DESCRIPTION OF THE PLAN

Introduction

In connection with the reorganization of the Association into the mutual holding company form of organization and the related stock offering of Oconee Federal Financial Corp., the Association desires to permit employees who participate in the Plan to purchase common stock of Oconee Federal Financial Corp.

The Plan is a single employer tax-qualified plan with a cash or deferred compensation feature established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Association intends that the Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. The Association will adopt any amendments to the Plan that may be necessary to ensure the continuing qualified status of the Plan under the Code and applicable Treasury Regulations.

Employee Retirement Income Security Act of 1974 (“ERISA”). The Plan is an “individual account plan” other than a “money purchase pension plan” within the meaning of ERISA. As such, the Plan is subject to all of the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except to the funding requirements contained in Part 3 of Title I of ERISA, which by their terms do not apply to an individual account plan (other than a money purchase plan). The Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the Plan.

Reference to Full Text of Plan. The following portions of this prospectus supplement summarize certain provisions of the Plan. They are not complete and are qualified in their entirety by the full text of the Plan. Copies of the Plan are available to all employees by filing a request with Curtis Evatt, Executive Vice President and Chief Financial Officer, Oconee Federal Savings and Loan Association; telephone number: (864) 882-2765; fax: (864) 882-2765; email: curt.evatt@oconeefederal.com. You are urged to read carefully the full text of the Plan.

Eligibility and Participation

All employees of the Association are eligible to participate in the Plan except for the following ineligible classes of employees: (a) employees whose employment is governed by a collective bargaining agreement, (b) non-resident aliens who do not receive earned income which constitutes income from sources within the United States, (c) any individual who becomes an employee as the result of a merger or other acquisition, (d) leased employees, and (e) employees who are employed by an affiliated employer which does not adopt this Plan. If you are an eligible employee on October 1, 2010 and you are at least 21 years of age, you will become a participant in the Plan on October 1, 2010. In all other cases, you will need to be at least age 21 and have 90 consecutive days of employment. Your entry date into the Plan will be the first day of the first, fourth, seventh or tenth month of the plan year coinciding with or next following the date you satisfy the age and service requirements.

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Contributions under the Plan

Elective Deferrals. You are permitted to defer on a pre-tax basis up to 100% of your compensation, subject to certain restrictions imposed by the Code, and to have that amount contributed to the Plan on your behalf. For purposes of the Plan, “compensation” means the amount reported on your Form W-2. In 2010, the compensation of each participant taken into account under the Plan is limited to $245,000. (Limits established by the Internal Revenue Service are subject to increase pursuant to an annual cost-of-living adjustment, as permitted by the Code).

In connection with the stock offering, you may, as described above, direct the trustee to invest up to 100% of your Plan account in the Oconee Federal Financial Corp. Stock Fund as a one-time special election. Following the stock offering, you may elect to defer up to 100% of your elective salary deferral contributions or matching contributions into the Oconee Federal Financial Corp. Stock Fund and you may also elect to transfer into the Oconee Federal Financial Corp. Stock Fund all or a portion of your accounts invested in other funds under the Plan.

Employer Matching Contributions. The Association may, in its discretion, make matching contributions.

Profit Sharing Contributions . The Association may, in its discretion, make profit sharing contributions.

Limitations on Contributions

Limitations on Employee Salary Deferrals. For the Plan year beginning January 1, 2010, the amount of your before-tax contributions may not exceed $16,500 per calendar year.

Catch-up Contributions. If you have made the maximum amount of regular before-tax contributions allowed by the Plan or other legal limits and you have attained at least age 50 (or will reach age 50 prior to the end of the Plan year), you are also eligible to make an additional catch-up contribution. You may authorize your employer to withhold a specified dollar amount of your compensation for this purpose. For 2010, the maximum catch-up contribution is $5,500.

Investment of Contributions and Account Balances

All amounts credited to your accounts under the Plan are held in the Plan’s trust.

Prior to the effective date of the offering, you were provided the opportunity to direct the investment of your account into one of the following funds:

American Funds Euro Pacific Growth Fund (RERFX)

Vanguard 500 Index (VFINX)

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Fidelity Contrafund (FCNTX)

Columbia Dividend Income Z (GSFTX)

Vanguard Mid-Cap Index (VIMSX)

Perkins Mid-Cap Value J (JMCVX)

T. Rowe Price Small-Cap Value (PRSVX)

Vanguard Small Cap Index (NAESX)

Vanguard GNMA (VFIIX)

Metropolitan West Total Return Bond M (MWTRX)

Vanguard Total Bond Market Index (VBMFX)

Federated Capital Preservation Fund (FCPFQ)

T. Rowe Price Capital Appreciation (PRWCX)

Vanguard Target Retirement 2005 (VTOVX)

Vanguard Target Retirement 2015 (VTXVX)

Vanguard Target Retirement 2025 (VTTVX)

Vanguard Target Retirement 2035 (VTTHX)

Vanguard Target Retirement 2045 (VTIVX)

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Description of the Investment Funds

American Funds Euro Pacific Growth Fund (RERFX): The investment seeks to provide you with long-term growth of capital. The fund invests primarily in common stocks of issuers in Europe and the Pacific Basin that the investment adviser believes have the potential for growth. It normally invests at least 80% of net assets in securities of issuers in Europe and the Pacific Basin. The fund may invest a portion of its assets in common stocks and other securities of companies in countries with developing and/or markets and may also hold cash, money market instruments and fixed-income securities.

Vanguard 500 Index (VFINX): The investment seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stocks. The fund employs a passive management investment approach designed to track the performance of the Standard & Poor’s 500 index, a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. It invests all, or substantially all, of assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

Fidelity Contrafund (FCNTX): The investment seeks capital appreciation. The fund normally invests primarily in common stocks. It may invest in securities of companies whose value is not fully recognized by the public. The fund invests in both domestic and foreign issuers. It may invest in “growth” stocks or “value” stocks or both. The advisor uses fundamental analysis of each issuer’s financial condition and industry position and market and economic conditions to select investments.

Columbia Dividend Income Z (GSFTX): The investment seeks total return, consisting of current income and capital appreciation. The fund normally invests at least 80% of net assets in a diversified portfolio of income-producing equity securities. It may invest up to 20% of net assets in debt securities; including securities that are rated low and below investment grade or are unrated. The fund may also invest up to 20% of net assets in foreign securities.

Vanguard Mid-Cap Index (VIMSX): The investment seeks to track the performance of a benchmark index that measures the investment return of mid-capitalization stocks. The fund employs a passive management investment approach designed to track the performance of the MSCI US Mid Cap 450 index, a broadly diversified index of the stocks of medium-size U.S. companies. It attempts to replicate the target index by investing all, or substantially all, of assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

Perkins Mid-Cap Value J (JMCVX): The investment seeks capital appreciation. The fund primarily invests in the common stocks of mid-sized companies whose stock prices the portfolio managers believe to be undervalued. It normally invests at least 80% of assets in equity securities of companies whose market capitalization falls, at the time of purchase, within the 12-month average of the capitalization range of the Russell Midcap Value index. The fund may invest in foreign equity and debt securities, which may include investments in emerging markets. It can also invest assets in derivatives.

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T. Rowe Price Small-Cap Value (PRSVX): The investment seeks long-term capital growth. The fund will invest at least 80% of assets in companies with a market capitalization that is within or below the range of companies in the Russell 2000 index. While it invests most assets in U.S. common stocks, the fund may also purchase other securities including bonds, foreign stocks, futures, and options.

Vanguard Small Cap Index (NAESX): The investment seeks to track the performance of a benchmark index that measures the investment return of small capitalization stocks. The fund employs a passive management investment approach designed to track the performance of the MSCI US Small Cap 1750 index, a broadly diversified index of the stocks of smaller U.S. companies. It attempts to replicate the target index by investing all, or substantially all, of assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

Vanguard GNMA (VFIIX): The investment seeks to provide a moderate level of current income. The fund normally invests at least 80% of assets in government National Mortgage Association certificates. It may invest the balance of assets in other U.S. government obligations, as well as in repurchase agreements secured by U.S. government securities. The fund’s dollar-weighted average maturity will normally fall within an intermediate-term range (3 to 10 years).

Metropolitan West Total Return Bond M (MWTRX): The investment seeks to maximize long-term total return. The fund pursues its objective by investing, under normal circumstances, at least 80% of net assets in investment grade fixed income securities or unrated securities that are determined by the Adviser to be of similar quality. Up to 20% of the fund’s net assets may be invested in securities rated below investment grade. Under normal conditions, the portfolio duration is two to eight years and the dollar-weighted average maturity ranges from two to fifteen years.

Vanguard Total Bond Market Index (VBMFX): The investment seeks to track the performance of a broad, market-weighted bond index. The fund employs a “passive management”, or indexing investment approach designed to track the performance of the Barclays Capital U.S. Aggregate Float Adjusted index. It invests by sampling the index. It invests at least 80% of assets in bonds held in the index. The fund maintains a dollar-weighted average maturity consistent with that of the index, ranging between 5 and 10 years.

Federated Capital Preservation Fund (FCPFQ): The fund seeks to offer investors stable principal and high current income. To pursue its objective, the fund invests in stable value products, including GIC’s (Guaranteed Investment Contract), synthetic GIC’s and money market instruments.

T. Rowe Price Capital Appreciation (PRWCX): The investment seeks long-term capital appreciation. The fund normally invests primarily in the common stocks of established U.S. companies believed to have above-average potential for capital growth. It invest at least 50% of assess in common stocks and the remaining assets in other securities, including convertible securities, corporate and government debt, foreign securities, futures, and options.

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Vanguard Target Retirement 2005 (VTOVX): The investment seeks to provide growth of capital and current income. The fund primarily invests in other Vanguard mutual funds according to an asset allocation designed for investors planning to retire within a few years of 2005. It allocates approximately 62% of assets to bonds and money market instruments, and 38% to stocks.

Vanguard Target Retirement 2015 (VTXVX): The investment seeks to provide growth of capital and current income. The fund primarily invests in other Vanguard mutual funds according to an asset allocation designed for investors planning to retire within a few years of 2015. It typically allocates approximately 61% of assets to stocks, and 39% to bonds.

Vanguard Target Retirement 2025 (VTTVX): The investment seeks to provide growth of capital and current income. The fund primarily invests in other Vanguard mutual funds according to an asset allocation strategy designed for investors planning to retire within a few years of 2025. It allocates approximately 76% of assets to stocks and 24% to bonds.

Vanguard Target Retirement 2035 (VTTHX): The investment seeks to provide growth of capital and current income. The fund primarily invests in other Vanguard mutual funds according to an asset allocation strategy designed for investors planning to retire within a few years of 2035. It allocates approximately 90% of assets to stocks and 10% to bonds.

Vanguard Target Retirement 2045 (VTIVX): The investment seeks to provide growth of capital and current income. The fund primarily invests in other Vanguard mutual funds according to an asset allocation strategy designed for investors planning to retire within a few years of 2045. It allocates approximately 90% of assets to stocks and 10% to bonds.

For a discussion of material risks you should consider, see the “Risk Factors” section of the attached prospectus and the section of the Prospectus Supplement called “Notice of Your Rights Concerning Employer Securities” (see below).

Withdrawals and Distributions from the Plan

Applicable federal law requires the Plan to impose substantial restrictions on the right of a Plan participant to withdraw amounts held for his or her benefit under the Plan prior to the participant’s termination of employment with the Association. A substantial federal tax penalty may also be imposed on withdrawals made prior to the participant’s attainment of age 59  ¹ / 2 .

Rollover Account . You may make a withdrawal from your rollover account without any restrictions and pursuant to the procedures established in the Plan.

Distribution upon Termination of Employment . You may make withdrawals from your account at any time after you terminate employment. In the event your vested account balance as of the date of your termination is $5,000 or less, your interest in the Plan will be cashed out and payment sent to you or, at your election, rolled over to another qualified retirement plan or to an individual retirement account. If your vested interest is more than $1,000 but not more

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than $5,000 and you fail to elect a lump sum distribution or a rollover, your vested interest will be rolled over to an individual retirement account selected by the Association. If your total vested account exceeds $5,000 and you terminate employment upon retirement on or after normal retirement age or because you suffer a disability, your vested interest will be distributed as soon as administratively feasible. If you terminate employment for reasons other than retirement or disability, your vested interest will be distributed as soon as administratively feasible after the next regularly scheduled Plan valuation date following your termination of employment. The normal form of distribution of benefits is a joint and survivor annuity. Optional forms of payments are installment payments, period payments as requested by the participant or any other form of annuity which can be purchased by an insurance company.

Disability . In the event you become disabled, your benefits will become 100% vested and immediately distributable.

Death . In the event of your death, your benefits will become 100% vested. Any death benefit payable to a non-spouse beneficiary will be distributed in a lump sum. Death benefits payable to your spouse will be distributed as monthly payments until his or her death unless, with your spouse’s written consent, you waive the monthly payments, in which case your spouse will receive a lump sum.

Administration of the Plan

The Trustee and Custodian . The trustee of the Plan is the Association.

Plan Administrator . Pursuant to the terms of the Plan, the Plan is administered by the Plan administrator. The address of the Plan administrator is Oconee Federal Savings and Loan Association, Attention: Curtis Evatt, Executive Vice President and Chief Financial Officer, 201 North Second Street, Seneca, South Carolina 29678, telephone number: (864) 882-2765. The Plan administrator is responsible for the administration of the Plan, interpretation of the provisions of the Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the Plan, maintenance of Plan records, books of account and all other data necessary for the proper administration of the Plan, preparation and filing of all returns and reports relating to the Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under Sections 104 and 105 of ERISA.

Reports to Plan Participants . The Plan administrator will furnish you a statement at least quarterly showing the balance in your account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any).

Amendment and Termination

It is the intention of the Association to continue the Plan indefinitely. Nevertheless, the Association may terminate the Plan at any time. If the Plan is terminated in whole or in part, then regardless of other provisions in the Plan, you will have a fully vested interest in your

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accounts. The Association reserves the right to make any amendment or amendments to the Plan 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; provided, however, that the Association may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

Merger, Consolidation or Transfer

In the event of the merger or consolidation of the Plan with another plan, or the transfer of the Plan assets to another plan, the Plan requires that you would, if either the Plan or the other plan terminates, receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before the merger, consolidation or transfer, if the Plan had then terminated.

Federal Income Tax Consequences

The following is a brief summary of 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 relating to the Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Please consult your tax advisor with respect to any distribution from the Plan and transactions involving the Plan.

As a “tax-qualified retirement plan,” the Code affords the Plan special tax treatment, including:

(1) the sponsoring employer is allowed 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.

The Association will administer the Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

Lump-Sum Distribution . A distribution from the Plan to a participant or the beneficiary of a participant will qualify 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 participants under the Plan and all other profit sharing plans (and in some cases all other stock bonus plans), if any, maintained by the Association. The portion of any lump-sum distribution required to be included in your taxable income for federal income tax purposes consists of the entire amount of the lump-sum

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distribution, less the amount of after-tax contributions, if any, you have made to this Plan and any other profit sharing plans maintained by the Association, which is included in the distribution.

Oconee Federal Financial Corp. Common Stock Included in Lump-Sum Distribution . If a lump-sum distribution includes Oconee Federal Financial Corp. common stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to Oconee Federal Financial Corp. common stock, that is, the excess of the value of Oconee Federal Financial Corp. common stock at the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of Oconee Federal Financial Corp. common stock, for purposes of computing gain or loss on its subsequent sale, equals the value of Oconee Federal 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 Oconee Federal Financial Corp. common stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of Oconee Federal Financial Corp. common stock. Any gain on a subsequent sale or other taxable disposition of Oconee Federal Financial Corp. common stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. 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 by regulations to be issued by the Internal Revenue Service.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA . You may roll over virtually all distributions from the Plan to another qualified plan or to an individual retirement account (IRA) in accordance with the terms of the other plan or account.

Notice of Your Rights Concerning Employer Securities

There has been an important change in Federal law that provides specific rights concerning investments in employer securities, such as Oconee Federal Financial Corp. common stock. Because you may in the future have investments in Oconee Federal Financial Corp. Stock Fund under the Plan, you should take the time to read the following information carefully.

Your Rights Concerning Employer Securities . The Plan must allow you to elect to move any portion of your account that is invested in the Oconee Federal Financial Corp. Stock Fund from that investment into other investment alternatives under the Plan. You may contact the Plan Administrator shown above for specific information regarding this new right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All of the investment options under the Plan are available to you if you decide to diversify out of the Oconee Federal Financial Corp. Stock Fund.

The Importance of Diversifying Your Retirement Savings . To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can

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help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the rights described here and how these rights affect the amount of money that you invest in Oconee Federal Financial Corp. common stock through the Plan.

It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the Plan to help ensure that your retirement savings will meet your retirement goals.

Additional ERISA Considerations

As noted above, the Plan is subject to certain provisions of ERISA, including special provisions relating to control over the Plan’s assets by participants and beneficiaries. The Plan’s feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as the Association, the Plan Administrator, or the Plan’s trustee is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise of control over the assets in your Plan account.

Because you will be entitled to invest all or a portion of your account balance in the Plan in Oconee Federal Financial Corp. common stock, the regulations under Section 404(c) of ERISA require that the Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to the common stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

Securities and Exchange Commission 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 beneficially owning more than 10% of public companies such as Oconee Federal Financial Corp. Section 16(a) of the Securities

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Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of Oconee Federal Financial Corp., a Form 3 reporting initial beneficial ownership must be filed with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported periodically, either on a Form 4 within two business days after the change occurs, or annually on a Form 5 within 45 days after the close of Oconee Federal Financial Corp.’s fiscal year. Discretionary transactions in and beneficial ownership of the common stock through the Oconee Federal Financial Corp. Stock Fund of the Plan by officers, directors and persons beneficially owning more than 10% of the common stock of Oconee Federal Financial Corp. generally must be reported to the Securities and Exchange Commission by such individuals.

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 Oconee Federal Financial Corp. of profits realized by an officer, director or any person beneficially owning more than 10% of Oconee Federal Financial Corp.’s common stock resulting from non-exempt purchases and sales of Oconee Federal Financial Corp. common stock within any six-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.

Except for distributions of common stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons affected by Section 16(b) are required to hold shares of common stock distributed from the Plan for six months following such distribution and are prohibited from directing additional purchases within the Oconee Federal Financial Corp. Stock Fund for six months after receiving such a distribution.

Financial Information Regarding Plan Assets

Financial information representing the assets available for plan benefits at December 31, 2009, is available upon written request to the Plan Administrator at the address shown above.

LEGAL OPINION

The validity of the issuance of the common stock has been passed upon by Luse Gorman Pomerenk & Schick, A Professional Corporation, Washington, D.C., which firm acted as special counsel to Oconee Federal Financial Corp. in connection with Oconee Federal Financial Corp.’s stock offering.

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OCONEE FEDERAL FINANCIAL CORP.

Proposed Holding Company for Oconee Federal Savings and Loan Association

Up to 1,821,600 Shares of Common Stock

Oconee Federal Financial Corp. is offering on a best efforts basis up to 1,821,600 shares of its common stock for sale at $10.00 per share in connection with the reorganization of Oconee Federal Savings and Loan Association into the mutual holding company form of ownership. The shares being offered represent 33% of the shares of common stock of Oconee Federal Financial Corp. that will be outstanding following the offering. After the offering, 65% of our outstanding common stock will be owned by Oconee Federal, MHC, our federally chartered mutual holding company. In addition, Oconee Federal Savings and Loan Association intends to cause Oconee Federal Financial Corp. to issue, on behalf of Oconee Federal Savings and Loan Association, 2% of the shares of common stock that will be outstanding following the offering to a charitable foundation that Oconee Federal Savings and Loan Association will establish. The percentage of our outstanding shares to be owned by public stockholders, by Oconee Federal, MHC and by the charitable foundation will not be affected by the number of shares we sell in the offering. We must sell a minimum of 1,346,400 shares in order to complete the offering and we will terminate the offering if we do not sell the minimum number of shares. We may sell up to 2,094,840 shares because of regulatory considerations or changes in market or economic conditions without resoliciting subscribers.

Following the completion of the reorganization, we expect that the common stock of Oconee Federal Financial Corp. will be listed on The Nasdaq Capital Market. An active market, however, may not develop in our common stock.

Depositors who had accounts at Oconee Federal Savings and Loan Association with aggregate balances of at least $50 on June 30, 2009 will have first priority to purchase shares of common stock of Oconee Federal Financial Corp. The offering is scheduled to terminate at 4:00 p.m., Eastern Time on [Offering expiration date]. We may extend the termination date without notice to you, until [Extended offering expiration date], or such later date as the Office of Thrift Supervision may approve, which may not be beyond [extended closing date].

The minimum purchase is 25 shares of common stock. The maximum purchase that an individual may make through a single deposit account is 25,000 shares, and no person by himself, or with an associate or group of persons acting in concert may purchase more than 50,000 shares. Once submitted, orders are irrevocable unless the offering is terminated or extended beyond [Extended offering expiration date]. If the offering is extended beyond [Extended offering expiration date], subscribers will have the right to modify or rescind their purchase orders. Funds received prior to the completion of the offering will be held in a segregated account at Oconee Federal Savings and Loan Association or, at our discretion, at another federally insured depository institution. Whether the offering is completed or terminated, subscription funds will bear interest at our passbook savings rate, which is currently 0.50% per annum. If the offering is terminated, subscribers will have their funds returned promptly, with interest.

Mutual Securities, Inc. will use its best efforts to assist us in selling our common stock, but is not obligated to purchase any of the common stock that is being offered for sale. In addition, officers and directors may participate in the solicitation of offers to purchase common stock in reliance upon Rule 3a4-1 under the Securities Exchange Act of 1934, as amended. Subscribers will not pay any commissions to purchase shares of common stock in the offering.

This investment involves a degree of risk, including the possible loss of principal.

Please read the “ Risk Factors ” beginning on page 25.

OFFERING SUMMARY

Price: $10.00 per share

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, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                  , 2010

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SUMMARY

The following summary explains material information regarding the reorganization, the offering of common stock by Oconee Federal Financial Corp. and the business of Oconee Federal Savings and Loan Association. The summary may not contain all the information that is important to you. For additional information, you should read this entire prospectus carefully, including the financial statements and the notes to the financial statements of Oconee Federal Savings and Loan Association. In certain circumstances, where appropriate, the terms “we, “us” and “our” refer collectively to Oconee Federal, MHC, Oconee Federal Financial Corp. and Oconee Federal Savings and Loan Association or to any of those entities, depending on the context.

The Companies

Oconee Federal, MHC

Upon completion of the reorganization and the offering, Oconee Federal, MHC will become the federally chartered mutual holding company parent of Oconee Federal Financial Corp. Oconee Federal, MHC is not currently an operating company and has not engaged in any business to date. Oconee Federal, MHC will be formed upon completion of the reorganization. As a mutual holding company, Oconee Federal, MHC will be a non-stock company that has as its members all holders of the deposit accounts at Oconee Federal Savings and Loan Association, and certain borrowers of Oconee Federal Savings and Loan Association as of October 21, 1991 for so long as such borrowings remain in existence. As a mutual holding company, Oconee Federal, MHC is required by law to own a majority of the voting stock of Oconee Federal Financial Corp. The initial directors of Oconee Federal, MHC will consist of the current directors of Oconee Federal Savings and Loan Association.

Oconee Federal Financial Corp.

Oconee Federal Financial Corp. will be the federal mid-tier stock holding company for Oconee Federal Savings and Loan Association following the reorganization and offering. This offering is made by Oconee Federal Financial Corp. Oconee Federal Financial Corp. is not currently an operating company. Oconee Federal Financial Corp. will be formed upon completion of the reorganization. Oconee Federal Financial Corp. will be chartered under federal law and will own 100% of the common stock of Oconee Federal Savings and Loan Association. Our executive office will be located at 201 E. North Second Street, Seneca, South Carolina 29678, and our telephone number will be (864) 882-2765.

Oconee Federal Savings and Loan Association

Oconee Federal Savings and Loan Association is a federally chartered savings and loan association headquartered in Seneca, South Carolina. Oconee Federal Savings and Loan Association was originally chartered by the State of South Carolina in 1924 as Seneca Building and Loan Association. In 1958, we changed our name to “Oconee Savings and Loan Association” and in 1991 we converted to our federal charter under the name “Oconee Federal Savings and Loan Association.”

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We conduct our business from our main office, our executive office annex and three branch offices. All of our offices are located in Oconee County, South Carolina. Our primary market area consists of Oconee County and the nearby communities and townships in adjacent counties in South Carolina. The telephone number at our main office is (864) 882-2765. Our website address is www.oconeefederal.com . Information on our website should not be considered a part of this prospectus.

At June 30, 2010, we had total assets of $333.5 million, total deposits of $272.6 million and total equity of $59.7 million. We recorded net income of $2.6 million for the year ended June 30, 2010.

Our principal business activity is the origination of one- to four-family residential mortgage loans and, to a much lesser extent, non-residential mortgage loans, construction and land loans, and other loans. We offer a variety of deposit accounts, including checking, money market savings and certificates of deposit, and emphasize personal and efficient service for our customers.

Our Reorganization into a Mutual Holding Company and the Offering

We do not have stockholders in our current mutual form of ownership. Our depositors and certain borrowers as of October 21, 1991 currently have the right to vote on certain matters such as the election of directors and the proposed mutual holding company reorganization. The reorganization is a series of transactions by which we will convert our corporate structure from our current status as a mutual savings and loan association to the mutual holding company form of ownership. The reorganization will be conducted pursuant to a plan of reorganization and stock issuance plan, which we refer to as the plan of reorganization. Following the reorganization, Oconee Federal Savings and Loan Association will become a federal stock savings and loan association subsidiary of Oconee Federal Financial Corp. Oconee Federal Financial Corp. will be a majority-owned subsidiary of Oconee Federal, MHC. After the reorganization, our depositors will become members of Oconee Federal, MHC, and will continue to have the same voting rights in Oconee Federal, MHC as they have in Oconee Federal Savings and Loan Association prior to the reorganization.

We are offering between 1,346,400 and 1,821,600 shares of Oconee Federal Financial Corp. common stock based on our independent appraisal. The purchase price will be $10.00 per share. All investors will pay the same price per share in the offering. The $10.00 per share price was selected primarily because it is the price most commonly used in mutual holding company reorganizations and offerings. We may increase the amount of stock to be sold up to 2,094,840 shares without any further notice to you. In addition, Oconee Federal Savings and Loan Association intends to (a) cause Oconee Federal Financial Corp. to issue, on behalf of Oconee Federal Savings and Loan Association, a number of shares of common stock equal to 2% of the outstanding shares, which will be up to 110,400 shares at the maximum of the offering range, to Oconee Federal Charitable Foundation, a charitable foundation that Oconee Federal Savings and Loan Association will establish in connection with the reorganization, and (b) contribute to the charitable foundation an amount of cash such that the total contribution of cash and shares of common stock will equal $2.5 million, which will be $1,396,000 at the maximum of the offering range and $1,684,000 at the minimum of the offering range.

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The primary reasons for our decision to reorganize into a mutual holding company and conduct the offering are to establish an organizational structure that will enable us to:

The reorganization and the capital raised in the offering are expected to provide us with additional capital to support new loans and higher lending limits, support the growth of our banking franchise, provide an additional cushion against unforeseen risks and expand our asset base. The reorganization and offering also will allow us to establish and fund with stock and cash our charitable foundation as well as stock benefit plans for management and employees that will permit us to attract and retain qualified personnel.

Unlike a standard conversion transaction in which all of the common stock of the holding company of the converting savings and loan association is sold to the public, only a minority of the stock is sold to the public in a mutual holding company reorganization. A majority of the outstanding common stock must be held by the mutual holding company. Consequently, the shares that we are permitted to sell in the offering and issue to the charitable foundation represent a minority of our outstanding shares. As a result, a mutual holding company offering raises less than half the capital that would be raised in a standard conversion offering. Based on these restrictions and an evaluation of our capital needs, our board of directors has decided to offer 33% of our outstanding shares of common stock for sale in the offering; 65% of our shares will be retained by Oconee Federal, MHC and 2% of our shares will be issued to Oconee Federal Charitable Foundation on behalf of Oconee Federal Savings and Loan Association. Our board of directors has determined that offering 33% of our outstanding shares of common stock for sale in the offering will enable management to more effectively invest the capital raised in the offering. See “—Possible Conversion of Oconee Federal, MHC to Stock Form.”

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The following chart shows our corporate structure following the reorganization and offering:

Business Strategy

Our current community-oriented business strategy consists of the following:

A full description of our business strategy can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Oconee Federal Savings and Loan Association —Business Strategy” and a description of our products and services can be found under “Business of Oconee Federal Savings and Loan Association.”

Terms of the Offering

We are offering between 1,346,400 and 1,821,600 shares of common stock of Oconee Federal Financial Corp. to qualified depositors, our tax-qualified employee benefit plans and to the public to the extent shares remain available. The amount of capital we are raising in the offering is based on an appraisal of the pro forma market value of Oconee Federal Financial Corp. We may increase the maximum number of shares that we sell in the offering by up to 15%, to 2,094,840 shares, as a result of regulatory considerations, strong demand for the shares of common stock in the offering, or positive changes in financial markets in general and with

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respect to financial institution stocks in particular. Subscription priorities have been established for the allocation of common stock to the extent the subscription offering is oversubscribed. See “The Reorganization and Offering – Offering of Common Stock – Subscription Rights” for a description of allocation procedures in the event of an oversubscription.

Unless the pro forma market value of Oconee Federal Financial Corp. decreases below $40,800,000 or increases above $63,480,000, or the offering is extended beyond [Extended offering expiration date], you will not have the opportunity to change or cancel your stock order. The offering price of the shares of common stock is $10.00 per share. All investors will pay the same $10.00 purchase price per share. Investors will not be charged a commission to purchase shares of common stock. Mutual Securities, Inc., our financial advisor in connection with the reorganization and offering, will use its best efforts to assist us in selling our shares of common stock, but Mutual Securities, Inc. is not obligated to purchase any shares in the offering.

Persons Who May Order Stock in the Offering

We are offering the shares of common stock of Oconee Federal Financial Corp. in a “subscription offering” in the following descending order of priority:

Any shares of our common stock that remain unsold in the subscription offering will be offered for sale in a community offering that may commence concurrently with, during or promptly after, the subscription offering. The community offering must be completed within 45 days of the end of the subscription offering, unless extended with Office of Thrift Supervision approval. Natural persons residing in Oconee and Pickens Counties, South Carolina will have a purchase preference in any community offering. Shares also may be offered to the general public. We also may offer shares of common stock not purchased in the subscription offering or the community offering through a syndicate of brokers in what is referred to as a syndicated community offering managed by Mutual Securities, Inc. We have the right to accept or reject, in our sole discretion, any orders received in the community offering or the syndicated community offering.

To ensure proper allocation of stock, each eligible account holder must list on his or her stock order form all deposit accounts in which he or she had an ownership interest at June 30, 2009, September 30, 2010 or [Voting record date] as applicable. Failure to list an account or

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providing incorrect information could result in the loss of all or part of a subscriber’s stock allocation. We will attempt to identify your ownership in all accounts but cannot guarantee we will identify all accounts in which you had an ownership interest. Our interpretations of the terms and conditions of the stock issuance plan and of the acceptability of the order forms will be final.

How We Determined the Offering Range and the $10.00 Price Per Share

Our decision to offer between 1,346,400 shares and 1,821,600 shares, which is our offering range, is based on an independent appraisal of our pro forma market value prepared by McAuliffe Financial, LLC, a firm experienced in appraisals of financial institutions. McAuliffe Financial, LLC is of the opinion that as of September 3, 2010, the estimated pro forma market value of the common stock of Oconee Federal Financial Corp. on a fully converted equivalent basis (i.e., the pro forma market value of Oconee Federal Savings and Loan Association assuming that 100% of the common stock of Oconee Federal Financial Corp. were sold in a public offering, rather than the 33% that will be sold in the offering) was between $40.8 million and $55.2 million, with a midpoint of $48.0 million.

In preparing its independent appraisal, McAuliffe Financial, LLC considered the information contained in this prospectus, including Oconee Federal Savings and Loan Association’s financial statements. McAuliffe Financial, LLC also considered the following factors, among others:

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Set forth below are the names and locations of the peer group companies used by McAuliffe Financial, LLC in its independent appraisal. The peer group is comprised of savings institutions that met the following criteria: (i) high capital ratios and low non-performing assets; (ii) up to $1.0 billion in assets; (iii) conducted an initial public offering of its common stock prior to June 30, 2009; (iv) had positive core earnings for the most recent four quarters; (v) trade on NASDAQ; (vi) have had no public announcement of a second-step mutual holding company conversion; and (vii) operate in rural markets.

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McAuliffe Financial, LLC also considered the contribution of cash and shares of common stock to Oconee Federal Charitable Foundation. The contribution of cash and shares of common stock to the charitable foundation will reduce our estimated pro forma value. See “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation.”

In reviewing the appraisal prepared by McAuliffe Financial, LLC, our board of directors considered the methodologies and the appropriateness of the assumptions used by McAuliffe Financial, LLC in addition to the factors listed above, and our board of directors believes that these assumptions were reasonable.

Our board of directors determined that the common stock should be sold at $10.00 per share and that 33% of the shares of Oconee Federal Financial Corp. common stock should be offered for sale in the offering and 65% should be held by Oconee Federal, MHC (after giving effect to the issuance of shares of common stock to Oconee Federal Charitable Foundation). Our board of directors determined that offering 33% of our outstanding shares of common stock for sale in the offering allowed for an efficient use of net proceeds for Oconee Federal Financial Corp. and Oconee Federal Savings and Loan Association in the near-term. See “—Possible Conversion of Oconee Federal, MHC to Stock Form.” Based on the estimated valuation range and the purchase price, the number of shares of Oconee Federal Financial Corp. common stock that will be outstanding upon completion of the offering will range from 4,080,000 to 5,520,000 shares (subject to adjustment to up to 6,348,000 shares), and the number of shares of Oconee Federal Financial Corp. common stock that will be sold in the offering will range from 1,346,400 shares to 1,821,600 shares (subject to adjustment to up to 2,094,840 shares). The number of shares that Oconee Federal, MHC will own after the offering will range from 2,652,000 shares to 3,588,000 shares (subject to adjustment to up to 4,126,200 shares). The number of shares of common stock that Oconee Federal Charitable Foundation will own after the reorganization will range from 81,600 at the minimum of the offering range to 110,400 at the maximum of the offering range, subject to adjustment to as much as 126,960 at the adjusted maximum of the offering range. The estimated valuation range may be amended with the approval of the Office of Thrift Supervision, if required, or if necessitated by subsequent developments in the financial condition of Oconee Federal Savings and Loan Association or market conditions generally.

The independent appraisal will be updated before we complete the reorganization and offering. If the pro forma market value of the common stock at that time is either below $40.8 million or above $55.2 million, then Oconee Federal Financial Corp., after consulting with the Office of Thrift Supervision, may terminate the plan of reorganization and return all funds promptly with interest; extend or hold a new subscription or community offering, or both; establish a new offering range and commence a resolicitation of subscribers; or take such other actions as may be permitted by the Office of Thrift Supervision. Under such circumstances, we will notify you, and you will have the opportunity to change or cancel your order.

Two measures investors use to analyze an issuer’s stock are the ratio of the offering price to the issuer’s book value and the ratio of the offering price to the issuer’s annual net income. McAuliffe Financial, LLC considered these ratios, among other factors, in preparing its independent appraisal. Book value is the same as total equity, and represents the difference between the issuer’s assets and liabilities.

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The following table presents a summary of selected pricing ratios for the peer group companies and for us on a non-fully converted basis. These figures are from the McAuliffe Financial, LLC appraisal report.

Compared to the average pricing ratios of the peer group, our pro forma pricing ratios at the maximum of the offering range, indicated a discount of 6.95% on a price-to-core earnings basis and a discount of 19.08% on a price-to-book basis. At the minimum and maximum of the valuation range, a share of common stock is priced at 16.67 times and 23.26 times our core earnings, respectively. The peer group companies, as of September 3, 2010, traded on average at 29.05 times core earnings. The median trading price of the peer group common stock was at 19.10 times core earnings. At the minimum and maximum of the valuation range, the common stock is valued at 59.17% and 75.53%, respectively, of our pro forma book value. This represents a discount 43.02% at the minimum and 27.26% at the maximum of the valuation range to the average trading price-to-book value of peer group companies, which as of September 3, 2010 was 103.84%. As of September 3, 2010, the median trading price of peer group companies was 102.73% of the book value of these companies.

Our board of directors, in reviewing and accepting the valuation, considered the range of price-to-earnings multiples and the range of the price-to-book value ratios at the different amounts of shares to be sold in the offering. Our board of directors also considered the discount to our peer group with respect to the price-to-core earnings and price-to-book value, compared our pro forma book value and core earnings ratios to those of our peer group and noted the relative discount. In this regard, our board of directors noted the discounts applied by McAuliffe Financial, LLC with respect to our market area, the liquidity of our stock, the subscription interest in other recent mutual holding company offerings and the difficulty of marketing financial institutions’ stocks in today’s volatile economic climate. After extensive review, our board of directors concluded that such discounts were appropriate.

The independent appraisal did not consider one valuation approach to be more important than the other. Instead, the independent appraisal concluded that these ranges represented the appropriate balance of the two approaches to valuing Oconee Federal Financial Corp. and the

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number of shares to be sold, in comparison to the identified peer group institutions. The estimated appraised value and the resulting discounts took into consideration the potential financial impact of the reorganization and offering and the appraiser’s conclusions regarding Oconee Federal Financial Corp.’s financial condition and operation after the offering in comparison to the peer group companies.

The following table presents a summary of selected pricing ratios for the peer group companies, with such ratios adjusted to their fully converted equivalent basis, and the resulting pricing ratios for Oconee Federal Financial Corp. on a fully converted equivalent basis. Compared to the average fully-converted pricing ratios of the peer group, Oconee Federal Financial Corp.’s pro forma fully-converted pricing ratios at the maximum of the offering range indicated a discount of 8.10% on a price-to-core earnings basis and a discount of 19.24% on a price-to-book basis.

In preparing both the fully converted pricing ratio analysis and the non-fully converted pricing ratio analysis, McAuliffe Financial, LLC assumed offering expenses equal to $856,000 plus 1.5% of the gross proceeds of the offering not related to the sale of stock to our benefit plans and our officers and directors or issued to the charitable foundation, a pre-tax reinvestment rate of 0.39% of the net proceeds of the offering, a tax rate of 38%, purchases by the employee stock ownership plan equal to 3.92% of our outstanding shares (including shares issued to Oconee Federal, MHC and Oconee Federal Charitable Foundation) funded with a loan from Oconee Federal Financial Corp. with a 25-year term, purchases by the stock-based incentive plan equal to 1.96% of the shares issued in the offering (including shares issued to Oconee Federal, MHC and Oconee Federal Charitable Foundation) with a five-year vesting schedule and option grants under the stock-based incentive plan equal to 4.90% of the shares issued in the offering (including shares issued to Oconee Federal, MHC and the Oconee Federal Charitable Foundation). Shares of common stock purchased by the stock-based incentive plan were assumed at $10.00 per share. The stock options were assumed to be granted with an exercise price of $10.00 per share, vesting over a five-year period and have a term of 10 years.

The pro forma fully converted calculations use the same assumptions as applied to the peer group companies, and also assume the effect of the establishment and funding of our charitable foundation. See “Comparison of Valuation and Pro Forma Information With and Without the Charitable Foundation” for a discussion of the impact of our charitable foundation on our appraised value.

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The independent appraisal does not indicate market value. Do not assume or expect that Oconee Federal Financial Corp.’s valuation as indicated above means that the common stock will trade at or above the $10.00 purchase price after the reorganization and offering.