forma
                                                                                  At or For the Year Ended June 30, 2006
                                                                      -------------------------------------------------------------
                                                                                                                          Maximum,
                                                                        Minimum         Midpoint          Maximum       as adjusted
                                                                       1,625,625        1,912,500        2,199,375       2,529,281
                                                                      shares sold      shares sold      shares sold     shares sold
                                                                       at $10.00        at $10.00        at $10.00       at $10.00
                                                                       per share        per share        per share       per share
                                                                       ---------        ---------        ---------       ---------
                                                                                      (Dollars in thousands,
                                                                                except share and per share amounts)
                                                                                                              
Gross proceeds.................................................         $16,256          $19,125          $21,994          $25,293
Less expenses..................................................            (713)            (740)            (766)            (796)
Less ESOP funded by MSB Financial Corp.........................          (1,301)          (1,530)          (1,760)          (2,023)
Less restricted stock plan adjustment..........................            (708)            (833)            (958)          (1,102)
                                                                        -------          -------          -------          -------
   Estimated investable net proceeds...........................         $13,534          $16,022          $18,510          $21,372
                                                                        =======          =======          =======          =======

Net Income:
   Historical .................................................         $ 1,402          $ 1,402          $ 1,402          $ 1,402
   Pro forma income on net proceeds............................             423              501              579              668
   Pro forma ESOP adjustment(1)................................             (78)             (92)            (106)            (121)
   Pro forma restricted stock plan adjustment(2)...............             (85)            (100)            (115)            (132)
   Pro forma option adjustment(3)..............................            (127)            (149)            (172)            (197)
                                                                        -------          -------          -------          -------
   Pro forma net income(1)(2)(3)(4)............................         $ 1,535          $ 1,562          $ 1,588          $ 1,620
                                                                        =======          =======          =======          =======

   Historical .................................................         $  0.40          $  0.34          $  0.30          $  0.26
   Pro forma income on net proceeds ...........................            0.12             0.12             0.12             0.12
   Pro forma ESOP on net proceeds .............................           (0.02)           (0.02)           (0.02)           (0.02)
   Pro forma restricted stock plan adjustment .................           (0.02)           (0.02)           (0.02)           (0.02)
   Pro forma stock option adjustment ..........................           (0.04)           (0.04)           (0.04)           (0.04)
                                                                        -------          -------          -------          -------
   Pro forma earnings per share(5).............................         $  0.44          $  0.38          $  0.34          $  0.30
                                                                        =======          =======          =======          =======

Stockholders' equity:
   Historical .................................................         $19,491          $19,491          $19,491          $19,491
   Estimated net proceeds......................................          15,543           18,385           21,228           24,497
   Less: common stock acquired by ESOP(1)......................          (1,301)          (1,530)          (1,760)          (2,023)
   Less: common stock acquired by restricted stock plan(2).....            (708)            (833)            (958)          (1,102)
                                                                        -------          -------          -------          -------
   Pro forma stockholders' equity(4)...........................         $33,026          $35,513          $38,001          $40,863
                                                                        =======          =======          =======          =======

   Historical..................................................         $  5.40          $  4.59          $  3.99          $  3.47
   Estimated net proceeds......................................            4.30             4.33             4.34             4.36
   Less: common stock acquired by ESOP.........................           (0.36)           (0.36)           (0.36)           (0.36)
   Less: common stock acquired by restricted stock plan........           (0.20)           (0.20)           (0.20)           (0.20)
                                                                        -------          -------          -------          -------
   Pro forma book value per share(5)...........................         $  9.14          $  8.36          $  7.77          $  7.27
                                                                        =======          =======          =======          =======


Offering price as a percentage of pro forma
   book value per share........................................          109.41%          119.62%          128.70%          137.55%
                                                                         ======           ======           ======           ======

Offering price to pro forma earnings per share.................          22.73 x          26.32 x           29.41 x          33.33 x
                                                                         ======           ======           ======           ======


                                       22



----------------

(1)  The pro  forma net  income  assumes:  (i) that  Millington  Savings  Bank's
     contribution  to the Millington  Savings Bank Employee Stock Ownership Plan
     for the  principal  portion of the debt  service  requirement  for the year
     ended  June  30,  2006  was made at the end of the  period;  and (ii)  that
     13,005,  15,300,  17,595,  and  20,234  shares  at the  minimum,  midpoint,
     maximum,  and the  adjusted  maximum,  respectively,  were  committed to be
     released  during the year ended June 30, 2006,  at an average fair value of
     $10.00 per share and were accounted for as a charge to expense. If the fair
     market  value per share at the time shares are  committed to be released is
     different than $10.00 per share,  the related  expense  recognized  will be
     different.


(2)  The issuance of authorized  but unissued  shares of stock to the restricted
     stock  plan  instead  of open  market  purchases  would  dilute  the voting
     interests  of  stockholders  that  purchased  shares  in  the  offering  by
     approximately  1.9%.  If the  actual  cost of the  shares  acquired  by the
     restricted  stock plan is  different  than  $10.00 per share,  the  expense
     recognized  will be different.  There can be no assurance that  stockholder
     approval of the  restricted  stock plan will be obtained or that the actual
     purchase  price of the  shares  will be  equal to  $10.00  per  share.  See
     Management - Stock Benefit Plans - Restricted Stock Plan.

(3)  The pro forma net income  assumes that the options  granted under the stock
     option plan have a value of $4.07 per option,  which was  determined  using
     the  Black-Scholes-Merton   option  pricing  formula  using  the  following
     assumptions:  (i) the trading  price on date of grant was $10.00 per share;
     (ii)  exercise  price is equal to the  trading  price on the date of grant;
     (iii)  dividend  yield of 0%; (iv)  vesting  period of 5 years and expected
     life of 10 years; (v) expected  volatility of 9.69%; and risk-free interest
     rate of 5.15%.  Because  there is  currently  no market  for MSB  Financial
     Corp.'s common stock, the assumed  expected  volatility is based on the SNL
     Financial  MHC  index.  If the fair  market  value per share on the date of
     grant is different than $10.00,  or if the  assumptions  used in the option
     pricing  formula are different  from those used in preparing this pro forma
     data, the value of the options and the related  expense  recognized will be
     different.  There can be no assurance that the actual fair market value per
     share on the date of grant, and  correspondingly  the exercise price of the
     options,  will be $10.00 per share. The issuance of authorized but unissued
     shares of stock  instead of open  market  purchases  to fund  exercises  of
     options  granted  under the stock  option  plan  would  dilute  the  voting
     interests  of  stockholders  that  purchased  shares  in  the  offering  by
     approximately  4.7%.  See  Management - Stock  Benefit Plans - Stock Option
     Plan.

(4)  The retained  earnings of MSB Financial  Corp. and Millington  Savings Bank
     will continue to be substantially  restricted after the stock offering. See
     Our Policy  Regarding  Dividends and  Regulation - Regulation of Millington
     Savings Bank - Dividend and Other Capital Distribution Limitations.

(5)      For  purposes  of  calculating  earnings  per  share,  only the  shares
         committed to be released  under the  Millington  Savings Bank  Employee
         Stock  Ownership  Plan were  considered  outstanding.  For  purposes of
         calculating  book value per  share,  all  shares  under the  Millington
         Savings Bank Employee Stock Ownership Plan were considered outstanding.
         We have also  assumed  that no options  granted  under the stock option
         plan were exercised during the period and that the trading price of MSB
         Financial  Corp.  common  stock at the end of the period was $10.00 per
         share.  Under this  assumption,  using the treasury  stock  method,  no
         additional  shares  of stock  were  considered  to be  outstanding  for
         purposes of calculating earnings per share or book value per share.


                                       23



                   HISTORICAL AND PRO FORMA CAPITAL COMPLIANCE

         The following table presents  Millington  Savings Bank's historical and
pro forma capital position relative to its regulatory capital requirements as of
June 30, 2006. Pro forma capital levels assume receipt by the Bank of 50% of the
net  proceeds at all points of the  offering  range.  However,  such  additional
amount as may be necessary  will be contributed to the Bank so that the ratio of
its tangible  capital to its total assets upon  completion of the offering is at
least 10%. For a discussion of the assumptions  underlying the pro forma capital
calculations presented below, see Use of Proceeds,  Capitalization and Pro Forma
Data. For a discussion of the capital standards applicable to Millington Savings
Bank,  see  Regulation  -  Regulation  of  Millington  Savings Bank - Regulatory
Capital Requirements.


                                                                        Pro Forma at June 30, 2006
                                            ----------------------------------------------------------------------------------------
                                                   Minimum             Midpoint              Maximum           Maximum, as adjusted
                            Actual, at      1,625,625 shares sold 1,912,500 shares sold 2,199,375 shares sold 2,529,281 shares sold
                           June 30, 2006     at $10.00 per share   at $10.00 per share   at $10.00 per share  at $10.00 per share(1)
                        ------------------- --------------------  ------------------- --------------------- ----------------
                                  Percentage           Percentage           Percentage           Percentage          Percentage
                          Amount of Assets(2)  Amount of Assets(2)  Amount of Assets(2)  Amount of Assets(2)  Amount of Assets(2)
                          ------ ------------  ------ ------------  ------ ------------  ------ ------------  ------ ------------
                                                                   (Dollars in thousands)
                                                                                          
GAAP Capital............ $19,292      7.14%   $25,055      9.04%   $26,121      9.38%   $27,188       9.72%  $28,415     10.10%
                         =======      ====    =======      ====    =======     =====    =======      =====   =======     =====

Tangible Capital(3)..... $19,112      7.19%   $24,875      9.12%   $25,941      9.46%   $27,008       9.81%  $28,235     10.20%
Tangible Capital
  Requirement...........   3,987      1.50      4,093      1.50      4,112      1.50      4,132       1.50     4,154      1.50
                         -------     -----    -------     -----    -------     -----    -------      -----   -------     -----
Excess.................. $15,125      5.69%   $20,782      7.62%   $21,829      7.96%   $22,876       8.31%  $24,081      8.70%
                         =======      ====    =======      ====    =======     =====    =======      =====   =======     =====

Core Capital............ $19,112      7.19%   $24,875      9.12%   $25,941      9.46%   $27,008       9.81%  $28,235     10.20%
Core Capital
  Requirement...........  10,632      4.00     10,915      4.00     10,966      4.00     11,081       4.00    11,078      4.00
                         -------     -----    -------     -----    -------     -----    -------      -----   -------     -----
Excess.................. $ 8,480      3.19%   $13,960      5.12%   $14,975      5.46%   $15,990       5.81%  $17,157      6.20%
                         =======      ====    =======      ====    =======     =====    =======      =====   =======     =====
Total Risk-Based
  Capital(4)(5)......... $20,033     10.99%   $25,796     13.88%   $26,862     14.41%   $27,929      14.93%  $29,156     15.52%
Risk-Based Capital
  Requirement...........  14,577      8.00     14,860      8.00     14,912      8.00     14,963       8.00    15,023      8.00
                         -------     -----    -------     -----    -------     -----    -------      -----   -------     -----
Excess.................. $ 5,456      2.99%   $10,936      5.88%   $11,950      6.41%   $12,966       6.93%  $14,133      7.52%
                         =======     =====    =======     =====    =======     =====    =======      =====   =======     =====

Reconciliation of capital infused into
  Millington Savings Bank:
    Net proceeds infused...................   $ 7,772               $9,193              $10,614               $12,249

Less:
    Common Stock acquired by the
      Millington Savings Bank
      Employee Stock Ownership Plan........    (1,301)              (1,530)              (1,760)               (2,023)
    Common Stock acquired by
      restricted stock plan................      (708)                (833)                (958)               (1,102)
                                              -------              -------              -------               -------
Pro forma increase in GAAP and
  regulatory capital.......................   $ 5,763              $ 6,830              $ 7,896               $ 9,124
                                              =======              =======              =======               =======


-------------------
(1)  As adjusted  to give  effect to an increase in the number of shares  issued
     which could occur due to an increase in the offering  range of up to 15% as
     a result of  regulatory  considerations  or  changes  in market or  general
     financial  and  economic  conditions  following  the  commencement  of  the
     offerings.
(2)  Tangible  and  core  capital  levels  are  shown as a  percentage  of total
     adjusted assets.  The risk-based  capital level is shown as a percentage of
     risk-weighted assets.
(3)  Generally accepted  accounting  principles,  referred to as "GAAP," capital
     includes  goodwill,   intangible  assets  and  unrealized  gain  (loss)  on
     available for sale  securities,  net,  which are not included in regulatory
     capital.
(4)  Assumes   net   proceeds   are   invested   in  assets  that  carry  a  50%
     risk-weighting.
(5)  The difference  between core capital and risk-based capital is attributable
     to the addition of general loan loss reserves of $921,000.

                                       24


                               RECENT DEVELOPMENTS

The  financial  information  and other data in this  section is derived from MSB
Financial Corp.'s audited consolidated  financial statements at and for the year
ended June 30, 2006 and unaudited  consolidated  financial statements at and for
the  three  months  ended  September  30,  2006  and  2005.  In the  opinion  of
management,  all adjustments consisting of normal recurring adjustments that are
necessary for a fair  presentation  of the interim  periods have been reflected.
The results of  operations  and other data  presented for the three month period
ended  September  30, 2006 do not  necessarily  indicate the results that may be
expected for the year ending June 30, 2007 or any other period.




Balance Sheet Data:                               At                   At
                                              September 30,         June 30,
                                                  2006                2006
                                                      (In thousands)
                                                             
Total assets.............................       $275,721           $270,184
Cash and cash equivalents................          5,752              5,881
Loans receivable, net....................        223,662            218,321
Securities held to maturity..............         27,585             27,707
Deposits.................................        195,473            194,755
Federal Home Loan Bank advances..........         58,736             54,181
Total stockholder's equity...............         19,634             19,491








Summary of Operations:                                        For the Three Months
                                                               Ended September 30,
                                                            2006                2005
                                                          --------            ------
                                                             (In thousands)
                                                                         
Total interest income.....................................  $3,874              $3,223
Total interest expense....................................   2,195               1,367
                                                            ------               -----
     Net interest income..................................   1,679               1,856
Provision for loan losses.................................       -                  15
                                                            ------               -----
Net interest income after provision for loan losses.......   1,679               1,841
Noninterest income........................................     153                 159
Noninterest expense.......................................   1,611               1,404
                                                            ------               -----
Income before income taxes................................     221                 596
Income tax provision......................................      78                 224
                                                            ------               -----
Net income................................................  $  143              $  372
                                                            ======              ======


                                       25





                                                                       At or For the
                                                                    Three Months Ended
                                                                       September 30,
                                                                       -------------
                                                                      2006         2005
                                                                     ------       ------
                                                                         
Annualized Performance Ratios:

  Return on average assets (ratio of net income
    to average total assets)..................................        0.21%        0.62%

  Return on average equity (ratio of net income
    to average equity)........................................        2.89         8.09

  Net interest rate spread....................................        2.44         3.16

  Net interest margin on average interest-earning
    assets....................................................        2.63         3.30

  Average interest-earning assets to average
    interest-bearing liabilities..............................      105.65       105.72

  Operating expense ratio (noninterest expenses
     to average total assets).................................        2.38         2.33

  Efficiency ratio (noninterest expense divided by
    sum of net interest income and noninterest
    income)...................................................       87.94        69.68

Asset Quality Ratios:

  Non-performing loans to total loans.........................        0.64         1.19

  Non-performing assets to total assets.......................        0.52         0.95

  Net charge-offs to average loans outstanding................           -            -

  Allowance for loan losses to non-performing loans...........       64.23        37.73

  Allowance for loan losses to total loans....................        0.41         0.45

Capital Ratios:

  Equity to total assets at end of period.....................        7.12         7.52

  Average equity to average assets............................        7.28         7.62

Number of Offices ............................................         4            3


                                       26



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

General.  Total assets reached $275.7 million at September 30, 2006, compared to
$270.2 million at June 30, 2006.  The increase was fueled by loan  originations,
the funding for which was provided  primarily  by an increase in borrowed  funds
which grew to $58.7 million at September 30, 2006,  compared to $54.2 million at
June 30, 2006, an 8.3% increase.

Loans. Loans receivable,  net, rose to $223.7 million at September 30, 2006 from
$218.3  million at June 30, 2006,  an increase of $5.3  million,  or 2.4%.  As a
percentage of assets,  loans increased to 81.1% from 80.8%.  One-to-four  family
real  estate  loans  grew by $2.8  million  or 2.4%  between  June 30,  2006 and
September  30,  2006.  Home  equity  lending  continued  to be strong,  and this
portfolio grew during the three months ended  September 30, 2006 by $2.8 million
or 5.8%.

Securities.  Our portfolio of securities held to maturity  decreased slightly to
$27.6  million at  September  30, 2006 as compared to $27.7  million at June 30,
2006 due to principal  repayments  during the three months ended  September  30,
2006.  We did not  purchase  any new  securities  during the three  months ended
September  30,  2006,  and we  continue  to use cash flows  from the  securities
portfolio to fund loan originations.

Deposits. Total deposits at September 30, 2006 were $195.5 million,  compared to
$194.8  million at June 30,  2006.  Certificates  of deposit  increased  by $2.8
million  partially  offsetting  a decrease of $2.1  million in  interest-bearing
checking and savings accounts.

Borrowings.  Total  borrowings at September 30, 2006 amounted to $58.7  million,
compared to $54.2 million at June 30, 2006. The increase  resulted from the need
to fund new loans.  We anticipate  using net proceeds from the stock offering to
reduce our outstanding Federal Home Loan Bank borrowings.

Our  investment  in Federal Home Loan Bank of New York stock was $3.0 million at
September  30, 2006  compared to $2.8 million at June 30, 2006,  reflecting  the
increased level of borrowings.

Equity. Stockholder's equity was $19.6 million at September 30, 2006 as compared
to $19.5  million at June 30, 2006,  reflecting  net income for the  three-month
period of $143,000.

Comparison  of Operating  Results for the Three Months Ended  September 30, 2006
and 2005

General.  Our net income  for the three  months  ended  September  30,  2006 was
$143,000,  a 61.6%  decrease  compared to net income of  $372,000  for the three
months ended  September 30, 2005. This was primarily the result of a $177,000 or
9.5%  decrease  in net  interest  income and a  $207,000  or 14.7%  increase  in
non-interest  expense for the three months ended  September 30, 2006 as compared
to the same  period in 2005.  An  $83,000  increase  in  salaries  and  employee
benefits expense was the largest increase in the non-interest expense category.

Net Interest  Income.  Net interest  income for the three months ended September
30,  2006  amounted  to $1.7  million  and was  $177,000  or 9.5% lower than net
interest income for the three months ended September 30, 2005 of $1.9 million. A
$651,000  or 20.2%  increase  in  interest  income  for the three  months  ended
September 30, 2006 was  substantially  offset by a $828,000 or 60.6% increase in
interest expense.

                                       27



The increase in interest  income for the three months ended  September  30, 2006
resulted from a 13.5% increase in the average balance of interest-earning assets
and a 34 basis points  increase in the average yield thereon.  Our average yield
on loans  receivable for the three months ended September 30, 2006 was 6.37%, 34
basis points  greater than for the three months ended  September  30, 2005.  The
increase in yield on loans combined with a $29.9 million increase in the average
balance of loans  receivable  for the three months ended  September  30, 2006 is
responsible  for the 20.2%  increase  in interest  income over the three  months
ended September 30, 2005.

The 60.6% increase in interest  expense for the three months ended September 30,
2006 is attributable to higher interest rates and borrowings  during the period.
The average cost of deposits rose by 76 basis points,  while the average balance
of deposits was level between periods.  The average balance of Federal Home Loan
Bank  advances for the three months ended  September  30, 2006 was $57.5 million
and the average  cost  thereof was 5.19%.  This  represents  a $32.7  million or
131.9%  increase over the average  balance of $24.8 million for the three months
ended September 30, 2005 and a 127 basis point increase over the average cost of
advances for the 2005 period.

Provision  for Loan  Losses.  We did not make a loan loss  provision  during the
three months ended  September 30, 2006. A $15,000  provision was made during the
same period in 2005. The ratio of total  non-performing loans to total loans was
1.19% at  September  30, 2005 as compared to 0.64% at September  30,  2006.  The
allowance for loan losses  totaled  $921,000 at September 30, 2006 and reflected
our  estimation of the losses  inherent in our loan portfolio to the extent they
are both probable and reasonable to estimate.

Non-Interest Income. This category includes fees derived from checking accounts,
ATM  transactions and debit card use and mortgage related fees. It also includes
increases in the cash-surrender value of our bank owned life insurance. Overall,
non-interest  income fell by $6,000 or 3.8% for the three months ended September
30, 2006 as compared to the three months ended September 30, 2005.

Non-Interest  Expenses.  Total  non-interest  expenses grew by $207,000 or 15.0%
during the three months  ended  September  30, 2006 to $1.6 million  compared to
$1.4 million for same period in 2005.

Salaries and employee  benefits  expense  totaled  $777,000 for the three months
ended  September  30, 2006,  an $83,000 or 12.0%  increase over $694,000 for the
three months ended  September 30, 2005.  Salaries and employee  benefits are our
main  non-interest  expense  and  represented  48.1% and  49.4% of  non-interest
expenses for the three months ended September 30, 2006 and 2005, respectively.

Non-interest  expense for the 2006 period was also  impacted by the operation of
the Martinsville branch office which opened in July 2006.

Income Taxes.  Income tax expense for the three months ended  September 30, 2006
was $78,000 or 35.3% of income  before  income  taxes as compared to $224,000 or
37.6% of income  before  income taxes for the three months ended  September  30,
2005.  The  reduction for the three months ended  September  30, 2006  primarily
reflects lower pre-tax income for that period.

                                       28



                        SELECTED FINANCIAL AND OTHER DATA

         The financial  information and other data in this section is derived in
part from MSB Financial Corp.'s audited  consolidated  financial  statements and
should be read together with the consolidated financial statements and the notes
thereto beginning on page F-1 of this document.




Balance Sheet Data:
                                                            At June 30,
                                          2006       2005       2004       2003       2002
                                        --------   --------   --------   --------   --------
                                                          (In thousands)

                                                                    
  Total assets ......................   $270,184   $237,869   $215,881   $196,766   $168,914
  Cash and cash equivalents .........      5,881      5,666      3,800     13,338     14,909
  Loans receivable, net .............    218,321    187,192    168,614    138,496    122,969
  Securities held to maturity .......     27,707     28,292     31,515     37,606     24,167
  Deposits ..........................    194,755    196,931    190,500    180,343    153,920
  Federal Home Loan Bank advances.xxx     54,181     21,195      7,500       --         --
  Total stockholder's equity ........     19,491     18,089     16,578     15,230     13,933




Summary of Operations:
                                                     For the Year Ended June 30,
                                          2006       2005       2004       2003       2002
                                        --------   --------   --------   --------   --------
                                                         (In thousands)
                                                                    
  Total interest income .............   $ 14,117   $ 11,754   $ 10,769   $ 10,524   $ 10,281
  Total interest expense ............      6,661      4,386      3,856      4,277      5,025
                                        --------   --------   --------   --------   --------
     Net interest income ............      7,456      7,368      6,913      6,247      5,256
  Provision for loan losses .........         60        135        134        136        137
                                        --------   --------   --------   --------   --------
  Net interest income after provision
    for loan losses .................      7,396      7,233      6,779      6,111      5,119
  Noninterest income ................        603        629        517        432        372
  Noninterest expense ...............      5,763      5,432      4,900      4,448      3,489
                                        --------   --------   --------   --------   --------
  Income before taxes ...............      2,236      2,430      2,396      2,095      2,002
  Income tax provision ..............        834        919        948        798        703
                                        --------   --------   --------   --------   --------
  Net income ........................   $  1,402   $  1,511   $  1,448   $  1,297   $  1,299
                                        ========   ========   ========   ========   ========


                                       29





                                                                          At or For the Year Ended June 30,
                                                             ------------------------------------------------------------
                                                              2006         2005          2004         2003          2002
                                                             ------       ------        ------       ------        ------
                                                                                                  
Performance Ratios:
  Return on average assets (ratio of net income
    to average total assets).........................          0.55%        0.66%         0.70%        0.72%         0.83%
  Return on average equity (ratio of net income
    to average equity)...............................          7.31         8.64          9.07         8.83          9.77
  Net interest rate spread...........................          2.97         3.33          3.34         3.40          3.18
  Net interest margin on average interest-earning
    assets...........................................          3.12         3.44          3.50         3.61          3.47
  Average interest-earning assets to average
    interest-bearing liabilities.....................        105.53       105.45        107.97       108.47        109.98
  Operating expense ratio (noninterest expenses
    to average total assets).........................          2.25         2.37          2.38         2.47          2.22
  Efficiency ratio (noninterest expense divided by
    sum of net interest income and noninterest
    income)..........................................         71.51        67.93         65.95        66.60         61.99
Asset Quality Ratios:
  Non-performing loans to total loans................          0.32         1.25          1.13         2.09          1.25
  Non-performing assets to total assets..............          0.27         1.01          0.92         1.51          0.92
  Net charge-offs to average loans outstanding.......          0.01            -          0.03         0.20          0.01
  Allowance for loan losses to non-performing
    loans............................................        127.39        36.31         37.44        21.94         50.16
  Allowance for loan losses to total loans...........          0.41         0.45          0.42         0.46          0.63
Capital Ratios:
  Equity to total assets at end of period............          7.21         7.60          7.68         7.74          8.25
  Average equity to average assets...................          7.50         7.63          7.75         8.16          8.44
Number of Offices(1):                                             3            3             3            3             2


---------------
(1)  All of the Bank's  offices are full  service  locations.  The  Martinsville
     branch office opened subsequent to June 30, 2006 and is not included in the
     number shown above.

                                       30



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

         This   discussion   and  analysis   reflects  MSB   Financial   Corp.'s
consolidated  financial  statements and other relevant  statistical  data and is
intended to enhance your understanding of our financial condition and results of
operations.  You should read the information in this section in conjunction with
MSB Financial Corp.'s  consolidated  financial statements and accompanying notes
thereto  beginning on page F-1 of this document,  and the other statistical data
provided  in  this  prospectus.   Unless  otherwise  indicated,   the  financial
information  presented  in this  section  reflects  the  consolidated  financial
condition and results of operations  of MSB Financial  Corp.  and its direct and
indirect subsidiaries.

Overview

         We were  originally  founded in 1911 as  "Millington  Building and Loan
Association,"  and we  commenced  business  in a  small  office  located  over a
hardware  store on Long Hill Road in  Millington,  New  Jersey.  Our  operations
remained at that site and expanded  into larger  areas of the building  until we
finally  outgrew the space and in 1994 moved into a newly  constructed  building
adjacent to the original office.  This was our sole location until 1998, when we
opened our first branch office.

         Our primary  business is  attracting  retail  deposits from the general
public and using those deposits,  together with funds generated from operations,
principal repayments on securities and loans and borrowed funds, for our lending
and investing  activities.  Our loan  portfolio  consists of one- to four-family
residential   real  estate   mortgages,   commercial   real  estate   mortgages,
construction loans, commercial loans, home equity loans and lines of credit, and
other  consumer  loans.  We also  invest  in  U.S.  government  obligations  and
mortgage-backed  securities.  At June 30,  2006,  our total  assets  were $270.2
million. Total assets grew by 13.6% during the year ended June 30, 2006 and grew
by 10.2% the year before.

         Net income for the year ended June 30, 2006  totaled $1.4  million,  as
compared to $1.5  million for the year ended June 30, 2005 and $1.4  million for
the year ended June 30, 2004. Net interest income has been  constrained,  as our
net  interest  margin  was  compressed  due  to  the  increasing  interest  rate
environment.  For the year ended June 30,  2006,  interest  income  increased by
20.1% while  interest  expense  increased  by 51.9% as  compared  to 2005.  This
followed  increases  for the  year  ended  June 30,  2005 of 9.1%  and  13.7% in
interest  income and interest  expenses,  respectively,  as compared to the year
ended June 30, 2004.


         We  have  experienced  strong  loan  demand  in  recent  years  and the
resulting  growth in our loan portfolio has been  significant.  Between June 30,
2002 and June 30, 2006, total loans grew by $99.7 million to $224.4 million,  an
80% increase. Our difficulty has been growing the deposit side of our operations
to match the growth in the  lending  side of our  operations.  During  this same
period, our deposits grew by $40.8 million, a 26.5% increase.

         While  deposits  continue to be our primary  source of funds to support
our lending activities,  our loan originations in recent years have exceeded our
deposits. At June 30, 2006, our total loans to deposits ratio was 115%. This has
caused us to use Federal Home Loan Bank borrowings to fund loans, and borrowings
are  usually a higher cost  source of funds than  deposits,  which means our net
interest  rate  spread  and  profitability  are lower than if we did not have to
borrow funds.  As of three years ago, we had zero  borrowings  while at June 30,
2006 our Federal Home Loan Bank advances had grown to $54.2 million. In the near
term, we anticipate reducing a portion of these borrowings with the net proceeds
from the stock  offering.  At June 30, 2006, the majority of our borrowings were
short term borrowings, the repayment

                                       31



of which  would  not  force  us to  incur  prepayment  penalties.  That  planned
reduction, however, does not remove the need, if we are able to continue growing
our  loan  portfolio,  to also  grow  deposits  and  lessen  our  dependancy  on
borrowings as a funding source.

         We have  expanded  our  branch  network  in an effort to  increase  our
deposits.  Since 2002 we have opened two new offices and  relocated  an existing
office to a larger  facility.  We have another office  scheduled to open in late
2007. Our challenge going forward is whether we can  successfully  grow deposits
within this expanded branch network.

Critical Accounting Policies

         Our  accounting  policies  are  integral to  understanding  the results
reported and are described in Note 2 to our  consolidated  financial  statements
beginning on page F-1 of this document. In preparing the consolidated  financial
statements, management is required to make estimates and assumptions that affect
the  reported  amounts  of  assets  and  liabilities  as of  the  dates  of  the
consolidated statements of financial condition and revenues and expenses for the
periods  then  ended.  Actual  results  could  differ  significantly  from those
estimates.  A material estimate that is particularly  susceptible to significant
change relates to the determination of the allowance for loan losses.

         The  allowance for loan losses  represents  our best estimate of losses
known and inherent in our loan  portfolio  that are both probable and reasonable
to estimate.  In  determining  the amount of the allowance  for loan losses,  we
consider the losses inherent in our loan portfolio and changes in the nature and
volume of our loan  activities,  along with  general  economic  and real  estate
market  conditions.  We  utilize  a two tier  approach:  (1)  identification  of
impaired  loans  for  which   specific   reserves  are   established;   and  (2)
establishment  of general  valuation  allowances  on the  remainder  of the loan
portfolio.  We maintain a loan review  system  which  provides  for a systematic
review of the loan portfolio and the early  identification of potential impaired
loans.  Such system takes into  consideration,  among other things,  delinquency
status,  size of loan,  type of collateral  and the  financial  condition of the
borrower.  Specific loan loss allowances are  established  for identified  loans
based  on a review  of such  information  and/or  appraisals  of the  underlying
collateral. General loan loss allowances are based upon a combination of factors
including,  but not limited to, actual loan loss experience,  composition of the
loan portfolio, current economic conditions and management's judgment.

         Although  specific and general loan loss  allowances are established in
accordance  with  management's  best estimate,  actual losses are dependent upon
future events and, as such,  further provisions for loan losses may be necessary
in order to increase the level of the  allowance  for loan losses.  For example,
our  evaluation  of the allowance  includes  consideration  of current  economic
conditions,  and a change in economic conditions could reduce the ability of our
borrowers  to make  timely  repayments  of their  loans.  This  could  result in
increased  delinquencies and increased  non-performing loans, and thus a need to
make  increased  provisions to the  allowance for loan losses,  which would be a
charge to income  during  the  period  the  provision  is made,  resulting  in a
reduction to our earnings.  A change in economic conditions could also adversely
affect  the  value of the  properties  collateralizing  our real  estate  loans,
resulting in increased charge-offs against the allowance and reduced recoveries,
and thus a need to make  increased  provisions to the allowance for loan losses.
Furthermore,  a change in the composition of our loan portfolio or growth of our
loan portfolio could result in the need for additional provisions.

                                       32



Comparison of Financial Condition at June 30, 2006 and 2005

         General. Total assets reached $270.2 million at June 30, 2006, compared
to  $237.9   million  at  June  30,  2005.  The  increase  was  fueled  by  loan
originations,  the funding for which was  provided  primarily  by an increase in
borrowed  funds which grew to $54.2 million at June 30, 2006,  compared to $21.2
million at June 30, 2005.  The increase in borrowings  was necessary to meet the
strong loan  demand as deposits  fell  slightly,  to $194.8  million at June 30,
2006,  compared to $196.9  million at June 30, 2005.  The Bank's average cost of
interest-bearing  deposits for the year ended June 30, 2006 was 2.65%,  55 basis
points higher than the prior year. The Bank's strategy was to remain competitive
on rates but to limit the  increase in its cost of deposits  resulting  from the
increasing   interest  rate   environment  as  much  as  possible  by  utilizing
borrowings,   which  management   determined  to  be  more  cost-effective  than
aggressively seeking additional deposits through competitive pricing.

         Total  assets  grew $32.3  million or 13.6%  between  years while total
liabilities   grew  by  $30.9  million  or  14.1%,  and  the  ratio  of  average
interest-earning  assets to  average-interest  bearing  liabilities  was static,
increasing only 8 basis points between years.

         Loans.  Loans receivable,  net, rose to $218.3 million at June 30, 2006
from $187.2 million at June 30, 2005, an increase of $31.1 million, or 16.6%. As
a percentage of assets, loans increased to 80.8% from 78.7%. The Bank benefitted
from strong  demand for  one-to-four  family and home equity loans in its market
area.  One-to-four family real estate loans grew by $7.4 million or 6.5% between
June 30,  2005 and June 30,  2006.  Following a 28.9%  increase  during the year
ended June 30, 2005, the home equity portfolio continued to grow during the year
ended June 30, 2006 and increased by $11.0 million or 28.6%. The commercial real
estate, construction, commercial and consumer loan portfolios grew also.

         Securities.  Our  portfolio of  securities  held to maturity was nearly
unchanged at $27.7 million at June 30, 2006 as compared to $28.3 million at June
30, 2005.  Maturities,  calls and principal  repayments  during the year totaled
$584,000 as compared to $3.2 million  during the prior year. We did not purchase
any new  securities  during  either of the last two years as we continued to use
those cash flows to fund loan  originations.  We anticipate that cash flows from
the  securities  portfolio  may continue to be used to reduce  Federal Home Loan
Bank borrowings.

         Deposits. Total deposits at June 30, 2006 were $194.8 million, compared
to $196.9 million at June 30, 2005.  Certificates  of deposit  increased by $8.2
million  partially  offsetting a decrease of $11.1  million in  interest-bearing
checking and savings accounts.

         Borrowings.  Total  borrowings  at June  30,  2006  amounted  to  $54.2
million,  compared to $21.2 million at June 30, 2005.  We  anticipate  using net
proceeds  from the stock  offering to reduce our  outstanding  Federal Home Loan
Bank borrowings.

         Our  investment  in  Federal  Home Loan Bank of New York stock was $2.8
million at June 30, 2006  compared to $1.5 million at June 30, 2005,  reflecting
the required  increase in  ownership  of Federal Home Loan Bank stock  resulting
from the increase in borrowings during the year ended June 30, 2006.

         Equity.  Stockholder's  equity was $19.5  million  at June 30,  2006 as
compared  to $18.1  million  at June 30,  2005,  reflecting  net  income of $1.4
million for the year ended June 30, 2006.

                                       33



Comparison of Operating Results for the Three Years Ended June 30, 2006

         General. Our results of operations depend primarily on our net interest
income.  Net interest  income is the difference  between the interest  income we
earn  on  our   interest-earning   assets  and  the   interest  we  pay  on  our
interest-bearing  liabilities. It is a function of the average balances of loans
and investments versus deposits and borrowed funds outstanding in any one period
and the  yields  earned  on those  loans and  investments  and the cost of those
deposits and borrowed funds.  Our results of operations are also affected by our
provision  for  loan  losses,  non-interest  income  and  non-interest  expense.
Non-interest income includes service fees and charges,  including income on bank
owned life  insurance.  Non-interest  expense  includes  salaries  and  employee
benefits,  occupancy and equipment expense and other general and  administrative
expenses such as service bureau fees and advertising costs.

         Our net income for the year ended  June 30,  2006 was $1.4  million,  a
7.2% decrease compared to net income of $1.5 million for the year ended June 30,
2005. An $88,000 or 1.2% increase in net interest income and a $75,000  decrease
in the  provision  for loan  losses to $60,000  for the year ended June 30, 2006
from  $135,000  for the year  ended  June 30,  2005 were not  enough to negate a
$331,000 or 6.1%  increase in  non-interest  expense for the year ended June 30,
2006. A $297,000  increase in salaries and employee  benefits expense  accounted
for most of the increase in non-interest expense.

         Net income of $1.5 million for the year ended June 30, 2005 represented
a  4.4%increase  as  compared  to net income for the year ended June 30, 2004 of
$1.4 million.  Net interest  income grew by $455,000 or 6.6% while  non-interest
income  rose by  $112,000.  These  increases,  however,  were  mostly  offset by
non-interest expenses for the year ended June 30, 2005 which grew by $532,000 or
10.9% compared to the year ended June 30, 2004.

         Net Interest  Income.  Net interest  income for the year ended June 30,
2006  amounted to $7.5  million and was $88,000 or 1.2% higher than net interest
income for the year ended June 30, 2005 of $7.4 million. A $2.4 million or 20.1%
increase in interest  income for the year ended June 30, 2006 was  substantially
offset by a $2.3  million  or 51.9%  increase  in  interest  expense so that net
interest  income for the year ended June 30, 2006 was nearly flat as compared to
the year ended June 30, 2005.

         The  increase  in  interest  income for the year  ended  June 30,  2006
resulted  from an 11.6%  increase  in the  average  balance of  interest-earning
assets and a 42 basis points increase in the average yield thereon.  Our average
yield on loans  receivable for the year ended June 30, 2006 was 6.20%,  39 basis
points  greater than for the year ended June 30, 2005.  The increase in yield on
loans  combined  with a $26.1 million  increase in the average  balance of loans
receivable  for the year ended June 30, 2006 are primarily  responsible  for the
20.1% increase in interest income over the year ended June 30, 2005.

         The 51.9% increase in interest expense for the year ended June 30, 2006
is largely  attributable to higher  borrowings during the year. The average cost
of deposits  rose by 55 basis  points,  but the average  balance of deposits was
level between years.  The average balance of Federal Home Loan Bank advances for
the year ended June 30, 2006 was $37.6  million and the average cost thereof was
4.43%.  This  represents  a $23.3  million or 163.7%  increase  over the average
balance of $14.3  million for the year ended June 30, 2005 and a 147 basis point
increase over the average cost of advances for the year ended June 30, 2005.

         Net  interest  income for the year ended June 30, 2005 was $7.4 million
as compared to $6.9  million for the year ended June 30,  2004,  representing  a
$455,000 or 6.6% increase.  Interest income for the year ended June 30, 2005 was
$11.8 million compared to $10.8 million for the year ended June 30, 2004. This

                                       34



9.1% increase in interest  income for the year ended June 30, 2005 was partially
offset by a 13.7% or $530,000 increase in interest expense.

         The $1.0  million  increase in interest  income for the year ended June
30, 2005  resulted  primarily  from an 8.4%  increase in the average  balance of
interest-earning  assets  as the  average  yield  of  interest-  earning  assets
increased  slightly  between years,  from 5.45% to 5.49%. Our average balance of
loans  receivable  for the year ended June 30,  2005 was $28.1  million or 18.5%
higher than for the year ended June 30, 2004.  Interest income on loans was $1.5
million or 16.6% higher  primarily as a result of the 18.5%  increase in average
balance.  A 10 basis point decrease in the average yield on loans from 5.91% for
the year  ended  June 30,  2004 to 5.81% for the year  ended  June 30,  2005 was
caused by a heavy amount of refinancing  activity when borrowers  perceived that
the historically low rate environment was ending.

         The 13.7% increase in interest expense for the year ended June 30, 2005
as  compared  to the year ended June 30,  2004  resulted  from a 232.8% or $10.0
million increase in the average balance of Federal Home Loan Bank advances and a
184 basis point  increase in the average  cost  thereof  from 1.12% for the year
ended June 30, 2004 to 2.96% for the year ended June 30, 2005.  Interest expense
also rose as a result of a $10.1 million or 5.6% increase in the average balance
of interest-bearing  deposits. The average cost of deposits,  however,  actually
fell three  basis  points  for the year  ended  June 30,  2005 since much of the
growth in  deposits  occurred in the lower  costing  checking  and money  market
account categories.

         Our net  interest  rate  spread  was 3.34% for the year  ended June 30,
2004,  compared to 3.33% for the year ended June 30, 2005 and 2.97% for the year
ended June 30, 2006. The spread decreased during the year ended June 30, 2006 as
our average cost of interest-bearing liabilities increased by 78 basis points to
2.94%, a 36.1% increase over the year ended June 30, 2005. The Bank's increasing
utilization of Federal Home Loan Bank advances to fund loan originations had the
effect of  increasing  the  average  cost of  interest-bearing  liabilities.  In
comparison,  the average  yield on  interest-earning  assets  increased 42 basis
points  from 5.49% for the year ended June 30,  2005 to 5.91% for the year ended
June 30, 2006.

         Provision for Loan Losses. The allowance for loan losses is a valuation
account  that  reflects  our  estimation  of the  losses  inherent  in our  loan
portfolio to the extent they are both probable and  reasonable to estimate.  The
allowance is established  through provisions for loan losses that are charged to
income in the period they are established. We charge losses on loans against the
allowance for loan losses when we believe the  collection  of loan  principal is
unlikely.  Recoveries  on loans  previously  charged-off  are added  back to the
allowance.  Compared to the year ended June 30, 2004, the provision for the year
ended June 30, 2005 was  essentially  the same. The provision for the year ended
June 30, 2006 was  substantially  less and the  decrease  reflected  the drop in
total  non-performing  loans from $2.4  million at June 30,  2005 to $723,000 at
June 30, 2006,  which was attributable to  non-performing  loans being paid off.
The  ratio of total  non-performing  loans to total  loans was 1.13% at June 30,
2004 and 1.24% at June 30, 2005 and then dropped to 0.32% at June 30, 2006.

         Non-Interest  Income. This category includes fees derived from checking
accounts, ATM transactions and debit card use and mortgage related fees. It also
includes increases in the cash-surrender value of our bank owned life insurance.
Overall, non-interest income fell by $26,000 for the year ended June 30, 2006 as
compared to the year ended June 30, 2005 and  increased by $112,000 for the year
ended June 30, 2005 as compared to the year ended June 30, 2004.

         Income  from fees and  service  charges  is the  largest  component  of
non-interest  income and totaled  $338,000,  $322,000 and $335,000 for the years
ended June 30, 2006, 2005 and 2004.

                                       35



         Income on bank owned life insurance of $156,000 for the year ended June
30,  2005 and  $162,000  for the year ended June 30, 2006  represented  the next
largest  component of  non-interest  income for those years.  The Bank purchased
$3.5 million of bank owned life  insurance  during the year ended June 30, 2004.
Income on bank owned life insurance  totaled $56,000 for the year ended June 30,
2004.

         Non-interest  income  included income from investment in real estate of
$52,000 and  $51,000 in the years ended June 30, 2005 and 2004.  During the year
ended June 30,  2006,  a loss from  investment  in real estate of  $120,000  was
recorded,  primarily  representing  a  $110,000  loss  related  to the sale of a
property.

         Non-Interest Expenses.  Total non-interest expenses grew by 6.1% during
the year ended June 30, 2006 and by 10.9%  during the year ended June 30,  2005.
They amounted to $5.8 million, $5.4 million and $4.9 million for the years ended
June 30, 2006, 2005 and 2004, respectively.

         Salaries and  employee  benefits  expense  totaled $2.8 million for the
year ended June 30, 2006, a $297,000 or 11.9%  increase over the year ended June
30, 2005.  Salaries and  employee  benefits  expense for the year ended June 30,
2005 totaled $2.5  million,  a $292,000 or 13.3%  increase over $2.2 million for
the year  ended June 30,  2004.  Salaries  and  employee  benefits  are our main
non-interest  expense and  represented  48.4%,  46.4% and 45.0% of  non-interest
expenses  for the  years  ended  June 30,  2006,  2005 and  2004,  respectively.
Included in employee benefits is an Executive Incentive Retirement Plan which we
implemented during the year ended June 30, 2004.

         Non-interest  expense  will  be  impacted  in  future  periods  by  the
operation of the  Martinsville  branch  office which opened in July 2006 and the
Bernardsville branch office, which is projected to open in late 2007.

         We also expect that non-interest  expenses will be higher going forward
as a result of the accounting,  legal and various other additional  non-interest
expenses associated with operating as a public company, particularly as a result
of the requirements of the Sarbanes-Oxley Act of 2002.


         Additional  annual employee  compensation and benefit expenses stemming
from the shares granted to employees,  officers and directors  under new benefit
plans will also increase  non-interest  expenses.  We will recognize expense for
the  Millington  Savings  Bank  Employee  Stock  Ownership  Plan when shares are
committed to be released to participants'  accounts and will recognize  expenses
for  restricted  stock  awards  over  the  vesting  period  of  awards  made  to
recipients.  In addition, we will be required to recognize  compensation expense
related to stock options outstanding based upon the fair value of such awards at
the date of grant over the period that such awards are earned.


         Income  Taxes.  Income tax expense for the year ended June 30, 2006 was
$834,000 as compared to $919,000  for the year ended June 30, 2005 and  $948,000
for the year ended June 30, 2004. The reduction for the year ended June 30, 2006
reflects lower pre-tax income for that year as well as a slight reduction in the
effective  tax rate.  The reduction for the year ended June 30, 2005 as compared
to the year ended June 30, 2004  reflects a decrease in the  effective  tax rate
from  39.6% to  37.8%.  The  decrease  in the  effective  tax rate was due to an
increase in income from bank owned life insurance, which is tax exempt.

                                       36



Average  Balance Sheet.  The following  tables set forth certain  information at
June 30, 2006 and for the years ended June 30, 2006,  2005 and 2004. The average
yields and costs are  derived  by  dividing  income or  expense  by the  average
balance  of assets or  liabilities,  respectively,  for the  periods  presented.
Average balances are derived from daily balances.



                                                                                   Year Ended June 30,
                                                  ----------------------------------------------------------------------------------
                                At June 30, 2006              2006                        2005                       2004
                                ----------------  --------------------------  ---------------------------  -------------------------
                                                            Interest Average            Interest  Average          Interest  Average
                                          Yield/    Average  Earned/  Yield/  Average    Earned/   Yield/  Average  Earned/   Yield/
                                 Balance   Cost     Balance   Paid     Cost   Balance     Paid      Cost   Balance   Paid      Cost
                                 -------   ----     -------   ----     ----   -------     ----      ----   -------   ----      ----
                                                                                (Dollars in thousands)
                                                                                            
Interest-earning assets:
  Loans(1)....................  $219,242   6.28%   $205,905 $12,773   6.20%  $179,837   $10,457    5.81%  $151,736 $ 8,967     5.91%
  Securities..................    27,707   3.93%     27,959   1,177   4.21%    29,505     1,215    4.12%    38,690   1,736    4.49%
  Other interest-earning
    assets(2).................     6,923   5.34%      5,008     167   3.33%     4,636        82    1.77%     6,995      66    0.94%
                                --------           -------- -------          --------   -------           -------- -------
  Total interest-earning
    assets....................   253,872   6.00%    238,872  14,117   5.91%   213,978    11,754    5.49%   197,421  10,769    5.45%
                                                            -------                     -------                    -------
  Non-interest-earning
    assets....................    16,312             16,719                    15,292                        8,534
                                --------           --------                  --------                     --------
  Total assets................  $270,184           $255,591                  $229,270                     $205,955
                                ========           ========                  ========                     ========
Interest-bearing liabilities:
  NOW & money market..........  $ 30,896   0.97%   $ 34,117     329   0.96%  $ 36,251       334    0.92%  $ 31,594     319    1.01%
  Savings and club deposits...    42,696   1.49%     44,839     568   1.27%    49,757       604    1.21%    49,162     597    1.21%
  Certificates of deposit.....   112,028   4.15%    109,755   4,098   3.73%   102,635     3,025    2.95%    97,803   2,892    2.96%
                                --------           -------- -------          --------   -------           -------- -------
  Total interest-bearing
    deposits..................   185,620   3.01%    188,711   4,995   2.65%   188,643     3,963    2.10%   178,559   3,808    2.13%
  Federal Home Loan Bank
    advances..................    54,181   5.11%     37,637   1,666   4.43%    14,272       423    2.96%     4,289      48    1.12%
                                --------           -------- -------          --------   -------           -------- -------
  Total interest-bearing
    liabilities...............   239,801   3.49%    226,348   6,661   2.94%   202,915     4,386    2.16%   182,848   3,856    2.11%
                                                            -------                     -------                    -------
  Non-interest-bearing
    deposits..................     9,135              8,294                     7,297                        5,683
  Other non-interest-bearing
    liabilities...............     1,757              1,782                     1,572                        1,461
                                --------           --------                  --------                     --------
  Total liabilities...........   250,693            236,424                   211,784                      189,992
  Stockholder's equity........    19,491             19,167                    17,486                       15,963
                                --------           --------                  --------                     --------
  Total liabilities and
    stockholder's equity......  $270,184           $255,591                  $229,270                     $205,955
                                ========           ========                  ========                     ========

  Net interest rate
    spread(3).................             2.51%            $ 7,456   2.97%             $ 7,368    3.33%           $ 6,913    3.34%
                                           ====             =======   ====              =======    ====            =======    ====
  Net interest margin(4)......                                        3.12%                        3.44%                      3.50%
                                                                      ====                         ====                       ====
  Ratio of interest-
    earning assets to
    interest-bearing
    liabilities...............    105.87%            105.53%                   105.45%                      107.97%
                                  ======             ======                    ======                       ======


-----------------
(1)  Non-accruing loans have been included, and the effect of such inclusion was
     not material. The allowance for loan losses is excluded, while construction
     loans in process and deferred fees are included.
(2)  Includes  Federal Home Loan Bank stock at cost and term deposits with other
     financial institutions.
(3)  Net interest  rate spread  represents  the  difference  between the average
     yield on  interest-earning  assets and the average cost of interest-bearing
     liabilities.  (4) Net interest  margin  represents net interest income as a
     percentage of average interest-earning assets.

                                       37



         Rate/Volume  Analysis.  The following table reflects the sensitivity of
our interest income and interest  expense to changes in volume and in prevailing
interest  rates during the periods  indicated.  Each category  reflects the: (1)
changes in volume  (changes in volume  multiplied  by old rate);  (2) changes in
rate  (changes in rate  multiplied by old volume);  and (3) net change.  The net
change attributable to the combined impact of volume and rate has been allocated
proportionally to the absolute dollar amounts of change in each.



                                                  Year Ended                      Year Ended
                                                    June 30,                       June 30,
                                        ----------------------------- -------------------------------
                                                2006 vs. 2005                    2005 vs. 2004
                                        ----------------------------- -------------------------------
                                        Increase (Decrease)              Increase (Decrease)
                                              Due to                           Due to
                                        ----------------------------- -------------------------------
                                        Volume       Rate       Net      Volume       Rate       Net
                                        ------       ----       ---      ------       ----       ---
                                                               (In thousands)
                                                                           
Interest and dividend income:
  Loans ............................   $ 1,583    $   733    $ 2,316    $ 1,643    $  (153)   $ 1,490
  Securities .......................       (64)        26        (38)      (387)      (134)      (521)
  Other interest-earning assets ....         7         78         85        (28)        44         16
                                       -------    -------    -------    -------    -------    -------
  Increase (decrease) in
    total interest income ..........     1,526        837      2,363      1,228       (243)       985

Interest expense:
NOW and money market accounts ......   $   (20)   $    15    $    (5)   $    45    $   (30)   $    15
Savings and club ...................       (64)        28        (36)         7       --            7
Certificates of deposit ............       223        850      1,073        143        (10)       133
                                       -------    -------    -------    -------    -------    -------
  Total interest-bearing deposits ..       139        893      1,032        195        (40)       155
Federal Home Loan Bank advances ....       954        289      1,243        220        155        375
                                       -------    -------    -------    -------    -------    -------
  Increase in total interest expense     1,093      1,182      2,275        415        115        530

Change in net interest income ......   $   433    $  (345)   $    88    $   813    $  (358)   $   455
                                       =======    =======    =======    =======    =======    =======


Management of Interest Rate Risk and Market Risk

         Qualitative   Analysis.   Because  the   majority  of  our  assets  and
liabilities  are sensitive to changes in interest  rates, a significant  form of
market risk for us is interest rate risk, or changes in interest rates.

         We derive our income mainly from the difference or "spread" between the
interest  earned on loans,  securities and other  interest-earning  assets,  and
interest paid on deposits, borrowings and other interest-bearing liabilities. In
general,  the larger the spread, the more we earn. When market rates of interest
change,  the  interest  we receive on our assets and the  interest we pay on our
liabilities  will  fluctuate.  This can cause  decreases  in our  spread and can
adversely affect our income.

         Several  years ago  market  interest  rates  were at  historically  low
levels.  However,  between  June 2004 and June 2006,  the U.S.  Federal  Reserve
steadily  increased  its target  federal funds rate,  raising it 17 times,  from
1.00% to 5.25%.  While  the  federal  funds  rate and  other  short-term  market
interest rates, which we use as a guide to our deposit pricing,  have increased,
intermediate-  and long-term  market interest rates,  which we use as a guide to
our  loan  pricing,  have  not  increased  proportionately.  This  has  led to a
"flattening" of the market yield curve,  which has even  "inverted"  recently as
short-term  rates have exceeded  long-term rates over an  intermediate  maturity
horizon.  The relatively  flat yield curve has hurt our net interest rate spread
and net interest  margin  because the interest rates we pay on our deposits have
repriced  upwards  faster than the interest  rates that we earn on our loans and
investments.

                                       38



         Quantitative  Analysis. The following table presents Millington Savings
Bank's net portfolio value as of June 30, 2006. The Bank outsources its interest
rate  risk  modeling  and the net  portfolio  values  shown in this  table  were
calculated by an outside consultant, based on information provided by Millington
Savings Bank.


                                        At June 30, 2006
           ---------------------------------------------------------------------
                                                   Net Portfolio Value
             Net Portfolio Value           as % of Present Value of Assets
           ------------------------  -------------------------------------------
Changes in                                          Net Portfolio   Basis Point
Rates       $ Amount     $ Change     % Change       Value Ratio       Change
--------    --------     --------     --------       -----------       ------
            (Dollars in thousands)
+300 bp       10,282      (12,755)      -55.37%          4.22%        (454) bp
+200 bp       14,293       (8,743)      -37.95%          5.72%        (303) bp
+100 bp       18,470       (4,567)      -19.82%          7.21%        (154) bp
   0 bp       23,037            0         0.00%          8.75%            0 bp
-100 bp       26,879        3,843        16.68%          9.97%          122 bp
-200 bp       29,532        6,495        28.20%         10.77%          201 bp

         Future  interest  rates or their effect on net  portfolio  value or net
interest  income are not  predictable.  Computations  of prospective  effects of
hypothetical interest rate changes are based on numerous assumptions,  including
relative levels of market interest rates, prepayments, and deposit run-offs, and
should not be relied upon as indicative of actual results.  Certain shortcomings
are  inherent  in  this  type  of  computation.   Although  certain  assets  and
liabilities may have similar maturity or periods of repricing, they may react at
different  times and in  different  degrees to  changes  in the market  interest
rates.  The interest  rate on certain types of assets and  liabilities,  such as
demand  deposits and savings  accounts,  may  fluctuate in advance of changes in
market interest rates,  while rates on other types of assets and liabilities may
lag behind changes in market interest rates.  Certain assets, such as adjustable
rate mortgages, generally have features which restrict changes in interest rates
on a short-term  basis and over the life of the asset.  In the event of a change
in  interest  rates,  prepayments  and early  withdrawal  levels  could  deviate
significantly  from  those  assumed  in making  calculations  set  forth  above.
Additionally,  an  increased  credit  risk may  result  as the  ability  of many
borrowers to service  their debt may  decrease in the event of an interest  rate
increase.

         Notwithstanding  the discussion  above, the quantitative  interest rate
analysis presented above indicates that a rapid increase in interest rates would
adversely affect our net interest margin and earnings.

Liquidity, Commitments and Capital Resources

         The Bank must be capable of meeting  its  customer  obligations  at all
times.  Potential  liquidity  demands  include  funding loan  commitments,  cash
withdrawals  from  deposit  accounts  and other  funding  needs as they  present
themselves. Accordingly, liquidity is measured by our ability to have sufficient
cash reserves on hand, at a reasonable cost and/or with minimum losses.

         Senior  management is  responsible  for managing our overall  liquidity
position and risk and is responsible  for ensuring that our liquidity  needs are
being met on both a daily and long term basis. The Financial  Review  Committee,
comprised  of senior  management  and chaired by President  and Chief  Executive
Officer Gary  Jolliffe,  is  responsible  for  establishing  and  reviewing  our
liquidity procedures, guidelines, and strategy on a periodic basis.

                                       39



         Our approach to managing  day-to-day  liquidity is measured through our
daily  calculation of investable funds and/or borrowing needs to ensure adequate
liquidity.  In addition,  senior management  constantly evaluates our short-term
and long-term  liquidity risk and strategy  based on current market  conditions,
outside investment and/or borrowing opportunities,  short and long-term economic
trends, and anticipated short and long-term liquidity  requirements.  The Bank's
loan and deposit  rates may be adjusted as another  means of managing  short and
long-term  liquidity  needs. We do not at present  participate in derivatives or
other  types of hedging  instruments  to meet  liquidity  demands,  as we take a
conservative approach in managing liquidity.

         At June 30, 2006,  the Bank had  outstanding  commitments  to originate
loans of $3.0 million,  construction  loans in process of $5.0  million,  unused
lines of credit of $26.5  million  and  standby  letters of credit of  $108,000.
Certificates  of  deposit  scheduled  to  mature in one year or less at June 30,
2006, totaled $76.5 million.

         The Bank generates cash through  borrowings  from the Federal Home Loan
Bank to meet its day-to- day funding  obligations.  At June 30, 2006,  its total
loans to deposits  ratio was 115%. At June 30, 2006,  the Bank's  collateralized
borrowing  limit with the  Federal  Home Loan Bank was $56.2  million,  of which
$54.2 million was  outstanding.  As of June 30, 2006,  the Bank also had a $20.0
million  line of credit with a  financial  institution  for  reverse  repurchase
agreements (which is a form of borrowing) that it could access if necessary.

         The  following   tables  disclose  our   contractual   obligations  and
commitments as of June 30, 2006.



                                                       Less Than                           After
                                               Total     1 Year   1-3 Years  4-5 Years    5 Years
                                               -----     ------   ---------  ---------    -------
                                                                (In thousands)
                                                                          
Federal Home Loan Bank borrowings.........   $ 54,181   $ 41,500   $      -   $ 12,681   $      -
Certificates of deposit ..................     79,772     44,207     23,166      2,395     10,004
Leases ...................................      1,751        237        474        474        566
                                             --------   --------   --------   --------   --------
      Total ..............................   $135,704   $ 85,944   $ 23,640   $ 15,550   $ 10,570
                                             ========   ========   ========   ========   ========




                                               Total
                                             Amounts   Less Than                           After
                                            Committed    1 Year   1-3 Years  4-5 Years    5 Years
                                            ---------    ------   ---------  ---------    -------
                                                                (In thousands)
                                                                        
Lines of credit(1) ......................     $26,546   $   726     $ 1,646    $  599     $23,575
Construction loans in process ...........       4,968     4,460         508         -           -
Other commitments to extend credit(1)....       2,979     2,979           -         -           -
                                              -------   -------     -------    ------     -------
    Total ...............................     $34,493   $ 8,165     $ 2,154    $  599     $23,575
                                              =======   =======     =======    ======     =======

----------------
(1) Represents amounts committed to customers.

         Consistent  with its goals to operate a sound and profitable  financial
organization,   the  Bank   actively   seeks  to   maintain   its  status  as  a
well-capitalized institution in accordance with regulatory standards. As of June
30, 2006, the Bank exceeded all applicable regulatory capital requirements.  See
Note 13 to our consolidated  financial statements beginning at page F-1 for more
information about the Bank's regulatory capital compliance.

                                       40



Off-Balance Sheet Arrangements

         We are a party to financial instruments with  off-balance-sheet risk in
the normal  course of our business of investing in loans and  securities as well
as in the normal course of maintaining and improving  Millington  Savings Bank's
facilities.   These   financial   instruments   include   significant   purchase
commitments,  such as  commitments  related  to  capital  expenditure  plans and
commitments to purchase investment securities or mortgage-backed securities, and
commitments to extend credit to meet the financing  needs of our  customers.  At
June 30,  2006,  our  significant  off-balance  sheet  commitments  consisted of
commitments to originate loans of $3.0 million, construction loans in process of
$5.0  million,  unused lines of credit of $26.5  million and standby  letters of
credit of $108,000.

         Commitments  to extend  credit are  agreements to lend to a customer as
long as there is no  violation of any  condition  established  in the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee.  Our  exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for commitments to
extend credit is represented by the contractual amount of those instruments.  We
use the same credit policies in making  commitments and conditional  obligations
as we do  for  on-balance-sheet  instruments.  Since  a  number  of  commitments
typically expire without being drawn upon, the total  commitment  amounts do not
necessarily  represent  future cash  requirements.  For  additional  information
regarding our outstanding  lending  commitments at June 30, 2006, see Note 14 to
our consolidated financial statements beginning on page F-1.

Impact of Inflation

         The financial  statements  included in this document have been prepared
in accordance with accounting principles generally accepted in the United States
of America.  These principles  require the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation.

         Our primary assets and liabilities are monetary in nature. As a result,
interest  rates  have a more  significant  impact  on our  performance  than the
effects  of  general  levels  of  inflation.  Interest  rates,  however,  do not
necessarily  move in the same  direction or with the same magnitude as the price
of goods and services,  since such prices are affected by inflation. In a period
of rapidly rising interest rates, the liquidity and maturities of our assets and
liabilities are critical to the maintenance of acceptable performance levels.

         The principal effect of inflation on earnings,  as distinct from levels
of interest rates, is in the area of non-interest expense. Expense items such as
employee  compensation,  employee benefits and occupancy and equipment costs may
be  subject to  increases  as a result of  inflation.  An  additional  effect of
inflation  is the  possible  increase  in the  dollar  value  of the  collateral
securing loans that we have made. We are unable to determine the extent, if any,
to which  properties  securing our loans have appreciated in dollar value due to
inflation.

Recent Accounting Pronouncements

         On December 16, 2004, the Financial Accounting Standards Board ("FASB")
issued  Statement  of  Financial   Accounting   Standards   ("SFAS")  No.  123R,
"Share-Based  Payment," which replaces SFAS No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees."  This  statement  will  require  that all  share-based  payments  to
employees,  including  grants  of  employee  stock  options,  be  recognized  as
compensation costs in the financial statements

                                       41



based on their fair values.  The  effective  date of this  statement was delayed
until fiscal years  beginning after June 15, 2005. The impact of the adoption of
this  standard  will be  dependent  on the  nature  and  extent  of  stock-based
compensation  granted in future periods.  See Pro Forma Data for an illustration
of the application of this standard.

         In May 2005,  the FASB  issued SFAS No.  154,  "Accounting  Changes and
Error  Corrections,"  which  establishes,  unless  impracticable,  retrospective
application  as the  required  method  for  reporting  a  change  in  accounting
principle  in the absence of explicit  transition  requirements  specific to the
newly  adopted  accounting  principle.   The  statement  provides  guidance  for
determining  whether  retrospective   application  of  a  change  in  accounting
principle is  impracticable.  The  statement  also  addresses the reporting of a
correction of error by restating  previously issued financial  statements.  SFAS
No. 154 is effective for  accounting  changes and  corrections of errors made in
fiscal years  beginning after December 15, 2005. We will adopt this statement as
required,  and do not believe the  adoption  will have a material  effect on our
results of operations or financial position.

         In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid  Financial  Instruments."  SFAS No. 155 amends SFAS No. 133 and 140,  and
improves the financial  reporting of certain  hybrid  financial  instruments  by
requiring more consistent  accounting that eliminates  exemptions and provides a
means to simplify the accounting for these instruments.  Specifically,  SFAS No.
155 allows financial  instruments that have embedded derivatives to be accounted
for as a whole  (eliminating the need to bifurcate the derivative from its host)
if the holder elects to account for the whole  instrument on a fair value basis.
SFAS No. 155 is effective for all financial instruments acquired or issued after
the beginning of an entity's  first fiscal year that begins after  September 15,
2006. We are required to adopt the  provisions  of SFAS No. 155, as  applicable,
beginning  on July 1, 2007.  We do not believe the adoption of SFAS No. 155 will
have any impact on our financial position or results of operations.

         In March 2006, the FASB issued SFAS No. 156,  "Accounting for Servicing
of  Financial  Assets - An Amendment  of FASB  Statement  No. 140." SFAS No. 156
requires  that  all  separately   recognized   servicing  assets  and  servicing
liabilities be initially  measured at fair value, if  practicable,  and permits,
but does not  require,  the  subsequent  measurement  of  servicing  assets  and
servicing  liabilities  at fair  value.  SFAS  No.  156 is  effective  as of the
beginning of an entity's first fiscal year that begins after September 15, 2006,
which for us will be July 1, 2007.  We do not believe  that the adoption of SFAS
No. 156 will have any effect on our financial position or results of operations.

         In July 2006, the FASB issued FASB  Interpretation  No. 48, "Accounting
for Uncertainty in Income Taxes - an  Interpretation  of FASB Statement No. 109"
(FIN 48), which clarifies the accounting for uncertainty in tax positions.  This
Interpretation  requires that companies recognize in their financial  statements
the impact of a tax position  only, if the company has  determined  based on the
technical  merits of the tax position,  that the tax position  would more likely
than not be sustained upon an examination by the appropriate  taxing  authority.
The provisions of FIN 48 are effective for fiscal years beginning after December
15,  2006,  with the  cumulative  effect of the change in  accounting  principle
recorded as an adjustment to opening retained  earnings.  We do not believe that
the adoption of FIN 48 will have any effect on our financial position or results
of operations.

                                       42



                         BUSINESS OF MSB FINANCIAL, MHC

         MSB Financial,  MHC is a federal mutual holding  company and is subject
to regulation by the Office of Thrift Supervision.  MSB Financial, MHC currently
owns 100% of the outstanding common stock of MSB Financial Corp. Upon completion
of the offering, it will own 55%. So long as MSB Financial, MHC is in existence,
it will own a majority of the outstanding common stock of MSB Financial Corp. If
MSB Financial, MHC converted to a full stock company in what is referred to as a
"second-step conversion," it would cease to exist. The Board of Directors has no
current plans to undertake a second- step transaction.

         The primary business activity of MSB Financial,  MHC going forward will
continue to be owning a majority of MSB  Financial  Corp.'s  common  stock.  MSB
Financial,  MHC,  however,  is  authorized  to  engage  in  any  other  business
activities that are permissible for mutual holding  companies under federal law,
including  investing  in  loans  and  securities.  MSB  Financial,  MHC does not
maintain  offices  separate from those of Millington  Savings Bank or employ any
persons other than certain  Millington  Savings Bank  officers.  Officers of MSB
Financial, MHC are not separately compensated for their service.

                         BUSINESS OF MSB FINANCIAL CORP.

         MSB Financial Corp. is a federal mutual holding company  subsidiary and
is subject to regulation by the Office of Thrift  Supervision.  It was organized
for the purpose of being a holding company for Millington Savings Bank.

         MSB  Financial  Corp.'s  primary  activity  is and will  continue to be
holding all of the stock of Millington Savings Bank. MSB Financial Corp. intends
to use the  proceeds of the offering as  discussed  under Use of  Proceeds.  MSB
Financial  Corp.  does not maintain  offices  separate  from those of Millington
Savings Bank or employ any persons  other than certain  Millington  Savings Bank
officers.  Officers of MSB Financial  Corp. are not separately  compensated  for
their service.

                       BUSINESS OF MILLINGTON SAVINGS BANK

General

         Millington Savings Bank is a New  Jersey-chartered  stock savings bank.
Its deposits are federally insured by the Deposit Insurance Fund as administered
by the Federal  Deposit  Insurance  Corporation  and it is  regulated by the New
Jersey  Department of Banking and Insurance  and the Federal  Deposit  Insurance
Corporation.

         Our primary  business is  attracting  retail  deposits from the general
public and using those deposits,  together with funds generated from operations,
principal repayments on securities and loans and borrowed funds, for our lending
and investing  activities.  Our loan portfolio  consists of  one-to-four  family
residential  real  estate  mortgages,  home  equity  loans and lines of  credit,
commercial real estate  mortgages,  construction  loans,  commercial  loans, and
consumer   loans.   We  also   invest  in  U.S.   government   obligations   and
mortgage-backed  securities.  At June 30,  2006,  our loan  portfolio  comprised
approximately 81% of our total assets, and our securities portfolio  represented
10% of our total assets.

         Market  Area.  Our main  office is  located  in  Millington,  in Morris
County,  New Jersey.  We currently  have three branch  offices:  one in the Dewy
Meadow Village complex and one in the RiverWalk Village complex, both located in
the Basking Ridge section of Bernards Township, and one in the

                                       43



Martinsville  section of  Bridgewater,  all three of which are  within  Somerset
County,  New  Jersey.  A new branch is  scheduled  to open in  Bernardsville  in
Somerset  County in late 2007.  Morris County covers an area of 469 square miles
and contains 39  municipalities  with a 2000 Census  population of approximately
470,000.  Somerset  County  covers an area of 305 square  miles and  contains 21
municipalities  with a  population  of  approximately  315,000.  Our  lending is
concentrated   in  central  New  Jersey  and  the  source  of  our  deposits  is
predominantly  the communities  surrounding our offices.  These  communities are
demographically  similar in their higher  levels of  education  and white collar
jobs as  compared to the county  average,  and all but one is  characterized  by
household  income  above the county  average.  The  communities  in which we are
located are generally  considered to be developing or maturing markets projected
to experience  increases in population  and  households  through the next census
date of 2010.

         Our  business of  attracting  deposits  and making  loans is  primarily
conducted  within our market area. A downturn in the local  economy could reduce
the amount of funds  available for deposit and the ability of borrowers to repay
their loans. As a result, our profitability could decrease.

         Competition.  We operate in a market area with a high  concentration of
banking and  financial  institutions,  and we face  substantial  competition  in
attracting  deposits and in originating  loans. A number of our  competitors are
significantly   larger   institutions  with  greater  financial  and  managerial
resources  and  lending  limits.  Our  ability  to  compete  successfully  is  a
significant factor affecting our growth potential and profitability.

         Our competition for deposits and loans historically has come from other
insured  financial  institutions  such as local and regional  commercial  banks,
savings  institutions,  and credit unions located in our primary market area. We
also compete with mortgage  banking and finance  companies for real estate loans
and with commercial  banks and savings  institutions  for consumer loans, and we
face  competition  for funds  from  investment  products  such as mutual  funds,
short-term money funds and corporate and government securities.  There are large
competitors  operating throughout our total market area, and we also face strong
competition from other community-based financial institutions.

Lending Activities

         We have traditionally  focused on the origination of one-to-four family
loans and home  equity  loans and lines of  credit,  which  together  comprise a
substantial majority of the total loan portfolio.  We also provide financing for
commercial real estate,  including multi-family  dwellings/apartment  buildings,
service/retail  and mixed-use  properties,  churches and non-profit  properties,
medical and dental facilities and other commercial real estate. In recent years,
construction loans have grown as a component of our portfolio. We also originate
commercial loans. Our consumer loans are comprised of auto loans, personal loans
and account loans.

                                       44



         Loan  Portfolio   Composition.   The  following   tables  analyzes  the
composition of the Bank's portfolio by loan category at the dates indicated.



                                                                              At June 30,
                                      --------------------------------------------------------------------------------------------
                                           2006               2005               2004                2003               2002
                                      ---------------    ---------------   ----------------    ----------------    ---------------
                                      Amount  Percent    Amount  Percent   Amount   Percent    Amount   Percent    Amount  Percent
                                      ------  -------    ------  -------   ------   -------    ------   -------    ------  -------
                                                                         Dollars in thousands)
                                                                                             
Type of Loans:
One-to-four family real estate....  $120,921   53.89%  $113,488   58.50% $109,781    62.73%  $ 96,085    67.55%  $ 88,423   70.90%
Commercial real estate............    23,587   10.51     17,971    9.26    17,162     9.81     12,367     8.69     11,016    8.83
Construction......................    23,276   10.37     18,398    9.48    13,668     7.81      7,686     5.40      3,486    2.80
Consumer..........................     1,861    0.83      1,819    0.94     1,703     0.97      1,604     1.13      2,015    1.62
Home equity.......................    49,257   21.95     38,291   19.74    29,710    16.98     21,543    15.14     17,502   14.03
Commercial........................     5,497    2.45      4,029    2.08     2,970     1.70      2,969     2.09      2,274    1.82
                                    --------  ------   --------  ------  --------   ------   --------   ------   --------  ------

     Total loans receivable.......   224,399  100.00%   193,996  100.00%  174,994   100.00%   142,254   100.00%   124,716  100.00%
                                              ======             ======             ======              ======             ======

Less:
  Construction loans in process...    (4,968)            (5,719)           (5,371)             (2,882)               (842)
  Allowance for loan losses.......      (921)              (874)             (742)               (651)               (783)
  Deferred loan fees..............      (189)              (211)             (267)               (226)               (123)
                                    --------           --------          --------            --------            --------

     Total loans receivable, net..  $218,321           $187,192          $168,614            $138,495            $122,968
                                    ========           ========          ========            ========            ========

                                       45



         Loan Maturity Schedule.  The following table sets forth the maturity of
the Bank's loan portfolio at June 30, 2006. Demand loans, loans having no stated
maturity,  and  overdrafts  are  shown as due in one  year or less.  Undisbursed
amounts on  construction  loans  totaling  $5.0 million at June 30, 2006 are not
shown in the table. The table shows contractual  maturities and does not reflect
repricing or the effect of prepayments. Actual maturities may differ.



                                                               At June 30, 2006
                               ------------------------------------------------------------------------------------------
                               One-to-Four
                                 Family      Commercial
                               Real Estate   Real Estate   Construction   Consumer    Home Equity  Commercial     Total
                               -----------   -----------   ------------   --------     ---------   ----------   ---------
                                                                (In thousands)
                                                                                          
Amounts Due:
Within 1 Year................    $  1,875       $     7       $   424       $1,309      $     -       $  739    $  4,354
                                 --------       -------       -------       ------      ------        ------    --------

After 1 year:
  1 to 5 years...............      39,611         9,145        17,884          516        2,190        4,210      73,556
  5 to 10 years..............      12,163         4,606             -           36       13,329          485      30,619
  10 to 15 years.............      29,552         8,088             -            -       17,056           63      54,759
  Over 15 years..............      37,720         1,741             -            -       16,682            -      56,143
                                 --------       -------       -------       ------      -------       ------    --------

Total due after one year.....     119,046        23,580        17,884          552       49,257        4,758     215,077
                                 --------       -------       -------       ------      -------       ------    --------
Total amount due.............    $120,921       $23,587       $18,308       $1,861      $49,257       $5,497    $219,431
                                 ========       =======       =======       ======      =======       ======    ========

                                       46



         The  following  table sets forth the dollar amount of all loans at June
30, 2006 due after June 30, 2007, which have fixed interest rates and which have
floating or adjustable interest rates.



                                                             Floating or
                                      Fixed Rates          Adjustable Rates        Total
                                      -----------          ----------------        -----
                                                            (In thousands)
                                                                       
One-to-four family real estate......     $116,405                $ 2,641         $119,046
Commercial real estate..............       23,580                      -           23,580
Construction........................            -                 17,884           17,884
Consumer............................          552                      -              552
Home equity.........................       30,409                 18,848           49,257
Commercial..........................        2,419                  2,339            4,758
                                         --------                 ------         --------
  Total.............................     $173,365                $41,712         $215,077
                                          =======                 ======          =======


         One-to-Four Family Real Estate Mortgages.  Our primary lending activity
consists of the origination of one-to-four  family first mortgage  loans.  Fixed
rate,  conventional  mortgage loans are offered by the Bank with terms from 5 to
30 years.  A bi-weekly  payment  option is  available  wherein a payment is made
every  fourteen  days via automatic  deduction  from the  borrower's  Millington
Savings Bank account.

         We also  originate  fixed rate balloon  mortgages with terms of 3 to 10
years and  flexible  amortizations.  At the end of each term the mortgage may be
paid off in full with no penalty or,  provided that the loan is in good standing
and there has been no negative change in value of the collateral,  we may extend
the existing  mortgage on new terms,  at a new interest rate. If the mortgage is
extended, there may be additional charges at the time of each extension.

         We originate  adjustable rate mortgages,  or ARM's,  with up to 30 year
terms at rates based upon the U.S.  Treasury  One Year  Constant  Maturity as an
index.  Our ARM's currently  reset on an annual basis,  beginning with the first
year,  and have a two percent  annual  increase  cap and a six percent  lifetime
adjustment cap.

         Substantially all residential  mortgages include "due on sale" clauses,
which are provisions  giving the lender the right to declare a loan  immediately
payable if the borrower sells or otherwise transfers an interest in the property
to a third party. Property appraisals on real estate securing one-to-four family
residential loans are made by state certified or licensed independent appraisers
and are performed in accordance  with applicable  regulations  and policies.  We
require  title  insurance  policies  on  all  first  lien  one-  to-four  family
residential  loans.  Homeowners,  liability,  fire  and,  if  applicable,  flood
insurance policies are also required.

         We provide financing on residential investment properties with either 3
to 10 year balloon  mortgages or 5 to 30 year fixed duration  mortgages.  At the
end of each term a balloon mortgage on an investment property may be paid off in
full with no penalty or,  provided  that the loan is in good  standing and there
has been no  negative  change  in value of the  collateral,  we may  extend  the
existing  mortgage on new terms,  at a new  interest  rate.  If the  mortgage is
extended,  there may be additional  charges at the time of each  extension.  Our
investment  property  lending is available to  individuals  or  proprietorships,
partnerships,  limited  liability  corporations,  and corporations with personal
guarantees. All investment property is underwritten on its ability substantially
to  carry  itself,  unless  the  property  is a  two-family  residence  with the
mortgagor  living in one of the units.  Preference is given to those loans where
rental  income  covers all  operating  expenses,  including  but not  limited to
principal  and  interest,   real  estate  tax,

                                       47



hazard  insurance,  utilities,  maintenance,  and  reserve.  Operating  expenses
generally  may not exceed rental income by more than 10%. Any negative cash flow
will be included in the limit on the borrower's total debt ratio.

         We generally  originate  one-to-four  family first mortgage loans,  for
primary residence or investment,  for up to 80% loan-to-value.  Although not our
normal  practice,  our  lending  policy  permits us to exceed  this  limit.  Our
president and executive vice president are both authorized to approve a loan-to-
value ratio of up to 90%. Loans in excess of 90% loan-to-value must have private
mortgage insurance and must be approved by the Board of Directors.

         Commercial  Real Estate  Mortgages.  Our commercial real estate lending
includes   multi-family   dwellings/apartment   buildings,   service/retail  and
mixed-use  properties,  churches and non-profit  properties,  medical and dental
facilities and other commercial real estate. Our commercial real estate mortgage
loans are either 3 to 10 year  balloon  mortgages  (with a maximum  amortization
period of 25 years) or 15 year fixed duration mortgages. This type of lending is
made available to proprietorships,  partnerships, and corporations with personal
guarantees. All commercial property is underwritten on its ability substantially
to carry itself.  A cash flow and lease analysis is performed for each property.
Preference  is given to those loans where  rental  income  covers all  operating
expenses,  including but not limited to principal and interest, real estate tax,
hazard insurance,  utilities,  maintenance,  and reserve. Operating expenses may
exceed  rental  income  by not more  than 10%.  Any  negative  cash flow will be
included in the limit on the borrower's total debt ratio. Cash from other assets
of the borrower,  who may own multiple properties and generate a surplus, can be
made available to cover debt-service shortages of the financed property.

         The maximum loan-to-value ratio on most commercial real estate loans we
originate is 80%.  Although not our normal practice,  our lending policy permits
us to originate these loans in excess of an 80% loan-to-value. Our President and
Executive Vice President are authorized to approve a  loan-to-value  ratio of up
to 90% on commercial real estate loans.

         The  management  skills  of the  borrower  are  judged  on the basis of
his/her  professional  experience  and must be  documented  to meet  the  Bank's
satisfaction in relation to the desired project. The assets of the borrower must
indicate  his/her ability to support the proposed  investment,  both in terms of
liquidity and net worth, and tangible  history of the borrower's  capability and
experience must be evident.

         Unlike  single-family  residential  mortgage loans, which generally are
made on the basis of the  borrower's  ability to make  repayment from his or her
employment and other income,  and which are secured by real property whose value
tends to be more easily  ascertainable,  multi-family and commercial real estate
loans  typically  are  made  on the  basis  of the  borrower's  ability  to make
repayment from the cash flow of the borrower's  business or rental income.  As a
result,  the  availability  of funds for the repayment of commercial real estate
and  multi-family  loans may be  substantially  dependent  on the success of the
business itself and the general economic environment. Commercial real estate and
multi-family loans, therefore,  have greater credit risk than one-to-four family
residential mortgages or consumer loans. In addition, commercial real estate and
multi-family  loans generally result in larger balances to single borrowers,  or
related groups of borrowers and also  generally  require  substantially  greater
evaluation and oversight efforts.

         Construction  Loans.  We originate  construction  and land  acquisition
loans for an  owner-occupied  residence or to a builder with a valid contract of
sale.  With prior Board of Director  approval,  we also  provide  financing  for
speculative residential or commercial  construction and development.  Individual
consideration is given to builders based on their past performance, workmanship,
and financial worth. Our

                                       48



construction  lending  includes loans for  construction or major  renovations or
improvements  of owner-  occupied  residences,  however,  the  majority  of this
portfolio consists of real estate developers.

         Construction  loans are mortgages with a one year  duration.  Funds are
disbursed periodically upon inspections made by our inspectors on the completion
of each phase, as per the approved draw schedule. Funds disbursed may not exceed
90%  loan-to-value  of land and  improvements  at any time during  construction.
Interest  rates on  disbursed  funds  are based on the rate and terms set at the
time of closing. The majority of our construction lending is variable rate loans
with rates tied to the prime rate published in The Wall Street  Journal,  plus a
premium.  Payments  on  disbursed  funds  must be made on a monthly  basis.  The
loan-to-value limitation on land acquisition loans is 75%.

         Construction lending is generally considered to involve a higher degree
of  credit  risk  than  residential   mortgage  lending.   If  the  estimate  of
construction  cost  proves to be  inaccurate,  we may be  compelled  to  advance
additional funds to complete the construction with repayment dependent, in part,
on the success of the ultimate  project rather than the ability of a borrower or
guarantor to repay the loan. If we are forced to foreclose on a project prior to
completion,  there is no  assurance  that we will be able to recover  all of the
unpaid portion of the loan. In addition,  we may be required to fund  additional
amounts  to  complete  a  project  and  may  have to hold  the  property  for an
indeterminate period of time.

         Consumer Loans.  Our consumer  lending products consist of new and used
auto loans,  secured and unsecured  personal loans,  account loans and overdraft
lines of credit.  The maximum term for a loan on a new or used automobile is six
years or four  years,  respectively.  We will lend up to 80% of retail  value or
dealer  invoice on a car loan. We offer a deduction on the interest rate for car
loans with  payments  automatically  deducted  from the  borrower's  checking or
statement savings account with us.

         Our  personal  loans have terms of up to four years with a minimum  and
maximum balance of $1,000 and $5,000,  respectively. A deduction to the interest
rate is offered  for loans with  automatic  debit  repayment  from a checking or
statement  savings  account  with us. Our account  loans  permit a depositor  to
borrow  up to 90% of his or her  funds  on  deposit  with us in  certificate  of
deposit  accounts.  The interest rate is the current rate paid to the depositor,
plus a premium.  A minimum  payment of interest  only is  required.  We offer an
overdraft  line of credit  with a minimum  of $500 and up to a maximum of $5,000
and an  interest  rate  tied to the  prime  rate  published  in The Wall  Street
Journal, plus a premium.

         Consumer lending is generally  considered to involve a higher degree of
credit risk than  residential  mortgage  lending.  Consumer  loan  repayment  is
dependent on the borrower's  continuing financial stability and can be adversely
affected by job loss, divorce,  illness or personal bankruptcy.  The application
of various federal laws,  including  federal and state bankruptcy and insolvency
laws, may limit the amount which can be recovered on consumer loans in the event
of a default. Account loans are fully secured.

         Home Equity Loans and Lines of Credit.  We offer fixed rate home equity
loans and variable rate home equity lines of credit with a minimum  credit limit
of $5,000.  Collateral  valuation is  established  through a variety of methods,
including an on-line appraisal valuation estimator, drive by appraisals,  recent
assessed tax value, purchase price or consideration value as evidenced by a deed
or property search report or a report of real estate comparables from a licensed
realtor.  Loan requests over $250,000,  however,  require full  appraisals,  and
requests over $450,000 require Board approval.  The loan-to-value  limit on home
equity lending is 80% on owner occupied property and 75% on investment property.
The  variable  rate on home equity  lines of credit is  adjusted  monthly and is
currently set at prime for owner  occupied  properties  and prime plus a premium
for investment properties.  The fixed rate loans on

                                       49



investment  property are also higher than fixed rate owner  occupied home equity
loans.  We generally  provide home equity  financing  only for a first or second
lien position.

         Our fixed  rate home  equity  loans  have  terms of 5 to 30 years.  Our
variable  rate home equity  lines of credit have terms of 15 years,  and we also
offer an interest  only home equity line of credit based on a 10 year term.  The
loan-to-value  limit on  interest  only home  equity  financing  is 70% on owner
occupied  property and 60% on  investment  property.  We also offer bridge loans
with a variable rate and a 70% loan- to-value  limit on owner occupied  property
and 60% on investment property.

         Commercial  Loans.  We offer revolving lines of credit to businesses to
finance short-term working capital needs like accounts receivable and inventory.
These lines of credit may be  unsecured  or secured by accounts  receivable  and
inventory or real estate. We generally provide such financing for no more than a
3 year term and with a variable rate.

         We also originate  commercial term loans to fund longer-term  borrowing
needs such as purchasing  equipment,  property improvements or other fixed asset
needs. These loans are secured by new and used machinery,  equipment,  fixtures,
furniture or other  long-term  fixed  assets and have terms of 1 to 7 years.  We
originate  commercial term loans for other general long-term  business purposes,
and these loans are secured by real estate. Interest on commercial term loans is
payable monthly and principal may be payable monthly or quarterly.

         The normal minimum  amount for our  commercial  term loans and lines of
credit is $5,000.  We generally will not lend more than $100,000 on a commercial
line of credit or  $500,000  on a  commercial  term loan.  We  typically  do not
provide working capital loans to businesses outside our normal market area or to
new  businesses  where  repayment  is  dependent  solely  on  future  profitable
operation  of the  business.  We avoid  originating  loans for which the primary
source of repayment could be liquidation of the collateral  securing the loan in
light of poor repayment  prospects.  We typically require personal guarantees on
all commercial loans, regardless of other collateral securing the loan.

         The loan-to-value  limits related to commercial  lending vary according
to the collateral.  Loans secured by real estate may be originated for up to 80%
loan-to-value. Other limits are as follows. Savings accounts: 90% of the deposit
amount; accounts receivable:  80% of eligible amounts receivable 60 days or less
past due or 90 days  from  invoice,  whichever  is less;  inventory:  50% of raw
materials and 60% of finished goods; stocks: 50% to 75% depending on exchange or
market listing;  bonds: 'A' rated or better,  90% of market value, less than 'A'
rated,  60% of market value;  new  equipment:  75% of purchase  price;  and used
equipment: lesser of 75% of purchase price or 75% of current market value.

         Loans to One Borrower.  Under federal law, savings  institutions  have,
subject to certain exemptions, lending limits to one borrower in an amount equal
to the greater of $500,000 or 15% of the  institution's  unimpaired  capital and
surplus. Accordingly, as of June 30, 2006, our loans to one borrower legal limit
was approximately  $2.9 million.  The Bank's loans to one borrower legal lending
limit will be higher  following the stock  offering  because the stock  offering
proceeds will increase the Bank's capital.

         Loans that approach the loans to one borrower  limit are fully reviewed
by the Board of Directors  before being  approved.  The Bank's lending  policies
require  Board  approval  before  any  borrower's   existing  and/or   committed
borrowings  from the Bank may exceed $1.0 million in aggregate.  Any single loan
in excess of $1.0 million also requires prior Board approval.

                                       50



         Loan Originations,  Purchases,  Sales, Solicitation and Processing. Our
customary sources of loan applications include repeat customers,  referrals from
realtors and other professionals and "walk-in"  customers.  Our residential loan
originations  are  driven  by  the  Bank's  reputation,   as  opposed  to  being
advertising driven.

         We normally do not sell loans into the  secondary  mortgage  market and
did not sell any loans in the five  years  ended June 30,  2006.  Because it has
been our policy to retain the loans we originate in our  portfolio,  we have not
uniformly  originated our real estate  mortgage loans to meet the  documentation
standards to sell loans in the secondary mortgage market. We may do so, however,
in the future if we find it  desirable in  connection  with  interest  rate risk
management to sell longer term fixed rate mortgages into the secondary  mortgage
market.

         We did not purchase any loans in the five years ended June 30, 2006 and
we have generally not purchased  participation  interests in loans originated by
other banks.

         Loan  Approval  Procedures  and  Authority.  Lending  policies and loan
approval  limits are  approved  and adopted by the Board of  Directors.  Lending
authority  is vested  primarily in President  and Chief  Executive  Officer Gary
Jolliffe,  Executive Vice President and Chief Operating  Officer Michael Shriner
and Vice  President  and Chief  Lending  Officer  Nancy  Schmitz.  Each of these
officers may approve  loans within the  following  limits:  first  mortgage real
estate and construction loans up to $500,000;  home equity loans up to $150,000;
consumer  loans up to  $150,000;  and  commercial  loans up to  $150,000.  These
officers  may  combine  their  authorities  to make home  equity,  consumer  and
commercial  loans up to $450,000 and first mortgage real estate and construction
loans up to $1.0  million.  Prior Board  approval is required  for home  equity,
consumer and commercial  loans in excess of $450,000 and for first mortgage real
estate and  construction  loans in excess of $1.0  million.  The Board also must
give prior approval for any  aggregation of existing  and/or  committed loans to
one borrower that exceed $1.0 million.  Certain other Bank  employees  also have
limited lending authority.

Asset Quality

         Loan Delinquencies and Collection Procedures. The Bank's procedures for
delinquent loans are as follows:



                             
         15 days delinquent:        late charge added and first delinquent notice mailed.
         30 days delinquent:        second delinquent notice mailed.
         45 days delinquent:        additional late charge added, third delinquent notice mailed
                                    and telephone contact made.
         60 days delinquent:        telephone contact made and separate letter mailed.
         90 days delinquent:        Board of Directors makes decision to foreclose or workout.


         When a loan is 90 days delinquent,  the Board may determine to refer it
to an attorney for repossession or foreclosure. All reasonable attempts are made
to collect from borrowers  prior to referral to an attorney for  collection.  In
certain instances,  we may modify the loan or grant a limited moratorium on loan
payments to enable the borrower to reorganize his or her financial affairs,  and
we attempt to work with the borrower to  establish a repayment  schedule to cure
the delinquency.

         As to mortgage loans, if a foreclosure  action is taken and the loan is
not  reinstated,  paid in full or  refinanced,  the property is sold at judicial
sale at which we may be the buyer if there are no adequate offers to satisfy the
debt.  Any property  acquired as the result of foreclosure or by deed in lieu of

                                       51



foreclosure  is  classified  as real estate  owned until it is sold or otherwise
disposed of. When real estate owned is acquired,  it is recorded at the lower of
the unpaid  principal  balance of the related loan or its fair market value less
estimated selling costs. The initial writedown of the property is charged to the
allowance  for loan losses.  Adjustments  to the carrying  value of the property
that result from  subsequent  declines in value are charged to operations in the
period in which the declines  occur.  At June 30,  2006,  we held no real estate
owned.

         As to commercial loans, the Bank requires updated financial  statements
when the loan becomes 90 days  delinquent.  As to account loans, the outstanding
balance is collected from the related  account along with accrued  interest when
the loan is 180 days delinquent.

         Loans are reviewed on a regular basis, and all delinquencies of 60 days
or more are reported to the Board of Directors.  Loans are placed on non-accrual
status when they are more than 90 days  delinquent,  with the exception of loans
that may be placed on a  non-accrual  status at any time if, in the  opinion  of
management,  the  collection  of additional  interest is doubtful.  Loans with a
loan-to-value  ratio of 60% or less,  however,  are not automatically  placed on
non-accrual status if more than 90 days delinquent.  Interest accrued and unpaid
at the time a loan is placed on non-accrual  status is charged against  interest
income.  Subsequent  payments are either  applied to the  outstanding  principal
balance or recorded as  interest  income,  depending  on the  assessment  of the
ultimate  collectibility  of the loan.  At June 30, 2006,  we had  approximately
$424,000 of loans that were held on a non-accrual basis.

                                       52



         Non-Performing   Assets.  The  following  table  provides   information
regarding our  non-performing  loans and other  non-performing  assets as of the
dates indicated.



                                                                                     At June 30,
                                                               ---------------------------------------------------------
                                                               2006         2005         2004          2003         2002
                                                               ----         ----         ----          ----         ----
                                                                                   (In thousands)
                                                                                                  
Loans accounted for on a non-accrual basis:
  One-to-four family real estate.....................          $  -       $1,662       $  951        $1,103       $  520
  Commercial real estate.............................             -            -          216           555          664
  Construction.......................................             -            -           55           527          128
  Consumer...........................................             1           13            -            10           49
  Home equity........................................           325          554          549           409           49
  Commercial.........................................            98           99          124             -          125
                                                               ----       ------       ------        ------       ------
     Total...........................................           424        2,328        1,895         2,604        1,535
                                                               ----       ------       ------        ------       ------
Accruing loans contractually past due
  90 days or more:
  One-to-four family real estate.....................           252           39           74             -           10
  Commercial real estate.............................             -            -            -           363            -
  Construction.......................................            47            -            -             -            -
  Consumer...........................................             -            2           13             -           11
  Home equity........................................             -           38            -             -            -
  Commercial.........................................             -            -            -             -            5
                                                               ----       ------       ------        ------       ------
     Total...........................................           299           79           87           363           26
                                                               ----       ------       ------        ------       ------
Total non-performing loans...........................           723        2,407        1,982         2,967        1,561
                                                               ----       ------       ------        ------       ------
Total non-performing assets..........................          $723       $2,407       $1,982        $2,967       $1,561
                                                               ====       ======       ======        ======       ======
Total non-performing loans to total loans............          0.32%        1.24%        1.13%         2.09%        1.25%

Total non-performing loans to total assets...........          0.27%        1.01%        0.92%         1.51%        0.92%
Total non-performing assets to total assets..........          0.27%        1.01%        0.92%         1.51%        0.92%



         During the year ended June 30, 2006,  gross interest  income of $34,000
would have been recorded on loans accounted for on a non-accrual  basis if those
loans had been current, and $35,000 of interest on a cash basis as collected was
included in income.

         Classified  Assets.  Management,  in compliance with the Uniform Credit
Classification  and Account  Management  Policy  adopted by the Federal  Deposit
Insurance Corporation,  has instituted an internal loan review program,  whereby
non-performing loans are classified as special mention, substandard, doubtful or
loss.  It is our  policy  to  review  the loan  portfolio,  in  accordance  with
regulatory classification procedures, on at least a quarterly basis. When a loan
is classified as substandard or doubtful, management is required to evaluate the
loan for impairment.  When management  classifies a portion of a loan as loss, a
reserve  equal to 100% of the loss amount is required to be  established  or the
loan is to be charged-off.

         An asset that does not currently expose the Bank to a sufficient degree
of risk to  warrant  an  adverse  classification,  but  which  possesses  credit
deficiencies or potential  weaknesses that deserve  management's close attention
is classified as "special mention."

                                       53



         An asset classified as  "substandard" is inadequately  protected by the
current net worth and paying capacity of the obligor or the collateral  pledged,
if any. Assets so classified have well-defined  weaknesses and are characterized
by the  distinct  possibility  that  the  Bank  will  sustain  some  loss if the
deficiencies are not corrected.

         An asset classified as "doubtful" has all the weaknesses  inherent in a
"substandard"  asset  with the added  characteristic  that the  weaknesses  make
collection or  liquidation  in full, on the basis of currently  existing  facts,
conditions, and values, highly questionable and improbable. The possibility of a
loss on a doubtful asset is high.

         That  portion  of  an  asset   classified   as  "loss"  is   considered
uncollectible and of such little value that its continuance as an asset, without
establishment  of a specific  valuation or charge-off,  is not  warranted.  This
classification  does not  necessarily  mean  that an  asset  has  absolutely  no
recovery or salvage value; but rather, it is not practical or desirable to defer
writing off a basically  worthless  asset even though  partial  recovery  may be
effected in the future.

         Management's  classification  of assets is  reviewed  by the Board on a
regular  basis  and by the  regulatory  agencies  as part of  their  examination
process.  An independent loan review firm performs  periodic reviews of our loan
portfolio.

         The following table discloses the Bank's classification of assets as of
June 30, 2006.


                                                       At June 30,
                                                          2006
                                                       -----------
                                                      (In thousands)
           Special Mention........................        $1,372
           Substandard............................           185
           Doubtful...............................             -
           Loss...................................             1
                                                         -------
             Total................................        $1,558
                                                          ======

         At  June  30,  2006,  $722,000  of the  loans  classified  as  "special
mention,"  none of the loans  classified as  "substandard"  and all of the loans
classified as "loss" are included under  non-performing  assets, as shown in the
table above.

         Allowance for Loan Losses. The allowance for loan losses is a valuation
account that reflects our  estimation of the losses in our loan portfolio to the
extent they are both  probable  and  reasonable  to estimate.  The  allowance is
established through provisions for loan losses that are charged to income in the
period they are established. We charge losses on loans against the allowance for
loan  losses when we believe  the  collection  of loan  principal  is  unlikely.
Recoveries on loans previously charged-off are added back to the allowance.

         Management, in determining the allowance for loan losses, considers the
losses  inherent in the loan  portfolio  and changes in the nature and volume of
our  loan  activities,  along  with  general  economic  and real  estate  market
conditions.  We establish a specific allowance for loans classified as "loss" or
that are  determined  to be impaired.  We make  provisions  for loan losses to a
general  allowance  according to (i) the type of loan,  one-to-four  family real
estate  mortgages,   commercial  real  estate  mortgages,   construction  loans,
commercial term loans and lines of credit,  consumer loans and home equity loans
and lines of credit, with commercial,  construction and consumer loans receiving
a higher  allowance than other loan types,  and

                                       54



(ii)  whether  the loan is current and  performing  or  delinquent,  with higher
allowances  made according to the number of days a loan is delinquent.  However,
for purposes of  establishing  the general  valuation  allowance  loans that are
delinquent  90 days or more are treated as current if they have a  loan-to-value
ratio of less than 60%.

         We maintain a loan review system which provides for a systematic review
of the loan portfolios and the early identification of potential impaired loans.
We generally review a loan for impairment as soon as the loan is 60 or more days
delinquent. A loan evaluated for impairment is deemed to be impaired when, based
on current  information  and events,  it is  probable  that we will be unable to
collect  all  amounts  due  according  to the  contractual  terms  of  the  loan
agreement. All loans identified as impaired are evaluated  independently.  We do
not aggregate such loans for evaluation purposes.  Payments received on impaired
loans are applied first to unpaid interest,  escrow and late charges and then to
principal.

         Specific loan loss  allowances are  established  for  identified  loans
based  on a review  of such  information  and/or  appraisals  of the  underlying
collateral. General loan loss allowances are based upon a combination of factors
including,  but not limited to, actual loan loss experience,  composition of the
loan portfolio, current economic conditions and management's judgment. In recent
years,  our  charge-offs  have been low and  therefore our  provisions  for loan
losses have been  reflective of other factors,  including  economic  conditions,
annual  growth of the loan  portfolio  respectively,  as well as the  increasing
percentage of commercial real estate and construction  loans,  home equity loans
and commercial  loans relative to total loans.  The decreased  provision for the
year  ended  June  30,  2006  is  attributable   to  the  substantial   drop  in
non-performing loans during the year.

         The   estimation  of  the  allowance  for  loan  losses  is  inherently
subjective as it requires  estimates and  assumptions  that are  susceptible  to
significant  revisions as more information becomes available or as future events
change.  Future  additions to the  allowance for loan losses may be necessary if
economic  and other  conditions  in the  future  differ  substantially  from the
current operating environment. In addition, the New Jersey Department of Banking
and Insurance and the Federal Deposit Insurance Corporation, as an integral part
of their examination  process,  periodically review our loan and foreclosed real
estate  portfolios  and the  related  allowance  for loan  losses and  valuation
allowance for  foreclosed  real estate.  They may require the allowance for loan
losses or the  valuation  allowance for  foreclosed  real estate to be increased
based on their review of information  available at the time of the  examination,
which would negatively affect our earnings.

                                       55



         The following table sets forth  information  with respect to the Bank's
allowance for loan losses for the periods indicated:



                                                                               Year Ended June 30,
                                                            -----------------------------------------------------------
                                                            2006         2005          2004          2003          2002
                                                            ----         ----          ----          ----          ----
                                                                              (Dollars in thousands)
                                                                                               
Allowance balance at beginning of period...........         $874         $742          $651          $783          $657
                                                            ----         ----          ----          ----          ----
Provision for loan losses..........................           60          135           134           136           137
                                                            ----         ----          ----          ----          ----
Charge-offs:
  Commercial real estate...........................            -            -             -           264             -
  Consumer.........................................           17            3            45             5            11
                                                            ----         ----          ----          ----          ----
     Total charge-offs.............................           17            3            45           269            11
                                                            ----         ----          ----          ----          ----

Recoveries:
  Consumer.........................................            4            -             2             1             -
                                                            ----         ----          ----          ----          ----
     Total recoveries..............................            4            -             2             1             -
                                                            ----         ----          ----          ----          ----
Net (charge-offs) recoveries.......................         $(13)        $ (3)         $(43)        $(268)         $(11)
                                                            ----         ----          ----          ----          ----
Allowance balance at end of period.................         $921         $874          $742          $651          $783
                                                            ====         ====          ====          ====          ====
Total loans outstanding at end of period...........     $224,399     $193,996      $174,994      $142,254      $124,716
                                                        ========     ========      ========      ========      ========
Average loans outstanding during period............     $205,905     $179,837      $151,736      $133,119      $116,761
                                                        ========     ========      ========      ========      ========
Allowance for loan losses as a
   percentage of non-performing loans..............       127.39%       36.31%        37.44%        21.94%        50.16%
Allowance for loan losses as a
   percentage of total loans.......................         0.41%        0.45%         0.42%         0.46%         0.63%
Net loans charge-offs as a
   percentage of average loans.....................         0.01%        0.00%         0.03%         0.20%         0.01%


                                       56



         Allocation of Allowance for Loan Losses. The following table sets forth
the allocation of the Bank's  allowance for loan losses by loan category and the
percent  of loans  in each  category  to total  loans  receivable  at the  dates
indicated.  The  portion  of the loan  loss  allowance  allocated  to each  loan
category  does not  represent  the total  available  for future losses which may
occur  within  the loan  category  since the  total  loan  loss  allowance  is a
valuation allocation applicable to the entire loan portfolio.



                                                                        At June 30,
                                  ---------------------------------------------------------------------------------------
                                       2006              2005              2004             2003              2002
                                  ---------------   ---------------   ---------------   ---------------   ---------------
                                           Percent           Percent           Percent           Percent           Percent
                                          of Loans          of Loans          of Loans          of Loans          of Loans
                                          to Total          to Total          to Total          to Total          to Total
                                  Amount    Loans   Amount    Loans   Amount    Loans   Amount    Loans   Amount    Loans
                                  ------    -----   ------    -----   ------    -----   ------    -----   ------    -----
                                                                   (Dollars in thousands)
                                                                                      
At end of period allocated to:
 One-to-four family real estate...  $436    55.29%    $467    60.86%    $418    65.48%    $362    70.03%    $287     72.88%
 Commercial real estate...........   108    11.08       72     9.60       85    10.18       83     8.91      352      8.93
 Construction.....................   125     8.39       72     6.78       47     4.92       52     3.79       23      2.25
 Consumer.........................     9     0.32       19     0.35        8     0.40       19     0.78       29      1.23
 Home equity......................   178    22.57      202    20.46      157    17.62      108    14.79       66     13.37
 Commercial.......................    65     2.35       42     1.95       27     1.40       27     1.70       26      1.34
                                    ----   ------     ----   ------     ----   ------     ----   ------     ----    ------
     Total allowance..............  $921   100.00%    $874   100.00%    $742   100.00%    $651   100.00%    $783    100.00%
                                    ====   ======     ====   ======     ====   ======     ====   ======     ====    ======


                                       57



Securities Portfolio

         General.  Our  investment  policy is  designed to manage cash flows and
foster  earnings within prudent  interest rate risk and credit risk  guidelines.
The portfolio mix is governed by our short term and long term  liquidity  needs.
Rate-of-return, cash flow, rating and guarantor-backing are also considered when
making investment decisions.  The purchase of principal only and stripped coupon
interest  only  security  instruments  is  specifically  not  authorized  by our
investment policy.  Furthermore,  other than government related securities which
may not be rated, we only purchase securities with a rating of AAA or AA.

         At June 30, 2006,  our held to maturity  securities  portfolio  totaled
$27.7 million and  represented 10% of our total assets.  We invest  primarily in
mortgage-backed  securities,  U.S.  government  obligations and U.S.  government
agency issued securities.

         Mortgage-backed securities represent a participation interest in a pool
of  mortgages  issued  by  U.S.  government  agencies  or   government-sponsored
entities,  such as Federal Home Loan Mortgage  Corporation  ("Freddie Mac"), the
Government  National  Mortgage  Association  ("Ginnie  Mae"),  and  the  Federal
National Mortgage Association ("Fannie Mae"), as well as non-government, private
corporate issuers.  Mortgage-backed  securities are pass-through  securities and
generally  yield less than the mortgage  loans  underlying the  securities.  The
characteristics  of the  underlying  pool  of  mortgages,  i.e.,  fixed-rate  or
adjustable-rate,  as well as prepayment  risk, are passed on to the  certificate
holder.

         Mortgage-backed  securities  issued  or  sponsored  by U.S.  government
agencies and  government-sponsored  entities are guaranteed as to the payment of
principal and interest to investors.  Private corporate issuers' mortgage-backed
securities typically offer rates above those paid on government agency issued or
sponsored securities, but lack the guaranty of those agencies.

         Statement of Financial  Accounting  Standards No. 115,  "Accounting for
Certain Investments in Debt and Equity Securities,"  requires that securities be
categorized as "held to maturity," "trading securities" or "available for sale,"
based on  management's  intent as to the ultimate  disposition of each security.
Statement No. 115 allows debt  securities to be classified as "held to maturity"
and reported in financial  statements at amortized cost if the reporting  entity
has the  positive  intent  and  ability to hold these  securities  to  maturity.
Securities  that might be sold in response to changes in market  interest rates,
changes in the security's  prepayment risk,  increases in loan demand,  or other
similar factors cannot be classified as "held to maturity."

         Nearly all of our securities  portfolio is purchased with the intent to
hold the  security  until  maturity.  At June 30,  2006,  we  maintained a small
trading account totaling  $109,000 and the rest of our securities  portfolio was
classified as held to maturity.  Securities not classified as "held to maturity"
or as  "trading  securities"  are  classified  as  "available  for sale" and are
reported  at fair  value  with  unrealized  gains and  losses on the  securities
impacting equity.

         At June 30, 2006 our securities portfolio did not contain securities of
any issuer, other than the U.S. government or its agencies,  having an aggregate
book value in excess of 10% of our equity.  We do not currently  participate  in
hedging  programs,  interest  rate caps,  floors or swaps,  or other  activities
involving  the  use  of  off-balance  sheet  derivative  financial  instruments,
however, we may in the future utilize such instruments if we believe it would be
beneficial for managing our interest rate risk.

                                       58



         The  following  table  sets  forth  the  carrying  value of our held to
maturity securities portfolio at the dates indicated.  Securities  classified as
held to maturity are shown at our amortized cost.



                                                                              At June 30,
                                                                 --------------------------------------
                                                                   2006           2005            2004
                                                                   ----           ----            ----
                                                                         (In thousands)
                                                                                     
Securities Held to Maturity:
  U.S. Government Agency Obligations....................         $24,127        $24,133         $26,588
  Government National Mortgage Association..............              69             87             109
  Federal Home Loan Mortgage Corporation................             923          1,206           1,630
  Federal National Mortgage Association.................           2,588          2,866           3,188
                                                                 -------        -------         -------
    Total securities held to maturity...................         $27,707        $28,292         $31,515
                                                                 =======        =======         =======


                                       59



         The  following  table  sets forth  certain  information  regarding  the
carrying  values,  weighted  average  yields and  maturities  of our  securities
portfolio at June 30, 2006. This table shows contractual maturities and does not
reflect  repricing  or the  effect  of  prepayments.  Actual  maturities  of the
securities held by us may differ from contractual maturities because issuers may
have  the  right  to call or  prepay  obligations  with  or  without  prepayment
penalties. Callable securities pose reinvestment risk because we may not be able
to reinvest the  proceeds  from called  securities  at an  equivalent  or higher
interest rate.



                                                                        At June 30, 2006
                                    ------------------------------------------------------------------------------------------------
                                                                                              More than
                                    One Year or Less  One to Five Years Five to Ten Years     Ten Years          Total Securities
                                    ----------------  ----------------- ----------------- -----------------  -----------------------
                                    Carrying Average  Carrying Average  Carrying  Average Carrying  Average  Carrying Average Market
                                      Value   Yield     Value   Yield     Value    Yield    Value    Yield     Value   Yield   Value
                                      -----   -----     -----   -----     -----    -----    -----    -----     -----   -----   -----
                                                                      (Dollars in thousands)
                                                                                           
U.S. Government agency
  obligations....................   $     -       -%  $15,000    3.02%    $4,000    4.25%  $5,127    5.44%   $24,127   3.74% $23,273

Mortgage-Backed Securities:
  Government National Mortgage
  Association....................         -       -         -       -          -       -       69    5.47         69   5.49       70

  Federal Home Loan Mortgage
    Association..................         -       -         -       -        172    6.52      751    4.84        923   5.15      938

  Federal National Mortgage
    Association..................         -       -       894    6.13      1,035    4.39      659    5.21      2,588   5.20    2,540
                                    -------    ----   -------    ----     ------    ----   ------    ----    -------   ----  -------

  Total..........................   $     -       -%  $15,894    3.20%    $5,207    4.35%  $6,606    5.35%   $27,707   3.93% $26,821
                                    =======    ====   =======    ====     ======    ====   ======    ====    =======   ====  =======


                                       60



Sources of Funds

         General.  Deposits  are our major source of funds for lending and other
investment purposes.  To the extent that our loan originations have exceeded the
funding  available from  deposits,  we have borrowed funds from the Federal Home
Loan Bank to  supplement  the  amount of funds for  lending  and  funding  daily
operations. At June 30, 2006 our total loans to deposits ratio was 115%.

         In addition,  we derive funds from loan and mortgage-backed  securities
principal  repayments,  and proceeds  from the  maturity and call of  investment
securities.  Loan and  securities  payments  are a relatively  stable  source of
funds,  while  deposit  inflows and outflows  are  significantly  influenced  by
pricing strategies and money market conditions.

         Deposits.  Our current deposit  products  include  checking and savings
accounts,  certificates  of  deposit  and  fixed  or  variable  rate  individual
retirement  accounts  (IRA's).  Deposit account terms vary,  primarily as to the
required minimum balance amount, the amount of time, if any, that the funds must
remain on deposit and the applicable  interest  rate.  Our savings  account menu
includes  regular  passbook,  statement,  money  market and club  accounts.  Our
certificates of deposit  currently range in terms from 6 months to 10 years. Our
IRA's  are  available  with the  same  maturities  as  certificates  of  deposit
accounts,  with  the  exception  of the 30  month  term.  We  offer  a two  year
certificate  of deposit that permits the depositor to increase the interest rate
to the current two year rate once during the term.

         In  May  2006,  we  introduced  an  "Opportunity  Savings  Account,"  a
six-level tiered savings account, and a "Value Checking Account," a non-interest
bearing account with no minimum balance requirement or maintenance fees offering
unlimited check writing, free first order of checks, debit card, on-line banking
and bill  paying,  telephone  banking and direct  deposit,  plus a one year safe
deposit  box  based on  availability  as well as no fee for  out-of-network  ATM
transactions (other than any fee charged by the financial  institution operating
that ATM).

         Deposits are obtained  primarily  from within New Jersey.  The Bank has
not previously  utilized the services of deposit brokers but management,  at the
board's direction, is evaluating brokered deposits as a funding source. Premiums
or incentives for opening accounts are sometimes offered. We periodically select
particular  certificate of deposit  maturities for promotion in connection  with
asset/liability management and interest rate risk concerns.

         The  determination  of deposit and certificate  interest rates is based
upon a number of factors,  including:  (1) need for funds based on loan  demand,
current  maturities of deposits and other cash flow needs;  (2) a current survey
of a selected group of  competitors'  rates for similar  products;  (3) economic
conditions; and (4) business plan projections.

         A large  percentage  of our  deposits are in  certificates  of deposit,
which  totaled  57.5%  of  total  deposits  at June  30,  2006.  The  inflow  of
certificates  of deposit and the  retention of such  deposits  upon maturity are
significantly  influenced by general interest rates and money market conditions,
making  certificates of deposit  traditionally a more volatile source of funding
than core deposits.  Our liquidity  could be reduced if a significant  amount of
certificates of deposit maturing within a short period of time were not renewed.
To the extent  that such  deposits  do not remain  with us,  they may need to be
replaced with  borrowings  which could increase our cost of funds and negatively
impact our net interest rate spread and our financial condition.

                                       61



         The following table sets forth the distribution of deposits at the Bank
at the dates indicated and the weighted  average nominal interest rates for each
period on each category of deposits presented.



                                                                               At June 30,
                                     -----------------------------------------------------------------------------------------------
                                               2006                                2005                            2004
                                     ------------------------------    ------------------------------   ----------------------------
                                                          Weighted                          Weighted                       Weighted
                                              Percent      Average                Percent    Average              Percent   Average
                                              of Total     Nominal               of Total    Nominal              of Total  Nominal
                                     Amount   Deposits       Rate       Amount   Deposits      Rate      Amount  Deposits    Rate
                                     ------   --------       ----       ------   --------      ----      ------  --------    ----
                                                                          (Dollars in thousands)
                                                                                                  
Non-interest-bearing demand
   deposits......................  $  9,135      4.69%           -%  $   8,421      4.27%         -%  $   7,122     3.74%        -%

Interest-bearing demand
   deposits......................    30,896     15.87         0.97      35,758     18.16       0.93      35,860    18.83      0.93

Savings and club deposits........    42,696     21.92         1.49      48,916     24.84       1.22      52,927    27.78      1.21

Certificates of deposit..........   112,028     57.52         4.15     103,836     52.73       3.30      94,591    49.65      2.80
                                   --------    ------         ----    --------    ------       ----    --------   ------      ----

     Total deposits..............  $194,755    100.00%        2.87%   $196,931    100.00%      2.21%   $190,500   100.00%     1.90%
                                   ========    ======         ====    ========    ======       ====    ========   ======      ====


                                       62



         The following table sets forth the  certificates of deposit at the Bank
classified by interest rate as of the dates indicated.



                                                                          At June 30,
                                   -----------------------------------------------------------------------------------------
                                            2006                             2005                            2004
                                   ------------------------         ------------------------         -----------------------
                                                    Percent                          Percent                         Percent
                                   Amount          of Total         Amount          of Total         Amount         of Total
                                   ------          --------         ------          --------         ------         --------
                                                                    (Dollars in thousands)
                                                                                                
Interest Rate
-------------
1.00% - 1.99%.............        $      8             0.01%       $  6,091             5.87%        $33,956          35.90%
2.00% - 2.99%.............           2,375             2.12          36,083            34.75          23,291          24.62
3.00% - 3.99%.............          28,049            25.04          38,192            36.78          15,300          16.18
4.00% - 4.99%.............          68,182            60.86          14,762            14.22          13,162          13.91
5.00% - 5.99%.............          13,400            11.96           7,748             7.46           7,777           8.22
6.00% - 6.99%.............              14             0.01             960             0.92           1,105           1.17
                                  --------           ------        --------           ------         -------         ------
  Total...................        $112,028           100.00%       $103,836           100.00%        $94,591         100.00%
                                  ========           ======        ========           ======         =======         ======


         The   following   table  sets  forth  the  amount  and   maturities  of
certificates of deposit at the Bank at June 30, 2006.



                                                                     Amount Due
                               -----------------------------------------------------------------------------------------
                                                                                                               After
                                    June 30,         June 30,        June 30,       June 30,       June 30,       June 30,
Interest Rate                         2007             2008            2009           2010           2011           2012
----------------                   --------         --------        --------       --------       --------       --------
                                                                 (In thousands)
                                                                                              
1.00% - 1.99%.............          $     8          $     -         $    -         $    -          $  -          $     -
2.00% - 2.99%.............            2,374                1              -              -             -                -
3.00% - 3.99%.............           23,232            3,614          1,049              -             -              154
4.00% - 4.99%.............           46,489           14,045          2,732          1,729           666            2,521
5.00% - 5.99%.............            4,352            1,716              3              -             -            7,329
6.00% - 6.99%.............                8                6              -              -             -                -
                                    -------          -------         ------         ------          ----          -------
    Total.................          $76,463          $19,382         $3,784         $1,729          $666          $10,004
                                    =======          =======         ======         ======          ====          =======


         The  following  table  shows the amount of the Bank's  certificates  of
deposit of  $100,000  or more by time  remaining  until  maturity as of June 30,
2006.


                                                    Certificates
Remaining Time Until Maturity                        of Deposits
-----------------------------                        -----------
                                                   (In thousands)
Within three months.......................            $ 8,775
Three through six months..................              7,396
Six through twelve months.................             10,165
Over twelve months........................             10,872
                                                       ------
    Total.................................            $37,208
                                                      =======

         Borrowings. To supplement our deposits as a source of funds for lending
or  investment,  we have borrowed funds in the form of advances from the Federal
Home Loan Bank. At June 30, 2006, our  collateralized  borrowing  limit with the
Federal Home Loan Bank was $56.2 million and our outstanding

                                       63



borrowings  with the Federal Home Loan Bank totaled $54.2  million.  Information
regarding  our  total  borrowings  as of June  30,  2006  are set  forth  in the
following table.



                                                                          At June 30, 2006
                                                            -------------------------------------------
                                                            Balance         Rate               Maturity
                                                            -------         ----               --------
                                                                   (Dollars in thousands)
                                                                                  
Total Borrowings:
Overnight Line of Credit.............................       $18,500   daily adjustable               next day
                                                                       rate (5.42% on
                                                                       June 30, 2006)
30 Day Adjustable Rate Advance.......................       $23,000   daily adjustable                30 days
                                                                       rate (5.41% on
                                                                       June 30, 2006)
Five Year Amortizing Fixed Rate Advance..............        $2,681              3.60%            August 2009
Five Year Fixed Rate Advance.........................        $5,000              4.25%          December 2009
Five Year Fixed Rate Advance.........................        $5,000              4.28%              June 2010


         Short-term  Federal Home Loan Bank  advances  generally  have  original
maturities of less than one year.  Information regarding our short-term advances
for the dates and periods indicated are set forth in the following table.



                                                                                 At or For the
                                                                               Year Ended June 30,
                                                                     ------------------------------------
                                                                     2006             2005          2004
                                                                     ----             ----          ----
                                                                              (Dollars in thousands)
                                                                                        
Short-Term Borrowings:
Average balance outstanding...............................         $24,602          $ 8,033       $ 4,289
Maximum amount outstanding
  at any month-end during the period......................          41,500           13,400         7,500
Balance outstanding at end of period......................          41,500            7,750         7,500
Weighted average interest rate during the period..........           4.59%            2.23%         1.12%
Weighted average interest rate at end of period...........           5.41%            3.49%         1.61%


         Advances from the Federal Home Loan Bank are  typically  secured by the
Federal Home Loan Bank stock and a portion of our residential mortgage loans and
by other assets, mainly securities which are obligations of or guaranteed by the
U.S.  government.  Additional  information  regarding our borrowings is included
under Note 8 to our consolidated financial statements beginning on page F-1.

Subsidiary Activity

         MSB Financial  Corp. has no direct  subsidiaries  other than Millington
Savings  Bank.   Millington  Savings  Bank  has  one  wholly-owned   subsidiary,
Millington Savings Services Corp.,  formed in 1984. The service corporation owns
the Bank's former main office building, on which a sale is pending.

                                       64



Personnel

         As of  June  30,  2006,  Millington  Savings  Bank  had  49  full  time
equivalent  employees.  The  employees  are  not  represented  by  a  collective
bargaining  unit, and the Bank believes its  relationship  with the employees is
good.

Properties and Equipment

         At June 30, 2006,  our  investment  in property and  equipment,  net of
depreciation  and  amortization,   totaled  $8.9  million,  including  leasehold
improvements and construction in progress.


                                           Year Facility         Leased or
Office Location                               Opened               Owned
---------------                               ------               -----

Millington Main Office
1902 Long Hill Road                            1994                Owned
Millington, NJ
Dewy Meadow Branch Office
415 King George Road                           2002               Leased
Basking Ridge, NJ
RiverWalk Branch Office
675 Martinsville Road                         2005(1)             Leased
Basking Ridge, NJ
Martinsville Branch Office
1924 Washington Valley Road                    2006               Leased
Martinsville, NJ

------------------
(1)  The Bank's first branch office  location  opened in 1998 in Liberty Corner,
     New Jersey.  This office was relocated to RiverWalk Plaza in Basking Ridge,
     New Jersey in 2005.

         The above  table does not include our  Bernardsville  branch  office on
Morristown  Road in  Bernardsville,  New Jersey  which is in  construction.  The
projected opening date for this office is late 2007.

Legal Proceedings

         Millington  Savings  Bank,  from  time to time,  is a party to  routine
litigation  which  arises in the normal  course of  business,  such as claims to
enforce liens,  condemnation proceedings on properties in which we hold security
interests, claims involving the making and servicing of real property loans, and
other issues incident to our business.  There were no lawsuits  pending or known
to be  contemplated  against MSB Financial  Corp. or Millington  Savings Bank at
June 30, 2006 that would have a material effect on our operations or income.

                                   REGULATION

         Millington  Savings Bank and MSB  Financial  Corp.  operate in a highly
regulated  industry.  This regulation  establishes a comprehensive  framework of
activities in which a savings and loan holding  company and federal savings bank
may engage and is intended primarily for the protection of the deposit insurance
fund and depositors. Set forth below is a brief description of certain laws that
relate to the

                                       65



regulation of Millington  Savings Bank and MSB Financial  Corp. The  description
does not purport to be complete and is qualified in its entirety by reference to
applicable laws and regulations.

         Regulatory  authorities  have extensive  discretion in connection  with
their  supervisory  and  enforcement  activities,  including  the  imposition of
restrictions  on the operation of an institution  and its holding  company,  the
classification of assets by the institution and the adequacy of an institution's
allowance for loan losses. Any change in such regulation and oversight,  whether
in the form of regulatory policy, regulations, or legislation, including changes
in the regulations  governing  mutual holding  companies,  could have a material
adverse  impact on MSB  Financial  Corp.,  Millington  Savings  Bank,  and their
operations.  The adoption of  regulations or the enactment of laws that restrict
the operations of Millington  Savings Bank and/or MSB Financial  Corp. or impose
burdensome   requirements   upon  one  or  both  of  them  could   reduce  their
profitability and could impair the value of Millington Savings Bank's franchise,
resulting in negative effects on the trading price of MSB Financial Corp. common
stock.

Regulation of Millington Savings Bank

         General.   As  a  New  Jersey  chartered,   Federal  Deposit  Insurance
Corporation-insured   savings  bank,  Millington  Savings  Bank  is  subject  to
extensive  regulation by the New Jersey  Department of Banking and Insurance and
the Federal Deposit Insurance  Corporation.  This regulatory structure gives the
regulatory authorities extensive discretion in connection with their supervisory
and  enforcement   activities  and  examination  policies,   including  policies
regarding the  classification  of assets and the level of the allowance for loan
losses.  The  activities  of federal  savings  banks are  subject  to  extensive
regulation,  including restrictions or requirements with respect to loans to one
borrower,  the percentage of non-mortgage  loans or investments to total assets,
capital   distributions,   permissible   investments  and  lending   activities,
liquidity,  transactions  with  affiliates and community  reinvestment.  Federal
savings  banks are also subject to reserve  requirements  imposed by the Federal
Reserve System.  A federal savings bank's  relationship  with its depositors and
borrowers is regulated by both state and federal law, especially in such matters
as the  ownership  of savings  accounts  and the form and  content of the bank's
mortgage documents.

         Millington  Savings Bank must file  regulatory  reports  concerning its
activities and financial  condition,  and must obtain regulatory approvals prior
to entering into certain  transactions,  such as mergers with or acquisitions of
other financial institutions. The New Jersey Department of Banking and Insurance
and the Federal  Deposit  Insurance  Corporation  regularly  examine  Millington
Savings  Bank  and  prepares  reports  to  Millington  Savings  Bank's  Board of
Directors on  deficiencies,  if any,  found in its  operations.  The  regulatory
authorities  have  substantial  discretion  to impose  enforcement  action on an
institution  that  fails to  comply  with  applicable  regulatory  requirements,
particularly with respect to its capital requirements.

         Insurance of Deposit Accounts.  Deposit accounts in Millington  Savings
Bank are insured by the Deposit  Insurance Fund of the Federal Deposit Insurance
Corporation,  generally up to a maximum of $100,000  for  standard  accounts and
$250,000 for  individual  retirement  accounts.  The Federal  Deposit  Insurance
Corporation  maintains a risk-based deposit insurance assessment system by which
institutions   are  assigned  to  one  of  three   categories   based  on  their
capitalization and one of three  subcategories  based on examination ratings and
other supervisory information. An institution's assessment rate depends upon the
categories  to which it is assigned.  Assessment  rates for Savings  Association
Insurance Fund member  institutions are determined  semi-annually by the Federal
Deposit  Insurance  Corporation  and  currently  range from zero basis points of
assessable  deposits  for the  healthiest  institutions  to 27 basis  points  of
assessable deposits for the riskiest. The assessment rate for Millington Savings
Bank is currently 0%.

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         In addition to assessments for deposit  insurance,  all Federal Deposit
Insurance  Corporation-insured  institutions  are required to pay assessments to
the Federal  Deposit  Insurance  Corporation to fund payments on bonds issued in
the late  1980s by a  federal  agency to  recapitalize  the  predecessor  to the
Savings  Association  Insurance Fund. These  assessments will continue until the
Financing Corporation bonds mature in 2019.

         The  Federal   Deposit   Insurance   Corporation   may   terminate   an
institution's  deposit insurance upon a finding that the institution has engaged
in unsafe or unsound practices, is in an unsafe or unsound condition to continue
operations  or has violated  any  applicable  law,  regulation,  rule,  order or
condition.

         Federal Deposit Insurance Reform.  The Federal Deposit Insurance Reform
Act of 2005 was enacted on  February 8, 2006 as a part of the Deficit  Reduction
Act of 2005.  Effective  March 31, 2006, the Bank Insurance Fund and the Savings
Association  Insurance  Fund were merged into a new  combined  fund,  called the
Deposit  Insurance Fund. The Federal Deposit  Insurance Reform Act will also (i)
increase deposit insurance  coverage for retirement  accounts to $250,000,  (ii)
index the current $100,000  insurance  coverage limit for standard  accounts and
the new  $250,000  limit for  retirement  accounts  to reflect  inflation  (with
adjustments for inflation every five years,  commencing  January 1, 2011), (iii)
require the Federal  Deposit  Insurance  Corporation  to assess  annual  deposit
insurance premiums on all banks and savings  institutions,  (iv) give a one-time
insurance   assessment  credit  totaling  $4.7  billion  to  banks  and  savings
institutions  in  existence  on  December  31,  1996  that can be used to offset
premiums  otherwise due, (v) impose a cap on the level of the Deposit  Insurance
Fund and provide for dividends or rebates when the fund grows beyond a specified
threshold,   (vi)  adopt  a  historical   basis  concept  for  distributing  the
aforementioned one-time credit and dividends (with each institution's historical
basis  to be  determined  by a  formula  that  looks  back to the  institution's
assessment  base in 1996 and adds  premiums  paid  since  that  time)  and (vii)
authorize  revisions to the current  risk-based  system for assessing  premiums,
including  replacing the current fixed reserve ratio requirement of 1.25% with a
range of between 1.15% and 1.5% of insured deposits.

         The merger of the two deposit  insurance  funds required by the Federal
Deposit  Insurance  Reform Act was  effective as of March 31, 2006.  The Federal
Deposit  Insurance  Corporation is required to adopt final rules for the rest of
the provisions no later than 270 days after  enactment.  Such  regulations  will
result in the imposition of deposit insurance  assessments on all members of the
Deposit Insurance Fund,  including Millington Savings Bank, and such assessments
could have an adverse effect on the operating expenses and results of operations
of Millington Savings Bank.  Millington Savings Bank's management cannot predict
the rate of any such insurance  assessments or the effect of the  assessments on
its operations.

         Regulatory Capital Requirements.  Federal Deposit Insurance Corporation
capital regulations  require savings  institutions to meet three minimum capital
standards:  (1) tangible  capital equal to 1.5% of total  adjusted  assets,  (2)
"Tier 1" or  "core"  capital  equal to at  least 4% (3% if the  institution  has
received the highest  possible  rating on its most recent  examination) of total
adjusted assets, and (3) risk-based  capital equal to 8% of total  risk-weighted
assets.  At June 30, 2006,  Millington  Savings Bank was in compliance  with the
minimum capital  standards and qualified as "well  capitalized."  For Millington
Savings  Bank's  compliance  with  these  regulatory  capital   standards,   see
Historical  and  Pro  Forma  Capital  Compliance  as  well  as  Note  13 to  the
consolidated  financial  statements.   In  assessing  an  institution's  capital
adequacy, the Federal Deposit Insurance Corporation takes into consideration not
only these numeric factors but also qualitative  factors,  and has the authority
to establish  higher  capital  requirements  for individual  institutions  where
necessary.

                                       67



         The  Federal  Deposit  Insurance  Corporation  may  require any savings
institution that has a risk-based capital ratio of less than 8%, a ratio of Tier
1 capital to  risk-weighted  assets of less than 4% or a ratio of Tier 1 capital
to total adjusted assets of less than 4% (3% if the institution has received the
highest  rating  on its most  recent  examination)  to take  certain  action  to
increase  its  capital  ratios.   If  the  savings   institution's   capital  is
significantly  below  the  minimum  required  levels  of  capital  or  if  it is
unsuccessful in increasing its capital ratios, the institution's  activities may
be restricted.

         For purposes of the capital regulations, tangible capital is defined as
core capital less all intangible  assets except for certain  mortgage  servicing
rights.  Tier 1 or core  capital  is  defined  as common  stockholders'  equity,
non-cumulative perpetual preferred stock and related surplus, minority interests
in   the   equity   accounts   of   consolidated   subsidiaries,   and   certain
non-withdrawable   accounts  and  pledged  deposits  of  mutual  savings  banks.
Millington Savings Bank does not have any  non-withdrawable  accounts or pledged
deposits.  Tier 1 and core  capital are reduced by an  institution's  intangible
assets, with limited exceptions for certain mortgage and non-mortgage  servicing
rights and purchased credit card  relationships.  Both core and tangible capital
are further  reduced by an amount  equal to the savings  institution's  debt and
equity investments in  "non-includable"  subsidiaries  engaged in activities not
permissible  for national  banks other than  subsidiaries  engaged in activities
undertaken  as  agent  for  customers  or in  mortgage  banking  activities  and
subsidiary depository institutions or their holding companies.

         The risk-based capital standard for savings  institutions  requires the
maintenance of total capital of 8% of risk-weighted assets. Total capital equals
the sum of core and  supplementary  capital.  The  components  of  supplementary
capital  include,  among other  items,  cumulative  perpetual  preferred  stock,
perpetual   subordinated   debt,   mandatory   convertible   subordinated  debt,
intermediate-term  preferred stock, the portion of the allowance for loan losses
not  designated  for specific loan losses and up to 45% of  unrealized  gains on
equity  securities.  The  portion  of the  allowance  for loan and lease  losses
includable  in  supplementary  capital  is  limited  to a  maximum  of  1.25% of
risk-weighted assets. Overall,  supplementary capital is limited to 100% of core
capital.  For purposes of  determining  total capital,  a savings  institution's
assets are reduced by the amount of capital instruments held by other depository
institutions  pursuant  to  reciprocal  arrangements  and by the  amount  of the
institution's  equity  investments  (other  than  those  deducted  from core and
tangible   capital)   and  its  high   loan-to-value   ratio   land   loans  and
non-residential construction loans.

         A savings  institution's  risk-based  capital  requirement  is measured
against risk-weighted assets, which equal the sum of each on-balance-sheet asset
and the  credit-equivalent  amount of each  off-balance-sheet  item after  being
multiplied by an assigned risk weight. These risk weights range from 0% for cash
to 100% for delinquent loans, property acquired through foreclosure,  commercial
loans, and certain other assets.

         Dividend  and  Other  Capital  Distribution   Limitations.   A  savings
institution, like Millington Savings Bank, that is a subsidiary of a savings and
loan  holding  company must file an  application  or a notice with the Office of
Thrift  Supervision  at least thirty days before making a capital  distribution,
such  as  paying  a  dividend  to MSB  Financial  Corp.  The  Office  of  Thrift
Supervision  imposes  various  restrictions  or  requirements  on the ability of
savings institutions to make capital distributions,  including cash dividends. A
savings  institution  must file an  application  for prior approval of a capital
distribution  if:  (i) it is not  eligible  for  expedited  treatment  under the
applications  processing  rules of the  Office of Thrift  Supervision;  (ii) the
total  amount of all  capital  distributions,  including  the  proposed  capital
distribution,  for the applicable  calendar year would exceed an amount equal to
the  savings   institution's   net  income  for  that  year  to  date  plus  the
institution's  retained net income for the preceding  two years;  (iii) it would
not  adequately  be  capitalized  after the  capital  distribution;  or (iv) the
distribution would violate an agreement with the

                                       68



Office of Thrift  Supervision  or applicable  regulations.  The Office of Thrift
Supervision  may  disapprove  a  notice  or deny an  application  for a  capital
distribution if: (i) the savings institution would be undercapitalized following
the capital  distribution;  (ii) the proposed capital distribution raises safety
and  soundness  concerns;  or (iii) the  capital  distribution  would  violate a
prohibition contained in any statute, regulation or agreement.

         Capital  distributions  by MSB Financial  Corp.,  as a savings and loan
holding  company,  are not subject to the Office of Thrift  Supervision  capital
distribution  rules.  Because  MSB  Financial  Corp.  will retain 50% of the net
proceeds of the stock  offering,  the possibility  that Millington  Savings Bank
would need to file an application rather than a notice for capital distributions
is not expected to affect the payment of cash  dividends by MSB Financial  Corp.
to its stockholders or the amount of such dividends.

         Safety and  Soundness  Standards.  As required by statute,  the federal
banking agencies have adopted guidelines establishing general standards relating
to  internal   controls,   information   and  internal   audit   systems,   loan
documentation,  credit underwriting, interest rate exposure, asset growth, asset
quality,  earnings and compensation,  fees and benefits. The guidelines require,
among other things, the  implementation of appropriate  systems and practices to
identify and manage the risks and exposures  specified in the guidelines.  If it
is  determined  that a  savings  institution  has  failed  to meet any  standard
prescribed  by the  guidelines,  the  institution  may be  required to submit an
acceptable plan to achieve compliance with the standard.

         Qualified  Thrift  Lender  Test.  Savings   institutions  must  meet  a
qualified  thrift  lender test or they become  subject to the business  activity
restrictions  and branching rules  applicable to national banks. To qualify as a
qualified  thrift  lender,  a savings  institution  must  either (i) be deemed a
"domestic  building and loan  association"  under the  Internal  Revenue Code by
maintaining  at least 60% of its  total  assets in  specified  types of  assets,
including cash, certain government securities, loans secured by and other assets
related to  residential  real  property,  educational  loans and  investments in
premises of the  institution  or (ii)  satisfy the  statutory  qualified  thrift
lender test set forth in the Home Owners' Loan Act by  maintaining  at least 65%
of its  portfolio  assets in qualified  thrift  investments  (defined to include
residential mortgages and related equity investments,  certain  mortgage-related
securities,  small  business  loans,  student loans and credit card loans).  For
purposes of the statutory  qualified  thrift lender test,  portfolio  assets are
defined as total assets minus goodwill and other intangible assets, the value of
property  used by the  institution  in conducting  its  business,  and specified
liquid assets up to 20% of total assets. A savings institution must maintain its
status as a qualified  thrift  lender on a monthly basis in at least nine out of
every twelve  months.  Millington  Savings Bank met the qualified  thrift lender
test as of June 30, 2006 and in each of the last twelve  months and,  therefore,
qualifies as a qualified thrift lender.

         A savings bank that fails the qualified thrift lender test and does not
convert to a bank charter generally will be prohibited from: (1) engaging in any
new activity not  permissible  for a national  bank,  (2) paying  dividends  not
permissible under national bank regulations, and (3) establishing any new branch
office in a location not  permissible  for a national bank in the  institution's
home  state.  In  addition,  if the  institution  does not  requalify  under the
qualified  thrift  lender test within  three years after  failing the test,  the
institution  would be prohibited  from engaging in any activity not  permissible
for a national  bank and would have to repay any  outstanding  advances from the
Federal Home Loan Bank as promptly as possible.

         Community Reinvestment Act. Under the Community Reinvestment Act, every
insured  depository  institution,  including  Millington  Savings  Bank,  has  a
continuing  and  affirmative  obligation  consistent  with its  safe  and  sound
operation to help meet the credit needs of its entire  community,  including low
and moderate  income  neighborhoods.  The  Community  Reinvestment  Act does not
establish specific lending

                                       69



requirements  or  programs  for  financial  institutions  nor  does it  limit an
institution's  discretion  to develop the types of products and services that it
believes are best suited to its particular community. The Community Reinvestment
Act requires the depository  institution's record of meeting the credit needs of
its community to be assessed and taken into account in the evaluation of certain
applications by such  institution,  such as a merger or the  establishment  of a
branch  office  by  Millington   Savings  Bank.  An   unsatisfactory   Community
Reinvestment  Act examination  rating may be used as the basis for the denial of
an application.  Millington Savings Bank received a "satisfactory" rating in its
most recent Community Reinvestment Act examination.

         Federal Home Loan Bank System.  Millington  Savings Bank is a member of
the Federal Home Loan Bank of New York,  which is one of twelve regional federal
home loan banks. Each federal home loan bank serves as a reserve or central bank
for its members within its assigned  region.  It is funded  primarily from funds
deposited  by  financial  institutions  and  proceeds  derived  from the sale of
consolidated obligations of the Federal Home Loan Bank System. It makes loans to
members  pursuant  to  policies  and  procedures  established  by its  board  of
directors.

         As a member,  Millington  Savings  Bank is  required  to  purchase  and
maintain  stock in the Federal  Home Loan Bank of New York in an amount equal to
the greater of 1% of our  aggregate  unpaid  residential  mortgage  loans,  home
purchase contracts or similar obligations at the beginning of each year or 5% of
our outstanding Federal Home Loan Bank advances.

         The  Federal  Home Loan Banks are  required  to  provide  funds for the
resolution  of troubled  savings  institutions  and to  contribute to affordable
housing programs through direct loans or interest subsidies on advances targeted
for community  investment and low- and moderate-income  housing projects.  These
contributions  have  adversely  affected  the  level of  Federal  Home Loan Bank
dividends  paid and could  continue to do so in the future.  In addition,  these
requirements  could result in the Federal Home Loan Banks imposing a higher rate
of interest on advances to their members.

         The USA Patriot Act.  Millington Savings Bank is subject to regulations
implementing  the Uniting and  Strengthening  America by  Providing  Appropriate
Tools  Required to Intercept  and  Obstruct  Terrorism  Act of 2001,  or the USA
Patriot Act. The USA Patriot Act gives the federal  government powers to address
terrorist  threats  through  enhanced  domestic  security   measures,   expanded
surveillance  powers,  increased  information  sharing and broadened  anti-money
laundering requirements. By way of amendments to the Bank Secrecy Act, Title III
of the USA Patriot Act takes measures intended to encourage  information sharing
among bank regulatory  agencies and law  enforcement  bodies.  Further,  certain
provisions  of Title III  impose  affirmative  obligations  on a broad  range of
financial  institutions,  including banks,  thrifts,  brokers,  dealers,  credit
unions,  money  transfer  agents  and  parties  registered  under the  Commodity
Exchange Act.

         Among  other  requirements,  Title III of the USA  Patriot  Act and the
related regulations impose the following  requirements with respect to financial
institutions:

o    Establishment of anti-money  laundering  programs that include, at minimum:
     (i) internal policies,  procedures, and controls; (ii) specific designation
     of an anti-money  laundering  compliance  officer;  (iii) ongoing  employee
     training  programs;  and (iv) an  independent  audit  function  to test the
     anti-money laundering program.

                                       70



o    Establishment of a program specifying  procedures for obtaining identifying
     information  from  customers  seeking  to  open  new  accounts,   including
     verifying the identity of customers within a reasonable period of time.

o    Establishment of appropriate,  specific, and, where necessary, enhanced due
     diligence policies,  procedures, and controls designed to detect and report
     money laundering.

o    Prohibitions  on  establishing,   maintaining,  administering  or  managing
     correspondent  accounts for foreign shell banks  (foreign banks that do not
     have a physical  presence in any  country),  and  compliance  with  certain
     record  keeping  obligations  with  respect to  correspondent  accounts  of
     foreign banks.

         Bank   regulators   are  directed  to  consider  a  holding   company's
effectiveness  in combating money  laundering when ruling on applications  under
the Federal Reserve Act and the Bank Merger Act.

Regulation of MSB Financial Corp.

         General.  MSB  Financial  Corp.  is a savings and loan holding  company
within the meaning of Section 10 of the Home Owners' Loan Act. It is required to
file reports with the Office of Thrift  Supervision and is subject to regulation
and  examination by the Office of Thrift  Supervision.  MSB Financial Corp. must
also obtain  regulatory  approval from the Office of Thrift  Supervision  before
engaging in certain transactions,  such as mergers with or acquisitions of other
financial  institutions.  In  addition,  the  Office of Thrift  Supervision  has
enforcement  authority over MSB Financial Corp. and any non-savings  institution
subsidiaries.  This  permits  the Office of Thrift  Supervision  to  restrict or
prohibit  activities  that it  determines  to be a  serious  risk to  Millington
Savings Bank.  This  regulation is intended  primarily for the protection of the
depositors and not for the benefit of stockholders of MSB Financial Corp.

         Activities Restrictions. As a savings and loan holding company and as a
subsidiary  holding company of a mutual holding company,  MSB Financial Corp. is
subject to statutory and regulatory restrictions on its business activities. The
non-banking  activities of MSB Financial Corp. and its  non-savings  institution
subsidiaries are restricted to certain activities  specified by Office of Thrift
Supervision regulation, which include performing services and holding properties
used by a savings institution subsidiary,  activities authorized for savings and
loan  holding  companies  as  of  March  5,  1987,  and  non-banking  activities
permissible for bank holding companies  pursuant to the Bank Holding Company Act
of  1956  or  authorized  for  financial  holding  companies   pursuant  to  the
Gramm-Leach-Bliley Act. Before engaging in any non-banking activity or acquiring
a company engaged in any such activities, MSB Financial Corp. must file with the
Office  of  Thrift  Supervision  either  a  prior  notice  or (in  the  case  of
non-banking  activities  permissible for bank holding  companies) an application
regarding its planned activity or acquisition.

         Mergers and Acquisitions. MSB Financial Corp. must obtain approval from
the Office of Thrift Supervision before acquiring,  directly or indirectly, more
than 5% of the voting stock of another  savings  institution or savings and loan
holding  company or acquiring such an institution or holding  company by merger,
consolidation  or purchase of its assets.  Federal law also  prohibits a savings
and loan holding  company from  acquiring  more than 5% of a company  engaged in
activities other than those authorized for savings and loan holding companies by
federal law or acquiring or retaining  control of a depository  institution that
is not insured by the Federal Deposit  Insurance  Corporation.  In evaluating an
application for MSB Financial Corp. to acquire control of a savings institution,
the Office of Thrift  Supervision  would  consider the financial and  managerial
resources  and  future   prospects  of  MSB  Financial   Corp.  and  the  target

                                       71



institution,  the effect of the acquisition on the risk to the insurance  funds,
the convenience and the needs of the community and competitive factors.

         Waivers  of  Dividends  by  MSB  Financial,   MHC.   Office  of  Thrift
Supervision  regulations  require  MSB  Financial,  MHC to notify  the Office of
Thrift  Supervision of any proposed  waiver of its receipt of dividends from MSB
Financial Corp. The Office of Thrift Supervision reviews dividend waiver notices
on a case-by-case basis, and, in general, does not object to any such waiver if:
(i) the waiver would not be detrimental to the safe and sound  operations of the
subsidiary  savings  association and (ii) the mutual holding  company's board of
directors  determines  that such  waiver  is  consistent  with  such  directors'
fiduciary  duties  to the  mutual  holding  company's  members.  Subject  to the
non-objection  of the  Office  of Thrift  Supervision,  we  anticipate  that MSB
Financial, MHC will waive dividends paid by MSB Financial Corp., if any.

         Conversion  of MSB  Financial,  MHC to Stock  Form.  Office  of  Thrift
Supervision  regulations  permit MSB  Financial,  MHC to convert from the mutual
form  of  organization  to the  capital  stock  form of  organization,  commonly
referred  to as a second step  conversion.  In a second  step  conversion  a new
holding  company would be formed as the successor to MSB  Financial  Corp.,  MSB
Financial,  MHC's  corporate  existence  would end,  and certain  depositors  of
Millington  Savings Bank would  receive the right to subscribe for shares of the
new holding  company.  In a second step  conversion,  each share of common stock
held by  stockholders  other  than MSB  Financial,  MHC  would be  automatically
converted into shares of common stock of the new holding company.

         Acquisition of Control. Under the federal Change in Bank Control Act, a
notice  must be  submitted  to the  Office of Thrift  Supervision  if any person
(including a company), or group acting in concert, seeks to acquire "control" of
a savings and loan holding  company or savings  association.  An  acquisition of
"control" can occur upon the acquisition of 10% or more of the voting stock of a
savings and loan holding company or savings  institution or as otherwise defined
by the Office of Thrift  Supervision.  Under the Change in Bank Control Act, the
Office of Thrift Supervision has 60 days from the filing of a complete notice to
act,  taking into  consideration  certain  factors,  including the financial and
managerial  resources  of  the  acquirer  and  the  anti-trust  effects  of  the
acquisition.  Any  company  that so  acquires  control  would then be subject to
regulation as a savings and loan holding company.

Federal Securities Laws

         General. MSB Financial Corp. has filed with the Securities and Exchange
Commission a  registration  statement  under the  Securities Act of 1933 for the
registration  of the common stock to be issued  pursuant to the  offering.  Upon
completion of the offering, MSB Financial Corp. common stock will continue to be
registered  with the  Securities  and Exchange  Commission  under the Securities
Exchange Act of 1934. MSB Financial  Corp.  will be subject to the  information,
proxy  solicitation,  insider trading  restrictions and other requirements under
the Securities Exchange Act of 1934.

         Sarbanes-Oxley  Act of 2002. The Sarbanes-Oxley Act of 2002 implemented
various  legislative  reforms   addressing,   among  other  matters,   corporate
governance,  auditing and accounting,  executive compensation,  and enhanced and
timely  disclosure of corporate  information.  As directed by Section  302(a) of
Sarbanes-Oxley  Act and the  implementing  rules of the  Securities and Exchange
Commission,  MSB Financial  Corp.'s Chief Executive  Officer and Chief Financial
Officer each will be required to certify that its quarterly  and annual  reports
do not contain any untrue  statement of a material  fact. The rules have several
requirements, including having these officers certify that: they are responsible
for establishing,  maintaining and regularly evaluating the effectiveness of our
internal  controls;  they have made certain

                                       72



disclosures  to our auditors  and the audit  committee of the Board of Directors
about our internal controls; and they have included information in our quarterly
and  annual  reports  about  their   evaluation  and  whether  there  have  been
significant  changes in our  internal  controls or in other  factors  that could
significantly affect internal controls.

                                    TAXATION

Federal Taxation

         Savings  institutions are subject to the Internal Revenue Code of 1986,
as amended, in the same general manner as other corporations.

         All thrift institutions are now subject to the same provisions as banks
with respect to deductions for bad debts.  Thrift  institutions that are treated
as "small banks" (the average  adjusted bases for all assets of such institution
equals $500 million or less) under the Internal Revenue Code may account for bad
debts by using the experience method for determining additions to their bad debt
reserve.  Thrift  institutions  that are not treated as small banks must now use
the specific charge-off method.

         MSB  Financial  Corp.  may exclude  from its income  100% of  dividends
received from Millington  Savings Bank as a member of the same affiliated  group
of  corporations.  A 70% dividends  received  deduction  generally  applies with
respect to dividends  received  from  corporations  that are not members of such
affiliated group.

         MSB Financial  Corp.  and  Millington  Savings Bank file a consolidated
federal tax return with MSB  Financial,  MHC.  Such income tax returns  have not
been audited by the IRS during the past five years.

State Taxation

         MSB Financial  Corp.  and its  subsidiaries  file New Jersey income tax
returns and are  subject to a 9% state  income tax that is  calculated  based on
federal taxable income, subject to certain adjustments.

         The state income tax returns of MSB Financial, MHC, MSB Financial Corp.
and  Millington  Savings Bank have not been audited  during the past five years.
For additional information, see Note 10 to the consolidated financial statements
beginning on page F-1.

                                   MANAGEMENT

General

         MSB Financial  Corp.'s Board of Directors is composed of seven members,
with each  director  serving  for a term of three years in  accordance  with the
requirement in MSB Financial Corp.'s bylaws that directors be divided into three
classes, as nearly equal in number as possible, with one class elected annually.
Each director of MSB Financial Corp. also serves as a director of MSB Financial,
MHC,  Millington Savings Bank and Millington Savings Service Corp. MSB Financial
Corp.'s and  Millington  Savings Bank's  officers are appointed  annually by the
Board of Directors and serve at the Board's discretion.

                                       73





                                                                                                     Current
                                                                                       Director       Term
                           Age    Position                                             Since(1)      Expires
                           ---    --------                                             --------      -------
                                                                                       
Directors:
----------
Albert N. Olsen            71     Chairman                                               1974         2009
Gary T. Jolliffe           62     Director, President and Chief Executive Officer        1992         2009
E. Haas Gallaway, Jr.      65     Director                                               1987         2007
W. Scott Gallaway          60     Director                                               2000         2007
Thomas G. McCain           68     Director                                               1992         2008
Ferdinand J. Rossi         64     Director                                               1975         2008
Michael A. Shriner         42     Director, Executive Vice President                     1999         2007
                                  and Chief Operating Officer
Senior Management:
------------------
Jeffrey E. Smith           57     Vice President and Chief Financial Officer
Nancy E. Schmitz           50     Vice President, Chief Lending Officer
                                  and Corporate Secretary
Susan M. Schumann          56     Vice President
Betty Zangari              62     Vice President and Assistant Corporate Secretary


----------------------
(1)  Indicates  the year the  individual  first became a director of  Millington
     Savings  Bank.  Upon the formation of MSB  Financial  Corp.  in 2004,  each
     person serving at that time as a director of Millington Savings Bank became
     a director of MSB Financial Corp.

Biographical Information

         Albert N. Olsen has been a director of  Millington  Savings  Bank since
October 1974 and was elected  chairman of the Board in December  1999. Mr. Olsen
is a certified public  accountant and is president of Olsen & Thompson,  P.A., a
CPA firm  established  in 1961.  In  addition,  Mr. Olsen is a member of Olsen &
Thompson  Investment  Advisory  Services,  LLC. Mr. Olsen is a member of the New
Jersey  Society  of  Certified  Public  Accountants  and has  served in  various
positions with the Society,  including  chairman of the Committee for Management
of Accounting Practices,  trustee,  treasurer, vice president,  president of the
Morris-Sussex-Warren  Chapter  and  chairman  of the  Board and  trustee  of the
Society's  Insurance  Trust. In addition,  Mr. Olsen is a member of the American
Institute of Certified Public  Accountants,  a past trustee and past chairman of
the Board of the  Midland  School  Foundation  and a past  board  member of Mrs.
Wilson's (Halfway House).

         Gary T. Jolliffe joined Millington  Savings Bank in January 1986 as its
executive  vice  president  and was appointed as its president in 1990. In 1992,
Mr. Jolliffe was also appointed to the position of chief  executive  officer and
also became a director. Mr. Jolliffe has been a member of the Board of Governors
of the New  Jersey  League of  Community  Bankers  since  July 1999  serving  in
numerous  positions,  including  chairman of the New Jersey  League of Community
Bankers from July 2004 to June 30, 2005.  Mr.  Jolliffe is a member of the Board
of Trustees of Freedom House Foundation, Glen Gardner, New Jersey, and is also a
member of the  Bernardsville  Rotary Club in which he has held the  positions of
director, president, vice president and treasurer.

         E. Haas  Gallaway,  Jr. has been a director of Millington  Savings Bank
since  October  1987.  He is President and Manager of Gallaway and Crane Funeral
Home with  principal  offices  located  in Basking  Ridge and a branch  location
located in Bernardsville. This firm was founded by his father, E. Haas Gallaway,
Sr. in Millington in 1935 and moved to its present  location in Basking Ridge in
1936. Mr.  Gallaway has been  associated  with the firm since 1960,  purchased a
minority position in the firm in

                                       74



1963 and the  remainder of the  corporation  in 1976.  He is a licensed  funeral
director in the states of New Jersey and Florida.  Mr.  Gallaway is a member and
past  president of the Morris County  Funeral  Directors'  Association,  The New
Jersey  State  Funeral  Directors'  Association,   National  Funeral  Directors'
Association,  and member and past  president of the  Bernardsville  Rotary Club,
former  director  and past  president  of the  Somerset  Hills YMCA,  and a past
president  of the Board of Directors of Honesty  House  formerly of Stirling.  A
life-long  resident  of the area,  he has  resided in  Bernardsville  since 1949
coming from Basking Ridge.

         W. Scott Gallaway founded Gallaway Associates,  a Real Estate Brokerage
and Appraisal  firm in 1975 and sold the brokerage  portion to Remax  Properties
Unlimited  in 2000.  He  remains  a  Broker/Salesperson  with  Remax  Properties
Unlimited.  Mr.  Gallaway is a licensed Real Estate  Appraiser and has served as
President and/or an Officer of numerous Professional  Organizations and a member
and Past President of the Bernardsville  Rotary Club. Mr. E. Haas Gallaway,  Jr.
and Mr. W. Scott Gallaway are brothers.

         Dr. Thomas G. McCain became principal of the Fairmount Avenue School in
Chatham, New Jersey in 1964 after having taught in Berlin,  Connecticut. He left
Chatham  nine  years  later to become  Assistant  Superintendent  of  Schools in
Freeport,  New York and in 1978  was  appointed  Superintendent  of  Schools  in
Bernardsville,  New  Jersey,  the  district  from which he retired  from  public
education in 1988.  Since then Mr.  McCain has been  president and sole owner of
Learning  Builders,  a firm that  provides  planning  and  training  services to
schools and businesses in several states.


         Ferdinand  (Fred) J. Rossi has been a director  of  Millington  Savings
Bank since 1975. He is currently the township  administrator for the Township of
Morris  in Morris  County,  New  Jersey  and has held that  office  since  1995.
Previously,  Mr. Rossi served as the county administrator for Morris County, New
Jersey  for 15 years,  and the  township  clerk and then  administrator  for the
Township of Long Hill (formerly Passaic Township) for 12 years. He has served as
president of the New Jersey  Association of County  Administrators  and Managers
and is a former  member  and  president  of the  Bernardsville  Rotary  Club.  A
life-long  resident of the area, he was raised in Gillette and currently resides
in Millington.


         Michael A. Shriner has been  employed by the Bank since 1987 and became
its vice  president  in 1990,  senior vice  president  in 1997,  executive  vice
president in 2002 and chief  operating  officer in 2006. He was appointed to the
Board of  Directors in 1999.  Mr.  Shriner  currently  serves as chairman of the
Mortgage  Steering  Committee,  is a  member  of  the  Residential  Lending  and
Affordable Housing Committee and a former member of the Consumer Lending and CRA
Committee of the New Jersey League of Community Bankers. He is a graduate of The
National School of Banking (Fairfield University).  Mr. Shriner is currently the
financial secretary for the Knights of Columbus in Roselle Park, New Jersey.

         Jeffrey  E.  Smith  joined  Millington  Savings  Bank in  1996.  He was
appointed as its controller in 1998,  vice president and controller in 2002, and
in 2006 became vice president and chief financial officer.  Mr. Smith previously
served as vice president and controller for United  National Bank in Plainfield,
New Jersey where he was employed for 11 years.

         Nancy E.  Schmitz has been  employed by  Millington  Savings Bank since
1997 and started as its assistant  corporate  secretary and  commercial  lending
officer. In 1999, Ms. Schmitz became corporate  secretary.  In addition to being
the commercial lending officer, she has been responsible for the Bank's consumer
loan  portfolio  since 1997.  In 2006 she became a vice  president and the chief
lending  officer for  Millington  Savings  Bank.  Ms.  Schmitz has over 25 years
banking experience, beginning as a branch loan

                                       75



officer for Lloyds Bank  California in 1978 and serving at that  institution and
others in various  positions  including as a commercial  credit analyst,  a vice
president of corporate lending and a senior corporate banking officer.

         Susan M. Schumann  joined  Millington  Savings Bank in 1984 as a teller
and has been  promoted  several  times.  She is currently a vice  president  and
responsible for security,  marketing,  advertising and facilities.  Ms. Schumann
also serves as the Bank Secrecy Act officer.

         Betty Zangari  joined  Millington  Savings Bank in 1992 as a teller and
was  promoted to head teller in 1996.  In 1998,  Ms.  Zangari  became  Assistant
Corporate Secretary.  She was appointed Operations Supervisor in 2005 and became
a vice president in 2006.

Director Compensation

         Millington  Savings Bank  directors  currently are paid a fee of $2,200
per board  meeting.  The chairman of the Board of Directors  currently is paid a
fee of $4,400 per board  meeting.  The Board has  regular  meetings on a monthly
basis and annually holds a special strategic planning meeting, for a total of 13
meetings per year. No additional  compensation is paid for serving on the Boards
of MSB Financial Corp. or MSB Financial,  MHC. Mr. Jolliffe and Mr. Shriner,  as
employee  directors,  are not  compensated for serving as directors of the Bank,
MSB  Financial  Corp.  or MSB  Financial,  MHC.  Each of the  Bank's  directors,
including the employee directors, serves on the subsidiary service corporation's
Board of Directors and is paid a $200 quarterly retainer.

           Directors  are paid a flat  monthly  fee of $300 for their  committee
participation.  The  Board  maintains  an Audit  Committee,  an  Asset/Liability
Management  Committee  and an  Asset/Quality  Committee.  The Board has recently
established a Compensation Committee and a Nominating Committee.

         The Audit Committee is currently comprised of Directors E. H. Gallaway,
Jr., W. S. Gallaway, McCain, Olsen and Rossi. Director Olsen serves as the audit
committee financial expert.

         The Bank's  Directors  Consultation  and  Retirement  Plan (the "DCRP")
provides  retirement benefits to the directors of the Bank based upon the number
of years of service to the Bank's  board.  To be  eligible  to receive  benefits
under the DCRP, a director  generally  must have  completed at least 10 years of
service and must not retire from the board prior to reaching 65 years of age. If
a director  agrees to become a  consulting  director  to the  Bank's  board upon
retirement,  he will  receive a monthly  payment  equal to 30-60% of the highest
Bank's board fee and retainer in effect  during the  three-year  period prior to
the date of  retirement  based on the number of years of service as a  director.
Benefits under the DCRP begin upon a director's  retirement and are paid for 120
months; provided,  however, that in the event of a director's death prior to the
receipt of all monthly  payments,  payments  shall  continue  to the  director's
surviving  spouse or estate until 120 payments  have been made.  The  retirement
benefit  amount is payable to the  participant  for an  additional  period of 24
months for each  additional  period of five years of  service  completed  by the
director  in excess of twenty  years of  service as of their  actual  retirement
date.  In the event there is a change in control  (as defined in the DCRP),  all
directors will be presumed to have 20 years of service and attained age 65 under
the DCRP and each  director will receive a lump sum payment equal to the present
value of future  benefits  payable.  All  payments  under the plan need to be in
accordance  with Code  Section  409A.  Benefits  under the DCRP are unvested and
forfeitable  until  retirement  at or  after  age 65 with at  least  10 years of
service,  termination  of  service  following  a change in  control,  disability
following  at least 10 years of  service  or death.  For the year ended June 30,
2006, the Bank's contribution and benefits paid under the DCRP totaled $24,000.

                                       76



Executive Compensation

         Summary Compensation Table. The following table sets forth the cash and
non-cash  compensation awarded to or earned by the president and chief executive
officer and other named executive officers for the year ended June 30, 2006.




                                                                       Annual Compensation(1)
                                                                       ----------------------
                                                                                                  All Other
Name and Principal Position                                   Year       Salary         Bonus    Compensation
---------------------------                                  ------      ------         -----    ------------
                                                                                      
Gary T. Jolliffe                                              2006      $182,598       $16,000     $78,353 (2)
President and Chief Executive Officer

Michael A. Shriner                                            2006      $130,312       $16,000     $28,678 (3)
Executive Vice President and Chief Operating Officer

Jeffrey E. Smith                                              2006       $93,444        $6,000     $20,352 (4)
Vice President and Chief Financial Officer


--------------
(1)  Compensation  information  for the  years  ended  2004 and 2005 is  omitted
     because MSB Financial Corp. was not a reporting company under Section 13(a)
     or 15(d) of the Securities Exchange Act of 1934 during those periods.


(2)      Consists of $902 for life  insurance,  an employer  contribution to the
         Millington  Savings Bank 401(k)  Savings and Profit Sharing Plan in the
         amount of $27,237 and an award under the executive incentive retirement
         plan of $50,214.

(3)      Consists of $144 for life  insurance,  an employer  contribution to the
         Millington  Savings Bank 401(k)  Savings and Profit Sharing Plan in the
         amount of $18,761 and an award under the executive incentive retirement
         plan of $9,773.

(4)      Consists of $485 for life  insurance,  an employer  contribution to the
         Millington  Savings Bank 401(k)  Savings and Profit Sharing Plan in the
         amount of $12,841 and an award under the executive incentive retirement
         plan of $7,026.


         Employment Agreements.  The Bank has entered into employment agreements
with Messrs. Jolliffe,  Shriner and Smith. Mr. Jolliffe's,  Mr Shriner's and Mr.
Smith's current base salaries are $197,500, $142,000 and $101,000, respectively.
Mr. Jolliffe's and Mr. Shriner's employment agreements have terms of three years
while  Mr.  Smith's  agreement  has a term of one year.  Each of the  agreements
provides  for an annual  one-year  extension of the term of the  agreement  upon
determination of the Board of Directors that the executive's performance has met
the  requirements  and standards of the Board, so that the remaining term of the
agreement  continues  to be three  years,  in the case of Messrs.  Jolliffe  and
Shriner,  and one year, in the case of Mr. Smith. If the Bank terminates Messrs.
Jolliffe,  Shriner or Smith  without  "just cause" as defined in the  agreement,
they  will be  entitled  to a  continuation  of  their  salary  from the date of
termination through the remaining term of their agreement, but in no event for a
period of less than 12 months and during the same period,  the cost of obtaining
all health, life,  disability,  and other benefits at levels substantially equal
to those  being  provided  on the date of  termination  of  employment.  Messrs.
Jolliffe,  Shriner  and  Smith's  employment  agreements  provide  that if their
employment  is  terminated  without  just cause within  twenty-four  months of a
change in  control,  they will be paid an amount  equal to  approximately  three
times  their base salary for  Messrs.  Jolliffe  and Shriner and one year in the
case of Mr.  Smith.  This  amount  may be paid in a lump  sum at the  employee's
discretion.  If not paid in a lump sum,  the  amount is paid over 36 months  for
Messrs.  Jolliffe and Shriner and 12 months for Mr. Smith or the remaining  term
of the agreement, whichever is less. If change in control payments had been made
under the  agreements  as of June 30,  2006,  the  payments  would have  equaled
approximately $592,000, $426,000, and $101,000, to Mr. Jolliffe, Mr. Shriner and
Mr. Smith, respectively.

                                       77



         The Bank has entered  into one year  employment  agreements  with three
other officers on terms substantially the same as Mr. Smith's agreement.

         Executive  Incentive  Retirement Plan. The Bank's  executive  incentive
retirement plan provides for equal annual  installments for a period of 15 years
commencing on the first day of the calendar month  following the  termination of
employment due to  retirement,  resignation,  disability or death.  All payments
under the plan are in accordance  with Code Section 409A.  The amount payable is
based on the vested balance of the executive's  accumulated awards plus interest
at the prime rate published in The Wall Street Journal,  credited quarterly, but
no less than 4% or  greater  than 12%.  The  annual  awards  are based  upon the
executive's  base  salary in effect  at the  beginning  of the plan year and the
Bank's net income for the prior fiscal year. The  percentage  vested is based on
the sum of the  executive's age and years of service.  The  participant  becomes
fully  vested at age 65,  death,  disability  or upon a change in control of the
Bank.  Upon the death of the  participant,  the  beneficiary  shall  receive the
remaining  balance  paid in a lump sum. The plan expense for the year ended June
30, 2006 was approximately $103,000.

         Split Dollar Life Insurance  Agreement.  The Bank has entered into Life
Insurance Agreements with Officers Jolliffe,  Shriner and Smith, which provide a
death benefit equal to the  following:  if the executive is: (i) employed by the
Bank at the time of his or her death,  (ii) has retired from employment with the
Bank after  completion  of not less than twenty  (20) years of service  with the
Bank,  or (iii) has retired  from  employment  with the Bank and at such date of
retirement the sum of the  executive's  age and years of service equals not less
than 70, then the  executive's  beneficiary  is entitled to payment of an amount
equal to 200% of the  executive's  highest  annual base  salary  (not  including
bonus,  equity  compensation,  deferred  compensation  or  any  other  forms  of
compensation)  in effect at the Bank at any time during the three calendar years
prior to the date of death of the  executive.  The maximum  death  benefits  for
Officers Jolliffe,  Shriner and Smith are approximately  $375,000,  $402,000 and
$367,000, respectively.

         If a change in control of the Bank shall occur prior to the executive's
termination of employment or retirement,  then the death benefit  coverage shall
remain in effect until the executive's death,  unless the agreement is otherwise
terminated  pursuant  to its terms  prior to such  date of a change in  control.
Coverage  under the agreement for the executive who terminates  employment  with
the Bank (for reasons other than death or a change in control of the Bank) prior
to  completion  of at least ten years of service with the Bank (and prior to the
occurrence  of a  change  of  control)  will  cease  on his or her  last  day of
employment with the Bank.


         401(k) Savings and Profit  Sharing Plan.  The  Millington  Savings Bank
401(k) Savings and Profit Sharing Plan is a tax-qualified  defined  contribution
savings  plan with a profit  sharing  component  for the benefit of all eligible
employees. The plan has a profit-sharing component and an annual contribution is
made by the Bank to the plan for all employees who have completed  twelve months
of service.  In addition,  employees may also voluntarily elect to defer between
1% and 80% of their compensation as 401(k) savings under the plan, not to exceed
applicable  limits under federal tax laws.  All eligible  employees  receive the
profit-sharing  contribution  regardless  of whether they defer salary under the
plan. In calendar year 2006, an employee  could defer up to the lower of $15,000
or 80% of his salary.  Employees age 50 and over may make catch-up contributions
($5,000 in 2006).  The plan also  provides  for matching  contributions  up to a
maximum  of 50% of the  first 6% of a  person's  salary  for  each  participant.
Employee contributions are immediately fully vested.  Matching contributions and
the  annual  profit-sharing  contribution  are  vested at a rate of 20% per year
after two years and completely vested after six years of service.


                                       78





         The  Bank's  employees  may use their  account  balances  in the 401(k)
Savings  and  Profit  Sharing  Plan to pay for  shares  of  stock  in the  stock
offering.  Employees do not have special rights, however, to subscribe for stock
in the offering.  Their  eligibility  to subscribe  depends on whether they were
account  holders with $50 on deposit at June 30, 2005 or  September  30, 2006 or
account  holders at October 31, 2006.  Their orders will be allocated  under the
normal  order of  subscription  rights  priority in the same manner as all other
eligible depositors.  Following the stock offering,  Bank employees may purchase
additional  shares of MSB  Financial  Corp.  common stock through the plan using
funds in their  Millington  Savings Bank 401(k)  Savings and Profit Sharing Plan
accounts.  The plan  trustee  will  purchase  such shares in regular open market
stock transactions at market prices.


Stock Benefit Plans


         Employee  Stock  Ownership  Plan.  The Bank  intends to  establish  the
Millington  Savings Bank Employee Stock Ownership Plan for the exclusive benefit
of participating  employees of Millington  Savings Bank, to be implemented prior
to the  completion  of  the  offering.  Participating  employees  are  salaried,
full-time  employees  who have  completed  at least one year of service and have
attained the age of 21. An application for a letter of  determination  as to the
tax-qualified  status of the Millington  Savings Bank Employee  Stock  Ownership
Plan will be  submitted  to the IRS.  Although no  assurances  can be given,  we
expect that a favorable letter of determination will be received from the IRS.

         The  Millington  Savings Bank Employee  Stock  Ownership  Plan is to be
funded by contributions made by Millington Savings Bank in cash or common stock.
Benefits  may be paid  either  in  shares of the  common  stock or in cash.  The
Millington  Savings Bank Employee  Stock  Ownership  Plan will borrow funds with
which to acquire up to 8% of the shares sold in the offering,  which  represents
3.6% of the  total  number  of shares  of  common  stock  outstanding  after the
offering, including shares held by MSB Financial, MHC.

         The Millington Savings Bank Employee Stock Ownership Plan may elect, in
whole or in part, to fill its order through open market purchases  subsequent to
the closing of the offering,  subject to any required  regulatory  approval.  It
intends to borrow funds from MSB Financial  Corp. The loan is expected to be for
a term of ten years at an annual interest rate equal to the prime rate published
in The Wall Street  Journal.  Presently it is  anticipated  that the  Millington
Savings Bank Employee Stock  Ownership Plan will purchase up to 8% of the shares
sold in the  offering.  The loan will be  secured by the  shares  purchased  and
earnings of employee  stock  ownership plan assets.  Shares  purchased with loan
proceeds will be held in a suspense account for allocation among participants as
the  loan  is  repaid.  It  is  anticipated  that  all  contributions   will  be
tax-deductible.

         Contributions  to the Millington  Savings Bank Employee Stock Ownership
Plan and shares  released  from the suspense  account  will be  allocated  among
participants  on the  basis  of  base  compensation.  All  participants  must be
employed on the last day of a plan year, or have terminated employment following
death, disability or retirement, in order to receive an allocation.  Participant
benefits  become  fully  vested in their  allocations  following  five  years of
service.


                                       79




Employment  service before the adoption of the Millington  Savings Bank Employee
Stock   Ownership   Plan  shall  be  credited   for  the  purposes  of  vesting.
Contributions  to the Millington  Savings Bank Employee Stock  Ownership Plan by
Millington Savings Bank are discretionary and as a result benefits payable under
the Millington Savings Bank Employee Stock Ownership Plan cannot be estimated.

         The Board of Directors has appointed  the  non-employee  directors to a
committee  that will  administer  the  Millington  Savings Bank  Employee  Stock
Ownership  Plan and serve as its trustees.  The trustees must vote all allocated
shares as directed by plan participants. Unallocated shares and allocated shares
for which no timely direction is received will be voted as directed by the Board
of Directors or the  Millington  Savings Bank Employee  Stock  Ownership  Plan's
committee, subject to the trustees' fiduciary duties.


         Stock  Option  Plan.  We  intend to adopt a stock  option  plan for the
benefit  of  directors  and  officers  after the  passage of at least six months
following  the  completion  of the  offering.  Up to 4.9% of the total number of
shares of common stock outstanding after the offering,  including shares held by
MSB  Financial,  MHC, will be reserved for issuance under the stock option plan.
No determinations  have been made as to any specific grants to be made under the
stock option plan or the terms thereof.

         The  purpose of the stock  option  plan will be to  attract  and retain
qualified  personnel in key  positions,  provide  officers and directors  with a
proprietary interest in MSB Financial Corp. as an incentive to contribute to our
success and reward directors and officers for outstanding performance.  Although
the terms of the stock option plan have not yet been determined,  it is expected
that the stock  option  plan will  provide  for the grant  of:  (1)  options  to
purchase the common stock  intended to qualify as incentive  stock options under
the Internal Revenue Code (incentive stock options); and (2) options that do not
so qualify (non-incentive stock options). The exercise price of any options will
be not less than the fair market value of the common stock on the date of grant.
Any stock  option  plan  would be in  effect  for up to 10 years  following  the
earlier of adoption by the Board of Directors  or approval by the  stockholders.
Options would expire no later than 10 years following the date granted and would
expire  earlier  if the  option  committee  so  determines  or in the  event  of
termination of employment.  Options would be granted based upon several factors,
including seniority, job duties and responsibilities and job performance.

         Restricted  Stock Plan. We also intend to establish a restricted  stock
plan to provide our officers and directors  with a  proprietary  interest in MSB
Financial  Corp.  after  the  passage  of at  least  six  months  following  the
completion of the offering. The restricted stock plan is expected to provide for
the award of common stock, subject to vesting restrictions, to eligible officers
and directors.


         We expect to contribute  funds to the restricted stock plan to acquire,
in the  aggregate,  up to 1.96% of the total  number  of shares of common  stock
outstanding after the offering,  including shares held by MSB Financial, MHC. If
we  implement  the  restricted  stock plan within one year of the  offering  and
Millington  Savings Bank's tangible capital following the stock offering is less
than 10%,  then the number of shares  that may be awarded  under the  restricted
stock  plan  will be  reduced  and may not  exceed  1.47%  of the  total  shares
outstanding  rather than 1.96%.  If, at our  discretion,  we further  reduce the
restricted  stock plan to 1.3%, we may keep the number of shares in the employee
stock  ownership  plan at 3.6%. If we reduce the  restricted  stock plan to only
1.47% of the outstanding shares, however, then the employee stock ownership plan
would also be reduced, to 3.4%.

         In the  event  that  the  plan is  implemented  within  one year of the
offering and the Bank's  tangible  capital  following  the offering is less than
10%, then the plan shares will be limited to not


                                       80




more than 1.47% of the total number of shares of common stock  outstanding after
the  offering.  Shares  used to fund the  restricted  stock plan may be acquired
through open market  purchases or provided from authorized but unissued  shares.
No  determinations  have been made as to the  specific  terms of the  restricted
stock plan.


         Dilution.  While our  intention  is to fund the stock  option  plan and
restricted  stock  plan  through  open  market   purchases,   stockholders  will
experience  a  reduction  or  dilution  in  ownership  interest if the plans are
instead funded with newly-issued shares.

         The  issuance  of  authorized  but  unissued  shares  of  stock  to the
restricted  stock plan instead of open market  purchases would dilute the voting
interests of existing stockholders by approximately 1.9%.

         The issuance of  authorized  but unissued  shares of stock to the stock
option plan instead of open market  purchases would dilute the voting  interests
of existing stockholders by approximately 4.7%.

Compensation Committee Interlocks and Insider Participation

         During  the year  ended  June 30,  2006,  MSB  Financial  Corp.  had no
"interlocking"  relationships in which (i) an executive officer of MSB Financial
Corp.  served as a director or member of the  compensation  committee of another
entity,  one of whose executive officers served on the Board of Directors of MSB
Financial Corp.;  (ii) an executive  officer of MSB Financial Corp.  served as a
director of another entity,  one of whose executive  officers served on Board of
Directors  of MSB  Financial  Corp.;  and  (iii)  an  executive  officer  of MSB
Financial Corp. served as a director or member of the compensation  committee of
another  entity,  one of whose  executive  officers  served as a director of MSB
Financial Corp.

Transactions with Management and Others

         No directors, executive officers or their immediate family members were
engaged, directly or indirectly, in transactions with MSB Financial Corp. or any
subsidiary  during the three  years ended June 30,  2006 that  exceeded  $60,000
(excluding loans with Millington Savings Bank).

         Millington  Savings  Bank makes loans to its  officers,  directors  and
employees in the ordinary  course of business.  All  directors and employees are
offered a 50 basis point  reduction  on  interest  rates for  consumer  loans or
primary residence mortgage loans. Such loans do not include more than the normal
risk of collectibility or present other unfavorable  features. At June 30, 2006,
loans to officers and directors or their  immediate  family members totaled $5.4
million and were all current and performing in accordance with their terms.


Proposed Stock Purchases by Management

         Preliminary  indications from our directors and executive  officers and
their  associates are that they will subscribe for an aggregate of approximately
132,000 shares in the stock offering. If 1,912,500 shares are sold (the midpoint
of the offering range), their anticipated  purchases would represent 3.1% of the
total shares  outstanding  after the  offering,  including  shares issued to MSB
Financial, MHC.

         The following  table sets forth for each of the directors and executive
officers (including in each case all "associates" of the directors and executive
officers)  the number of shares of common stock which each  director and officer
have preliminarily indicated they intend to purchase.


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                                                          Total Dollar
                                        Total Number        Amount of
                                       of Shares to be    Shares to be
                  Name                    Purchased         Purchased
                  ----                    ---------         ---------

Albert N. Olsen....................        25,000         $   250,000
Ferdinand J. Rossi.................        10,000             100,000
Michael A. Shriner.................        15,000             150,000
Gary T. Jolliffe...................        20,000             200,000
W. Scott Gallaway..................        20,000             200,000
Thomas G. McCain...................        15,000             150,000
E. Haas Gallaway, Jr...............        25,000             250,000
Jeffrey E. Smith...................         2,000              20,000
     Total                                132,000          $1,320,000


The above  table does not  include  purchases  by the  Millington  Savings  Bank
Employee  Stock  Ownership Plan and does not take into account any stock benefit
plans to be adopted following the stock offering. If the stock benefit plans are
adopted as discussed in this prospectus and were funded with newly issued shares
instead of shares acquired in open market purchases,  the aggregate ownership of
directors and executive officers would increase.

Purchases of common stock in the offering by directors  and  executive  officers
and their  associates  will be counted  toward the minimum of  1,625,625  shares
required to be sold to public stockholders to complete the offering.  Management
may,  but is not  required  to,  purchase  additional  shares in the offering to
satisfy this minimum,  subject to the limitation on the individual maximum share
purchase limitations and the requirement that directors,  executive officers and
their associates may not purchase, in the aggregate, more than 30% of the shares
sold in the offering.


                                  THE OFFERING

         The Board of Directors  adopted the plan authorizing the stock offering
on July 17, 2006,  subject to the approval of the Office of Thrift  Supervision.
We received  authorization  from the Office of Thrift Supervision to conduct the
stock offering on November __, 2006. Office of Thrift Supervision  authorization
does not  constitute a  recommendation  or  endorsement  of an investment in our
stock by the Office of Thrift Supervision.

General

         MSB Financial Corp.  will sell its common stock to eligible  depositors
of  Millington  Savings  Bank in a  subscription  offering  and,  if shares  are
available,  to the general  public in a community  offering  and/or a syndicated
community  offering.  The stock offering will be accomplished in accordance with
the procedures set forth in the plan, the  requirements  of applicable  laws and
regulations, and the policies of the Office of Thrift Supervision.

                                       82



         We are offering for sale  between  1,625,625  shares at the minimum and
2,199,375 shares at the maximum of the offering range  (2,529,281  shares at the
adjusted  maximum.  The minimum  purchase is 25 shares of common stock  (minimum
investment  of $250).  Our common  stock is being  offered  at a fixed  price of
$10.00 per share in the offering.  Interest will be paid on  subscription  funds
from the date the payment is received until the offering is either  completed or
terminated.

         We may cancel the offering at any time prior to  completion.  If we do,
orders for common stock  already  submitted  will be canceled  and  subscribers'
funds will be returned with interest.

         In accordance with Rule 15c2-4 of the Securities  Exchange Act of 1934,
pending  completion or termination of the offering,  subscription funds received
by us will be invested only in investments permissible under Rule 15c2-4.

Purposes of the Stock Offering

         The proceeds from the sale of common stock of MSB Financial  Corp. will
provide  Millington  Savings  Bank with new equity  capital,  which will support
future growth and expanded  operations.  While Millington Savings Bank currently
exceeds all regulatory  capital  requirements to be considered well capitalized,
the sale of stock, coupled with the accumulation of earnings,  less dividends or
other reductions in capital, from year to year, provides a means for the orderly
preservation and expansion of Millington Savings Bank's capital base.

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

Conduct of the Offering

         Subject to the limitations of the plan of stock issuance adopted by our
Board of Directors, shares of common stock are being offered in descending order
of priority in the subscription offering to:

o    Eligible  Account Holders  (depositors at the close of business on June 30,
     2005 with deposits of at least $50.00);

o    the Millington Savings Bank Employee Stock Ownership Plan; and

o    Supplemental  Eligible Account Holders (depositors at the close of business
     on September 30, 2006 with deposits of at least $50.00).

o    Other  Depositors  (depositors at the close of business on October 31, 2006
     who are not  Eligible  Account  Holders or  Supplemental  Eligible  Account
     Holders).

         To the extent that shares  remain  available  and  depending  on market
conditions  at or near  the  completion  of the  subscription  offering,  we may
conduct a community offering and possibly a syndicated  community offering.  The
community offering, if any, may commence at any time during or subsequent to the
completion of the subscription  offering. A syndicated community offering, if we
conduct one, would commence just prior to, or as soon as practicable  after, the
termination  of  the  subscription   offering.

                                       83



In any community offering or syndicated community offering,  we will fill orders
for our  common  stock in an  equitable  manner  as  determined  by the Board of
Directors in order to achieve a wide distribution of the stock.


         Any shares sold above the maximum of the offering  range may be sold to
the  Millington  Savings Bank Employee Stock  Ownership  Plan before  satisfying
remaining  unfilled  orders  of  Eligible  Account  Holders  to fill the  plan's
subscription,  or the plan may purchase some or all of the shares covered by its
subscription  after the  offering in the open  market,  subject to any  required
regulatory approval.


Subscription Offering

         Subscription Rights.  Non-transferable subscription rights to subscribe
for the  purchase  of common  stock  have been  granted  under the plan of stock
issuance to the following persons in the following order of priority:

         Priority 1: Eligible  Account  Holders.  Each Eligible  Account  Holder
shall be given the opportunity to purchase,  subject to the overall  limitations
described  under The Stock  Offering - Limitations on Purchases of Common Stock,
up to the  greater  of (i) the  maximum  purchase  limitation  in the  community
offering  (i.e.,  20,000  shares),  (ii)  one-tenth of 1% of the total shares of
common stock offered in the  subscription and community  offering,  and (iii) 15
times  the  product  (rounded  down  to  the  next  whole  number)  obtained  by
multiplying  the  total  number  of  shares  of  common  stock  offered  in  the
subscription and community offering by a fraction, of which the numerator is the
total amount of the qualifying  deposits of the Eligible  Account Holder and the
denominator  is the total  amount of all  qualifying  deposits  of all  Eligible
Account  Holders.  If there are  insufficient  shares  available  to satisfy all
subscriptions of Eligible Account Holders,  shares will be allocated to Eligible
Account  Holders so as to permit each  subscribing  Eligible  Account  Holder to
purchase a number of shares sufficient to make his total allocation equal to the
lesser of 100 shares or the number of shares  ordered.  Thereafter,  unallocated
shares will be allocated to remaining subscribing Eligible Account Holders whose
subscriptions  remain  unfilled in the same  proportion  that each  subscriber's
qualifying  deposit  bears to the total  amount of  qualifying  deposits  of all
subscribing Eligible Account Holders, in each case measured as of June 30, 2005,
whose  subscriptions  remain unfilled.  Subscription rights received by officers
and directors of MSB  Financial  Corp.  or  Millington  Savings  Bank,  and such
persons'  associates,  based on their increased  deposits in Millington  Savings
Bank in the one  year  preceding  June  30,  2005  will be  subordinated  to the
subscription  rights of all other  Eligible  Account  Holders.  To ensure proper
allocation of stock,  each Eligible  Account  Holder must list on his order form
all accounts in which he had an ownership  interest as of the Eligibility Record
Date.  Failure to list an account,  or providing  incorrect  information,  could
result in the loss of all or a part of the subscriber's allocation.


         Priority 2: The Employee Stock  Ownership Plan. If there are sufficient
shares  remaining  after  satisfaction  of  subscriptions  by  Eligible  Account
Holders,  the Millington Savings Bank Employee Stock Ownership Plan may be given
the opportunity to purchase in the aggregate up to but less than 5% of the total
number of shares of common stock  issued in the offering to public  stockholders
and to MSB  Financial,  MHC. It is expected  that the  Millington  Savings  Bank
Employee  Stock  Ownership Plan will purchase up to 8% of the shares sold in the
offering.  To the extent that it does not purchase  shares in the  offering,  it
intends  to  purchase  shares in the open  market  purchases  subsequent  to the
closing of the offering, subject to any required regulatory approval.


                                       84



         Priority  3:  Supplemental  Eligible  Account  Holders.  If  there  are
sufficient  shares  remaining after  satisfaction of  subscriptions  by Eligible
Account  Holders  and the  employee  stock  ownership  plan,  each  Supplemental
Eligible  Account Holder shall be given the opportunity to purchase,  subject to
the overall  limitations  described  under The Stock  Offering - Limitations  on
Purchases  of  Common  Stock,  up to the  greater  of (i) the  maximum  purchase
limitation in the community offering (i.e.,  20,000 shares),  (ii) one- tenth of
1% of the total shares of common stock offered in the subscription and community
offering, and (iii) 15 times the product (rounded down to the next whole number)
obtained by  multiplying  the total number of shares of common stock  offered in
the subscription and community offering by a fraction, of which the numerator is
the amount of the  qualifying  deposits  of the  Supplemental  Eligible  Account
Holder and the denominator is the total amount of all qualifying deposits of all
Supplemental  Eligible Account Holders. If Supplemental Eligible Account Holders
subscribe for a number of shares which,  when added to the shares subscribed for
by Eligible  Account Holders and the employee stock ownership plan, is in excess
of the total  number of shares  offered  in the  offering,  the shares of common
stock will be allocated among subscribing  Supplemental Eligible Account Holders
first so as to permit each subscribing  Supplemental  Eligible Account Holder to
purchase a number of shares sufficient to make his total allocation equal to the
lesser of 100 shares or the number of shares  ordered.  Thereafter,  unallocated
shares will be  allocated  to each  subscribing  Supplemental  Eligible  Account
Holder whose  subscription  remains  unfilled in the same  proportion  that each
subscriber's  qualifying deposit bear to the total amount of qualifying deposits
of all subscribing  Supplemental Eligible Account Holders, in each case measured
as of September 30, 2006, whose subscriptions remain unfilled.  To ensure proper
allocation of stock, each Supplemental  Eligible Account Holder must list on his
order  form  all  accounts  in  which  he had an  ownership  interest  as of the
Supplemental  Eligibility Record Date. Failure to list an account,  or providing
incorrect  information,  could  result  in the  loss  of  all  or a part  of the
subscriber's allocation.

Priority 4: Other  Depositors.  If there are sufficient  shares  remaining after
satisfaction  of  all  subscriptions  by  the  Eligible  Account  Holders,   the
tax-qualified employee stock benefit plans and the Supplemental Eligible Account
Holders,  each Other Depositor (depositors as of October 31, 2006) who is not an
Eligible Account Holder or a Supplemental Eligible Account Holder shall have the
opportunity  to purchase up to the greater of 20,000  shares of common  stock or
one-tenth of 1% of the total  offering of shares of common stock  offered in the
subscription  offering,  subject to the overall purchase  limitations  described
under The Stock  Offering - Limitations  on Purchases of Common Stock.  If Other
Depositors  subscribe  for a number of shares  which,  when  added to the shares
subscribed for by Eligible Account  Holders,  the  tax-qualified  employee stock
benefit plans and Supplemental  Eligible  Account  Holders,  is in excess of the
total  number of shares  offered in the  offering,  the  subscriptions  of Other
Depositors will be allocated among  subscribing  Other Depositors to permit each
subscribing  Other  Depositor to purchase a number of shares  sufficient to make
his total  allocation  of common  stock equal to the lesser of 100 shares or the
number of shares  ordered.  Any shares  remaining  will be  allocated  among the
subscribing  Other Depositors whose  subscriptions  remain  unsatisfied on a 100
shares (or whatever lesser amount is available) per order basis until all orders
have been filled or the remaining shares have been allocated.

         Restrictions on Transfer of Subscription Rights and Shares.  Applicable
regulations   and  the  plan  of  stock  issuance   prohibits  any  person  with
subscription rights,  including Eligible Account Holders , Supplemental Eligible
Account  Holders and Other  Depositors,  from  transferring or entering into any
agreement or understanding to transfer the legal or beneficial  ownership of the
subscription rights or the shares of common stock to be issued when subscription
rights are exercised. Subscription rights may be exercised only by the person to
whom they are granted.  Each person  subscribing  for shares will be required to
certify  that such person is  purchasing  shares  solely for his own account and
that he has no agreement or understanding  regarding the sale or transfer of the
shares.  The  regulations  also  prohibit any

                                       85



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  before  the
completion of the offering.

         We will pursue any and all legal and equitable remedies in the event we
become  aware of the transfer of  subscription  rights and will not honor orders
which we determine involve the transfer of subscription rights.

Deadlines for Purchasing Stock

         The subscription  offering will terminate at 12:00 noon,  Eastern time,
on December ___, 2006. We may extend this  expiration date without notice to you
for up to 45 days, until  _______________,  2007. Once submitted,  your order is
irrevocable  unless the offering is extended beyond  ________________,  2007. We
may  request  permission  from the  Office of Thrift  Supervision  to extend the
offering beyond ________________, 2007, and the Office of Thrift Supervision may
grant one or more extensions of the offering of up to 90 days per extension, but
in no event may the  offering  be extended  beyond  ____________,  2008.  If the
offering  is  extended  beyond  ________________,  2007,  we  will  notify  each
subscriber  and  subscribers  will have the right to confirm,  modify or rescind
their  subscriptions.  If an  affirmative  response is not received prior to the
expiration of the  resolicitation  period, a subscriber's  subscription  will be
canceled and funds will be returned with interest.

         A community  offering  and a  syndicated  community  offering,  if such
offerings are  conducted,  may terminate at any time without notice but no later
than ________________, 2007.

Community Offering

         If less  than  the  total  number  of  shares  of  common  stock  to be
subscribed for in the offering are sold in the subscription offering then shares
remaining  unsubscribed  may be made  available  for  purchase in the  community
offering to certain members of the general public.  The maximum amount of common
stock that any person may purchase in the community  offering is 20,000  shares,
or $200,000.


         Preference in the community shall be given first to natural persons and
trusts of natural persons residing in Morris and Somerset  Counties,  New Jersey
and second to other natural  persons and trusts of natural  persons  residing in
New Jersey.  If shares are available  for these  "preferred  purchasers"  in the
community offering but there are insufficient  shares to satisfy all orders, the
available  shares will be allocated  first to each  preferred  purchasers  whose
order we accept in an amount  equal to the lesser of 100 shares or the number of
shares ordered by each such  subscriber,  if possible.  After that,  unallocated
shares will be allocated among the remaining  preferred  purchasers whose orders
remain  unsatisfied in the same  proportion that the unfilled order of each such
subscriber bears to the total unfilled orders of all such subscribers. If, after
filling the orders of the first group of preferred  purchasers  (natural persons
and trusts of natural  persons  residing in Morris and  Somerset  Counties,  New
Jersey) and then the orders of the second group of preferred purchasers (natural
persons  and trusts of  natural  persons  residing  in New  Jersey),  shares are
available  for  other  subscribers  in the  community  offering  but  there  are
insufficient shares to satisfy all orders,  shares will be allocated in the same
manner as for preferred purchasers.


         We will consider persons  residing in one of the specified  counties if
they occupy a dwelling in the county and establish an ongoing physical  presence
in the county that is not merely  transitory in nature. We may utilize depositor
or loan records or other evidence  provided to us to make a determination  as to
whether a person is a resident in one of the specified  counties.  In all cases,
the determination of residence status will be made by us in our sole discretion.

                                       86



         The  community  offering,  if any,  may  commence at any time during or
subsequent  to  the  completion  of the  subscription  offering.  The  community
offering,  if any, must be completed  within 45 days after the completion of the
subscription  offering  unless  otherwise  extended  by  the  Office  of  Thrift
Supervision.

         If we receive  regulatory  approval for an extension,  all  subscribers
will be notified of the extension and of the duration of any extension  that has
been granted, and will have the right to confirm, increase,  decrease or rescind
their orders. If we do not receive an affirmative  response from a subscriber to
any  resolicitation,  the  subscriber's  order will be  rescinded  and all funds
received will be promptly returned with interest.

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

Syndicated Community Offering

         The plan of stock issuance  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 Keefe,  Bruyette and Woods,  Inc., acting as our agent. In such
capacity,  Keefe,  Bruyette  and  Woods,  Inc.  may  form a  syndicate  of other
broker-dealers.   Alternatively,   we  may  sell  any  remaining  shares  in  an
underwritten  public offering.  Neither Keefe,  Bruyette and Woods, Inc. nor any
registered broker-dealer will have any obligation to take or purchase any shares
of the  common  stock in the  syndicated  community  offering;  however,  Keefe,
Bruyette  and  Woods,  Inc.  has  agreed to use its best  efforts in the sale of
shares in any syndicated  community offering.  The syndicated community offering
would  terminate no later than 45 days after the expiration of the  subscription
offering,  unless  extended  by us,  with  approval  of  the  Office  of  Thrift
Supervision.  See -  Community  Offering  above  for a  discussion  of rights of
subscribers in the event an extension is granted.

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

         Purchasers  in  the  syndicated  community  offering  are  eligible  to
purchase up to $200,000 of common stock (which  equals  20,000  shares).  We may
begin the syndicated  community offering or underwritten  public offering at any
time following the commencement of the subscription offering.

         If we are unable to find  purchasers  from the  general  public for all
unsubscribed  shares,  we will make other  purchase  arrangements,  if feasible.
Other purchase arrangements must be approved by the Office of Thrift Supervision
and may provide for purchases by directors, officers, their associates and other
persons in excess of the limitations  provided in the plan of stock issuance and
in excess of the proposed  director  purchases  discussed  earlier,  although no
purchases are currently intended. If other purchase arrangements cannot be made,
we may do any of the following: terminate the stock offering and promptly return
all  funds;  return  all  funds,  then set a new  offering  range and notify all
subscribers  to give them the  opportunity  to confirm,  cancel or change  their
orders;  or take such other  actions as may be permitted by the Office of Thrift
Supervision.

                                       87



Limitations on Purchases of Common Stock

         The following additional  limitations have been imposed on purchases of
shares of common stock:

          1.   The  maximum  number of  shares  which  may be  purchased  in the
               offering  by any  individual  (or  individuals  through  a single
               account) shall not exceed 20,000 shares, or $200,000.  This limit
               applies  to  stock  purchases  in  total  in  the   subscription,
               community and syndicated community offerings.


          2.   The  maximum  number  of  shares  that  may be  purchased  by any
               individual together with any associate or group of persons acting
               in concert is 25,000 shares, or $250,000. Any persons or entities
               having the same  address  on an  account or stock  order form are
               considered  to be acting in concert.  This limit applies to stock
               purchases in total in the subscription,  community and syndicated
               community offerings.  This limit does not apply to the Millington
               Savings Bank Employee  Stock  Ownership  Plan which may subscribe
               for up to but less  than 5% of the  total  number  of  shares  of
               common stock issued in the offering to public stockholders and to
               MSB Financial, MHC.


          3.   The  maximum  number of  shares  which  may be  purchased  in all
               categories  in the  offering by our officers  and  directors  and
               their  associates  in the  aggregate  shall not exceed 30% of the
               total number of shares sold in the offering.

          4.   The minimum order is 25 shares, or $250.

          5.   If the number of shares otherwise allocable 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
               allocated   to  that  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  associates  complies with the
               above  maximums,  and the  maximum  number  of  shares  shall  be
               reallocated among that person and his associates in proportion to
               the shares  subscribed by each (after first applying the maximums
               applicable to each person, separately).

          6.   Depending upon market or financial conditions,  with the approval
               of the  Office  of  Thrift  Supervision  and  without  notice  to
               subscribers,  we  may  decrease  or  increase  the  purchase  and
               ownership  limitations.  If a purchase  limitation  is increased,
               subscribers in the subscription  offering who ordered the maximum
               amount  will  be  given  the   opportunity   to  increase   their
               subscriptions  up to the then  applicable  limit. We also may, in
               our sole discretion, contact other large subscribers to give them
               the same  opportunity.  The effect of this type of resolicitation
               will be an increase in the number of shares owned by  subscribers
               who increase their subscriptions.

         7.   If the total  number of shares  offered  increases in the offering
              due to an increase in the maximum of the estimated valuation range
              of up to 15% (the  adjusted  maximum) the  additional  shares will
              generally be issued in the  following  order of  priority:  (a) to
              fill the employee  stock  ownership  plan's  subscription;  (b) if
              there is an oversubscription at the Eligible Account Holder level,
              to fill unfilled subscriptions of Eligible Account Holders; (c) if
              there is an oversubscription at the Supplemental  Eligible Account
              Holder  level,  to fill  unfilled  subscriptions  of  Supplemental
              Eligible Account Holders;  (d) if  there is an oversubscription at

                                       88



              the Other  Depositor  level,  to fill  unfilled  subscriptions  of
              Other  Depositors;  (e) to fill  orders  received  in  a community
              offering;  with preference given to persons who live in  the local
              community;  and (f) to fill  orders  received  in  the  syndicated
              community  offering.  The Millington  Savings  Bank Employee Stock
              Ownership  Plan  may,  however,  elect to fill part or all of  its
              stock order in the open  market,  after  completion  of the  stock
              offering.


          8.   No person will be allowed to purchase any stock if that  purchase
               would be illegal  under any federal or state law or regulation or
               would violate regulations or policies of the National Association
               of Securities  Dealers. We and/or our representatives may ask for
               an  acceptable  legal  opinion from any  purchaser  regarding the
               legality  of the  purchase  and may refuse to honor any  purchase
               order if that opinion is not timely furnished.

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

          10.  The above  restrictions also apply to purchases by persons acting
               in concert under  applicable  regulations of the Office of Thrift
               Supervision.   Under   regulations   of  the   Office  of  Thrift
               Supervision, our directors are not considered to be affiliates or
               a group acting in concert with other directors solely as a result
               of membership on our Board of Directors.

          11.  In addition,  in any community  offering or syndicated  community
               offering,  we must first fill orders for our common stock up to a
               maximum of 2% of the total  shares  issued in the  offering  in a
               manner that will achieve a wide  distribution  of the stock,  and
               thereafter  any  remaining  shares will be  allocated on an equal
               number of shares  per order  basis,  until all  orders  have been
               filled or the shares have been exhausted.

         The  term  "associate"  of a  person  is  defined  in the plan of stock
issuance to mean:

          (1)  any  corporation or organization of which that person is a senior
               officer or partner or is, directly or indirectly,  the beneficial
               owner of 10% or more of any class of equity securities;

          (2)  any trust or other estate in which that person has a  substantial
               beneficial  interest or as to which that person serves as trustee
               or in a similar fiduciary capacity; or

          (3)  an individual  who is related by blood or marriage to that person
               if they live in the same home as that person.

         For  example,  a  corporation  for which a person  serves as an officer
would  be an  associate  of  that  person  and  all  shares  purchased  by  that
corporation  would be  included  with the  number of shares  which  that  person
individually could purchase under the above limitations.

         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

                                       89


          (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.

         A person or  company  which  acts in  concert  with  another  person or
company  ("other  party")  shall also be deemed to be acting in concert with any
person or company who is also acting in concert with that other  party.  We will
presume that  certain  persons are acting in concert  based upon various  facts,
including  the fact that persons have joint  account  relationships  or the fact
that such  persons  have  filed  joint  Schedules  13D with the  Securities  and
Exchange  Commission  with respect to other  companies.  We reserve the right to
make an independent  investigation of any facts or circumstances  brought to our
attention  that indicate that one or more persons acting  independently  or as a
group  acting  in  concert  may be  attempting  to  violate  or  circumvent  the
regulatory prohibition on the transferability of subscription rights.

         We have  the  right,  in our  sole  discretion,  to  determine  whether
prospective   purchasers  are   "associates"   or  "acting  in  concert."  These
determinations  are in our sole discretion and may be based on whatever evidence
we believe to be  relevant,  including  joint  account  relationships  or shared
addresses on the records of Millington Savings Bank.

         Each person  purchasing shares of the common stock in the offering will
be  considered  to have  confirmed  that his purchase does not conflict with the
maximum  purchase  limitation.  If the  purchase  limitation  is violated by any
person or any associate or group of persons  affiliated  or otherwise  acting in
concert with that person, we will have the right to purchase from that person at
the $10.00 purchase price per share all shares acquired by that person in excess
of that  purchase  limitation  or, if the excess  shares  have been sold by that
person, to receive the difference  between the purchase price per share paid for
the excess  shares and the price at which the  excess  shares  were sold by that
person. Our right to purchase the excess shares will be assignable.

         Common  stock  purchased  pursuant  to  the  offering  will  be  freely
transferable,  except  for  shares  purchased  by our  directors  and  executive
officers.  For  certain  restrictions  on  the  common  stock  purchased  by our
directors  and  executive   officers,   see  The  Offering  -  Restrictions   on
Transferability by Directors and Executive Officers.

Ordering and Receiving Common Stock


         Use of Order  Forms.  Rights  to  subscribe  may only be  exercised  by
completion of an order form.  Any person  receiving an order form who desires to
subscribe  for  shares  of  common  stock  must do so  prior  to the  applicable
expiration  date by  delivering  by mail or in person a  properly  executed  and
completed  order form,  together with full payment of the purchase price for all
shares for which  subscription is made or include  appropriate  authorization in
the space  provided  on the order form for  withdrawal  of full  payment  from a
deposit  account at Millington  Savings  Bank;  provided,  however,  that if the
Millington  Savings Bank Employee  Stock  Ownership  Plan  subscribes for shares
during the subscription  offering, it will not be required to pay for the shares
at the time it subscribes  but rather may pay for the shares upon  completion of
the  offering.  All  subscription  rights  will expire on the  expiration  date,
whether or not we have been able to locate each person  entitled to subscription
rights. To place an order in the community  offering,  an investor must complete
an order  form and  return  it prior to the  applicable  expiration  date.  Once
submitted, subscription orders cannot be revoked without our consent.


                                       90



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

         To  ensure  that your  stock  purchase  eligibility  and  priority  are
properly  identified,  you must list all accounts on the order form,  giving all
names in each account and the account number as of the  appropriate  eligibility
date.  We will strive to identify  your  ownership in all  accounts,  but cannot
guarantee we will identify all accounts in which you have an ownership interest.

         If a stock order form:

o    is not delivered to a subscriber and is returned to us by the United States
     Postal Service or we are unable to locate the addressee;

o    is not received by us or is received after the applicable expiration date;

o    is not completed correctly or executed; or

o    is not accompanied by the full required  payment for the shares  subscribed
     for,  including  instances where a savings  account or certificate  balance
     from  which  withdrawal  is  authorized  is  unavailable,   uncollected  or
     insufficient to fund the required payment,  but excluding  subscriptions by
     the employee stock ownership plan;

         then the subscription  rights for that person will lapse as though that
person  failed to  return  the  completed  order  form  within  the time  period
specified.

         However, we may, but will not be required to, waive any irregularity on
any order  form or  require  the  submission  of  corrected  order  forms or the
remittance of full payment for subscribed  shares by a date that we may specify.
The waiver of an  irregularity  on an order form in no way obligates us to waive
any other  irregularity on any other order form. Waivers will be considered on a
case by case basis. We are not required to accept orders received on photocopies
or facsimile order forms, or for which payment is to be made by wire transfer or
payment  from  private  third  parties.  Our  interpretation  of the  terms  and
conditions of the plan of stock issuance and of the  acceptability  of the order
forms  will  be  final,  subject  to the  authority  of  the  Office  of  Thrift
Supervision.

         The  reverse  side of the order  form  contains  a  certification  form
mandated by regulation.  We will not accept order forms where the  certification
form is not executed.  By executing and returning the  certification  form,  you
will be certifying that you received this prospectus and acknowledging  that the
common stock is not a deposit  account and is not insured or  guaranteed  by the
federal government.  You also will be acknowledging that you received disclosure
concerning the risks involved in this offering.  The certification form could be
used as support to show that you understand the nature of this investment.

         To ensure that each  purchaser  receives a prospectus at least 48 hours
before the  applicable  expiration  date, in accordance  with Rule 15c2-8 of the
Securities  Exchange Act of 1934,  no  prospectus  will be mailed any later than
five days prior to the expiration date or hand delivered any later than two days
prior to the expiration  date.  Execution of the order form will confirm receipt
or delivery in accordance with Rule 15c2-8. Order forms will only be distributed
with a prospectus.

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         Payment  for Shares.  For  subscriptions  to be valid,  payment for all
subscribed  shares will be required to accompany  all properly  completed  order
forms,  on or prior to the expiration date specified on the order form unless we
extend the date. The Millington  Savings Bank Employee Stock  Ownership Plan may
pay for the shares it subscribes  for upon  completion of the offering.  Payment
for shares of common stock may be made:


o    in cash, if delivered in person;

o    by check or money order made payable to MSB Financial Corp.; or

o    for shares subscribed for in the subscription offering, by authorization of
     withdrawal from deposit accounts maintained with Millington Savings Bank.

         If you  choose to pay by cash,  you must  deliver  the stock  order and
certification  form and  payment  in person to any branch  office of  Millington
Savings Bank and it will be exchanged for a bank check or money order. Please do
not send cash in the mail.

         In accordance with Rule 15c2-4 of the Securities  Exchange Act of 1934,
subscribers'  checks must be made  payable to MSB  Financial  Corp.,  and checks
received  by the stock  information  center  will be  deposited  directly to the
segregated  deposit account at Millington Savings Bank established to hold funds
received as payment for shares.  Interest will be paid on payments made by cash,
check or money order at Millington  Savings Bank's regular passbook savings rate
of interest from the date payment is received until the offering is completed or
terminated.  We may decide during the offering also to hold funds  received with
orders in a deposit account at another insured depository institution. In either
case,  we will pay interest on all funds  received at a rate equal to Millington
Savings Bank's regular passbook savings rate.


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


         Appropriate  means by which account  withdrawals  may be authorized are
provided on the order form. If a subscriber authorizes us to withdraw the amount
of the purchase price from his or her deposit  account,  we will do so as of the
completion  of the  offering,  though the account  must  contain the full amount
necessary  for  payment  at  the  time  the  subscription  is  received.  Once a
withdrawal has been authorized,  none of the designated withdrawal amount may be
used by a subscriber for any purpose other than to purchase the common stock for
which a  subscription  has been made until the  offering  has been  completed or
terminated.  In the case of payments  authorized  to be made through  withdrawal
from savings accounts,  all sums authorized for withdrawal will continue to earn
interest at the applicable account rate until the offering has been completed or
terminated.  Sums  authorized for withdrawal  from a certificate of deposit will
continue to earn  interest at the  contract  rate on the  certificate  until the
offering  has  been  completed  or  terminated.  Interest  penalties  for  early
withdrawal  applicable to  certificate  accounts  will not apply to  withdrawals
authorized for the purchase of shares.  However, if a partial withdrawal results
in a certificate account with a balance less than the applicable minimum balance
requirement,  the  certificate  shall be  canceled  at the  time of  withdrawal,
without  penalty,  and the  remaining  balance will be converted  into a savings
account and will earn interest at the regular  passbook  savings rate subsequent
to the

                                       92



withdrawal.  In the case of  payments  made in cash or by check or money  order,
funds  will be placed  in a  segregated  account  and  interest  will be paid by
Millington  Savings  Bank at the  regular  passbook  savings  rate from the date
payment is received until the offering is completed or  terminated.  An executed
order  form,  once we receive it, may not be  modified,  amended,  or  rescinded
without our consent,  unless the offering is not completed  within 45 days after
the conclusion of the subscription  offering,  in which event subscribers may be
given the opportunity to increase, decrease, or rescind their subscription for a
specified  period of time. If the offering is not completed for any reason,  all
funds  submitted  pursuant  to the  offerings  will be  promptly  refunded  with
interest as described above.

         A  subscriber  interested  in using funds in an  individual  retirement
account to purchase common stock must do so through a self-directed IRA account.
Millington  Savings Bank IRA accounts are not self-  directed  accounts.  To use
funds in an IRA account at  Millington  Savings  Bank, a subscriber  must make a
trustee-to-trustee  transfer of the IRA funds held at Millington Savings Bank to
a trustee offering a self-directed IRA program with the agreement that the funds
will be  used  to  purchase  shares  in the  offering.  There  will be no  early
withdrawal or Internal Revenue Service interest penalties for transfers. The new
trustee  would  hold the  common  stock in a  self-directed  account in the same
manner as we now hold the depositor's IRA funds.  An annual  administrative  fee
may be payable to the new trustee.  Subscribers  interested  in using funds in a
Millington  Savings Bank IRA account to purchase common stock should contact the
stock information  center as soon as possible so that the necessary forms may be
forwarded for execution and returned before the  subscription  offering ends. In
addition, federal laws and regulations require that officers,  directors and 10%
stockholders who use  self-directed IRA funds to purchase shares of common stock
in the subscription  offering,  make purchases for the exclusive  benefit of IRA
accounts.

         Federal regulations prohibit Millington Savings Bank from lending funds
or extending credit to any person to purchase the common stock in the offering.

         Stock Information  Center.  Our stock information  center is located at
the Bank's main office at 1902 Long Hill Road, Millington, New Jersey. The phone
number is (___) ___-____.  The stock information center's hours of operation are
generally _____ a.m. to ____ p.m., Eastern time, Monday through Friday.

         Delivery of Stock Certificates.  Certificates representing common stock
issued  in the  offering  will be mailed by our  transfer  agent to the  persons
entitled  thereto at the address noted on the order form, as soon as practicable
following completion of the offering. Any certificates returned as undeliverable
will be held until  claimed by persons  legally  entitled  thereto or  otherwise
disposed of in accordance with applicable law. Until certificates for the common
stock are available and delivered to subscribers, subscribers may not be able to
sell the shares of stock for which they  subscribed,  even though trading of our
common stock may have commenced.

Restrictions on Repurchase of Shares

         Under  Office  of Thrift  Supervision  regulations,  we may not,  for a
period of one year from the date of the  completion of the offering,  repurchase
any of our  common  stock  from any  person,  except (1) in an offer made to all
stockholders to repurchase the common stock on a pro rata basis, approved by the
Office of Thrift  Supervision,  (2) the  repurchase  of  qualifying  shares of a
director,  or (3)  repurchases to fund restricted  stock plans or  tax-qualified
employee stock benefit plans, including the employee stock ownership plan. Where
extraordinary  circumstances exist, the Office of Thrift Supervision may approve
the open market repurchase of up to 5% of our common stock during the first year
following the offering.

                                       93



To receive  such  approval,  we must  establish  compelling  and valid  business
purposes  for  the  repurchase  to the  satisfaction  of the  Office  of  Thrift
Supervision. Furthermore, repurchases of any common stock are prohibited if they
would cause Millington Savings Bank's regulatory capital to be reduced below the
amount required under the regulatory capital  requirements imposed by the Office
of Thrift  Supervision.  If, in the future, the rules and regulations  regarding
the  repurchase  of  stock  are  liberalized,  we  may  utilize  the  rules  and
regulations then in effect.

How We  Determined  the  $10.00  Per Share  Price and the Number of Shares to Be
Issued in the Stock Offering

         The plan of stock  issuance  requires  that the  purchase  price of the
common  stock  must be based on the  appraised  pro  forma  market  value of MSB
Financial  Corp. and  Millington  Savings Bank, as determined on the basis of an
independent valuation. For its services in making this appraisal, RP Financial's
fees and out-of-pocket expenses are estimated to total approximately $47,000. We
have agreed to indemnify RP Financial  and any employees of RP Financial who act
for or on behalf of RP Financial in connection  with the  appraisal  against any
and all loss, cost, damage,  claim,  liability or expense of any kind, including
claims under federal and state securities laws, arising out of any misstatement,
untrue  statement of a material fact or omission to state a material fact in the
information supplied by us to RP Financial, unless RP Financial is determined to
be negligent or otherwise at fault.

         RP  Financial  made its  appraisal  in  reliance  upon the  information
contained in this prospectus,  including the financial statements.  RP Financial
also considered the following factors, among others:

o    the present and projected  operating results and financial condition of MSB
     Financial  Corp.  and  Millington  Savings  Bank,  which were  prepared  by
     Millington  Savings  Bank and then  adjusted by RP Financial to reflect the
     estimated net proceeds of this offering, the estimated expense of our stock
     benefit  plans and the economic and  demographic  conditions  in Millington
     Savings Bank's existing marketing area as prepared by RP Financial;

o    certain historical,  financial and other information relating to Millington
     Savings Bank prepared by Millington Savings Bank; and

o    the impact of the stock offering on our net worth and earnings potential as
     calculated by RP Financial.


         The  appraisal  also  incorporated  an  analysis  of a  peer  group  of
publicly-traded  mutual  holding  companies  that RP Financial  considered to be
comparable to Millington  Savings Bank. The peer group analysis  conducted by RP
Financial included a total of 10  publicly-traded  mutual holding companies with
total assets of more than $100 million and less than $600 million.  The analysis
of  comparable  publicly-  traded  institutions  included an  evaluation  of the
average and median price-to-earnings and price-to-book value ratios indicated by
the market prices of the peer companies.  RP Financial  applied the peer group's
pricing ratios, as adjusted to allow for differences between MSB Financial Corp.
and the peer group,  to MSB Financial  Corp.'s pro forma earnings and book value
to derive the estimated pro forma market value of MSB Financial Corp.


         On the basis of the  foregoing,  RP  Financial  advised in its opinion,
dated  September  1, 2006,  that the  estimated  pro forma  market  value of MSB
Financial  Corp.  on a  fully-converted  basis  ranged  from a minimum  of $36.1
million to a maximum of $48.9  million  with a midpoint  of $42.5  million.  The
Board of Directors determined that 45% of the total shares of common stock to be
outstanding  upon  completion

                                       94



of the offering should be sold. Based on the estimated  valuation and the $10.00
per share price,  the total number of shares of common stock that MSB  Financial
Corp. will issue, including shares issued to MSB Financial, MHC, will range from
a minimum of 3,612,500 shares to a maximum of 4,887,500 shares,  with a midpoint
of  4,250,000  shares.  The  shares of MSB  Financial  Corp.  stock that are not
offered for sale in the offering  will be issued to MSB  Financial,  MHC,  which
will own 55% of the  total  outstanding  common  stock  upon  completion  of the
offering.

         The estimated  valuation  range may be amended with the approval of the
Office of Thrift  Supervision or if necessitated  by subsequent  developments in
the consolidated financial condition of MSB Financial Corp. or market conditions
generally.  In the event the estimated  valuation  range is updated to amend the
value of MSB Financial  Corp. on a  fully-converted  basis below $36.1  million,
which is the minimum of the estimated  valuation  range, or above $56.2 million,
which is the adjusted maximum of the estimated  valuation range, a new appraisal
will be filed with the Office of Thrift Supervision.

         RP Financial' valuation is not intended, and must not be construed,  as
a recommendation  of any kind as to the advisability of purchasing MSB Financial
Corp.'s  shares.  RP Financial  did not  independently  verify the  consolidated
financial  statements and other information provided by us, nor did RP Financial
value  independently our assets or liabilities.  The valuation considers us as a
going concern and should not be  considered as an indication of our  liquidation
value. Moreover,  because this valuation is necessarily based upon estimates and
projections of a number of matters, all of which are subject to change from time
to time, no assurance can be given that persons  purchasing  common stock in the
offerings will  thereafter be able to sell such shares at prices at or above the
purchase price or in the range of the valuation described above.

         No  sale of  shares  of  common  stock  in the  stock  offering  may be
completed  unless RP Financial  confirms  that nothing of a material  nature has
occurred which would cause it to conclude that the aggregate value of the common
stock to be issued is materially incompatible with the estimate of the aggregate
consolidated  pro forma  market  value of MSB  Financial  Corp.  and  Millington
Savings Bank.  If this  confirmation  is not  received,  we may cancel the stock
offering, extend the offering period and establish a new estimated valuation and
offering  range  and/or  estimated  price  range,  extend,  reopen or hold a new
offering or take any other action the Office of Thrift Supervision may permit.

         Depending  upon market or financial  conditions  following the start of
the  subscription  offering,  the total  number of shares of common  stock to be
issued may be increased or decreased  without a  resolicitation  of subscribers,
provided  that the  product  of the  total  number of  shares  issued  times the
purchase  price is not below the  minimum or more than 15% above the  maximum of
the estimated valuation range. If market or financial conditions change so as to
cause  the  aggregate  value of the  common  stock to be  issued to be below the
minimum of the estimated  valuation  range or more than 15% above the maximum of
this range,  purchasers  will be resolicited  and be permitted to continue their
orders, in which case they will need to reconfirm their  subscriptions  prior to
the expiration of the  resolicitation  offering or their subscription funds will
be promptly  refunded with interest,  or be permitted to modify or rescind their
subscriptions.  Any change in the estimated  valuation range must be approved by
the Office of Thrift Supervision.

         An increase  in the number of shares of common  stock to be issued as a
result of an increase in the  estimated  pro forma market  value would  decrease
both a subscriber's  ownership  interest and MSB Financial Corp.'s pro forma net
income and stockholders'  equity on a per share basis while increasing pro forma
net income and  stockholders'  equity on an aggregate  basis.  A decrease in the
number of shares of common stock to be issued would increase both a subscriber's
ownership   interest  and  MSB  Financial

                                       95



Corp.'s pro forma net income and stockholders' equity on a per share basis while
decreasing pro forma net income and stockholders' equity on an aggregate basis.

         Copies  of  the  appraisal  report  of  RP  Financial,   including  any
amendments,  and the detailed  report of the appraiser  setting forth the method
and  assumptions  for the appraisal  are available for  inspection at the Bank's
main  office and the other  locations  specified  under  Where You Can Find More
Information.  The appraisal report is an exhibit to the  registration  statement
filed with the Securities and Exchange Commission.

Plan of Distribution/Marketing Arrangements

         We have  engaged  Keefe,  Bruyette  and Woods,  Inc.,  a  broker-dealer
registered with the National  Association of Securities  Dealers, as a financial
and marketing  advisor in connection  with the offering of our common stock.  In
its role as financial and marketing  advisor,  Keefe,  Bruyette and Woods,  Inc.
will assist us in the offering as follows:

o    consulting as to the securities marketing implications of any aspect of the
     plan of stock issuance;

o    reviewing with our Board of Directors the securities marketing implications
     of the independent appraiser's appraisal of the common stock;

o    reviewing all offering  documents,  including the  prospectus,  stock order
     forms  and  related   offering   materials  (we  are  responsible  for  the
     preparation and filing of such documents);

o    assisting in the design and  implementation of a marketing strategy for the
     offering;

o    assisting  us in  scheduling  and  preparing  for meetings  with  potential
     investors and broker-dealers; and

o    providing  such other  general  advice  and  assistance  we may  request to
     promote the successful completion of the offering.

         For these services,  Keefe, Bruyette and Woods, Inc. will receive a fee
of  1.0%  of the  aggregate  dollar  amount  of the  common  stock  sold  in the
subscription  and  community  offerings  if the stock  issuance is  consummated,
excluding in each case shares purchased by the Millington  Savings Bank Employee
Stock  Ownership  Plan and  shares  purchased  by our  directors,  officers  and
employees and their immediate families.


         The plan of stock issuance  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 Keefe,  Bruyette  and Woods,  Inc.  In such  capacity,  Keefe,
Bruyette and Woods, Inc. may form a syndicate of other  broker-dealers.  Neither
Keefe,  Bruyette and Woods, Inc. nor any registered  broker-dealer will have any
obligation to take or purchase any shares of the common stock in the  syndicated
community offering;  however,  Keefe, Bruyette and Woods, Inc. has agreed to use
its best efforts in the sale of shares in any syndicated community offering.  If
there is a syndicated community offering,  Keefe,  Bruyette and Woods, Inc. will
receive a management  fee of 1.0% of the  aggregate  dollar amount of the common
stock sold in the  syndicated  community  offering.  The total  fees  payable to
Keefe,  Bruyette and Woods,  Inc. and other  National  Association of Securities
Dealers

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member firms in the syndicated  community  offering shall not exceed 5.5% of the
aggregate  dollar  amount of the common stock sold in the  syndicated  community
offering.

         We  also  will  reimburse  Keefe,  Bruyette  and  Woods,  Inc.  for its
reasonable out-of-pocket expenses (including legal fees and expenses) associated
with its  marketing  effort,  up to a maximum of  $65,000.  If the plan of stock
issuance is  terminated or if Keefe,  Bruyette and Woods,  Inc.  terminates  its
agreement with us in accordance  with the  provisions of the  agreement,  Keefe,
Bruyette and Woods,  Inc.  will only  receive  reimbursement  of its  reasonable
out-of-pocket  expenses.  We will  indemnify  Keefe,  Bruyette  and Woods,  Inc.
against  liabilities and expenses  (including legal fees) incurred in connection
with certain claims or litigation arising out of or based upon untrue statements
or omissions contained in the offering material for the common stock,  including
liabilities under the Securities Act of 1933.

         Keefe,  Bruyette and Woods, Inc. has not prepared any report or opinion
constituting  a  recommendation  or advice to us or to persons who subscribe for
our common stock, nor has it prepared an opinion as to the fairness to us of the
purchase  price or the  terms of the  common  stock  offered  for  sale.  Keefe,
Bruyette  and  Woods,  Inc.  expresses  no opinion as to the prices at which the
common stock, once issued, may trade.

         Our   directors  and  executive   officers  may   participate   in  the
solicitation  of offers to purchase  common stock.  Other trained  employees may
participate in the offering in ministerial  capacities,  providing clerical work
in effecting a sales transaction or answering questions of a ministerial nature.
Other questions of prospective purchasers will be directed to executive officers
or registered representatives of Keefe, Bruyette and Woods, Inc. We will rely on
Rule  3a4-1 of the  Securities  Exchange  Act of 1934 so as to permit  officers,
directors  and  employees to  participate  in the sale of our common  stock.  No
officer,  director or employee will be compensated for his or her  participation
by the payment of commissions  or other  remuneration  based either  directly or
indirectly on the transactions in the common stock.

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Restrictions on Transferability by Directors and Executive Officers


         Shares of the common  stock  purchased  by our  directors  or executive
officers  cannot be sold for a period of one year  following  completion  of the
offering,  except  for a  disposition  of shares  after  death.  To ensure  this
restriction  is  upheld,  shares of the common  stock  issued to  directors  and
executive  officers  will  bear a legend  restricting  their  sale.  Appropriate
instructions  will be issued to the transfer  agent with  respect to  applicable
restrictions  on transfer  of such stock.  Any shares  issued to  directors  and
executive officers as a stock dividend, stock split or otherwise with respect to
restricted stock will be subject to the same restriction.

         For a period of three years  following the offering,  our directors and
executive  officers and their  associates may not, without the prior approval of
the Office of Thrift Supervision, purchase our common stock except from a broker
or dealer registered with the SEC. This prohibition does not apply to negotiated
transactions including more than 1% of our common stock or purchases made by tax
qualified  or  non-tax  qualified  employee  stock  benefit  plans  which may be
attributable to individual directors or executive officers.

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

Restrictions on Agreements or Understandings  Regarding Transfer of Common Stock
to be Purchased in the Offering

         Before the  completion  of the  offering,  no depositor may transfer or
enter into an agreement or understanding to transfer any subscription  rights or
the legal or beneficial  ownership of the shares of common stock to be purchased
in the offering. Depositors who submit an order form will be required to certify
that their purchase of common stock is solely for their own account and there is
no agreement or understanding regarding the sale or transfer of their shares. We
intend to pursue any and all legal and equitable  remedies after we become aware
of any  agreement  or  understanding,  and will not honor  orders we  reasonably
believe to involve an agreement or understanding  regarding the sale or transfer
of shares.

Effects of the Stock Offering

         General.  The stock  offering  will not have any  effect on  Millington
Savings Bank's present business of accepting deposits and investing its funds in
loans and other investments permitted by law. The

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stock offering will not result in any change in the existing  services  provided
to depositors  and borrowers,  or in existing  offices,  management,  and staff.
After the stock offering, Millington Savings Bank will continue to be subject to
regulation, supervision, and examination by the New Jersey Department of Banking
and Insurance and the Federal Deposit Insurance Corporation.

         Deposits  and Loans.  Each  holder of a deposit  account in  Millington
Savings  Bank at the time of the stock  offering  will  continue  as an  account
holder in  Millington  Savings  Bank  after the  stock  offering,  and the stock
offering will not affect the deposit balance, interest rate or other terms. Each
deposit account will be insured by the Federal Deposit Insurance  Corporation to
the same extent as before the stock  offering.  Depositors will continue to hold
their existing certificates,  savings records,  checkbooks and other evidence of
their  accounts.  The stock  offering  will not affect the loans of any borrower
from Millington Savings Bank. The amount, interest rate, maturity, security for,
and obligations under each loan will remain  contractually fixed as they existed
prior to the stock offering.

         Voting Rights. As a New Jersey chartered stock savings bank, all voting
rights of Millington  Savings Bank are held solely by its sole stockholder,  MSB
Financial  Corp. All voting rights of MSB Financial Corp. are held solely by its
sole stockholder,  MSB Financial,  MHC. All voting rights of MSB Financial,  MHC
are held by the  Board of  Directors  of MSB  Financial,  MHC.  After  the stock
offering,  the  voting  rights  of MSB  Financial  Corp.  will  be  held  by its
stockholders.  MSB Financial,  MHC will own a majority of the outstanding common
stock of MSB Financial  Corp., and thus the Board of Directors of MSB Financial,
MHC,  which  is  comprised  of the same  individuals  who are  directors  of MSB
Financial Corp., will control the affairs of MSB Financial Corp.,  including the
election of directors of MSB Financial Corp.

         Material  Federal and State Tax  Consequences of the Offering.  We have
received an opinion from Malizia Spidi & Fisch,  PC on the material  federal tax
consequences of the stock offering to MSB Financial Corp., the purchasers of its
common stock and the recipients of  subscription  rights to purchase such common
stock. The opinion has been filed as an exhibit to the registration statement of
which this  prospectus  is a part and covers those  federal tax matters that are
material  to the  transaction.  Such  opinion is made in reliance  upon  various
statements,  representations  and declarations as to matters of fact made by us,
as detailed in the opinion. The opinion provides that:

          o    we will  recognize  no gain or loss upon the  receipt of money in
               exchange for shares of common stock; and

          o    no gain or loss will be recognized by Eligible  Account  Holders,
               Supplemental  Eligible  Account Holders or Other  Depositors upon
               the  distribution  to  them of the  nontransferable  subscription
               rights to purchase shares of common stock.

         The opinion in the second bullet above is predicated on representations
from Millington Savings Bank, MSB Financial Corp. and MSB Financial, MHC that no
person shall receive any payment,  whether in money or property,  in lieu of the
issuance of subscription  rights. The opinion in the second bullet above is also
based on the position that the subscription  rights to purchase shares of common
stock  received by  Eligible  Account  Holders,  Supplemental  Eligible  Account
Holders and Other Depositors have a fair market value of zero. In reaching their
opinion stated in the second bullet above,  Malizia Spidi & Fisch,  PC has noted
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
recipients  with the right only to purchase  shares of common  stock at the same
price to be paid by members of the  general  public in any  community  offering.
Malizia Spidi & Fisch, PC believes that it is more likely than not that the fair
market  value of the  subscription

                                       99



rights to purchase common stock is zero.  Malizia Spidi & Fisch, PC has noted in
its opinion that they are not aware of the Internal  Revenue Service claiming in
any similar  transaction that subscription rights have any market value. In that
there are no judicial opinions or official Internal Revenue Service positions on
this issue,  however,  such position  related to subscription  rights comes to a
reasoned  conclusion  instead of an absolute  conclusion on these  issues.  Such
conclusion of counsel is supported by a letter from RP Financial furnished to us
which  states that the  subscription  rights do not have any value when they are
distributed or exercised.  If the Internal  Revenue Service  disagrees with this
valuation of subscription  rights and determines that such  subscription  rights
have value,  income may be recognized by recipients of these rights,  in certain
cases whether or not the rights are  exercised.  This income may be capital gain
or  ordinary  income,  and  MSB  Financial  Corp.  could  recognize  gain on the
distribution of these rights. Based on the foregoing,  Malizia Spidi & Fisch, PC
believes that it is more likely than not that the  nontransferable  subscription
rights to purchase our common stock have no value.

         We are also  subject to New Jersey  income  taxes and have  received an
opinion from Beard Miller  Company LLP that the stock  offering  will be treated
for New Jersey state tax purposes similar to the treatment of the stock offering
for federal tax purposes.

         Unlike a private  letter ruling from the IRS, the federal and state tax
opinions  have no binding  effect or official  status,  and no assurance  can be
given that the  conclusions  reached in any of those opinions would be sustained
by a court if contested by the IRS or the New Jersey tax  authorities.  Eligible
Account  Holders and  Supplemental  Eligible  Account  Holders are encouraged to
consult with their own tax advisers as to the tax  consequences in the event the
subscription rights are determined to have any market value.

Interpretation, Amendment or Termination of the Plan of Stock Offering

         If  determined  to be necessary or desirable by the Board of Directors,
the  plan may be  amended  by a  two-thirds  vote of the  full  Board,  with the
concurrence of the Office of Thrift Supervision. To the extent permitted by law,
all interpretations by us of the plan of stock issuance will be final;  however,
such interpretations have no binding effect on the Office of Thrift Supervision.
The plan of stock issuance  provides that, if deemed necessary or desirable,  we
may substantively  amend the plan of stock issuance as a result of comments from
regulatory authorities or otherwise.

         Completion  of the  offering  requires  the sale of all  shares  of the
common stock within ninety days following approval of the plan of stock issuance
by the  Office of Thrift  Supervision,  unless an  extension  is  granted by the
Office of Thrift  Supervision.  If this condition is not satisfied,  the plan of
stock  issuance  will be terminated  and we will  continue our business.  We may
terminate the plan of stock issuance at any time.

Conditions to the Offering

         Completion of the offering is subject to several factors, including:

1.   the  receipt  of all  the  required  approvals  of  the  Office  of  Thrift
     Supervision for the issuance of common stock in the offering, and

2.   the sale of 1,625,625 shares of common stock.

                                      100



         If such  conditions  are not met before we complete the  offering,  all
funds  received  will be promptly  returned  with  interest  and all  withdrawal
authorizations  will be  canceled.  The  stock  purchases  of our  officers  and
directors will be counted for purposes of meeting the minimum number of shares.

               RESTRICTIONS ON ACQUISITION OF MSB FINANCIAL CORP.

General

         The principal federal regulatory  restrictions which affect the ability
of any person, firm or entity to acquire MSB Financial Corp., Millington Savings
Bank or their respective  capital stock are described below.  Also discussed are
certain  provisions  in MSB  Financial  Corp.'s  charter and bylaws which may be
deemed to  affect  the  ability  of a person,  firm or  entity  to  acquire  MSB
Financial Corp.

Statutory and Regulatory Restrictions on Acquisition

         The Change in Bank Control Act provides that no person, acting directly
or  indirectly  or  through or in concert  with one or more other  persons,  may
acquire control of a savings institution unless the Office of Thrift Supervision
has been given 60 days prior written notice.  The Home Owners' Loan Act provides
that no company may acquire "control" of a savings institution 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.  Pursuant to
federal regulations,  control of a savings institution is conclusively deemed to
have been acquired by, among other things,  the  acquisition of more than 25% of
any class of voting  stock of the  institution  or the  ability to  control  the
election of a majority of the directors of an institution.  Moreover, control is
presumed to have been  acquired,  subject to rebuttal,  upon the  acquisition of
more than 10% of any class of voting stock,  or of more than 25% of any class of
stock of a savings  institution,  where certain enumerated "control factors" are
also present in the acquisition.

         The Office of Thrift Supervision may prohibit an acquisition of control
if:

o    it would result in a monopoly or substantially lessen competition;

o    the  financial  condition  of the  acquiring  person might  jeopardize  the
     financial stability of the institution; or

o    the competence,  experience or integrity of the acquiring  person indicates
     that it would not be in the interest of the  depositors or of the public to
     permit the acquisition of control by such person.

         These  restrictions  do not  apply  to  the  acquisition  of a  savings
institution's capital stock by one or more tax-qualified  employee stock benefit
plans, provided that the plans do not have beneficial ownership of more than 25%
of any class of equity security of the savings institution.

         For a period of three years following completion of the stock issuance,
Office of Thrift  Supervision  regulations  generally  prohibit  any person from
acquiring or making an offer to acquire beneficial ownership of more than 10% of
the stock of MSB Financial  Corp. or Millington  Savings Bank without  Office of
Thrift Supervision approval.

         Current  Office  of  Thrift  Supervision  regulations  permit  a mutual
holding company to be acquired by a mutual  institution or in a  remutualization
transaction.  However,  the  Office of Thrift  Supervision  has

                                      101



issued a policy statement indicating that it views remutualization  transactions
as  raising  significant  issues  concerning  disparate  treatment  of  minority
stockholders  and  mutual  members  of the  target  entity  and  raising  issues
concerning  the effect on the  mutual  members of the  acquiring  entity.  Under
certain  circumstances,  the Office of Thrift Supervision  intends to give these
issues   special   scrutiny   and   reject   applications   providing   for  the
remutualization  of a mutual  holding  company  unless the applicant can clearly
demonstrate that the Office of Thrift Supervision's concerns are not warranted.

Charter and Bylaws of MSB Financial Corp.

         The  following  discussion  is a summary of certain  provisions  of the
charter and bylaws of MSB Financial Corp.  that relate to corporate  governance.
The description is necessarily general and qualified by reference to the charter
and bylaws.

         Classified Board of Directors.  The Board of Directors of MSB Financial
Corp.  is required by the bylaws to be divided into three  staggered  classes as
equal in size as is possible,  with one class elected  annually by  stockholders
for three-year  terms. A classified  Board promotes  continuity and stability of
management of MSB Financial  Corp., but 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.  Directors  are elected by a
plurality of votes cast, and because MSB  Financial,  MHC will own a majority of
the common stock, it will control the election of directors.

         Limitation  of Beneficial  Ownership and Voting.  For a period of three
years following the offering, Office of Thrift Supervision regulations generally
prohibit  any person  from  acquiring  or making an offer to acquire  beneficial
ownership of more than 10% of the then-outstanding shares of MSB Financial Corp.
common stock without Office of Thrift Supervision prior approval.

         Additionally,  our charter  includes a provision that limits the voting
rights  of a single  stockholder  to no more  than  10% of the  then-outstanding
shares, including shares held by MSB Financial,  MHC, for a period of five years
from the date this stock offering is completed.

         Authorized but Unissued  Shares of Capital  Stock.  Following the stock
offering,  MSB  Financial  Corp.  will have  authorized  but unissued  shares of
preferred  stock and common stock.  See  Description of Capital Stock.  Although
these shares could be used by the Board of Directors of MSB  Financial  Corp. to
make it more  difficult  or to  discourage  an attempt to obtain  control of MSB
Financial Corp. through a merger,  tender offer, proxy contest or otherwise,  it
is unlikely that we would use or need to use shares for these  purposes  because
MSB Financial, MHC will own a majority of the common stock.

         Special Meetings of Stockholders.  MSB Financial Corp.'s bylaws provide
that special  meetings of stockholders may be called only by the chairman of the
Board,  the  president,  or a majority  of the Board of  Directors,  or upon the
written  request  of  the  holders  of not  less  than  one-tenth  of all of the
outstanding stock of MSB Financial Corp.

         How Shares are Voted.  MSB Financial  Corp.'s bylaws provide that there
will not be cumulative  voting by stockholders for the election of MSB Financial
Corp.'s directors. No cumulative voting rights means that MSB Financial, MHC, as
the holder of a  majority  of the  shares  eligible  to be voted at a meeting of
stockholders,  may elect all directors of MSB  Financial  Corp. to be elected at
that meeting.  This could prevent  minority  stockholder  representation  on MSB
Financial Corp.'s Board of Directors.

                                      102



         Procedures for Stockholder  Nominations.  MSB Financial  Corp.'s bylaws
provide that any  stockholder  wanting to make a nomination  for the election of
directors or a proposal for new business at a meeting of stockholders  must send
written notice to the Secretary of MSB Financial Corp. at least five days before
the date of the annual meeting. The bylaws further provide that if a stockholder
wanting to make a nomination  or a proposal for new business does not follow the
prescribed  procedures,  the proposal will not be considered until an adjourned,
special,  or annual meeting of the stockholders taking place thirty days or more
thereafter.  Management  believes  that  it is in  the  best  interests  of  MSB
Financial  Corp. and its  stockholders  to provide enough time for management to
disclose to stockholders  information about a dissident slate of nominations for
directors.  This advance notice  requirement  may also give  management  time to
solicit  its own  proxies  in an  attempt  to  defeat  any  dissident  slate  of
nominations  if  management  thinks it is in the best  interest of  stockholders
generally. Similarly, adequate advance notice of stockholder proposals will give
management time to study such proposals and to determine whether to recommend to
the stockholders that such proposals be adopted.

         Indemnification.    MSB   Financial    Corp.'s   bylaws   provide   for
indemnification  of its officers,  directors and employees to the fullest extent
authorized by the regulations of the Office of Thrift Supervision.

                          DESCRIPTION OF CAPITAL STOCK

General

         MSB Financial Corp. is authorized to issue 10,000,000  shares of common
stock, par value $0.10 per share and 5,000,000 shares of serial preferred stock,
no par  value.  Upon  completion  of the stock  offering,  we will have  between
3,612,500  shares of common stock at the minimum and 4,887,500  shares of common
stock at the maximum of the offering range outstanding  (5,620,625 shares at the
adjusted  maximum),  including  shares that will be held by MSB Financial,  MHC.
Upon payment of the purchase price shares of common stock issued in the offering
will be fully paid and non-assessable.  Each share of common stock will have the
same relative  rights as, and will be identical in all respects with, each other
share of common stock. The common stock will represent non-withdrawable capital,
will not be an account of insurable  type and will not be insured by the Federal
Deposit Insurance  Corporation or any other  governmental  agency.  The Board of
Directors can, without stockholder  approval,  issue additional shares of common
stock,  although MSB Financial,  MHC, so long as it is in existence,  must own a
majority of MSB Financial Corp.'s outstanding shares of common stock.

Common Stock

         Distributions.  MSB Financial  Corp.  can pay dividends if, as and when
declared by its Board of Directors, subject to compliance with limitations which
are imposed by law. See Our Policy  Regarding  Dividends.  The holders of common
stock of MSB  Financial  Corp.  will be entitled to receive and share equally in
such  dividends as may be declared by the Board of  Directors  of MSB  Financial
Corp. out of funds legally  available  therefor.  If MSB Financial Corp.  issues
preferred stock, the holders thereof may have a priority over the holders of the
common stock with respect to dividends.

         Voting  Rights.  The  holders of common  stock will  possess  exclusive
voting rights in MSB Financial  Corp.  The holder of shares of common stock will
be  entitled  to one  vote  for  each  share  held  on all  matters  subject  to
stockholder  vote and will not have any right to cumulate  votes in the election
of directors.

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         Liquidation  Rights. In the event of any liquidation,  dissolution,  or
winding-up of MSB  Financial  Corp.,  the holders of the common stock  generally
would be entitled to receive,  after payment of all debts and liabilities of MSB
Financial  Corp.  (including  all debts and  liabilities  of Millington  Savings
Bank),  all  assets  of MSB  Financial  Corp.  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; Redemption.  Because the holders of the common stock
do not have any preemptive rights with respect to any shares MSB Financial Corp.
may  issue,  the Board of  Directors  may sell  shares of  capital  stock of MSB
Financial Corp. without first offering such shares to existing stockholders. The
common stock will not be subject to any redemption provisions.

Preferred Stock

         We are authorized to issue up to 5,000,000  shares of serial  preferred
stock and to fix and state voting powers,  designations,  preferences,  or other
special  rights of  preferred  stock  and the  qualifications,  limitations  and
restrictions  of those  shares as the Board of  Directors  may  determine in its
discretion.  Preferred stock may be issued in distinctly  designated series, may
be  convertible  into common  stock and may rank prior to the common stock as to
dividends rights, liquidation preferences, or both, and may have full or limited
voting rights. The issuance of preferred stock could adversely affect the voting
and other rights of holders of common stock.

         The  authorized  but  unissued   shares  of  preferred  stock  and  the
authorized but unissued and unreserved  shares of common stock will be available
for issuance in future mergers or  acquisitions,  in future public  offerings or
private  placements.  Except as otherwise required to approve the transaction in
which the additional  authorized  shares of preferred stock would be issued,  no
stockholder  approval  generally  would be  required  for the  issuance of these
shares.

                             LEGAL AND TAX OPINIONS

         The  legality  of the  issuance of the common  stock being  offered and
certain  matters  relating to the stock  offering and federal  taxation  will be
passed  upon for us by  Malizia  Spidi & Fisch,  PC,  Washington,  D.C.  Matters
relating to state  taxation  will be passed upon for us by Beard Miller  Company
LLP,  Pine Brook,  New Jersey.  Certain  legal  matters  will be passed upon for
Keefe, Bruyette & Woods, Inc. by Muldoon Murphy & Aguggia LLP, Washington, D.C.

                                     EXPERTS

         The  consolidated  financial  statements of MSB Financial Corp. at June
30, 2006 and 2005 and for each of the years in the three year period  ended June
30, 2006 have been  included in this  prospectus  in reliance upon the report of
Beard Miller Company LLP, appearing  elsewhere in this prospectus,  and upon the
authority of said firm as experts in accounting and auditing.

         RP Financial, LC has consented to the publication in this document of a
summary of its letter to MSB Financial Corp.  setting forth its conclusion as to
the estimated pro forma market value of the common stock and has also  consented
to the use of its name and  statements  with  respect  to it  appearing  in this
document.

                                      104



                          CHANGE IN INDEPENDENT AUDITOR

         On April 1, 2005,  MSB Financial  Corp.'s former  independent  auditor,
Radics & Co., LLC ("Radics"), merged with Beard Miller Company LLP to become the
Pine Brook,  New Jersey  office of Beard Miller.  As a result of the merger,  on
April 1, 2005,  Radics  resigned as independent  auditors of MSB Financial Corp.
and MSB Financial Corp. engaged Beard Miller as its successor  independent audit
firm. MSB Financial Corp.'s engagement of Beard Miller was approved by the Audit
Committee.  The report of Radics on MSB Financial Corp.'s consolidated financial
statements  as of and for the fiscal year ended June 30, 2004 did not contain an
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope, or accounting principles. During the 2004 fiscal year,
and in connection with the audit of MSB Financial Corp.'s consolidated financial
statements  for such  period,  and for the period  from July 1, 2004 to April 1,
2005, there were no disagreements  between MSB Financial Corp. and Radics on any
matter of accounting principles or practices,  consolidated  financial statement
disclosure,  or  auditing  scope or  procedure,  which,  if not  resolved to the
satisfaction  of Radics,  would have  caused  Radics to make  reference  to such
matter  in  connection   with  its  audit  reports  on  MSB  Financial   Corp.'s
consolidated financial statements.

                            REGISTRATION REQUIREMENTS

         Prior to completion of the offering,  we will register our common stock
with the SEC pursuant to Section 12(g) of the  Securities  Exchange Act of 1934,
as amended. We will be subject to the information,  proxy solicitation,  insider
trading   restrictions,   tender  offer  rules,  periodic  reporting  and  other
requirements  of the SEC under the Securities  Exchange Act of 1934. We will not
deregister  the common  stock under the  Securities  Exchange  Act of 1934 for a
period of at least three years following the stock offering.

                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

         We have filed with the SEC a  registration  statement on Form S-1 under
the Securities Act of 1933, as amended, with respect to the common stock offered
in this  document.  As permitted by the rules and  regulations  of the SEC, this
document  does not contain  all the  information  set forth in the  registration
statement.  The statements  contained in this document as to the contents of any
contract  or other  document  filed  as an  exhibit  to the  Form  S-1  are,  of
necessity,  brief descriptions.  The registration  statement and exhibits can be
examined without charge at the public reference facilities of the SEC located at
100 F Street, N.E., Washington, D.C. You may obtain information on the operation
of the Public Reference Room by calling 1-800-SEC-0330. The SEC also maintains a
web site that  contains  reports,  proxy and  information  statements  and other
information  regarding  registrants,  including MSB Financial  Corp.,  that file
electronically   with   the   SEC.   The   address   for   this   web   site  is
http://www.sec.gov.

         We have filed an  application  for approval of the stock  issuance with
the Office of Thrift  Supervision.  This  prospectus  omits certain  information
contained in that  application.  That information can be examined without charge
at the public reference  facilities of the Office of Thrift Supervision  located
at 1700 G Street, N.W., Washington, D.C. 20552.

         A copy of our charter and bylaws, filed as exhibits to the registration
statement as well as those of Millington  Savings Bank and MSB  Financial,  MHC,
are  available  without  charge from MSB Financial  Corp.  Copies of the plan of
stock issuance are also available without charge.

                                       105



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS






Report of Independent Registered Public Accounting Firm..................... F-1

Consolidated Statements of Financial Condition
         as of June 30, 2006 and 2005 ...................................... F-2

Consolidated Statements of Income
         for the Years Ended June 30, 2006, 2005 and 2004................... F-3

Consolidated Statements of Changes in Stockholders' Equity
         for the Years Ended June 30, 2006, 2005 and 2004................... F-4

Consolidated Statements of Cash Flows
         for the Years Ended June 30, 2006, 2005 and 2004................... F-5

Notes to Consolidated Financial Statements.................................. F-7



         All  schedules  are omitted as the required  information  either is not
applicable or is included in the  consolidated  financial  statements or related
notes.

                                       104


[LOGO BMC]

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder
MSB Financial Corp. and Subsidiaries
Millington, New Jersey


         We have audited the accompanying  consolidated  statements of financial
condition of MSB Financial Corp. and subsidiaries (the "Company") as of June 30,
2006 and 2005,  and the related  consolidated  statements of income,  changes in
stockholder's  equity,  and cash  flows for each of the years in the  three-year
period ended June 30, 2006.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on the consolidated 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
consolidated financial statements are free of material misstatement. The Company
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 Company's  internal  control
over  financial  reporting.  Accordingly,  we express no such opinion.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
MSB  Financial  Corp.  and  subsidiaries  as of June 30, 2006 and 2005,  and the
consolidated  results of their  operations  and their cash flows for each of the
years  in the  three-year  period  ended  June  30,  2006,  in  conformity  with
accounting principles generally accepted in the United States of America.


                                                /s/Beard Miller Company LLP

Beard Miller Company LLP
Pine Brook, New Jersey
August 8, 2006

                                      F-1




MSB FINANCIAL CORP. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


                                                                                                     June 30,
                                                                                        ------------------------------------
                                                                                             2006                 2005
                                                                                        ---------------      ---------------
                                                                                         (Dollars in Thousands, except Per
                                                                                                  Share Amounts)
                                                                                                     
                                     ASSETS
     Cash and due from banks                                                                  $   1,779           $    2,140
     Interest-earning demand deposits with banks                                                  4,102                3,526
                                                                                        ---------------      ---------------

         Cash and Cash Equivalents                                                                5,881                5,666

     Trading securities                                                                             109                   82
     Securities held to maturity (fair value of $26,821 and $28,095, respectively)               27,707               28,292
     Loans receivable, net of allowance for loan losses of $921 and $874, respectively          218,321              187,192
     Investment in real estate                                                                       97                  825
     Premises and equipment                                                                       8,899                8,438
     Federal Home Loan Bank of New York stock, at cost                                            2,821                1,503
     Bank owned life insurance                                                                    4,004                3,842
     Accrued interest receivable                                                                  1,350                1,088
     Deferred income taxes                                                                          752                  676
     Other assets                                                                                   243                  265
                                                                                        ---------------      ---------------

         Total Assets                                                                          $270,184             $237,869
                                                                                        ===============      ===============

                        LIABILITIES AND RETAINED EARNINGS

LIABILITIES

     Deposits:
         Non-interest bearing                                                                $    9,135            $   8,421
         Interest bearing                                                                       185,620              188,510
                                                                                        ---------------      ---------------

         Total Deposits                                                                         194,755              196,931

     Advances from Federal Home Loan Bank of New York                                            54,181               21,195
     Advance payments by borrowers for taxes and insurance                                          529                  470
     Other liabilities                                                                            1,228                1,184
                                                                                        ---------------      ---------------

         Total Liabilities                                                                      250,693              219,780
                                                                                        ---------------      ---------------

COMMITMENTS AND CONTINGENCIES                                                                         -                    -
                                                                                        ---------------      ---------------

STOCKHOLDER'S EQUITY

     Common stock, par value $0.10; 10,000,000 shares authorized; 10,000 shares issued                1                    1
         and outstanding
     Paid-in capital                                                                                199                  199
     Retained earnings                                                                           19,291               17,889
                                                                                        ---------------      ---------------

         Total Stockholder's Equity                                                              19,491               18,089
                                                                                        ---------------      ---------------

         Total Liabilities and Stockholder's Equity                                            $270,184             $237,869
                                                                                        ===============      ===============

See notes to consolidated  financial statements.
------------------------------------------------------------------------------------------------------------------------------------


                                       F-2




MSB FINANCIAL CORP. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME


                                                                                      Years Ended June 30,
                                                                      ------------------------------------------------------
                                                                             2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                            (In Thousands, Except Per Share Amounts)
                                                                                                  
INTEREST INCOME
   Loans receivable, including fees                                           $12,773            $10,457            $  8,967
   Securities held to maturity                                                  1,177              1,215               1,736
   Other                                                                          167                 82                  66
                                                                      ----------------   ----------------    ---------------

       Total Interest Income                                                   14,117             11,754              10,769
                                                                      ----------------   ----------------    ---------------

INTEREST EXPENSE
   Deposits                                                                     4,995              3,963               3,808
   Borrowings                                                                   1,666                423                  48
                                                                      ----------------   ----------------    ---------------

       Total Interest Expense                                                   6,661              4,386               3,856
                                                                      ----------------   ----------------    ---------------

       Net Interest Income                                                      7,456              7,368               6,913

PROVISION FOR LOAN LOSSES                                                          60                135                 134
                                                                      ----------------   ----------------    ---------------

       Net Interest Income after Provision for Loan Losses                      7,396              7,233               6,779
                                                                      ----------------   ----------------    ---------------

NON-INTEREST  INCOME
   Fees and service charges                                                       338                322                 335
   Income from Bank Owned Life Insurance                                          162                156                  56
   Unrealized gain on trading securities                                           27                 14                   5
   Income from investment in real estate                                            -                 52                  51
   Other                                                                           76                 85                  70
                                                                      ----------------   ----------------    ---------------

       Total Non-Interest Income                                                  603                629                 517
                                                                      ----------------   ----------------    ---------------

NON-INTEREST EXPENSES
   Salaries and employee benefits                                               2,790              2,493               2,201
   Directors compensation                                                         307                280                 255
   Occupancy and equipment                                                        961                970                 849
   Service bureau fees                                                            502                496                 446
   Advertising                                                                    235                232                 213
   Loss from investment in real estate                                            120                  -                   -
   Other                                                                          848                961                 936
                                                                      ----------------   ----------------    ---------------

       Total Non-Interest Expenses                                              5,763              5,432               4,900
                                                                      ----------------   ----------------    ---------------

       Income before Income Taxes                                               2,236              2,430               2,396

INCOME TAXES                                                                      834                919                 948
                                                                      ----------------   ----------------    ---------------

       Net Income                                                            $  1,402           $  1,511            $  1,448
                                                                      ================   ================    ===============

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING, BASIC               10                 10                  10
   AND DILUTED
                                                                      ================   ================    ===============

EARNINGS PER SHARE - BASIC AND DILUTED                                        $140.20            $151.10             $144.80
                                                                      ================   ================    ===============

See notes to consolidated financial statements.
------------------------------------------------------------------------------------------------------------------------------------
                                       F-3







MSB FINANCIAL CORP. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

                                                                                                                 Total
                                                        Common           Paid-In            Retained         Stockholder's
                                                        Stock            Capital            Earnings             Equity
                                                   ---------------    ----------------   ----------------    ---------------
                                                                                (In Thousands)

                                                                                              
BALANCE - JUNE 30, 2003                                      $   -             $    -            $15,230             $15,230

     Issuance of common stock to MSB Financial,
         MHC                                                     1                199                  -                 200
     Initial funding of MSB Financial, MHC                       -                  -               (300)               (300)
     Net income                                                  -                  -              1,448               1,448
                                                   ---------------    ----------------   ----------------    ---------------

BALANCE - JUNE 30, 2004                                          1                199             16,378              16,578

     Net income                                                  -                  -              1,511               1,511
                                                   ---------------    ----------------   ----------------    ---------------

BALANCE - JUNE 30, 2005                                          1                199             17,889              18,089

     Net income                                                  -                  -              1,402               1,402
                                                   ---------------    ----------------   ----------------    ---------------

BALANCE - JUNE 30, 2006                                      $   1               $199            $19,291             $19,491
                                                   ===============    ================   ================    ===============

See notes to consolidated financial statements.
------------------------------------------------------------------------------------------------------------------------------------
                                       F-4





MSB FINANCIAL CORP. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                      Years Ended June 30,
                                                                      ------------------------------------------------------
                                                                           2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                                         (In Thousands)
                                                                                                  
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                $  1,402           $  1,511            $  1,448
   Adjustments to reconcile net income to net cash provided by
      operating activities:
         Net amortization (accretion) of securities premiums and
      discounts                                                                     1                  2                   2
         Net amortization of loan fees                                           (122)              (145)               (163)
         Depreciation and amortization expense                                    505                488                 439
         Provision for loan losses                                                 60                135                 134
         Earnings on bank owned life insurance                                   (162)              (156)                (56)
         Unrealized gain on trading securities                                    (27)               (14)                 (5)
         Realized loss on sale of investment in real estate                       110                  -                   -
         (Increase) in accrued interest receivable                               (262)              (115)                (35)
         Deferred income taxes                                                    (76)              (120)                (84)
         (Increase) decrease in other assets                                       22               (107)                 35
         Increase in other liabilities                                            118                360                  45
         Increase (decrease) in interest payable                                  (74)               (47)                  9
                                                                      ----------------   ----------------    ---------------

         Net Cash Provided by Operating Activities                              1,495              1,792               1,769
                                                                      ----------------   ----------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES Activity in held to maturity securities:
      Purchases                                                                     -                  -             (16,994)
      Maturities, calls and principal repayments                                  584              3,221              23,083
   Net increase in loans receivable                                           (31,067)           (18,568)            (30,089)
   Proceeds from sale of investment in real estate                                558                  -                   -
   Purchase of bank owned life insurance                                            -                  -              (3,500)
   Purchase of bank premises and equipment                                       (906)            (4,532)             (1,364)
   Purchase of Federal Home Loan Bank of New York stock                        (3,594)              (211)                (55)
   Redemptions of Federal Home Loan Bank of New York stock                      2,276                  -                   -
                                                                      ----------------   ----------------    ---------------

         Net Cash Used in Investing Activities                                (32,149)           (20,090)            (28,919)
                                                                      ----------------   ----------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in deposits                                         (2,176)             6,431              10,158
   Net increase in short-term borrowings                                       33,750                250               7,500
   Proceeds from long-term debt                                                     -             14,000                   -
   Repayments of long-term debt                                                  (764)              (555)                  -
   Increase in advance payments by borrowers for taxes and insurance               59                 38                  54
   Initial capitalization of mutual holding company                                 -                  -                (300)
   Sale of capital stock to mutual holding company                                  -                  -                 200
                                                                      ----------------   ----------------    ---------------

         Net Cash Provided by Financing Activities                             30,869             20,164              17,612
                                                                      ----------------   ----------------    ---------------

         Net Increase (Decrease) in Cash and Cash Equivalents                     215              1,866              (9,538)

CASH AND CASH EQUIVALENTS - BEGINNING                                           5,666              3,800              13,338
                                                                      ----------------   ----------------    ---------------

CASH AND CASH EQUIVALENTS - ENDING                                           $  5,881           $  5,666            $  3,800
                                                                      ================   ================    ===============

See notes to consolidated financial statements.
------------------------------------------------------------------------------------------------------------------------------------

                                       F-5





MSB FINANCIAL CORP. AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                      Years Ended June 30,
                                                                      ------------------------------------------------------
                                                                           2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                                         (In Thousands)

                                                                                                    
SUPPLEMENTARY CASH FLOWS INFORMATION
   Interest paid                                                             $  6,735           $  4,433            $  3,847
                                                                      ================   ================    ===============

   Income taxes paid                                                         $    967           $  1,015            $  1,098
                                                                      ================   ================    ===============

   Transfer of premises and equipment to investment in real estate           $      -           $    711            $      -
                                                                      ================   ================    ===============


See notes to consolidated financial statements.
------------------------------------------------------------------------------------------------------------------------------------
                                       F-6




MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - ORGANIZATION AND BUSINESS

On February 11, 2004,  the Board of Directors of Millington  Savings Bank ("MSB"
or the  Savings  Bank)  adopted  a Plan of  Reorganization  from a State  Mutual
Savings Bank to a State  Mutual  Savings  Bank  Holding  Company  (the  "Plan").
Pursuant to the Plan, the MSB reorganized as follows:

     (i)   The MSB  organized  MSB  Financial,  MHC  ("MHC"),  a Mutual  Holding
           Company;

     (ii)  The MHC organized MSB Financial Corp. ("SHC" or the Company), a stock
           holding company, as a wholly-owned subsidiary;

     (iii) The MHC  organized an interim  stock  savings bank  ("Interim")  as a
           wholly-owned subsidiary; and

     (iv)  The MSB  exchanged  its charter for a stock  savings bank charter and
           became  a  stock  savings  bank  (the  "Savings   Bank")  with  MSB's
           depositors receiving an interest in a liquidation account established
           in the Savings Bank and  constructively  receiving shares of stock in
           the  Savings  Bank  for  their  equity  interest  (i.e.,  voting  and
           liquidation rights) in MSB (the "Bank Conversion"). At the same time,
           Interim  merged with and into the Savings  bank. As part of the Plan,
           the Savings Bank's ownership interest in MHC was cancelled and all of
           the initially issued stock of the Savings Bank constructively held by
           the Savings Bank  stockholders was transferred to MHC in exchange for
           membership  interests in MHC. At the  conclusion of these steps,  the
           former  members  (i.e.,  the  depositors)  of MSB owned all of MHC by
           virtue  of their  membership  interests  in MHC,  MHC  owned  all the
           outstanding  stock of SHC, and SHC owned all of the outstanding stock
           of the Savings Bank.

The Plan was  approved  by the  Commissioner  of the New  Jersey  Department  of
Banking  and the  Office  of  Thrift  Supervision.  Additionally,  a  letter  of
non-objection was received from the Federal Deposit Insurance Corporation.

A special  meeting of depositors  of the MSB ("Special  Meeting") to approve the
Plan was held in accordance with New Jersey banking laws.

Following  the  completion  of the  Reorganization  on February  11,  2004,  all
depositors who had membership or liquidation  rights with respect to the Savings
Bank continue to have such rights solely with respect to the MHC as long as they
continue to hold deposit accounts with the Savings Bank.

Although SHC is authorized to issue stock to persons other than MHC, SHC has not
issued stock to such persons.  As of June 30, 2006, the MHC remains the owner of
100% of the issued and outstanding shares of the Company. Should stock be issued
to persons other than MHC in the future, the SHC will always be a majority-owned
subsidiary  of MHC as long as MHC is in existence.  See Note 17 for  information
regarding the stock issuance plan approved by the Board of Directors on July 17,
2006.

SHC and MHC are  authorized  to exercise all rights and powers  authorized  to a
corporation,  a bank holding  company and a New Jersey State mutual  savings and
loan holding company,  respectively,  subject to restrictions applicable to bank
holding  companies  and savings bank  holding  companies  under  federal and New
Jersey law.  Currently,  the only business activity of MHC is to hold all of the
outstanding stock of SHC and the only business activity of SHC is to hold all of
the outstanding stock of the Savings Bank.

The primary  business of the SHC is the  ownership  and operation of the Savings
Bank.  The Savings Bank is  principally  engaged in the  business of  attracting
deposits from the general public and using these  deposits,  together with other
funds, to purchase securities and to make loans secured by real estate.

--------------------------------------------------------------------------------
                                      F-7



MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidated Financial Statement Presentation

     The consolidated  financial  statements include the accounts of the Company
     and its wholly-owned subsidiaries,  the Savings Bank and Millington Savings
     Service Corp. (the "Service Corp."). All significant intercompany  accounts
     and transactions have been eliminated in consolidation.

     The consolidated financial statements have been prepared in conformity with
     accounting  principles  generally accepted in the United States of America.
     In preparing the consolidated financial statements,  management is required
     to make  estimates  and  assumptions  that affect the  reported  amounts of
     assets and  liabilities as of the dates of the  consolidated  statements of
     financial  condition  and revenues and expenses for the periods then ended.
     Actual results could differ significantly from those estimates.

     A material estimate that is particularly susceptible to significant changes
     relates to the  determination of the allowance for loan losses.  Management
     believes that the allowance for loan losses is adequate.  While  management
     uses available  information to recognize losses on loans,  future additions
     to the  allowance  for loan  losses  may be  necessary  based on changes in
     economic conditions in the Savings Bank's market area.

     In addition,  various  regulatory  agencies,  as an integral  part of their
     examination  process,  periodically review the Savings Bank's allowance for
     loan  losses.  Such  agencies  may require the  Savings  Bank to  recognize
     additions to the allowance for loan losses based on their  judgments  about
     information available to them at the time of their examination.

Cash and Cash Equivalents

     Cash and cash  equivalents  include  cash and amounts  due from  depository
     institutions  and  interest-bearing  deposits with  original  maturities of
     three months or less.

Securities

     Investments  in debt  securities  that the  Savings  Bank has the  positive
     intent and ability to hold to maturity are  classified as  held-to-maturity
     securities and reported at amortized cost. Debt and equity  securities that
     are bought and held principally for the purpose of selling them in the near
     term are classified as trading  securities and reported at fair value, with
     unrealized  holding gains and losses included in earnings.  Debt and equity
     securities  not classified as trading  securities  nor as  held-to-maturity
     securities are classified as available for sale  securities and reported at
     fair value,  with  unrealized  holding  gains or losses,  net of applicable
     income taxes, reported in a separate component of stockholder's equity.

     Individual  securities are considered impaired when fair value is less than
     amortized  cost.  Management  evaluates  on a  monthly  basis  whether  any
     securities   are   other-than-temporarily    impaired.   In   making   this
     determination,  we consider the extent and duration of the impairment,  the
     nature and  financial  health of the  issuer,  other  factors  relevant  to
     specific  securities,  and our ability and intent to hold  securities for a
     period of time sufficient to allow for any  anticipated  recovery in market
     value. If a security is determined to be  other-than-temporarily  impaired,
     an impairment loss is charged to operations.

     Discounts and premiums on securities are  accreted/amortized to maturity by
     use of the level-yield method. Gain or loss on sales of securities is based
     on the specific identification method.

--------------------------------------------------------------------------------
                                      F-8


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentration of Risk

     The Savings Bank's lending  activities are concentrated in loans secured by
     real estate located primarily in the State of New Jersey.

Loans Receivable

     Loans receivable are stated at unpaid principal balances less the allowance
     for loan losses and deferred loan fees. Loan  origination  fees and certain
     direct loan  origination  costs are deferred and  accreted/amortized  as an
     adjustment of yield over the contractual lives of the related loans.

     The Savings Bank  provides an allowance for  uncollected  interest on loans
     that are  contractually  delinquent  ninety days or more.  The allowance is
     established by a charge to interest income equal to all interest previously
     accrued.  Income is  subsequently  recognized  only to the extent that cash
     payments are received until such collections result in the reduction of the
     loan's  delinquent  status to under ninety days,  at which time the loan is
     returned to accrual status.

Allowance for Loan Losses

     An  allowance  for loan  losses is  maintained  at a level that  represents
     management's  best  estimate  of  losses  known  and  inherent  in the loan
     portfolio  that are both  probable and  estimable.  The  allowance for loan
     losses is  established  through a  provision  for loan  losses  charged  to
     operations.  The allowance is reduced by loans charged off and increased by
     recoveries,  if any, of amounts previously  charged off.  Management of the
     Savings Bank, in determining  the allowance for loan losses,  considers the
     risks  inherent in its loan  portfolio and changes in the nature and volume
     of its loan  activities,  along with the general  economic  and real estate
     market  conditions.  The Savings  Bank  utilizes a two tier  approach:  (1)
     identification  of  impaired  loans  and  establishment  of  specific  loss
     allowances  on such  loans;  and (2)  establishment  of  general  valuation
     allowances  on the  remainder  of its  loan  portfolio.  The  Savings  Bank
     maintains a loan review  system which  allows for a periodic  review of its
     loan portfolio and the early  identification  of potential  impaired loans.
     Such  system  takes into  consideration,  among other  things,  delinquency
     status,  size of loans,  type of collateral and financial  condition of the
     borrowers.  Specific loan loss  allowances are  established  for identified
     loans  based on a  review  of such  information  and/or  appraisals  of the
     underlying  collateral.  General  loan loss  allowances  are  based  upon a
     combination  of factors  including,  but not limited  to,  actual loan loss
     experience,  composition of the loan portfolio, current economic conditions
     and  management's  judgment.  Although  management  believes  that adequate
     specific and general loan loss  allowances are  established,  actual losses
     are  dependent  upon future events and, as such,  further  additions to the
     level of the loan loss allowance may be necessary.

     A loan  evaluated for  impairment is deemed to be impaired  when,  based on
     current  information and events,  it is probable that the Savings Bank will
     be unable to collect all amounts due according to the contractual  terms of
     the  loan  agreement.  All  loans  identified  as  impaired  are  evaluated
     independently.   The  Savings  Bank  does  not  aggregate  such  loans  for
     evaluation purposes.  Payments received on impaired loans are applied first
     to accrued interest receivable and then to principal.

Investment in Real Estate

     Investment in real estate consists of real property originally acquired for
     banking  operations and subsequently  used as rental  property.  Net income
     from operations is recorded in operations as earned.  Depreciation  charges
     are computed on the straight line method over the estimated  useful life of
     the property.

--------------------------------------------------------------------------------
                                      F-9


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Premises and Equipment

     Premises and  equipment  are  comprised of land,  at cost,  and  buildings,
     building   improvements,    furnishings   and   equipment   and   leasehold
     improvements,  at cost, less  accumulated  depreciation  and  amortization.
     Depreciation  and  amortization  charges are computed on the  straight-line
     method over the following estimated useful lives:

                                                                 Years
                                                         ---------------------
                 Building and improvements                      5 - 50
                 Furnishings and equipment                      3 - 15
                 Leasehold improvements                    Shorter of useful
                                                         life or term of lease

     Significant  renewals  and  betterments  are  charged to the  property  and
     equipment account. Maintenance and repairs are charged to operations in the
     year  incurred.  Rental  income is netted  against  occupancy  costs in the
     consolidated statements of income.

Bank Owned Life Insurance

     Bank owned life  insurance  is carried  at net cash  surrender  value.  The
     change in the net asset value is recorded  as a component  of  non-interest
     income.

Income Taxes

     The Company and its  subsidiaries  file a  consolidated  federal income tax
     return  with the MHC.  Federal  income  taxes  are  allocated  based on the
     contribution of their respective income or loss to the consolidated  income
     tax return. Separate state income tax returns are filed.

     Federal and state income taxes have been  provided on the basis of reported
     income.  The amounts  reflected on the income tax returns differ from these
     provisions  due  principally  to temporary  differences in the reporting of
     certain items of income and expense for financial  reporting and income tax
     reporting  purposes.  Deferred  income taxes are recorded to recognize such
     temporary differences.

Off-Balance Sheet Credit-Related Financial Instruments

     In the ordinary  course of business,  we enter into  commitments  to extend
     credit,  including  commitments  under  lines  of  credit.  Such  financial
     instruments are recorded when they are funded.

Business and Interest Rate Risk

     The  Company's  primary  business is the  ownership  and  operation  of the
     Savings Bank.  The Savings Bank is  principally  engaged in the business of
     attracting  deposits  from the  general  public and using  these  deposits,
     together with other funds, to purchase securities and to make loans secured
     by real estate.  The potential for interest-rate risk exists as a result of
     the generally  shorter  duration of the Savings  Bank's  interest-sensitive
     liabilities   compared   to   the   generally   longer   duration   of  its
     interest-sensitive  assets. In a rising rate environment,  liabilities will
     reprice faster than assets,  thereby reducing net interest income. For this
     reason, management regularly monitors the maturity structure of the Savings
     Bank's   assets  and   liabilities   in  order  to  measure  its  level  of
     interest-rate risk and to plan for future volatility.  The primary business
     of the Service Corp. is the ownership and operation of a single  commercial
     rental property.

--------------------------------------------------------------------------------
                                      F-10


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Reclassification

     Certain  amounts  for the  years  ended  June 30,  2005 and 2004  have been
reclassified to conform to the current year's presentation.


NOTE 3 - SECURITIES HELD TO MATURITY

The amortized  cost of securities  held to maturity and their  approximate  fair
values are summarized as follows:



                                                                           Gross              Gross
                                                       Amortized        Unrealized         Unrealized             Fair
                                                         Cost              Gains             Losses              Value
                                                   ---------------    ----------------   ----------------    ---------------
                                                                                (In Thousands)

                                                                                                
June 30, 2006:
     U.S. Government agencies                              $24,127              $   -               $854             $23,273
     Mortgage-backed securities                              3,580                 32                 64               3,548
                                                   ---------------    ----------------   ----------------    ---------------

                                                           $27,707                $32               $918             $26,821
                                                   ===============    ================   ================    ===============

June 30, 2005:
     U.S. Government agencies                              $24,133              $   1               $288             $23,846
     Mortgage-backed securities                              4,159                 92                  2               4,249
                                                   ---------------    ----------------   ----------------    ---------------

                                                           $28,292              $  93               $290             $28,095
                                                   ===============    ================   ================    ===============


All  mortgage-backed  securities  at June 30,  2006 and 2005 have been issued by
FNMA, FHLMC or GNMA.

The amortized  cost and estimated  fair value of securities  held to maturity at
June 30, 2006, by contractual  maturity,  are shown below.  Expected  maturities
will differ from contractual  maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.



                                                                                             Amortized           Fair
                                                                                               Cost              Value
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                      
          U.S. Government agencies:
               Due after one year through five years                                             $15,000             $14,449
               Due after five years through ten years                                              4,000               3,943
               Due thereafter                                                                      5,127               4,881
                                                                                         ----------------    ---------------

                                                                                                  24,127              23,273
          Mortgage-backed securities                                                               3,580               3,548
                                                                                         ----------------    ---------------

                                                                                                 $27,707             $26,821
                                                                                         ================    ===============


--------------------------------------------------------------------------------
                                      F-11


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3 - SECURITIES HELD TO MATURITY (CONTINUED)

There were no sales of securities  held to maturity  during the years ended June
30, 2006, 2005 and 2004. At June 30, 2006 and 2005,  securities held to maturity
with a carrying value of approximately $481,000 and $488,000, respectively, were
pledged to secure public funds on deposit.

The  following  table  shows  the  gross  unrealized  losses  and fair  value of
securities  in an  unrealized  loss  position,  and the length of time that such
securities have been in a continuous unrealized loss position:



                                    Less than 12 Months             More than 12 Months                   Total
                               ------------------------------  ------------------------------  -----------------------------
                                                   Gross                           Gross                          Gross
                                   Fair         Unrealized         Fair         Unrealized         Fair        Unrealized
                                   Value          Losses           Value          Losses           Value         Losses
                               --------------  --------------  --------------  --------------  -------------- --------------
                                                                      (In Thousands)

                                                                                             
June 30, 2006:
     U.S. Government
         agencies                     $1,044            $ 47         $22,192            $807         $23,236           $854
     Mortgage-backed
         securities                    1,113              63              80               1           1,193             64
                               --------------  --------------  --------------  --------------  -------------- --------------

                                      $2,157            $110         $22,272            $808         $24,429           $918
                               ==============  ==============  ==============  ==============  ============== ==============

June 30, 2005:
     U.S. Government
         agencies                     $    -            $  -         $22,712            $288         $22,712           $288
     Mortgage-backed
         securities                      214               1              58               1             272              2
                               --------------  --------------  --------------  --------------  -------------- --------------

                                      $  214            $  1         $22,770            $289         $22,984           $290
                               ==============  ==============  ==============  ==============  ============== ==============


At June 30, 2006,  management  concluded that the unrealized losses above (which
related to thirteen U.S.  Government Agency bonds and five Fannie Mae or Freddie
Mac  mortgage-backed  securities)  are  temporary  in nature  since they are not
related to the underlying  credit quality of the issuers and the Company has the
ability  and intent to hold these  securities  for a time  necessary  to recover
their cost. The losses above are primarily related to market interest rates.

--------------------------------------------------------------------------------
                                      F-12


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4 - LOANS RECEIVABLE

The composition of loans receivable at June 30, 2006 and 2005 is as follows:



                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                      
          Real estate mortgage:
               One-to-four family                                                               $120,921            $113,488
               Commercial                                                                         23,587              17,971
                                                                                         ----------------    ---------------

                                                                                                 144,508             131,459
                                                                                         ----------------    ---------------

          Real estate construction                                                                23,276              18,398
                                                                                         ----------------    ---------------

          Consumer:
               Deposit account                                                                     1,167               1,156
               Equity                                                                             49,257              38,291
               Automobile                                                                            464                 418
               Personal                                                                               77                  94
               Overdraft protection                                                                  153                 151
                                                                                         ----------------    ---------------

                                                                                                  51,118              40,110
                                                                                         ----------------    ---------------

          Commercial                                                                               5,497               4,029
                                                                                         ----------------    ---------------

                 Total Loans                                                                     224,399             193,996

          Loans in process                                                                        (4,968)             (5,719)
          Allowance for loan losses                                                                 (921)               (874)
          Deferred loan fees                                                                        (189)               (211)
                                                                                         ----------------    ---------------

                                                                                                $218,321            $187,192
                                                                                         ================    ===============


At June 30,  2006,  2005 and 2004,  loans  serviced by the Savings  Bank for the
benefit  of  others  totaled  approximately  $535,000,  $560,000  and  $583,000,
respectively.

The following  table  presents  changes in the allowance for loan losses for the
years ended June 30, 2006, 2005 and 2004:



                                                                           2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                                         (In Thousands)

                                                                                                   
          Balance, beginning                                                     $874               $742                $651
               Provision charged to operations                                     60                135                 134
               Loans charged off                                                  (17)                (3)                (45)
               Recoveries of loans previously charged off                           4                  -                   2
                                                                      ----------------   ----------------    ---------------

          Balance, ending                                                        $921               $874                $742
                                                                      ================   ================    ===============


--------------------------------------------------------------------------------
                                      F-13


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4 - LOANS RECEIVABLE (CONTINUED)


At and during the years  ended June 30, 2006 and 2005,  the Savings  Bank had no
loans that are considered to be impaired. Loans on which the accrual of interest
has been  discontinued  amounted to $424,000 and $2,328,000 at June 30, 2006 and
2005,  respectively.  During  the years  ended  June 30,  2006,  2005,  and 2004
$35,000,  $104,000,  and $78,000  respectively,  in interest was  collected  and
recognized on these loans.  During the years ended June 30, 2006, 2005, and 2004
had all such loans been  performing in  accordance  with their  original  terms,
interest income of $34,000,  $155,000,  and $118,000,  respectively,  would have
been  recognized.  The Savings Bank is not committed to lend additional funds on
these non-accrual loans.


NOTE 5 - PREMISES AND EQUIPMENT

The  components  of  premises  and  equipment  at June 30,  2006 and 2005 are as
follows:



                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                             
          Land                                                                                 $     671           $     671
          Buildings and improvements                                                               3,166               3,119
          Leasehold improvements                                                                   1,241               1,241
          Furnishings and equipment                                                                2,031               1,918
          Leasehold improvements/construction in process                                           4,680               3,934
                                                                                         ----------------    ---------------

                                                                                                  11,789              10,883
          Accumulated depreciation and amortization                                               (2,890)             (2,445)
                                                                                         ----------------    ---------------

                                                                                                $  8,899            $  8,438
                                                                                         ================    ===============


Depreciation  and  amortization   expense  on  premises  and  equipment  totaled
$445,000, $469,000, and $418,000 during the years ended June 30, 2006, 2005, and
2004, respectively.


NOTE 6 - ACCRUED INTEREST RECEIVABLE

The components of interest receivable at June 30, 2006 and 2005 are as follows:



                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                              
          Loans                                                                                   $1,047              $  791
          Securities held to maturity                                                                303                 297
                                                                                         ----------------    ---------------

                                                                                                  $1,350              $1,088
                                                                                         ================    ===============


--------------------------------------------------------------------------------
                                      F-14


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - DEPOSITS

Deposits  at  June  30,   2006  and  2005   consist  of  the   following   major
classifications:



                                                                  2006                                 2005
                                                   ---------------------------------    ---------------------------------
                                                                          Average                              Average
                                                       Amount              Rate            Amount               Rate
                                                   ---------------     -------------    ---------------     -------------
                                                                            (Dollars in Thousands)

                                                                                                
          Non-interest bearing demand                     $  9,135            -   %            $  8,421            -   %
          NOW                                               26,968         0.95                  30,325         0.88
          Super NOW                                          1,339         1.00                   2,376         1.00
          Savings and club                                  42,696         1.49                  48,916         1.22
          Money market demand                                2,589         1.15                   3,057         1.15
          Certificates of deposit                          112,028         4.15                 103,836         3.30
                                                   ---------------                      ---------------

                                                          $194,755         2.87   %            $196,931         2.21   %
                                                   ===============                      ===============


A summary of  certificates of deposit by maturity at June 30, 2006 is as follows
(in thousands):




                                                                                
                            Year ended June 30:
                                 2007                                                 $ 76,463
                                 2008                                                   19,382
                                 2009                                                    3,784
                                 2010                                                    1,729
                                 2011                                                      666
                                 Thereafter                                             10,004
                                                                               ----------------

                                                                                      $112,028
                                                                               ================


The aggregate  amount of certificates of deposit with a minimum  denomination of
$100,000  was   $37,208,000   and   $32,323,000  at  June  30,  2006  and  2005,
respectively.  Generally, deposits in excess of $100,000 are not insured by  the
FDIC.

A summary of interest  expense for the years ended June 30, 2006,  2005 and 2004
is as follows:



                                                                           2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                                         (In Thousands)

                                                                                                    
          Demand                                                               $  329             $  334              $  319
          Savings and club                                                        568                604                 597
          Certificates of deposit                                               4,098              3,025               2,892
                                                                      ----------------   ----------------    ---------------

                                                                               $4,995             $3,963              $3,808
                                                                      ================   ================    ===============


--------------------------------------------------------------------------------
                                      F-15


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8 - ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK

The Savings Bank has various credit  facilities with the Federal Home Loan Bank,
which  expire  on July 31,  2006,  and  provide  borrowings  up to  $56,163,000.
Short-term  borrowings against this facility totaled  $41,500,000 and $7,750,000
as of June 30, 2006 and 2005,  respectively.  The  interest  rate on  short-term
borrowings  at June  30,  2006  and  2005 was  5.42%  and  3.49%,  respectively.
Long-term  debt due to the  Federal  Home Loan  Bank at June 30,  2006 and 2005,
consisted of the following:




                                                                              Fixed
                                                                            Interest
                                 Maturity                                     Rate             2006                2005
-------------------------------------------------------------------       ------------   ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                        
          August 11, 2009                                                      3.60   %          $ 2,681             $ 3,445
          December 30, 2009                                                    4.25                5,000               5,000
          June 1, 2010                                                         4.28                5,000               5,000
                                                                                         ----------------    ---------------

                                                                               4.12   %          $12,681             $13,445
                                                                                         ================    ===============


The advances are secured by a blanket  assignment  of unpledged  and  qualifying
mortgage loans.


NOTE 9 - LEASE COMMITMENTS AND TOTAL RENTAL EXPENSE

The Savings Bank leases two branch locations under long-term  operating  leases.
Future minimum lease payments by year and in the aggregate, under noncancellable
operating leases with initial or remaining terms of one year or more,  consisted
of the following at June 30, 2006 (in thousands):



                                                                       
                            2007                                                        $  237
                            2008                                                           237
                            2009                                                           237
                            2010                                                           237
                            2011                                                           237
                            Thereafter                                                     566
                                                                               ----------------

                                                                                        $1,751
                                                                               ================


The  minimum  payments  have not been  reduced  by minimum  sublease  rentals of
$579,000 due in the future under noncancellable subleases.

The total rental expense for all leases for the years ended June 30, 2006, 2005,
and 2004 was approximately $242,000, $237,000, and $192,000 respectively.


--------------------------------------------------------------------------------
                                      F-16


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - INCOME TAXES

The income tax provision  consists of the following for the years ended June 30,
2006, 2005 and 2004:



                                                                           2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                                         (In Thousands)

                                                                                                   
          Current:
               Federal                                                           $701             $  805              $  799
               State                                                              209                233                 233
                                                                      ----------------   ----------------    ---------------

                                                                                  910              1,038               1,032
                                                                      ----------------   ----------------    ---------------

          Deferred:
               Federal                                                            (57)               (93)                (65)
               State                                                              (19)               (26)                (19)
                                                                      ----------------   ----------------    ---------------

                                                                                  (76)              (119)                (84)
                                                                      ----------------   ----------------    ---------------

                                                                                 $834             $  919              $  948
                                                                      ================   ================    ===============


A  reconciliation  of the statutory  federal  income tax at a rate of 34% to the
income tax expense  included in the statements of income at June 30, 2006,  2005
and 2004 is as follows:



                                                  2006                        2005                        2004
                                        -------------------------   -------------------------   -------------------------
                                                         % of                        % of                        % of
                                                        Pretax                      Pretax                      Pretax
                                            Amount      Income         Amount       Income         Amount       Income
                                        ------------  -----------   ------------  -----------   ------------- -----------
                                                                      (Dollars in Thousands)

                                                                                           
Federal income tax at statutory rate           $760       34.0   %         $826       34.0   %         $815       34.0   %
State tax, net of federal benefit               125        5.6              137        5.6              141        5.9
Other                                           (51)      (2.3)             (44)      (1.8)              (8)      (0.3)
                                        ------------  -----------   ------------  -----------   ------------- -----------

                                               $834       37.3   %         $919       37.8   %         $948       39.6   %
                                        ============  ===========   ============  ===========   ============= ===========




--------------------------------------------------------------------------------
                                      F-17


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - INCOME TAXES (CONTINUED)

The  components  of the net  deferred tax asset at June 30, 2006 and 2005 are as
follows:



                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                     
          Deferred tax assets:
               Depreciation                                                                        $  39               $  26
               Allowance for loan losses                                                             368                 349
               Uncollected interest                                                                    7                  45
               Benefit plans                                                                         326                 251
               Debit card loss                                                                        12                   5
                                                                                         ----------------    ---------------

                                                                                                     752                 676
          Deferred tax liabilities                                                                     -                   -
                                                                                         ----------------    ---------------

                 Net Deferred Tax Asset                                                             $752                $676
                                                                                         ================    ===============


Retained  earnings  include  $1,466,000 at June 30, 2006 and 2005,  for which no
provision for income tax has been made. These amounts  represent  deductions for
bad  debt  reserves  for  tax  purposes  which  were  only  allowed  to  savings
institutions  which met certain  definitional  tests  prescribed by the Internal
Revenue Code of 1986, as amended.  The Small Business Job Protection Act of 1996
eliminated the special bad debt deduction  granted solely to thrifts.  Under the
terms of the Act,  there  would be no  recapture  of the  pre-1988  (base  year)
reserves.  However,  these pre-1988 reserves would be subject to recapture under
the rules of the  Internal  Revenue  Code if the Savings Bank itself pays a cash
dividend in excess of earnings and profits, or liquidates. The Act also provides
for the recapture of deductions arising from "applicable excess reserve" defined
as the total amount of reserve over the base year  reserve.  The Savings  Bank's
total  reserve  exceeds  the base year  reserve  and  deferred  taxes  have been
provided for this excess.

--------------------------------------------------------------------------------
                                      F-18


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 11 - BENEFIT PLANS

Directors' Retirement Plan

     The Savings Bank has a directors'  retirement plan, which provides that any
     director  meeting  specified  age and service  requirements  may retire and
     continue to be paid. This plan is unfunded.

     The  following  table sets forth the plan's  funded status and activity for
the years ended June 30, 2006 and 2005:



                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                               (Dollars In Thousands)
                                                                                                     
          Actuarial present value of benefit obligations                                            $563                $525
                                                                                         ================    ===============

          Projected benefit obligation - beginning                                                  $600                $468
               Service cost                                                                           21                  16
               Interest cost                                                                          36                  31
               Actuarial loss                                                                          1                  11
               Annuity payment                                                                       (24)                (24)
               Plan amendment                                                                          -                  98
                                                                                         ----------------    ---------------

          Projected benefit obligation - ending                                                     $634                $600
                                                                                         ================    ===============

          Plan assets at fair value - beginning                                                     $  -                $  -
               Employer contribution                                                                  24                  24
               Settlements/payments                                                                  (24)                (24)
                                                                                         ----------------    ---------------

          Plan assets at fair value - ending                                                        $  -                $  -
                                                                                         ================    ===============

          Projected benefit obligation in excess of fair value                                      $634                $600
               Unrecognized loss                                                                       2                   2
               Unrecognized past service liability                                                   (86)               (133)
               Amount contributed in the fourth quarter                                               (6)                 (6)
                                                                                         ----------------    ---------------

          Accrued pension cost included in other liabilities                                        $544                $463
                                                                                         ================    ===============

          Assumptions:
               Discount rate                                                                        6.25%               6.13%
               Fee increase                                                                         3.25%               3.25%


--------------------------------------------------------------------------------
                                      F-19


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 11 - BENEFIT PLANS (CONTINUED)

Directors' Retirement Plan (Continued)

Net periodic  pension  cost for the years ended June 30, 2006 and 2005  included
the following:



                                                                                    2006            2005           2004
                                                                                -------------   -------------   ------------
                                                                                          (Dollars In Thousands)

                                                                                                       
          Service cost                                                                $  21             $16             $13
          Interest cost                                                                  36              31              28
          Amortization of unrecognized past service liability                            47              40              36
                                                                                -------------   -------------   ------------

          Net periodic plan cost                                                       $104             $87             $77
                                                                                =============   =============   ============

          Assumptions:
               Discount rate                                                           6.13%         6.13%             6.25%
               Fee increase                                                            3.25%         3.25%              N/A


The Savings  Bank's  contribution  and benefits paid amounted to $24,000 for the
years ended June 30, 2006 and 2005.

For the year ended June 30,  2007,  the  Savings  Bank's  expects to  contribute
$27,000 to the plan.

Estimated  future  benefit  payments  for years  ending June 30,  which  reflect
expected future service, as appropriate, are as follows (in thousands):



                                                                                 
                            2007                                                         $  27
                            2008                                                            36
                            2009                                                            47
                            2010                                                            45
                            2011                                                            62
                            2012 - 2016                                                    408


Executive Incentive Retirement Plan

     The  Savings  Bank  has  an  unfunded,  non-qualified  executive  incentive
     retirement  plan  covering all eligible  executives.  The plan provides for
     either a lump sum payment or equal annual  installments  for a period of 15
     years  commencing  on the first day of the  calendar  month  following  the
     termination  of employment due to  retirement,  resignation,  disability or
     death. The amount payable is based on the vested balance of the executive's
     accumulated  awards  plus  interest.  The annual  awards are based upon the
     executive's base salary in effect at the beginning of the plan year and the
     Savings Bank's net income for the prior fiscal year. The percentage  vested
     is based on the sum of the executive's  age and years of service.  The plan
     expense for the year ended June 30, 2006, 2005, and 2004 was  approximately
     $103,000, $63,000 and $29,000, respectively. The unfunded liability totaled
     approximately $195,000 and $92,000 at June 30, 2006 and 2005, respectively.

--------------------------------------------------------------------------------
                                      F-20


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - BENEFIT PLANS (CONTINUED)


401(k) Savings and Profit Sharing Plan

The Savings Bank sponsors a savings and profit sharing plan, pursuant to Section
401(k) of the Internal Revenue Code, for all eligible employees.  The plan has a
profit  sharing  component  paid  annually  by the  Savings  Bank of 11% of each
eligible employee's compensation. Employees may also elect to defer up to 80% of
their  compensation,  not to exceed applicable limits under federal tax law. The
Savings Bank will match 50% of the first 6% of the employee's salary deferral up
to a maximum of 3% of each employee's compensation. The Plan expense amounted to
approximately $220,000, $185,000 and $188,000 for the years ended June 30, 2006,
2005, and 2004, respectively.


NOTE 12 - TRANSACTIONS WITH OFFICERS AND DIRECTORS

The Savings  Bank has had,  and may be  expected to have in the future,  banking
transactions  in the ordinary  course of business with its officers,  directors,
their immediate  families,  and affiliated  companies  (commonly  referred to as
related parties), on the same terms, including interest rates and collateral, as
those  prevailing at the time for  comparable  transactions  with others.  These
persons were  indebted to the Savings  Bank for loans  totaling  $5,427,000  and
$4,427,000 at June 30, 2006 and 2005,  respectively.  During 2006, $2,080,000 of
new loans and $1,080,000 of repayments were made.


NOTE 13 - REGULATORY CAPITAL

The  Savings  Bank  is  subject  to  various  regulatory  capital   requirements
administered  by Federal and State  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  Savings  Bank's  financial  statements.  Under  capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
the Savings Bank must meet specific capital guidelines that involve quantitative
measures   of   the   Savings   Bank's   assets,   liabilities,    and   certain
off-balance-sheet items as calculated under regulatory accounting practices. The
Savings  Bank's  capital  amounts  and   classification   are  also  subject  to
qualitative  judgments by the regulators about components,  risk weighting,  and
other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Savings  Bank to maintain  minimum  amounts and ratios (set forth in
the table  below) of  tangible,  core and  risk-based  capital as defined in the
regulations. Management believes, as of June 30, 2006 and 2005, that the Savings
Bank met all capital adequacy requirements to which it is subject.

As of  January  18,  2006,  the most  recent  notification  from the  regulators
categorized the Savings Bank as well capitalized under the regulatory  framework
for prompt corrective action. To be categorized as well capitalized, the Savings
Bank must maintain minimum core, Tier 1 risk-based and total  risk-based  ratios
as set  forth in the  table.  There  are no  conditions  or  events  since  that
notification that management believes have changed the institution's category.

--------------------------------------------------------------------------------
                                      F-21


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 13 - REGULATORY CAPITAL (CONTINUED)

The  following  tables  present  a  reconciliation  of  capital  per  accounting
principles  generally  accepted  in the United  States of America  ("GAAP")  and
regulatory  capital and  information  as to the Savings Bank's capital levels at
the dates presented:



                                                                                                      June 30,
                                                                                         -----------------------------------
                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                      
          GAAP capital                                                                           $19,292             $17,890
          Investment in subsidiary                                                                  (180)               (181)
                                                                                         ----------------    ---------------

          Core and tangible capital                                                               19,112              17,709
          General valuation allowance                                                                921                 874
                                                                                         ----------------    ---------------

                                                                                                 $20,033             $18,583
                                                                                         ================    ===============




                                                                                                         To be Well
                                                                                                      Capitalized under
                                                                         For Capital Adequacy         Prompt Corrective
                                                        Actual                  Purposes              Action Provisions
                                                Amount         Ratio       Amount        Ratio        Amount       Ratio
                                              ----------      -------   -----------     -------     ----------    -------
                                                                         (Dollars In Thousands)

                                                                                               
June 30, 2006:
     Tangible                                  $19,112          7.19%   $=> 3,987       =>1.50%           N/A         N/A
     Core (leverage)                            19,112          7.19     =>10,632       =>4.00      $=>13,290     => 5.00%
     Tier 1 risk-based                          19,112         10.49          N/A          N/A       =>10,933     => 6.00
     Total risk-based                           20,033         10.99     =>14,577       =>8.00       =>18,222     =>10.00

June 30, 2005:
     Tangible                                  $17,709          7.58%   $=> 3,502       =>1.50%           N/A         N/A
     Core (leverage)                            17,709          7.58     => 9,339       =>4.00      $=>11,674     => 5.00%
     Tier 1 risk-based                          17,709         11.51          N/A          N/A       => 9,234     => 6.00
     Total risk-based                           18,583         12.07     =>12,312       =>8.00       =>15,390     =>10.00


NOTE 14 - COMMITMENTS AND CONTINGENCIES

The Savings Bank is a 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 extend credit and letters of
credit. Such commitments  involve,  to varying degrees,  elements of credit, and
interest  rate risk in excess of the  amount  recognized  in the  statements  of
financial condition.

--------------------------------------------------------------------------------
                                      F-22


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 14 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

The Savings Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial  instrument  for  commitments  to extend credit and
letters of credit is represented by the contractual amount of those instruments.
The  Savings  Bank  uses the same  credit  policies  in making  commitments  and
conditional obligations as it does for on-balance-sheet instruments.

At June 30, 2006 and 2005, the following financial  instruments were outstanding
whose contract amounts represent credit risk:



                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)

                                                                                                      
          Commitments to grant loans                                                             $ 2,979             $ 7,017
          Unfunded commitments under lines of credit                                              26,546              22,974
          Standby letters of credit                                                                  108                 255
                                                                                         ----------------    ---------------

                                                                                                 $29,633             $30,246
                                                                                         ================    ===============


At June 30, 2006, the  commitments  to grant loans included  $2,479,000 of fixed
rate mortgage loans with interest rates ranging from 5.75% to 9.00% and $500,000
of variable rate  construction  loans with an initial interest rate ranging from
8.25% to 9.00%.  Of the unfunded  commitments  under lines of credit at June 30,
2006,  $23,806,000  was available  under a homeowner's  equity lending  program,
$634,000  was  available  under an  overdraft  protection  lending  program  and
$2,106,000 was available under commercial lines of credit.  Amounts  outstanding
under these programs were assessed  interest  ranging from 0.50% below the prime
rate to 4.00% over the prime rate.  At June 30, 2006,  amounts  drawn on standby
letters of credit  were  assessed  rates of 2.00% over rate being  earned on the
passbook collateralizing the credit.

At June 30, 2005, the  commitments  to grant loans included  $4,817,000 of fixed
rate  mortgage  loans  with  interest  rates  ranging  from  4.63% to 6.88%  and
$2,200,000 of variable rate construction  loans with an initial interest rate of
6.75%.  Of the  unfunded  commitments  under  lines of credit at June 30,  2005,
$20,586,000 was available under a homeowner's  equity lending program,  $558,000
was available under an overdraft  protection  lending program and $1,830,000 was
available under  commercial  lines of credit.  Amounts  outstanding  under these
programs were assessed interest ranging from 2.00% below the prime rate to 5.00%
over the prime  rate.  At June 30,  2005,  amounts  drawn on standby  letters of
credit were assessed  rates ranging from 1.00% over the prime rate of 1.50% over
the prime rate.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since many of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent future cash  requirements.  The Savings Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained,  if
deemed  necessary  by the Savings  Bank upon  extension  of credit,  is based on
management's  credit  evaluation.  Collateral held varies but primarily includes
residential and income-producing commercial real estate properties.

--------------------------------------------------------------------------------
                                      F-23


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Standby letters of credit are conditional commitments issued by the Savings Bank
to guarantee  the  performance  of a customer to a third party.  The credit risk
involved in issuing  letters of credit is essentially  the same as that involved
in  extending  other loan  commitments.  The Savings  Bank  requires  collateral
supporting these letters of credit when deemed  necessary.  Management  believes
that the proceeds  obtained  through a liquidation of such  collateral  would be
sufficient to cover the maximum  potential  amount of future  payments  required
under the corresponding  guarantees.  The amount of the liability as of June 30,
2006 and 2005 for  guarantees  under  standby  letters  of credit  issued is not
material.


NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial  instrument  is defined as the amount at which the
instrument could be exchanged in a current  transaction between willing parties,
other than a forced liquidation sale. Significant  estimations were used for the
purposes of this  disclosure.  Estimated fair values have been determined  using
the best available data and estimation methodology suitable for each category of
financial instruments.  However, there are inherent weaknesses in any estimation
technique.  Therefore,  for  substantially all financial  instruments,  the fair
value estimates herein are not necessarily indicative of the amounts the Savings
Bank could have  realized in a sales  transaction  on the dates  indicated.  The
estimated  fair value  amounts have been  measured as of their  respective  year
ends, and have not been  reevaluated or updated for purposes of these  financial
statements  subsequent to those  respective  dates.  As such, the estimated fair
values of these  financial  instruments  subsequent to the respective  reporting
dates may be different than the amounts reported at each year end.

The following  information  should not be interpreted as an estimate of the fair
value of the entire Savings Bank since a fair value calculation is only provided
for a limited  portion of the Savings  Bank's assets and  liabilities.  Due to a
wide range of valuation techniques and the degree of subjectivity used in making
the estimates,  comparisons between the Savings Bank's disclosures, and those of
other  companies may not be meaningful.  The fair value  estimates,  methods and
assumptions for financial instruments are set forth below.

Cash and Cash Equivalents

     For cash and cash equivalents, the carrying amount is a reasonable estimate
of fair value.

Securities Held to Maturity and Trading Securities

     The fair values for securities held to maturity and trading  securities are
     based on quoted market prices, where available. If quoted market prices are
     not  available,  fair value is  estimated  using quoted  market  prices for
     similar securities.

Loans Receivable

     The fair value of loans receivable is estimated by discounting  future cash
     flows,  using the  current  rates at which  similar  loans would be made to
     borrowers   with  similar   credit  ratings  and  for  the  same  remaining
     maturities, of such loans.

Federal Home Loan Bank Stock

     The  carrying  amount of  Federal  Home Loan Bank stock  approximates  fair
value.

--------------------------------------------------------------------------------
                                      F-24


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Accrued Interest Receivable and Payable

     The carrying amount of accrued interest receivable and payable approximates
fair value.

Deposits

     Fair values for demand deposits, savings accounts and club accounts are, by
     definition,  equal to the amount  payable on demand at the reporting  date.
     Fair values of fixed-maturity certificates of deposit are estimated using a
     discounted  cash flow  calculation  that applies  interest rates  currently
     being offered on similar instruments with similar maturities.

Short-Term Borrowings and Long-term Debt

     Fair  values  of  borrowings  are  estimated  using  discounted  cash  flow
     analyses,  based on  rates  currently  available  to the  Savings  Bank for
     advances  from the Federal Home Loan Bank with similar  terms and remaining
     maturities.

Off-Balance Sheet Financial Instruments

     Fair values of  commitments  to extend credit are estimated  using the fees
     currently  charged to enter into  similar  agreements,  taking into account
     market  interest  rates,  the  remaining  terms,  and  the  present  credit
     worthiness of the counterparties.

     As of June 30, 2006 and 2005,  the fair value of the  commitments to extend
credit were not considered to be material.

The carrying  amounts and estimated fair values of the Savings Bank's  financial
instruments at June 30,2006 and 2005 are as follows:







                                                                      2006                               2005
                                                           ----------------------------       -----------------------------
                                                           Carrying      Estimated Fair       Carrying       Estimated Fair
                                                            Amount            Value            Amount            Value
                                                           --------      --------------       --------       --------------
                                                                                  (In Thousands)

                                                                                                   
Financial assets:
     Cash and cash equivalents                                 $  5,881         $  5,881          $  5,666          $  5,666
     Trading securities                                             109              109                82                82
     Securities held to maturity                                 27,707           26,821            28,292            28,095
     Loans receivable                                           218,321          212,546           187,192           186,291
     Federal Home Loan Bank stock                                 2,821            2,821             1,503             1,503
     Accrued interest receivable                                  1,350            1,350             1,088             1,088

Financial liabilities:
     Deposits                                                   194,755          193,902           196,931           196,910
     Advances from Federal Home Loan Bank
         of New York                                             54,181           53,596            21,195            21,140
     Accrued interest payable                                       114              114               186               186



--------------------------------------------------------------------------------
                                      F-25


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16 - PARENT ONLY FINANCIAL STATEMENTS



                                             Statements of Financial Condition
                                                                                                      June 30,
                                                                                         -----------------------------------
                                                                                              2006                2005
                                                                                         ----------------    ---------------
                                                                                                   (In Thousands)
                                            ASSETS
                                                                                                      
          Cash and due from banks                                                                $   199             $   199
          Investment in subsidiaries                                                              19,292              17,890
                                                                                         ----------------    ---------------

                 Total Assets                                                                    $19,491             $18,089
                                                                                         ================    ===============

                                     STOCKHOLDER'S EQUITY
          Stockholder's equity:
               Common stock                                                                            1                   1
               Paid-in capital                                                                       199                 199
               Retained earnings                                                                  19,291              17,889
                                                                                         ----------------    ---------------

                 Total Stockholder's Equity                                                      $19,491             $18,089
                                                                                         ================    ===============




                                                   Statements of Income
                                                                                       Year Ended June 30,
                                                                      ------------------------------------------------------
                                                                           2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                                         (In Thousands)

                                                                                                    
          Dividend from savings bank                                           $    -             $    -              $  200
          Equity in undistributed earnings of subsidiaries                      1,402              1,512               1,248
                                                                      ----------------   ----------------    ---------------

                 Income Before Income Taxes                                     1,402              1,512               1,448

          Income tax expense                                                        -                  1                   -
                                                                      ----------------   ----------------    ---------------

                 Net Income                                                    $1,402             $1,511              $1,448
                                                                      ================   ================    ===============


--------------------------------------------------------------------------------
                                      F-26


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 16 - PARENT ONLY FINANCIAL STATEMENTS (CONTINUED)




                                                 Statements of Cash Flows
                                                                                       Year Ended June 30,
                                                                      ------------------------------------------------------
                                                                           2006               2005                2004
                                                                      ----------------   ----------------    ---------------
                                                                                         (In Thousands)

                                                                                                   
          CASH FLOWS FROM OPERATING ACTIVITIES
               Net income                                                      $1,402             $1,511              $1,448
               Adjustments to reconcile net income to net cash
               provided by operating activities:
                   Equity in undistributed earnings of
                        subsidiaries                                           (1,402)            (1,512)             (1,248)
                                                                      ----------------   ----------------    ---------------

                 Net Cash Provided by (Used in) Operating
                     Activities                                                     -                 (1)                200
                                                                      ----------------   ----------------    ---------------

          CASH FLOWS USED IN OPERATING ACTIVITIES
               Purchase of common stock of savings bank                             -                  -                (200)
                                                                      ----------------   ----------------    ---------------

          CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
               Proceeds from sale of common stock to MHC                            -                  -                 200
                                                                      ----------------   ----------------    ---------------

                 Net Increase (Decrease) in Cash and Cash
                     Equivalents                                                    -                 (1)                200

          CASH AND CASH EQUIVALENTS - BEGINNING                                   199                200                   -
                                                                      ----------------   ----------------    ---------------

          CASH AND CASH EQUIVALENTS - ENDING                                  $   199            $   199             $   200
                                                                      ================   ================    ===============


NOTE 17 - STOCK OFFERING

On July 17, 2006,  the Board of  Directors of the MHC,  Company and Savings Bank
adopted a plan of stock issuance  pursuant to which the Company will sell common
stock  representing a minority ownership of the estimated pro forma market value
of the  Company,  which  will be  determined  by an  independent  appraisal,  to
eligible depositors of the Bank in a subscription offering and, if necessary, to
the  general  public of the  community  and/or  in a  syndicated  offering.  The
majority of the common  stock will  continue to be owned by the MHC. The Plan is
subject to approval of the Office of Thrift Supervision.

Cost incurred in  connection  with the offering will be recorded as reduction of
the proceeds from  offering.  If the  transaction is not  consummated,  all cost
incurred in connection with the transaction will be expensed.  At June 30, 2006,
no offering costs had been incurred.


--------------------------------------------------------------------------------
                                      F-27


MSB FINANCIAL CORP. AND SUBSIDIARIES
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 18 - RECENT ACCOUNTING PRONOUNCEMENTS

Accounting for Stock-Based Payments

     In December 2004,  the Financial  Accounting  Standards  Board (the "FASB")
     issued SFAS No. 123 (revised 2004),  "Share-Based  Payment." This statement
     revises the  original  guidance  contained  in SFAS No. 123 and  supersedes
     Accounting  Principles Board ("APB") Opinion No. 25,  "Accounting for Stock
     Issued to Employees," and its related implementation  guidance.  Under SFAS
     No. 123  (revised  2004),  an entity  such as the Bank will be  required to
     measure the cost of employee services received in exchange for any award of
     equity  instruments  made after June 30, 2006, based on the grant-date fair
     value of the award (with limited  exceptions)  and recognize such cost over
     the period  during  which an employee  is  required  to provide  service in
     exchange for the award (usually the vesting period).  For stock options and
     similar  instruments,   grant-date  fair  value  will  be  estimated  using
     option-pricing   models   adjusted  for  the  unique   characteristics   of
     instruments  (unless  observable  market  prices  for the  same or  similar
     instruments are  available).  SFAS No. 123 (revised 2004) will not have any
     effect on the Company's  existing  historical  financial  statements as the
     Company  has  not  had  and  does  not  currently   have  any   stock-based
     compensation  grants which would be subject to SFAS No. 123 (revised 2004).
     However,  should the Company grant stock compensation awards in the future,
     any such awards will require the recording of compensation expense.

Accounting Changes and Error Corrections

     In May 2005,  the FASB issued SFAS No. 154,  "Accounting  Changes and Error
     Corrections." The Statement requires retroactive application of a voluntary
     change in accounting  principle to prior period financial statements unless
     it is impracticable.  SFAS No. 154 also requires that a change in method of
     depreciation,  amortization,  or depletion  for  long-lived,  non-financial
     assets be accounted for as a change in accounting estimate that is affected
     by a change in accounting principle.  SFAS No. 154 replaces APB Opinion 20,
     "Accounting  Changes," and SFAS 3, "Reporting Accounting Changes in Interim
     Financial  Statements."  SFAS No.  154  will be  effective  for  accounting
     changes and  corrections  of errors made in fiscal  years  beginning  after
     December 15,  2005.  Management  currently  believes  that  adoption of the
     provisions of SFAS No. 154 will not have a material impact on the Company's
     consolidated financial statements.

--------------------------------------------------------------------------------
                                      F-28





You should rely only on the information  contained in this document. We have not
authorized  anyone to  provide  you with  information  that is  different.  This
document does not constitute an offer to sell, or the  solicitation  of an offer
to buy, any of the securities  offered hereby to any person in any  jurisdiction
in which  the  offer or  solicitation  would be  unlawful.  The  affairs  of MSB
Financial  Corp.  and  its  subsidiaries  may  change  after  the  date  of this
prospectus.  Delivery of this  document  and the sales of shares made  hereunder
does not mean otherwise.





                               MSB Financial Corp.
                   Holding Company for Millington Savings Bank



                     Up to 2,199,375 Shares of Common Stock
                 (Subject to Increase to Up to 2,529,281 Shares)





                                  -------------

                                   PROSPECTUS

                                  -------------






                             Keefe, Bruyette & Woods





                                  -------------





Until the later of  ____________,  2006,  or 25 days after  commencement  of the
syndicated community offering, if any, whichever is later, all dealers effecting
transactions in these securities, whether or not participating in this offering,
may be required  to deliver a  prospectus.  This is in addition to the  dealers'
obligation to deliver a prospectus when acting as underwriters  and with respect
to their unsold allotments or subscriptions.




                 PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 16.          Exhibits and Financial Statement Schedules.

         The exhibits and financial  statement  schedules  filed as part of this
Registration Statement are as follows:

         (a) Exhibits:


             
         1        Form of Sales Agency Agreement with Keefe Bruyette & Woods, Inc.*
         2        Plan of Stock Issuance*
         3.1      Charter of MSB Financial Corp.*
         3.2      Bylaws of MSB Financial Corp.*
         4        Specimen Stock Certificate of MSB Financial Corp.*
         5        Opinion of Malizia Spidi & Fisch, PC regarding legality of securities registered*
         8.1      Federal Tax Opinion of Malizia Spidi & Fisch, PC*
         8.2      State Tax Opinion of Beard Miller Company LLP*
         10.1     Employment Agreement with Gary T. Jolliffe*
         10.2     Employment Agreement with Michael A. Shriner*
         10.3     Employment Agreement with Jeffrey E. Smith*
         10.4     Form of Executive Life Insurance Agreement*
         10.5     Millington Savings Bank Executive Incentive Retirement Plan Agreement for President
                  and Chief Executive Officer*
         10.6     Millington Savings Bank Executive Incentive Retirement Plan Agreement for the
                  Benefit of Senior Officers*
         10.7     Millington Savings Bank Directors Consultation and Retirement Plan*
         23.1     Consent of Beard Miller Company LLP
         23.2     Consent of RP Financial, LC*
         23.3     Consent of Malizia Spidi & Fisch, PC (contained in its opinions filed as Exhibits 5 and
                  8.1)
         24       Power of Attorney (set forth on the signature  page)*
         99.1     Letter of RP  Financial, LC as to the value of subscription rights*
         99.2     Conversion Valuation Appraisal Report prepared by RP Financial, LC*
         99.3     Marketing Materials*
         99.4     Stock Order Form*

______________
*        Previously filed.

                                      II-1



                                   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 Millington, New Jersey
on November 9, 2006.

                                       MSB FINANCIAL CORP.

                                       By: /s/Gary T. Jolliffe
                                           -------------------------------------
                                           Gary T. Jolliffe
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)


         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
registration  statement  has been signed below by the  following  persons in the
capacities indicated on November 9, 2006.




                                                 

/s/Gary T. Jolliffe                                    /s/Albert N. Olsen                       *
------------------------------------------------       ------------------------------------------
Gary T. Jolliffe                                       Albert N. Olsen
President, Chief Executive Officer and Director        Chairman of the Board
(Principal Executive Officer)


/s/E. Haas Gallaway, Jr.                       *       /s/W. Scott Gallaway                     *
------------------------------------------------       ------------------------------------------
E. Haas Gallaway, Jr.                                  W. Scott Gallaway
Director                                               Director


Dr. Thomas G. McCain                           *       /s/Ferdinand J. Rossi                    *
------------------------------------------------       ------------------------------------------
Dr. Thomas G. McCain                                   Ferdinand J. Rossi
Director                                               Director


/s/Michael A. Shriner                                  /s/Jeffrey E. Smith
------------------------------------------------       ------------------------------------------
Michael A. Shriner                                     Jeffrey E. Smith
Executive Vice President, Chief Operating              Vice President and Chief Financial Officer
Officer and Director                                   (Principal Financial and Accounting Officer)



* Signed  pursuant  to power of  attorney  previously  filed  with  Registration
Statement on Form S-1.

                                      II-2