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

                                   FORM 10-QSB

(Mark One)

[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

     FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

     FOR THE TRANSITION PERIOD FROM _________ TO _________


                         Commission File Number 0-50322


                          COMMUNITY FIRST BANCORP, INC.
--------------------------------------------------------------------------------
        (Exact name of Small Business Issuer as specified in its Charter)


             MARYLAND                                          36-4526348
-------------------------------------                  -------------------------
(State or other jurisdiction of                               (IRS Employer
 incorporation or organization)                            Identification No.)


              2420 NORTH MAIN STREET, MADISONVILLE, KENTUCKY 42431
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


                                 (270) 326-3500
--------------------------------------------------------------------------------
                           (Issuer's telephone number)


                                 NOT APPLICABLE
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
         Yes [X]  No [ ]

     Indicate  by check mark  whether  the  Registrant  is a shell  company  (as
defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

     As of September  30, 2006,  there were 328,088  shares of the  Registrant's
common stock, par value $.01 per share, outstanding.

     Transitional Small Business Issuer Disclosure Format (check one):
         Yes       No   X
             ----     -----

<PAGE>
                          COMMUNITY FIRST BANCORP, INC.

                             MADISONVILLE, KENTUCKY

                                      INDEX

                                                                            PAGE
                                                                            ----

PART I.  FINANCIAL INFORMATION
------

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of September 30, 2006
                  (Unaudited) and December 31, 2005                           3
         Condensed Consolidated  Statements of Operations - (Unaudited)
                  for the three and nine months ended September 30, 2006
                  and 2005                                                    4
         Condensed Consolidated Statements of Cash Flows - (Unaudited)
                  for the nine months ended September 30, 2006 and 2005       5
         Condensed Consolidated Statements of Changes in Stockholders'
                  Equity - (Unaudited) for the nine months ended
                  September 30, 2006 and 2005                                 7
         Notes to Condensed Consolidated Financial Statements
                  (Unaudited)                                                 8

Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operation                         12

Item 3.  Controls and Procedures                                             17

PART II. OTHER INFORMATION
-------

Item 6.  Exhibits                                                            19

Signatures                                                                   20


                                       2
<PAGE>

                          COMMUNITY FIRST BANCORP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                           SEPTEMBER 30,         DECEMBER 31,
                                                                              2006                    2005
                                                                          -----------            ------------
                                                                          (UNAUDITED)
<S>                                                                       <C>                     <C>
                                 ASSETS
Cash and cash equivalents:
    Cash and due from banks                                               $   644,907             $   785,814
    Interest-bearing demand deposits                                        1,231,097               1,223,134
                                                                          -----------             -----------
        Total cash and cash equivalents                                     1,876,004               2,008,948

Securities, held-to-maturity (market values of
   $60,085 and $69,257 at September 30, 2006
   and December 31, 2005, respectively)                                        57,304                  65,522
Securities, available-for-sale, at fair value                               1,221,755               1,703,147
Loans, net of the allowance for loan loss of
   $370,879 and $387,822 at September 30, 2006
   and December 31, 2005, respectively                                     70,695,998              64,578,288
Premises and equipment, net                                                 2,139,182               2,286,004
Foreclosed real estate                                                         52,716                      --
Federal Home Loan Bank (FHLB) stock                                           753,200                 721,900
Interest receivable                                                           371,710                 288,501
Deferred income taxes                                                           9,887                  16,587
Other assets                                                                   89,099                  59,817
                                                                          -----------             -----------
        Total assets                                                      $77,266,855             $71,728,714
                                                                          ===========             ===========

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
    Deposits                                                              $62,695,625             $54,476,673
    FHLB advances                                                          10,275,000              13,000,000
    Advances under line of credit                                             750,000                 850,000
    Loans from directors                                                      390,126                 400,000
    Interest payable and other liabilities                                    355,594                 282,040
                                                                          -----------             -----------
        Total liabilities                                                  74,466,345              69,008,713
                                                                          -----------             -----------

Stockholders' equity:
    Preferred stock, $.01 par value;
      authorized 1,000,000 shares                                                  --                      --
    Common stock, $.01 par value: authorized,
      5,000,000 shares; issued and outstanding
      328,088 at September 30, 2006 and 277,725
      at December 31, 2005                                                      3,280                   2,777
    Additional paid-in capital                                              2,829,943               2,457,428
    Retained earnings - substantially
      restricted                                                              (13,518)                291,993
    Accumulated other comprehensive loss                                      (19,195)                (32,197)
                                                                          -----------             -----------
        Total stockholders' equity                                          2,800,510               2,720,001
                                                                          -----------             -----------
        Total liabilities and stockholders' equity
                                                                          $77,266,855             $71,728,714
                                                                          ===========             ===========
</TABLE>


            See notes to condensed consolidated financial statements.


                                       3
<PAGE>

                          COMMUNITY FIRST BANCORP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                            NINE MONTHS ENDED
                                                    SEPTEMBER 30,                                SEPTEMBER 30,
                                            -----------------------------            ----------------------------------
                                              2006                2005                   2006                   2005
                                            ----------          ---------            ----------              ----------
<S>                                         <C>                 <C>                  <C>                     <C>
Interest and dividend income:
  Loans                                     $1,081,771          $ 882,577            $3,074,640              $2,460,955
  Investment securities                         10,665             18,973                37,584                  64,682
  Dividends on FHLB Stock                       10,761              8,638                31,491                  25,405
                                            ----------          ---------            ----------              ----------
      Total interest and
        dividend income                      1,103,197            910,188             3,143,715               2,551,042
                                            ----------          ---------            ----------              ----------

Interest expense:
  Deposits                                     533,874            356,310             1,443,233                 969,485
  FHLB advances                                132,141            105,237               367,642                 250,587
  Other borrowings                              23,881             12,442                73,854                  33,832
                                            ----------          ---------            ----------              ----------
      Total interest expense                   689,896            473,989             1,884,729               1,253,904
                                            ----------          ---------            ----------              ----------

      Net interest income                      413,301            436,199             1,258,986               1,297,138

  Provision for loan losses                     16,000              8,000                17,500                  69,500
                                            ----------          ---------            ----------              ----------

      Net interest income
        after provision for
        loan losses                            397,301            428,199             1,241,486               1,227,638
                                            ----------          ---------            ----------              ----------

Noninterest income:
  Service charges and fees                     128,398            101,555               345,827                 272,721
  Gain (loss) on sale of
    foreclosed assets                               --             (2,000)                                       (2,000)
  Foreclosed real estate
    expense, net                                  (376)              (973)                 (926)                 (4,499)
  Gain (loss) on sale of
    repossessed vehicles                            --                 --                    --                  (1,965)
  Gain (loss) on sale of
    fixed assets                                    --                 --                 3,000
  Insurance commissions and
    premiums                                     2,080              1,839                 4,633                   4,600
  Other income                                   5,440              2,167                22,709                  11,626
                                            ----------          ---------            ----------              ----------
    Total noninterest income                   135,542            102,588               375,243                 280,483
                                            ----------          ---------            ----------              ----------

Noninterest expense:
  Compensation and benefits                    248,745            254,273               782,659                 768,610
  Directors fees                                 1,200             10,800                13,200                  32,400
  Occupancy expense                             78,227             84,787               239,441                 243,825
  Insurance premiums                            10,671             10,015                30,669                  21,358
  Data processing                               69,152             68,808               200,877                 177,828
  Advertising                                   18,389             14,590                71,569                  73,352
  Office supplies and postage                   27,889             30,133                90,288                  89,647
  Payroll and other taxes                       37,399             39,477               114,629                 111,224
  Professional fees                             28,246             25,884               104,179                  76,581
  Other operating expenses                      96,089             81,661               274,729                 245,993
                                            ----------          ---------            ----------              ----------
      Total noninterest
          expense                              616,007            620,428             1,922,240               1,840,818
                                            ----------          ---------            ----------              ----------
Loss before income taxes                       (83,164)           (89,641)             (305,511)               (332,697)
Provision (credit) for income
  taxes                                             --                 --                    --                      --

Net loss                                    $  (83,164)         $ (89,641)           $ (305,511)             $ (332,697)
                                            ==========          =========            ==========              ==========
Basic loss per share                        $    (0.25)         $   (0.32)           $    (0.99)             $    (1.20)
                                            ==========          =========            ==========              ==========
Diluted loss per share                      $    (0.25)         $   (0.32)           $    (0.99)             $    (1.20)
                                            ==========          =========            ==========              ==========
</TABLE>

            See notes to condensed consolidated financial statements.

                                       4
<PAGE>
                          COMMUNITY FIRST BANCORP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                   NINE MONTHS ENDED
                                                                     SEPTEMBER 30,
                                                             -----------------------------
                                                                 2006             2005
                                                             ------------    ------------
<S>                                                          <C>             <C>
Operating Activities:
    Net loss                                                 $   (305,511)   $   (332,697)
    Adjustments to reconcile net loss to net
      Cash provided by/(used in) operating activities:
        FHLB stock dividend                                       (31,300)        (24,600)
        Provision for loan losses                                  17,500          69,500
        Depreciation, amortization and accretion                  154,602         162,776
        Loss on sale of foreclosed assets                            --             2,000
        Loss on sale of repossessed vehicles                         --             1,965
        Deferred compensation for Restricted Stock Plan ..         (4,976)           --
        Change in assets and liabilities:
            Other assets                                          (81,998)        (81,137)
            Accrued interest receivable and other assets .        (83,209)        (54,201)
            Accrued interest payable and other liabilities       (154,649)        272,223
                                                             ------------    ------------
                Net cash provided by/(used in)
                  operating activities                           (489,541)         15,829
                                                             ------------    ------------

Investing Activities:
    Net increase in loans                                      (6,135,210)     (9,958,828)
    Proceeds from maturities/calls of available-for-sale
       securities                                                 500,000            --
    Proceeds from maturities/calls of held-to-maturity
       securities                                                   8,215          18,109
    Proceeds from sale of other real estate owned                    --            23,000
    Purchases of premises and equipment                            (6,683)           (650)
                                                             ------------    ------------
                Net cash used in investing activities          (5,633,678)     (9,918,369)
                                                             ------------    ------------

Financing Activities:
    Net increase in deposits                                    8,452,131       6,544,673
    Payments on short-term borrowings                         (18,925,000)     (9,500,000)
    Proceeds from short-term borrowings                        16,100,000       9,500,000
    Proceeds from issuance of stock                               363,144            --
                                                             ------------    ------------
                Net cash provided by financing activities       5,990,275       6,544,673
                                                             ------------    ------------

Net decrease in cash and cash equivalents                        (132,944)     (3,357,867)
Cash and cash equivalents, beginning of period                  2,008,948       5,793,196
                                                             ------------    ------------
Cash and cash equivalents, end of period                     $  1,876,004    $  2,435,329
                                                             ============    ============
</TABLE>

            See notes to condensed consolidated financial statements.

                                       5
<PAGE>
                          COMMUNITY FIRST BANCORP, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                 NINE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                             ------------------------
                                                                 2006        2005
                                                             ----------   -----------
<S>                                                          <C>             <C>
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest                                       $1,810,875   $1,220,072
                                                             ==========   ==========

NON-CASH TRANSACTIONS:
Federal Home Loan Bank Stock dividend received               $   31,300   $   24,600
                                                             ==========   ==========
Loans transferred to real estate                             $       --   $   25,000
                                                             ==========   ==========
Notes converted to stock                                     $    9,874   $       --
                                                             ==========   ==========
</TABLE>

            See notes to condensed consolidated financial statements.


                                       6
<PAGE>
                          COMMUNITY FIRST BANCORP, INC.
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                           COMMON STOCK             ADDITIONAL
                                                    ----------------------------    PAID-IN          RETAINED
                                                        SHARES       AMOUNT         CAPITAL          EARNINGS
                                                    ---------------------------------------------------------------
<S>                                                      <C>         <C>          <C>               <C>
    BALANCE, JANUARY 1, 2005                             277,725     $   2,777    $   2,457,428     $    731,477

      Comprehensive loss
        Net loss                                          --           --              --               (332,697)
        Change in unrealized loss on
          available-for-sale securities, net of
          taxes                                           --           --              --               --


           Total comprehensive loss
                                                    ------------     ---------    -------------     ------------

    BALANCE, SEPTEMBER 30, 2005                          277,725     $   2,777    $   2,457,428     $    398,780
                                                    ============     =========    =============     ============

    BALANCE, JANUARY 1, 2006                             277,725     $   2,777    $   2,457,428     $    291,993

      Comprehensive loss

        Net loss                                                                                        (305,511)
        Change in unrealized loss on
          available-for-sale securities, net of
          taxes

           Total comprehensive loss

      Issuance of stock                                   50,363           503          372,515
                                                    ------------     ---------    -------------     ------------
    BALANCE, SEPTEMBER 30, 2006                          328,088     $   3,280    $   2,829,943     $    (13,518)
                                                    ============     =========    =============     ============
<CAPTION>

                                                      ACCUMULATED
                                                        OTHER
                                                     COMPREHENSIVE       COMPREHENSIVE
                                                     INCOME (LOSS)       INCOME (LOSS)         TOTAL
                                                    --------------------------------------------------------

<S>                                                  <C>                 <C>                <C>
    BALANCE, JANUARY 1, 2005                         $      (28,187)          --            $  3,163,495

      Comprehensive loss
        Net loss                                          --             $    (332,697)         (332,697)
        Change in unrealized loss on
          available-for-sale securities, net of
          taxes                                              (4,700)            (4,700)           (4,700)
                                                                         -------------

           Total comprehensive loss                                      $    (337,397)
                                                     --------------      =============      ------------

    BALANCE, SEPTEMBER 30, 2005                      $      (32,887)                        $  2,826,098
                                                     ==============                         ============

    BALANCE, JANUARY 1, 2006                         $      (32,197)                        $  2,720,001

      Comprehensive loss

        Net loss                                                              (305,511)         (305,511)
        Change in unrealized loss on
          available-for-sale securities, net of
          taxes                                              13,002             13,002            13,002
                                                                         -------------
           Total comprehensive loss                                      $    (292,509)
                                                                         =============
      Issuance of stock                                                                          373,018
                                                     --------------                         ------------
    BALANCE, SEPTEMBER 30, 2006                      $      (19,195)                        $  2,800,510
                                                     ==============                         ============
</TABLE>

See notes to condensed consolidated financial statements.

                                       7
<PAGE>

                          COMMUNITY FIRST BANCORP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       COMMUNITY FIRST BANCORP, INC.

         In March 2003,  Community  First  Bancorp,  Inc.  (the  "Company")  was
         incorporated  to facilitate the conversion of Community First Bank (the
         "Bank")  from a  mutual  savings  bank to a  stock  savings  bank  (the
         "Conversion").  In connection with the Conversion,  the Company offered
         its common  stock to the  depositors  and  borrowers  of the Bank as of
         specified  dates.  The Conversion was  consummated on June 26, 2003, at
         which time the  Company  became the  holding  company  for the Bank and
         issued shares of its stock to the general public.

         The  Company  filed  a Form  SB-2  with  the  Securities  and  Exchange
         Commission  ("SEC") on April 1, 2003,  which as amended,  was  declared
         effective by the SEC on May 14, 2003. The Bank filed a Form AC with the
         Office of Thrift  Supervision  (the  "OTS") on April 2, 2003,  which as
         amended,   along  with  related  offering  and  proxy  materials,   was
         conditionally  approved by the OTS on May 14,  2003.  The Company  also
         filed an Application  H-(e)1-S with the OTS on April 2, 2003, which was
         conditionally  approved by the OTS on May 14, 2003.  The members of the
         Bank approved the Plan of Conversion at a special  meeting held on June
         23, 2003, and the subscription offering closed on June 17, 2003.

         On June 26, 2003, the Company  became the holding  company for the Bank
         upon  the   consummation   of  the   Conversion.   The  Conversion  was
         accomplished  through  the sale and  issuance by the Company of 277,725
         shares of common stock at $10 per share.  Net proceeds from the sale of
         common stock were $2,460,205. Costs associated with the Conversion were
         deducted  from  the  proceeds  from the sale of the  common  stock  and
         totaled $317,045.

2.       BASIS OF PRESENTATION

         The accompanying  unaudited condensed consolidated financial statements
         were  prepared  in  accordance  with  instructions  for Form 10-QSB and
         therefore,  do not include  all  disclosures  necessary  for a complete
         presentation of the balance sheets, statements of operations, statement
         of cash  flows and  statement  of changes  in  stockholders'  equity in
         conformity with accounting  principles generally accepted in the United
         States of  America.  However,  all  adjustments  (all of which are of a
         normal  recurring  nature),  which are, in the  opinion of  management,
         necessary for the fair presentation of the interim financial statements
         have been  included.  The condensed  consolidated  balance sheet of the
         Company as of  December  31,  2005 has been  derived  from the  audited
         condensed  consolidated  balance  sheet of the Company as of that date.
         Certain  information  and note  disclosures  normally  included  in the
         Company's  annual  financial  statements  prepared in  accordance  with
         accounting  principles  generally  accepted  in the  United  States  of
         America have been condensed or omitted.  These  condensed  consolidated
         financial   statements   should  be  read  in   conjunction   with  the
         consolidated  financial  statements  and notes thereto  included in the
         Company's  Form 10-KSB annual report for 2005 filed with the Securities
         and  Exchange  Commission.   The  results  of  operations  for  periods
         presented  are not  necessarily  indicative of the results which may be
         expected for the entire year.

         The unaudited condensed  consolidated  financial statements include the
         accounts of the Company  and the Bank for the  periods  presented.  All


                                       8
<PAGE>

         material intercompany balances and transactions have been eliminated in
         consolidation.


3.       STOCK-BASED EMPLOYEE COMPENSATION PLAN

         Stock Option Plan

         At September  30, 2006,  the Company has a stock option plan,  which is
         described  more fully in the notes to the  Company's  December 31, 2005
         audited financial  statements  contained in the Company's Annual Report
         on Form 10-KSB.  Through  December 31, 2005, the Company  accounted for
         this plan  under the  recognition  and  measurement  principles  of APB
         Opinion No. 25,  Accounting for Stock Issued to Employees,  and related
         Interpretations. No stock-based employee compensation cost is reflected
         in net income for 2005,  as all options  granted under this plan had an
         exercise price equal to the market value of the underlying common stock
         on the grant date. The following  table  illustrates  the effect on net
         income and earnings per share if the Company had applied the fair value
         provisions  of FASB  Statement  No.  123,  Accounting  for  Stock-Based
         Compensation, to stock-based employee compensation.
<TABLE>
<CAPTION>
                                                              FOR THE NINE MONTH PERIOD  FOR THE THREE MONTH PERIOD
                                                                 ENDED SEPTEMBER 30,         ENDED SEPTEMBER 30,
                                                                        2005                        2005
                                                              -----------------------------------------------------
<S>                                                           <C>                           <C>
Net loss, as reported                                         $ (332,697)                   $  (89,641)

Less total  stock-based  employee
     compensation  cost determined  under
     the fair value based method, net of
     income taxes                                                  9,718                         3,239
                                                                --------                     ---------

 Pro forma net loss                                           $ (342,415)                   $  (92,880)
                                                                ========                     =========

Earnings per share:
     Basic - as reported                                      $    (1.20)                   $    (0.32)
                                                                ========                     =========
     Basic - pro forma                                        $    (1.23)                   $    (0.33)
                                                                ========                     =========
     Diluted - as reported                                    $    (1.20)                   $    (0.32)
                                                                ========                     =========
     Diluted - pro forma                                      $    (1.23)                   $    (0.33)
                                                                ========                     =========
</TABLE>

         On December 8, 2005 the optionees agreed to the cancellation of all the
         outstanding stock options, which totaled 16,442 as of that date.

         Restricted Stock Plan

         The  Company has a  Restricted  Stock Plan,  covering  8,331  shares of
         common  stock,  whose  purpose is to reward and to retain  personnel of
         experience and ability in key positions of responsibility with the Bank
         and any  subsidiaries  with an increased equity interest in the Company
         as  compensation  for their prior and anticipated  future  professional
         contributions  and  service  to the Bank and any  subsidiaries.  Shares
         awarded under the plan entitle the  shareholder to all rights of common
         stock  ownership  except that the shares may not be sold,  transferred,
         pledged,  exchanged,  or  otherwise  disposed  of until the  shares are
         earned and  non-forfeitable.  The shares  awarded under the  Restricted
         Stock Plan shall be earned and non-forfeitable at the rate of one-fifth
         per year  over five  years  from the grant  date.  During  May 2005 the
         Company granted 5,197 shares with a restriction period of five years at
         a market price of $11.50.  Deferred  compensation expenses recorded for

                                       9
<PAGE>

         the three and nine months ended  September  30, 2006  relating to these
         shares  of  restricted  stock  was  approximately  $3,000  and  $6,000,
         respectively.

4.       OTHER COMPREHENSIVE LOSS

         Other comprehensive loss components and related taxes were as follows:
<TABLE>
<CAPTION>
                                                       FOR THE NINE          FOR THE NINE
                                                        MONTH PERIOD         MONTH PERIOD
                                                     ENDED SEPTEMBER 30      ENDED SEPTEMBER 30,
                                                              2006                2005
                                                              ----                ----
<S>                                                      <C>                   <C>
         Unrealized loss on available-
            for-sale securities before
            tax effect                                   $(19,705)             $ 7,121
         Tax benefit                                        6,700              (2,421)
                                                         --------             -------
                  Other comprehensive
                    income (loss)                        $(13,005)             $(4,700)
                                                         =========             =======
</TABLE>

  5.     EARNINGS PER SHARE

         Earnings per share has been determined in accordance with Statements of
         Financial  Accounting Standards No. 128, "Earnings per Share." Earnings
         per common share were  computed by dividing net income by the number of
         shares of common stock issued in the Bank's conversion to stock form as
         if such shares had been  outstanding for the entire period.  Securities
         authorized in connection  with the Company's  stock-based  compensation
         plans  could  dilute  earnings  per share in the  future,  but were not
         included in the current period's because of their anti-dilutive effect,
         so basic and diluted earnings per share are the same.

         The  following  data show the amounts  used in  computing  earnings per
         share (EPS).
<TABLE>
<CAPTION>
                                                                         2006                   2005
                                                                         ----                   ----
<S>                                                                    <C>                   <C>
                  Nine Months ended September 30,
                    Net loss                                           $(305,511)            $(332,697)
                    Weighted average number of
                      common shares                                      310,121               277,725
                                                                       ---------             ---------
                           Basic and dilutive
                              loss per share                           $   (0.99)            $   (1.20)
                                                                       =========             =========


                                                                         2006                    2005
                                                                         ----                    ----
                  Three Months ended September 30,
                    Net loss                                            $(83,164)            $ (89,641)
                    Weighted average number of
                      common shares                                      328,088               277,725
                                                                        --------             ---------
                           Basic and dilutive
                              loss per share                            $  (0.25)            $   (0.32)
                                                                        ========             =========
</TABLE>

                                       10
<PAGE>
     6. REGULATORY CAPITAL

         The Bank's actual capital and its statutory required capital levels are
as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                                    SEPTEMBER 30, 2006
                             ------------------------------------------------------------------------------
                                                                                           TO BE WELL
                                                                                           CAPITALIZED
                                                                                              UNDER
                                                                                              PROMPT
                                                                 FOR CAPITAL                CORRECTIVE
                                                                  ADEQUACY                    ACTION
                                                                  PURPOSES                  PROVISIONS
                             -------------------------   ------------------------   -----------------------
                                      ACTUAL                      REQUIRED                  REQUIRED
                             -------------------------   -------------------------  -----------------------
                                AMOUNT        %             AMOUNT        %            AMOUNT         %
                             -------------------------   -------------------------  -----------------------
<S>                          <C>             <C>         <C>            <C>         <C>             <C>
Tier 1 core capital          $3,911          5.06%       $3,092         4.00%       $3,865          5.00%
Tangible equity capital       3,911          5.06         1,159         1.50%          n/a           n/a
Total Risk-based capital      4,282          9.45         3,626         8.00%        4,533         10.00%
Tier 1 Risk-based capital     3,911          8.63         1,813         4.00%        2,720          6.00%

<CAPTION>
                                                    DECEMBER 31, 2005
                             ------------------------------------------------------------------------------
                                                                                           TO BE WELL
                                                                                           CAPITALIZED
                                                                                              UNDER
                                                                                              PROMPT
                                                                 FOR CAPITAL                CORRECTIVE
                                                                  ADEQUACY                    ACTION
                                                                  PURPOSES                  PROVISIONS
                             -------------------------   ------------------------   -----------------------
                                      ACTUAL                      REQUIRED                  REQUIRED
                             -------------------------   -------------------------  -----------------------
                                AMOUNT        %             AMOUNT        %            AMOUNT         %
                             -------------------------   -------------------------  -----------------------
<S>                          <C>             <C>         <C>            <C>         <C>             <C>
Tier 1 core capital             $3,923          5.47%       $2,871      4.00%         $3,589        5.00%
Tangible equity capital          3,923          5.47%        1,077      1.50%          1,077        1.50%
Total Risk-based capital         4,311         10.22%        3,373      8.00%          4,217       10.00%
Tier 1 Risk-based capital        3,923          9.30%        1,687      4.00%          2,530        6.00%
</TABLE>

                                       11
<PAGE>
ITEM 2.

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

GENERAL

The following discussion and analysis is intended to assist in understanding the
financial condition and results of operations of the Company.

FORWARD-LOOKING STATEMENTS

When used in this  discussion  and  elsewhere in this  Quarterly  Report on Form
10-QSB,  the words or phrases  "will likely  result,"  "are  expected  to," will
continue," "is anticipated,"  "estimate,"  "project," or similar expressions are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private  Securities  Litigation Reform Act of 1995. The Company cautions readers
not to place undue reliance on any such forward-looking statements,  which speak
only as of the date made, and advises  readers that various  factors,  including
regional  and  national  economic  conditions,  substantial  changes in level of
market  interest  rates,  credit  and  other  risks of  lending  and  investment
activities,  and competitive  and regulatory  factors could affect the Company's
financial  performance  and could  cause the Bank's  actual  results  for future
periods to differ  materially from those  anticipated or projected.  The Company
does not  undertake  and  specifically  disclaims  any  obligation to update any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

ALLOWANCE  FOR LOAN  LOSSES.  The  Company's  condensed  consolidated  financial
statements  are prepared in  accordance  with  accounting  principles  generally
accepted in the United States and follow general  practices within the financial
services  industry.  The most significant  accounting  policies  followed by the
Company are presented in Note 1 to the consolidated  financial statements in the
Company's  Annual Report on Form 10-KSB filed with the  Securities  and Exchange
Commission.  These policies,  along with the disclosures  presented in the other
financial  statement notes and in this financial review,  provide information on
how significant  assets and  liabilities are valued in the financial  statements
and how those values are determined.  Based on the valuation techniques used and
the sensitivity of financial statement amounts to the methods,  assumptions, and
estimates underlying those amounts,  management has identified the determination
of the  allowance  for loan losses to be the  accounting  area that requires the
most  subjective  or complex  judgments,  and as such  could be most  subject to
revision as new information becomes available.

The  allowance  for loan  losses  represents  management's  estimate of probable
credit  losses  inherent in the loan  portfolio.  Determining  the amount of the
allowance for loan losses is considered a critical  accounting  estimate because
it requires  significant judgment and the use of estimates related to the amount
and timing of expected future cash flows on impaired loans,  estimated losses on
loans based on historical loss experience, and consideration of current economic
trends and conditions, all of which may be susceptible to significant change.

The loan  portfolio  also  represents  the largest  asset type on the  condensed
consolidated  balance sheet. Note 1 to the consolidated  financial statements in
the  Company's  Annual  Report on Form  10-KSB  filed  with the  Securities  and
Exchange  Commission  describes the methodology  used to determine the allowance


                                       12
<PAGE>

for loan losses,  and a discussion of the factors  driving changes in the amount
of the allowance for loan losses is included under Asset Quality below.

Loans that  exhibit  probable  or  observed  credit  weaknesses  are  subject to
individual review. Where appropriate, reserves are allocated to individual loans
based on management's estimate of the borrower's ability to repay the loan given
the  availability  of  collateral,  other sources of cash flow and legal options
available to the Company.  Included in the review of individual  loans are those
that are  impaired as provided in SFAS No. 114,  "Accounting  by  Creditors  for
Impairment  of a  Loan."  The  Company  evaluates  the  collectibility  of  both
principal and interest when assessing the need for a loss accrual. Historical or
industry  loss  rates  are  applied  to  other  loans  not  subject  to  reserve
allocations.  These  historical  or  industry  loss  rates may be  adjusted  for
significant  factors that, in management's  judgment,  reflect the impact of any
current  conditions on loss recognition.  Factors which management  considers in
the analysis include the effects of the national and local economies,  trends in
the  nature  and  volume of loans  (delinquencies,  charge-offs  and  nonaccrual
loans),  changes  in  mix,  asset  quality  trends,  risk  management  and  loan
administration,  changes in internal lending policies and credit standards,  and
examination  results  from bank  regulatory  agencies  and our  internal  credit
examiners.

An unallocated  reserve is maintained to recognize the imprecision in estimating
and measuring loss when  evaluating  reserves for  individual  loans or pools of
loans.  Reserves on individual  loans and  historical or industry loss rates are
reviewed  quarterly and adjusted as necessary based on changing  borrower and/or
collateral conditions and actual collection and charge-off experience.

The Company has not substantively  changed any aspect of its overall approach in
the determination of the allowance for loan losses.  There have been no material
changes in  assumptions  or  estimation  techniques as compared to prior periods
that impacted the determination of the current period allowance.

Based on the procedures  discussed above,  management is of the opinion that the
reserve of $370,879 was adequate, but not excessive,  to absorb estimated credit
losses associated with the loan portfolio at September 30, 2006.

DEFERRED INCOME TAXES. We have recorded a net deferred tax asset of $9,900 as of
September  30, 2006,  relating to the  unrealized  losses on  available-for-sale
securities.  We evaluate  this asset on a quarterly  basis.  We have  recorded a
valuation allowance on our remaining deferred tax asset, as we can not determine
that it is more likely than not that it will be utilized. At September 30, 2006,
the valuation allowance is $670,700.

COMPARISON  OF THE RESULTS OF  OPERATIONS  FOR THE THREE AND NINE MONTH  PERIODS
ENDED SEPTEMBER 30, 2006 AND 2005

NET  INCOME/LOSS.  Net loss for the three  months ended  September  30, 2006 was
$83,200  ($0.25 per share)  compared to a net loss of $89,600  ($0.32 per share)
for the three months  ended  September  30,  2005.  Net loss for the nine months
ended  September 30, 2006 was $305,500  ($0.99 per share) compared to a net loss
of $332,700  ($1.20 per share) for the nine months ended September 30, 2005. The
improvement in net loss for the 2006 periods reflected increases in non-interest
income and, for the nine-month period, a lower provision for loan losses,  which
offset a decrease in net interest  income and an increase in other  expenses for
the periods.

NET INTEREST INCOME. Net interest income decreased $22,900, or 5.2%, to $413,300
for the three months ended September 30, 2006 compared to $436,200 for the three
months ended September 30, 2005. Year-to-date net interest

                                       13
<PAGE>

income was $1,259,000 compared to $1,297,100 for the nine months ended September
30, 2005, a decrease of $38,100,  or 2.9%.  The decrease in net interest  income
during the 2006 periods was  attributable to an increase in interest expense for
deposits  and  Federal  Home  Loan Bank and other  borrowings,  which  offset an
increase in interest income. Interest income for the three and nine months ended
September 30, 2006 was $1.1 million and $3.1 million,  respectively, an increase
of $193,000 and $592,700  over the prior year.  The increase in interest  income
reflects   a  higher   volume  of   interest-earning   assets  and  a  shift  in
interest-earning  assets into  higher-yielding  loans. For the nine months ended
September  30,  2006,  net loans  averaged  $66.7  million as  compared to $57.0
million  for the first nine  months of fiscal  year 2005,  an  increase  of $9.7
million,  or 17.0%.  The increased  income from loans helped offset increases in
interest expense of $215,900,  or 45.5%,  and $630,800,  or 50.3%, for the three
and nine months  ended  September  30,  2006,  respectively.  The  increases  in
interest  expense  reflect  both a higher  volume of deposits  and  increases in
short-term  rates as the result of the Federal  Reserve's  four increases in the
targeted Federal Funds rate over the past year.  Interest expense  increased due
to higher  rates and the  Bank's  greater  use of FHLB  borrowings  to fund loan
growth,  as well as the  Company's  use of a  revolving  line of credit with The
Banker's Bank to provide additional capital for the Bank.  Reflecting the recent
increases in  short-term  interest  rates,  which have not been  accompanied  by
increased  long-term  rates,  the Bank's interest rate spread decreased to 1.99%
for the nine months  ended  September  30,  2006  compared to 2.47% for the nine
months ended September 30, 2005. Net interest margin  decreased to 2.36% for the
2006 period compared to 2.71% for the 2005 period.

PROVISION FOR LOAN LOSSES. The provision for loan losses was $16,000 and $17,500
for the three and nine months ended September 30, 2006,  respectively,  compared
to $8,000 and $69,500 for the three and nine months  ended  September  30, 2005,
respectively.  The Bank  makes  provisions  for loan  losses in  amounts  deemed
necessary  to  maintain  the  adequacy  of the  allowance  for loan  losses.  At
September 30, 2006, the Bank's allowance for loan losses was $370,879, or 0.52%,
of the gross loan portfolio.

NONINTEREST  INCOME.  Noninterest income was $135,500 and $375,200 for the three
and nine months ended September 30, 2006, respectively, compared to $102,600 and
$280,500 for the three and nine months ended  September 30, 2005,  respectively.
The increase in nonintnerest  income included an increase in service charges and
fees which the Company attributes to a larger deposit base.  Included in service
charges and fees for the three and nine  months  ended  September  30, 2006 were
$27,200  and $79,300 in ATM fees,  an  increase of $6,900 and $22,300  over 2005
when such fees were categorized as other income.

NONINTEREST EXPENSE. Noninterest expense was $616,000 and $620,400 for the three
months ended  September  30, 2006 and 2005,  respectively,  and  $1,922,200  and
$1,840,800 for the nine months ended September 30, 2006 and 2005, respectively.

Compensation and benefits expense  decreased by $5,600, or 2.2%, to $248,700 for
the three months  ended  September  30, 2006  compared to $254,300 for the three
months ended  September 30, 2005 and increased by $14,100,  or 1.8%, to $782,700
for the nine months ended  September  30, 2006 compared to $768,600 for the nine
months ended  September  30, 2005.  The  increase in  compensation  and benefits
expense  was  primarily  due to an  increase  in the cost of funding  the Bank's
defined  benefit  pension  plan in the  current  low rate  environment.  Pension
expense increased $15,500, or 117.4%, to $28,700 for the quarter and $45,100, or
110.3%,  to $86,000 for the  nine-months  ended  September  30,  2006.  Salaries
decreased by $21,300,  or 9.5%, to $201,900 for the three months ended September
30, 2006 compared to $223,200 for the three months ended  September 30, 2005 and
decreased by $25,500,  or 3.9%, to $630,400 for the

                                       14
<PAGE>

nine months ended  September  30, 2006  compared to $655,900 for the nine months
ended September 30, 2005. Director fees declined $9,600, or 88.9%, to $1,200 for
the three months ended  September 30, 2006 and $19,200,  or 59.3% to $13,200 for
the nine months ended  September 30, 2006 from $10,800 and $32,400 for the three
and nine months ended  September  30, 2005 as certain  directors  have agreed to
waive their fees indefinitely.

Professional  fees  increased  $2,300,  or 8.9%, to $28,200 for the three months
ended  September 30, 2006 and increased  $27,600,  or 36.0%, to $104,200 for the
nine months  ended  September  30, 2006  compared to $25,900 and $76,600 for the
three and nine months ended  September 30, 2005 due to higher accruals for legal
and accounting fees.

Computer and data processing  expense increased by $400, or 0.6%, to $69,200 for
the three  months  ended  September  30, 2006  compared to $68,800 for the three
months ended September 30, 2005 and increased by $23,100,  or 13.0%, to $200,900
for the nine months  ended  September  30, 2006 and compared to $177,800 for the
nine months  ended  September  30,  2005.  The  increase  in  computer  and data
processing expense reflects the decision to begin offering free internet banking
and bill pay in response to competitive  considerations  as well as increases in
charges by our core data processor.

Advertising expenses increased $3,800, or 26.0%, to $18,400 for the three months
ended September 30, 2006 and decreased  $1,800, or 2.5%, to $71,600 for the nine
months ended  September  30, 2006  compared to $14,600 and $73,400 for the three
and nine months ended September 30, 2005. The increase during the quarter ending
September 30, 2006 reflects increased radio and advertising costs.

Office supplies and postage expenses  decreased  $2,200, or 7.3%, to $27,900 for
the three  months ended  September  30, 2006 and  increased  $700,  or 0.8%,  to
$90,300 for the nine months  ended  September  30, 2006  compared to $30,100 and
$89,600 for the three and nine months ended  September  30,  2005.  The increase
during the nine months  ended  September  30, 2006 was due  primarily  to rising
postage expenses and increased mailings due to the larger customer base.

Other operating expenses increased $14,400, or 17.6%, to $96,100 for the quarter
and increased  $28,700,  or 11.7%,  to $274,700  year-to-date  due in part to an
increase in regulatory assessments of $1,000, or 10.1%, to $10,900 for the three
months ended  September  30, 2006 and of $10,900,  or 51.2%,  to $32,200 for the
nine months ended September 30, 2006.  ATM-related fees increased by $9,900,  or
35.5%, to $37,800 for the three months ended September 30, 2006 and increased by
$26,200,  or 33.2%,  to $105,100 for the nine months ended  September  30, 2006.
Additionally,  service  charges  on the  Federal  Home Loan  Bank  correspondent
checking account  increased by $1,100,  or 8.3%, to $14,400 for the three months
ended September 30, 2006 and by $4,600, or 13.1%, to $39,700 for the nine months
ended September 30, 2006.

The FDIC has adopted a new risk-based  deposit insurance  assessment system that
will require all FDIC-insured  institutions to pay quarterly  premiums beginning
in  2007.   Annual   premiums   will  range  from  5  and  7  basis  points  for
well-capitalized  banks with the highest  examination  ratings to up to 43 basis
points for  undercapitalized  institutions.  The Bank will be able to offset the
premium with an estimated  assessment  credit of $41,000 for premiums paid prior
to 1996.

INCOME TAX EXPENSE.  The Company  provides for both the current and deferred tax
effects  of the  transactions  reported  in its  financial  statements  and  has
established  deferred tax assets and liabilities  for the temporary  differences
between the financial reporting and tax bases of its assets and liabilities. The
Company establishes  valuation allowances for its net deferred tax assets unless
it is more likely than not that these net  deferred tax assets will be

                                       15
<PAGE>

realized.  Based on its current  earnings,  its future projected  earnings,  and
other  factors,  the  Company  determined  in 2004  that it was  appropriate  to
establish a valuation allowance of $418,500 for its net deferred tax assets. The
balance of the  valuation  allowance  at  September  30, 2006 is  $670,700.  The
increases in the  valuation  allowance  for the nine months ended  September 30,
2006 of $103,900 relates to the net losses incurred in 2006.

As of September  30, 2006,  we had  approximately  $2.2 million in net operating
loss   carrryforwards   created  by  our  losses  in  prior  years.  These  loss
carryforwards  are  available  to offset our taxable  income in future  periods.
Under  Section  382 of the  Internal  Revenue  Code,  the  availability  of loss
carryforwards is limited if we undergo an ownership change for tax purposes.  An
ownership  change occurs when the percentage  stock  ownership of one or more 5%
stockholders  increase  by more  than  50  percentage  points  over  the  lowest
percentage owned by these stockholders at any time during any three-year period.
For  purposes of this test,  any new group of owners will be treated as a single
5%  stockholder.  Following an ownership  change,  the amount of taxable  income
which  may  be  offset  during  any  year  by  pre-change   net  operating  loss
carryforwards  is limited to an amount equal to (i) the fair market value of the
company  immediately  before  the  "ownership  change,"  multiplied  by (ii) the
applicable  long-term tax-exempt interest rate published by the Internal Revenue
Service.  To the extent the annual  limitation  in a year  exceeds  the  taxable
income for that year, the excess  limitation may be carried  forward to increase
the following year's limitation.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2006 AND DECEMBER 31, 2005

The  Company's  total assets as of  September  30, 2006 were $77.3  million,  an
increase of $5.6  million,  or 7.8%,  from  December  31,  2005's level of $71.7
million.  The increase was due primarily to growth in the loan  portfolio,  more
specifically  an increase  in  one-to-four  family  first  mortgage  loans which
increased  $6.3  million,  or 13.2%.  Net  loans  receivable  increased  by $6.1
million,  or 9.4%, which reflected our continued  marketing efforts.  Commercial
mortgage loans decreased  $293,800,  or 3.8%, and decreased to 10.4% of the loan
portfolio at September  30, 2006 from 11.3% at December 31, 2005.  The Company's
investment  securities  decreased  by  $489,600,  or 27.7%,  to $1.3  million at
September  30, 2006 due to  maturities  of  securities.  Premises and  equipment
decreased  $146,800,  or 6.4%, due to current year  depreciation.  The Company's
cash and cash equivalents as of September 30, 2006 were $1.9 million, a decrease
of $100,000 from December 31, 2005's level of $2.0 million.

Liabilities  increased by $5.5 million,  or 7.9%, to $74.5 million due primarily
to a $8.2  million,  or 15.1%,  increase in deposits  as the Bank  continued  to
attract  deposits  locally at favorable  rates.  The  increase in deposits  came
primarily from checking accounts and certificates of deposit.  Federal Home Loan
Bank advances  decreased $2.7 million,  or 21.0%,  to $10.3 million at September
30, 2006 from $13.0  million at December  31, 2005.  The Bank has used  proceeds
from the increase in deposits to help pay down the advances.  Advances under our
line of credit from our  correspondent  bank  decreased to $750,000 at September
30, 2006 from $850,000 at December 31, 2005 as we used a portion of the proceeds
from the private placement of our common stock to pay down the line.

Stockholders'  equity  increased to $2.8 million at September 30, 2006 from $2.7
million at  December  31,  2005.  The small  increase  in  stockholders'  equity
principally  reflects  $394,600 in proceeds  from the issue of 50,363  shares of
Common  Stock during the period and was  partially  offset by $305,500 in losses
during the period.

                                       16
<PAGE>

ASSET QUALITY

The following table sets forth  information  regarding the Bank's  nonperforming
assets at the dates indicated.
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,           DECEMBER 31,
                                                                                 2006                    2005
                                                                             ------------            ------------
<S>                                                                             <C>                    <C>
  Non-accrual loans                                                             $ 90,000               $263,000
  Accruing loans past due 90 days or more                                        328,200                 44,000
                                                                                --------               --------
    Total non-performing loans                                                   418,200                307,000
  Foreclosed assets                                                               52,700                     --
                                                                                --------               --------
    Total non-performing assets                                                 $470,900               $307,000
                                                                                ========               ========
</TABLE>

Non-accrual  loans at September  30, 2006  consisted  of 2 loans.  There were 10
accruing loans past due 90 days or more at September 30, 2006.

At September  30, 2006,  there were no loans  outstanding  not  reflected in the
above table as to which known  information  about  possible  credit  problems of
borrowers  caused  management  to have serious  doubts as to the ability of such
borrowers to comply with present loan repayment terms.

An analysis of the changes in the allowance for loan losses is as follows:
<TABLE>

                                                                                NINE MONTHS ENDED
                                                                                  SEPTEMBER 30,
                                                                          -----------------------------
                                                                             2006                2005
                                                                          ---------           ---------
<S>                                                                        <C>                <C>
Balance, beginning of period                                               $387,822           $ 319,937
Loans charged off                                                           (35,454)            (16,192)
Loan recoveries                                                               1,011               5,086
                                                                          ---------           ---------
     Net charge-offs                                                        (34,443)            (11,106)


Provision for loan losses                                                    17,500              69,500
                                                                          ---------           ---------

Balance, end of period                                                     $370,879           $ 378,331
                                                                          =========           =========
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company currently has no operating  business other than that of the Bank and
does not have material funding needs other than servicing its outstanding  debt.
In the future,  the Company may require funds for dividends and tax payments for
which it will rely on dividends and other  distributions from the Bank. The Bank
is subject to various regulatory restrictions on the payment of dividends.

The  Bank's  primary  sources  of funds  are  deposits,  repayment  of loans and
mortgage-backed  securities,  maturities  of  investments  and  interest-bearing
deposits and funds  provided  from  operations.  The Bank is also able to obtain
advances from the FHLB of Cincinnati.  While  scheduled  repayments of loans and
mortgage-backed   securities  and   maturities  of  investment   securities  are
relatively  predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by the general level of interest rates,  economic  conditions
and  competition.  The Bank uses its  liquidity  resources  principally  to fund
existing and future loan  commitments,  to fund maturing time  certificates  and
demand  deposit  withdrawals,  to invest in other  interest-earning  assets,  to
maintain liquidity, and to meet operating expenses.

                                       17
<PAGE>

Liquidity  may be adversely  affected by  unexpected  deposit  outflows,  higher
interest rates paid by competitors,  adverse  publicity  relating to the savings
and loan industry, and similar matters.  Management monitors projected liquidity
needs and determines the level  desirable,  based in part on our  commitments to
make loans and management's assessment of our ability to generate funds.

A major portion of our liquidity  consists of cash and cash  equivalents,  which
include cash and  interest-bearing  deposits in other banks.  The level of these
assets  is  dependent  upon our  operating,  investing,  lending  and  financing
activities  during  any given  period.  At  September  30,  2006,  cash and cash
equivalents totaled $1.9 million.

The Bank's primary investing  activities is the origination of loans. During the
nine months ended September 30, 2006 and 2005, loan  originations  totaled $21.9
million and $25.7 million, respectively.  These originations were funded in part
by proceeds from  repayments of loans,  maturities  and calls of investment  and
mortgage-backed securities and an increase in deposits and FHLB borrowings.

At September 30, 2006, the Bank had $2.7 million in  outstanding  commitments to
originate  loans.  The  Bank  anticipates  that it will  have  sufficient  funds
available to meet its current loan origination  commitments.  Time certificates,
which are  scheduled  to mature in one year or less,  totaled  $40.4  million at
September 30, 2006. Based on historical  experience,  management believes that a
significant  portion of such deposits will remain with the Bank,  although there
can be no  assurance  that it will do so.  In the  event  the Bank is  unable to
retain  these  deposits,  it may seek  replacement  funding  through the FHLB of
Cincinnati or other sources.

The Bank relies  primarily on local deposits for its funding needs.  In order to
finance loan growth,  the Bank may also borrow from the FHLB of  Cincinnati.  At
September 30, 2006, the Bank had $22.0 million in unused  borrowing  capacity at
the FHLB of Cincinnati.

The Bank is subject to minimum capital requirements under OTS regulations. Under
these regulations, banks must maintain a Tier 1 or Core Capital ratio of 5.0%, a
Tier 1  Risk-Based  Ratio  of 6.0% and a total  risk-based  ratio of 10.0% to be
"well  capitalized." To be adequately  capitalized a bank must maintain a Tier 1
Ratio of 4.0%, a Tier 1 Risk-Based Ratio of 4.0% and a Total Risk-Based  Capital
Ratio of 8.0%. At September 30, 2006,  the Bank's Tier 1/Core  Capital ratio was
5.06%,  its Tier 1 risk-based  capital ratio was 8.63% and its total  risk-based
capital ratio was 9.45%.

The  Company  has  previously  borrowed  $750,000  on a line  of  credit  from a
correspondent bank and $390,100 from directors to provide  additional  liquidity
at the holding  company level and for capital  contributions  for the Bank.  The
line of  credit  provides  for an  interest  rate at the prime  rate plus  0.25%
(currently 8.50%) and is secured by the Company's stock in the Bank. Interest on
the borrowing from directors is at 7.50% per annum. Both of these borrowings are
scheduled to mature on November 15, 2006.  Under the terms of the renewal of our
loan from the  correspondent  bank,  we are  required  to  maintain  an interest
reserve of approximately $53,000, which is pledged as additional collateral, and
Community First Bank is required to maintain a total risk-based capital ratio of
at least 10% (Bank's ratio at September  30, 2006 was 9.45%),  a Tier 1 leverage
ratio of a least 5.25% and a minimum  equity  capital of at least $3.0  million.
Criticized loans may not exceed 5.0% of assets. Although Community First Bank is
not currently in compliance with the regulatory capital requirements in the loan
agreement,  the  lender  has not  declared  a  default.  The  Company  currently
anticipates  that it will be able to renew these borrowings on similar terms but
does not have any

                                       18
<PAGE>

assurances in this regard.  In the event that the Company is unable to renew its
third-party   borrowing  on  acceptable  terms,  it  would  not  have  currently
sufficient  resources  to repay the  indebtedness  and would seek to replace the
borrowing with financing from another source or raise additional  equity capital
in a public  offering  or private  placement  or pursue a  combination  of these
strategies.  The Company has a  registration  statement on file with the SEC for
the sale of up to 862,500  shares of common  stock.  There can be no  assurance,
however,  that the  Company  would be able to  successfully  replace its current
funding  if it is not  available  on  acceptable  terms or that it  could  avoid
default.

ITEM 3.  CONTROLS AND PROCEDURES

The Company's  management  evaluated,  with the  participation  of the Company's
Chief Executive  Officer and Chief Financial  Officer,  the effectiveness of the
Company's  disclosure  controls  and  procedures,  as of the  end of the  period
covered by this report.  Based on that evaluation,  the Chief Executive  Officer
and Chief  Financial  Officer  concluded  that,  due to the material  weaknesses
described  below,  the Company's  disclosure  controls and  procedures  were not
effective to ensure that information  required to be disclosed by the Company in
the reports that it files or submits under the  Securities  Exchange Act of 1934
is  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in the Securities  and Exchange  Commission's  rules and forms.  There
were no changes in the Company's internal control over financial  reporting that
occurred during the Company's last fiscal quarter that have materially affected,
or are reasonably likely to materially  affect,  the Company's  internal control
over financial reporting.

In connection  with their audit of our financial  statements  for the year ended
December 31, 2005, our independent  registered  public  accounting  firm, King +
Company,  PSC,  identified  material  weaknesses,  as defined in Public  Company
Accounting  Oversight  Board  Standard  No.  2,  in our  internal  control  over
financial reporting.  Specifically, King + Company PSC noted a failure to timely
perform various account reconciliations.  In addition, King + Company, PSC noted
a lack of segregation of duties among the personnel  responsible for reconciling
various  accounts.  Management  believes  that these  weaknesses  are  primarily
attributable to human resource  limitations  within our accounting and financial
reporting   function   and  has   instituted   a  schedule   for   accomplishing
reconciliations as well as additional reviews of entries made by employees.  The
Company has hired  additional  personnel with internal audit  experience.  Daily
reconciliations  of the larger accounts and timely  reconciliations of the other
accounts are now being performed. We have allocated $75,000 of our allowance for
loan  loses  to  accommodate  losses  that  we  may  incur  in  connection  with
uncollected  overdrafts and other charges  carried in our Due From Bank account.
Actual losses will be recorded as they are identified during the  reconciliation
process.  All entries made by personnel in the  reconciliation  function are now
reviewed daily by a member of management.

Other than as described above,  there were no changes in the Company's  internal
control over financial  reporting that occurred during the Company's last fiscal
quarter that have materially  affected,  or are reasonably  likely to materially
affect, the Company's internal control over financial reporting.

                                       19
<PAGE>


PART II
                                OTHER INFORMATION


ITEM 6.  EXHIBITS
         -------

                  The  following   exhibits  are  either  being  filed  with  or
                  incorporated  by  reference in this  quarterly  report on Form
                  10-QSB:
<TABLE>
<CAPTION>
         NUMBER   DESCRIPTION
         ------   -----------
<S>      <C>      <C>
         3.1      Articles of Incorporation *
         3.2      Bylaws *
         4        Form of Common Stock Certificate *
         10.1     Employment Agreement with William M. Tandy *
         10.2     2004 Stock Option Plan **
         10.3     Community First Bank 2005 Restricted Stock Plan ***
         31.1     Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
         31.2     Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
         32       Section 1350 Certification
</TABLE>

         ---------------
         *        Incorporated by reference from the Registrant's Registration
                  Statement on Form SB-2 (File No. 333-104226).
         **       Incorporated by reference from Registrant's Registration
                  Statement on Form S-8 (File No. 333-116450).
         ***      Incorporated by reference from Registrant's Registration
                  Statement on Form S-8 (File No. 333-125769).


<PAGE>



                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                    COMMUNITY FIRST BANCORP, INC.


Date: November 14, 2006             /s/ William M. Tandy
                                    --------------------------------------------
                                    William M. Tandy, President
                                    (Duly Authorized Representative)


Date: November 14, 2006             /s/ Michael D. Wortham
                                    --------------------------------------------
                                    Michael D. Wortham, Vice President
                                    (Chief Financial Officer)


                                       20