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 June 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 June 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]


                                       1

<PAGE>

                          COMMUNITY FIRST BANCORP, INC.

                             Madisonville, Kentucky

                                      INDEX

                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION
------

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of June 30, 2006
              (Unaudited) and December 31, 2005                               3
         Condensed Consolidated Statements of Operations - (Unaudited)
              for the three and six months ended June 30, 2006
              and 2005                                                        4
         Condensed Consolidated Statements of Cash Flows - (Unaudited)
              for the six months ended June 30, 2006 and 2005                 5
         Condensed Consolidated Statements of Changes in Stockholders'
              Equity - (Unaudited) for the six months ended
              June 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 2.  Unregistered Sales of Equity Securities and
         Use of Proceeds                                                     19

Item 4.  Submission of Matters to a Vote of Security Matters

Item 6.  Exhibits                                                            19

Signatures                                                                   20














                                       2
<PAGE>

                          COMMUNITY FIRST BANCORP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              June 30,          December 31,
                                                                2006               2005
                                                            ------------       -------------
                                                            (Unaudited)
<S>                                                       <C>                <C>
           Assets
Cash and cash equivalents:
    Cash and due from banks                                 $    582,854       $    785,814
    Interest-bearing demand deposits                           1,610,151          1,223,134
                                                            ------------       ------------
        Total cash and cash equivalents                        2,193,005          2,008,948

Securities, held-to-maturity (market values of
   $63,086 and $69,257 at June 30, 2006
   and December 31, 2005, respectively)                           60,328             65,522
Securities, available-for-sale, at fair value                  1,206,947          1,703,147
Loans, net of the allowance for loan loss of
   $386,836 and $387,822 at June 30, 2006
   and December 31, 2005, respectively                        67,608,106         64,578,288
Premises and equipment, net                                    2,184,004          2,286,004
Foreclosed real estate                                            53,525                 --
Federal Home Loan Bank (FHLB) stock                              742,500            721,900
Interest receivable                                              335,214            288,501
Deferred income taxes                                             14,993             16,587
Other assets                                                      91,410             59,817
                                                            ------------       ------------
        Total assets                                        $ 74,490,032       $ 71,728,714
                                                            ============       ============

           Liabilities and Stockholders' Equity
Liabilities:
    Deposits                                                $ 60,294,684       $ 54,476,673
    FHLB advances                                              9,825,000         13,000,000
    Advances under line of credit                                750,000            850,000
    Loans from directors                                         390,126            400,000
    Interest payable and other liabilities                       356,458            282,040
                                                            ------------       ------------
        Total liabilities                                     71,616,268         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 June 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                                                  69,646            291,993
    Accumulated other comprehensive loss                         (29,105)           (32,197)
                                                            ------------       ------------
        Total stockholders' equity                             2,873,764          2,720,001
                                                            ------------       ------------
        Total liabilities and stockholders' equity
                                                            $ 74,490,032       $ 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 six months ended June 30, 2006 and 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                            Three Months Ended                  Six Months Ended
                                                 June 30,                           June 30,
                                      -----------------------------       -----------------------------
                                         2006              2005              2006              2005
                                      -----------       -----------       -----------       -----------
<S>                                 <C>               <C>               <C>               <C>
Interest and dividend income:
  Loans                               $ 1,015,657       $   821,115       $ 1,992,869       $ 1,578,378
  Investment securities                    12,331            20,866            26,919            45,709
  Dividends on FHLB Stock                  10,495             8,442            20,730            16,767
                                      -----------       -----------       -----------       -----------
      Total interest and
        dividend income                 1,038,483           850,423         2,040,518         1,640,854
                                      -----------       -----------       -----------       -----------

Interest expense:
  Deposits                                490,661           323,778           909,359           613,175
  FHLB advances                           110,170            80,119           235,501           145,350
  Other borrowings                         23,570            11,203            49,973            11,203
                                      -----------       -----------       -----------       -----------
      Total interest expense              624,401           415,100         1,194,833           769,728
                                      -----------       -----------       -----------       -----------

      Net interest income                 414,082           435,323           845,685           871,126

  Provision for loan losses                    --            22,500             1,500            61,500
                                      -----------       -----------       -----------       -----------
      Net interest income
        after provision for
        loan losses                       414,082           412,823           844,185           809,626
                                      -----------       -----------       -----------       -----------

Noninterest income:
  Service charges and fees                121,432            92,986           217,429           171,166
  Foreclosed real estate
    expense, net                               --            (2,931)             (550)           (3,526)
  Gain (loss) on sale of
    repossessed vehicles                    3,000               795             3,000            (1,965)
  Insurance commissions and
    premiums                                1,604             2,180             2,553             2,761
  Other income                              9,836             3,528            17,269             9,459
                                      -----------       -----------       -----------       -----------
    Total noninterest income              135,872            96,558           239,701           177,895
                                      -----------       -----------       -----------       -----------

Noninterest expense:
  Compensation and benefits               261,768           266,727           533,913           514,337
  Directors fees                            1,200            10,800            12,000            21,600
  Occupancy expense                        82,176            81,510           161,214           159,038
  Insurance premiums                       10,030             5,983            19,998            11,343
  Data processing                          67,652            57,605           131,725           109,020
  Advertising                              34,299            25,409            53,180            58,762
  Office supplies and postage              30,789            27,225            62,399            59,514
  Payroll and other taxes                  38,897            38,237            77,230            71,747
  Professional fees                        41,210            31,651            75,933            50,697
  Other operating expenses                 90,524            88,832           178,641           174,519
                                      -----------       -----------       -----------       -----------
      Total noninterest
          expense                         658,545           633,979         1,306,233         1,230,577
                                      -----------       -----------       -----------       -----------
Loss before income taxes                 (108,591)         (124,598)         (222,347)         (243,056)

Provision (credit) for income
  taxes                                        --                --                --                --
                                      -----------       -----------       -----------       -----------

Net loss                              $  (108,591)      $  (124,598)      $  (222,347)      $  (243,056)
                                      ===========       ===========       ===========       ===========
Basic loss per share                  $     (0.33)      $     (0.45)      $     (0.74)      $     (0.88)
                                      ===========       ===========       ===========       ===========
Diluted loss per share                $     (0.33)      $     (0.45)      $     (0.74)      $     (0.88)
                                      ===========       ===========       ===========       ===========
</TABLE>


            See notes to condensed consolidated financial statements.



                                       4

<PAGE>

                          COMMUNITY FIRST BANCORP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the six months ended June 30, 2006 and 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                                June 30,
                                                                   ----------------------------------
                                                                       2006                  2005
                                                                   ------------          ------------
<S>                                                              <C>                   <C>
Operating Activities:
    Net loss                                                       $   (222,347)         $   (243,056)
    Adjustments to reconcile net loss to net
      Cash used by operating activities:
        FHLB stock dividend                                             (20,600)              (16,000)
        Provision for loan losses                                         1,500                61,500
        Deferred compensation for Restricted Stock Plan                  (8,960)                   --
        Depreciation, amortization and accretion                        102,888               108,517
        Change in assets and liabilities:
            Other assets                                                (84,310)              (71,507)
            Accrued interest receivable and other assets                (46,713)              (40,486)
            Accrued interest payable and other liabilities             (149,801)              117,647
                                                                   ------------          ------------

                Net cash used by
                  operating activities                                 (428,343)              (81,420)
                                                                   ------------          ------------

Investing Activities:
    Net increase in loans                                            (3,032,126)           (6,980,563)
    Proceeds from maturities/calls of held-to-maturity
       securities                                                       505,192                15,692
    Purchases of premises and equipment                                      --                  (650)
                                                                   ------------          ------------

                Net cash used in investing activities                (2,526,934)           (6,965,521)
                                                                   ------------          ------------

Financing Activities:
    Net increase in deposits                                          6,051,190             6,319,851
    Payments on short-term borrowings                               (12,875,000)           (6,000,000)
    Proceeds from short-term borrowings                               9,600,000             4,500,000
    Proceeds from issuance of stock                                     363,144                    --
                                                                   ------------          ------------

                Net cash provided by financing activities             3,139,334             4,819,851
                                                                   ------------          ------------

Net (decrease) increase in cash and cash equivalents                    184,057            (2,227,090)
Cash and cash equivalents, beginning of period                        2,008,948             5,793,196
                                                                   ------------          ------------
Cash and cash equivalents, end of period                           $  2,193,005          $  3,566,106
                                                                   ============          ============
</TABLE>



            See notes to condensed consolidated financial statements.




                                       5
<PAGE>

                          COMMUNITY FIRST BANCORP, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                 For the six months ended June 30, 2006 and 2005
                                   (Unaudited)



                                                          Six Months Ended
                                                              June 30,
                                                    --------------------------
                                                        2006           2005
                                                    -----------     ----------

Supplemental Disclosures:
Cash paid for interest                               $1,144,860     $  758,525
                                                     ==========     ==========

Non-cash Transactions:
Federal Home Loan Bank Stock dividend received       $   20,600     $   16,000
                                                     ==========     ==========
Notes converted to stock                             $    9,874     $   25,000
                                                     ==========     ==========





            See notes to condensed consolidated financial statements.












                                       6


<PAGE>

                          COMMUNITY FIRST BANCORP, INC.
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 For the six months ended June 30, 2006 and 2005
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                   Accumulated
                                    Common Stock         Additional                  Other
                                  -------------------     Paid-in     Retained    Comprehensive     Comprehensive
                                    Shares     Amount     Capital     Earnings    Income (Loss)     Income (Loss)         Total
                                  --------------------------------------------------------------------------------------------------

<S>                              <C>        <C>       <C>           <C>          <C>              <C>                <C>
Balance, January 1, 2005           277,725    $ 2,777   $ 2,457,428   $ 731,477    $ (28,187)                --        $ 3,163,495

  Comprehensive income
    Net loss                            --         --            --    (243,056)          --        $  (243,056)          (243,056)
    Change in unrealized
      depreciation on
      available-for-sale
      securities, net of
      taxes                             --         --            --          --       (1,670)            (1,670)            (1,670)
                                                                                                    -----------
       Total comprehensive loss                                                                     $  (244,726)
                                   -------    -------   -----------   ---------    ---------        ===========        -----------

Balance, June 30, 2005             277,725    $ 2,777   $ 2,457,428   $ 488,421    $ (29,857)                          $ 2,918,769
                                   =======    =======   ===========   =========    =========                           ===========

Balance, January 1, 2006           277,725    $ 2,777   $ 2,457,428   $ 291,993    $ (32,197)                          $ 2,720,001

  Comprehensive income
    Net loss                            --         --            --    (222,347)          --           (222,347)          (222,347)
    Change in unrealized
      depreciation on
      available-for-sale
      securities, net of
      taxes                             --         --            --          --        3,092              3,092              3,092
                                                                                                    -----------        -----------
       Total comprehensive loss                                                                     $  (219,255)
                                                                                                    ===========
      Issuance of stock             50,363        503       372,515                                                        373,018
                                   -------    -------   -----------   ---------    ---------                           -----------

    Balance, June 30, 2006         328,088    $ 3,280   $ 2,829,943   $  69,646    $ (29,105)                          $ 2,873,764
                                   =======    =======   ===========   =========    =========                           ===========
</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.


                                       8
<PAGE>

     The  unaudited  condensed  consolidated  financial  statements  include the
     accounts  of the  Company  and the  Bank  for the  periods  presented.  All
     material  intercompany  balances and  transactions  have been eliminated in
     consolidation.


3.   STOCK-BASED EMPLOYEE COMPENSATION PLAN

     Stock Option Plan

     At June 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 six month     For the three month
                                              period ended           period ended
                                             June 30, 2005          June 30, 2005
                                            -----------------------------------------

<S>                                         <C>                    <C>
     Net loss, as reported                    $  (243,056)           $  (124,598)

     Less total stock-based employee
        compensation cost determined
        under the fair value based
        method, net of income taxes                 6,478                  3,239
                                              -----------            -----------

     Pro forma net loss                       $  (249,534)           $  (127,837)
                                              ===========            ===========

     Earnings per share:
         Basic - as reported                  $     (0.88)           $     (0.45)
                                              ===========            ===========
         Basic - pro forma                    $     (0.90)           $     (0.46)
                                              ===========            ===========
         Diluted - as reported                $     (0.88)           $     (0.45)
                                              ===========            ===========
         Diluted - pro forma                  $     (0.90)           $     (0.46)
                                              ===========            ===========
</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


                                       9
<PAGE>

     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 the three and
     six months ended June 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:

                                             For the six       For the six
                                             month period      month period
                                            ended June 30,    ended June 30,
                                                2006              2005
                                            --------------    --------------

     Unrealized loss on available-
        for-sale securities before
        tax effect                             $(4,688)         $ 2,531
     Tax benefit                                 1,594             (861)
                                                -------          -------
              Other comprehensive
                income (loss)                  $(3,094)         $ 1,670
                                               =======          =======

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).

                                           2006             2005
                                        ---------        ---------
     Six Months ended June 30,
       Net loss                         $(222,347)       $(243,056)
       Weighted average number of
         common shares                    300,989          277,725
                                        ---------        ---------
              Basic and dilutive
                 loss per share         $   (0.74)       $   (0.88)
                                        =========        =========


                                           2006             2005
                                        ---------        ---------
     Three Months ended June 30,
       Net loss                         $(108,591)       $(124,598)
       Weighted average number of
         common shares                    323,834          277,725
                                        ---------        ---------
              Basic and dilutive
                 loss per share         $   (0.33)       $   (0.45)
                                        =========        =========





                                       10


<PAGE>



6.   REGULATORY CAPITAL

     The Bank's actual capital and its statutory  required capital levels are as
     follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                   June 30, 2006
                                  ---------------------------------------------------------------------------------
                                                                                                To be Well
                                                                                             Capitalized Under
                                                                     For Capital             Prompt Corrective
                                                                  Adequacy Purposes          Action Provisions
                                  -------------------------   -------------------------  --------------------------
                                           Actual                     Required                   Required
                                  -------------------------   -------------------------  --------------------------
                                     Amount           %          Amount         %            Amount          %
                                  -------------------------   -------------------------  --------------------------

<S>                                <C>            <C>         <C>            <C>         <C>             <C>
     Tier 1 core capital             $3,962         5.32%       $2,981         4.00%       $3,727          5.00%

     Tangible equity capital          3,962         5.32%        1,118         1.50%          n/a           n/a

     Total Risk-based capital         4,349        10.00%        3,480         8.00%        4,351         10.00%

     Tier 1 Risk-based capital        3,962         9.11%        1,740         4.00%        2,610          6.00%
</TABLE>

<TABLE>
<CAPTION>
                                                                  December 31, 2005
                                  ---------------------------------------------------------------------------------
                                                                                                To be Well
                                                                                             Capitalized Under
                                                                     For Capital             Prompt Corrective
                                                                  Adequacy Purposes          Action 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



                                       12
<PAGE>

Exchange  Commission  describes the methodology  used to determine the allowance
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 $386,836 was adequate, but not excessive,  to absorb estimated credit
losses associated with the loan portfolio at June 30, 2006.

Deferred  Income Taxes.  We have recorded a net deferred tax asset of $15,000 as
of June 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 June 30, 2006, the
valuation allowance is $642,400.

COMPARISON  OF THE  RESULTS OF  OPERATIONS  FOR THE THREE AND SIX MONTH  PERIODS
ENDED JUNE 30, 2006 AND 2005

Net Income/Loss.  Net loss for the three months ended June 30, 2006 was $108,600
($0.33 per share)  compared to a net loss of $124,600  ($0.45 per share) for the
three  months  ended June 30,  2005.  Net loss for the six months ended June 30,
2006 was $222,300  ($0.74 per share)  compared to a net loss of $243,000  ($0.88
per share) for the six months ended June 30, 2005.  The  improvement in net loss
for the 2006  periods  reflected  increases in  non-interest  income and a lower
provision for loan losses, which offset a decrease in net interest income and an
increase in other expenses for the periods.


                                       13
<PAGE>

Net Interest Income. Net interest income decreased $21,200, or 4.9%, to $414,100
for the three  months  ended June 30, 2006  compared  to $435,300  for the three
months  ended June 30,  2005.  Year-to-date  net  interest  income was  $845,700
compared  to  $871,100  for the six months  ended June 30,  2005,  a decrease of
$25,400,  or 2.9%.  The decrease in net interest  income during the 2006 periods
was  attributable  to a decrease in investment  security  income,  as well as an
increase in interest  expense for  deposits and Federal Home Loan Bank and other
borrowings. Interest income for the three and six months ended June 30, 2006 was
$1.0  million and $2.0  million,  respectively,  an  increase  of  $188,000  and
$400,000 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 six  months  ended  June 30,  2006,  net  loans
averaged  $65.6 million as compared to $55.3 million for the first six months of
fiscal year 2005, an increase of $10.3 million,  or 18.6%.  The increased income
from loans helped offset  increases in interest  expense of $209,300,  or 50.4%,
and  $425,100,  or 55.2%,  for the three and six  months  ended  June 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 nine increases in the targeted  Federal Funds rate over the past year.
Interest  expense  has also  increased  due to 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 2.22% for the six months ended June 30, 2006  compared to 2.75% for
the six months ended June 30, 2005. Net interest  margin  decreased to 2.48% for
the 2006 period compared to 2.93% for the 2005 period.

Provision  for Loan Losses.  The provision for loan losses was $0 and $1,500 for
the three and six months ended June 30, 2006, respectively,  compared to $22,500
and $61,500 for the three and six months ended June 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 June 30, 2006,  the Bank's
allowance for loan losses was $386,800, or 0.57%, of the gross loan portfolio.

Noninterest  Income.  Noninterest income was $135,900 and $239,700 for the three
and six months  ended  June 30,  2006,  respectively,  compared  to $96,600  and
$177,900  for the three and six months ended June 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 six months  ended June 30, 2006 were  $25,400
and  $26,700 in ATM fees,  an  increase of $8,300 and $7,100 over 2005 when such
fees were categorized as other income.

Noninterest Expense. Noninterest expense was $658,500 and $634,000 for the three
months ended June 30, 2006 and 2005, respectively, and $1,306,200 and $1,230,600
for the six months ended June 30, 2006 and 2005, respectively.

Compensation and benefits expense  decreased by $4,900, or 1.8%, to $261,800 for
the three months  ended June 30, 2006  compared to $266,700 for the three months
ended June 30, 2005 and  increased by $19,600,  or 3.8%, to $533,900 for the six
months  ended June 30, 2006  compared to $514,300  for the six months ended June
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 $29,800, or 108.0%, to $57,400 for the six-months
ended June 30, 2006.  Salaries decreased by $6,500, or 2.9%, to $215,900 for the
three months ended June 30, 2006


                                       14

<PAGE>

compared to $222,400 for the three  months ended June 30, 2005 and  decreased by
$4,200,  or 1.0%, to $428,500 for the six months ended June 30, 2006 compared to
$432,700 for the six months ended June 30, 2005. Director fees declined $10,000,
or 88.9%,  to $1,000 for the three months  ended June 30, 2006 and  $10,000,  or
44.4% to $12,000 for the six months ended June 30, 2006 from $11,000 and $22,000
for the three and six months  ended June 30,  2005 as  directors  have agreed to
waive their fees until the end of September, 2006.

Professional  fees increased  $9,500,  or 30.0%, to $41,200 for the three months
ended June 30,  2006 and  increased  $25,200,  or 49.7%,  to $75,900 for the six
months ended June 30, 2006 compared to $31,700 and $50,700 for the three and six
months ended June 30, 2005 due to higher accruals for legal and accounting fees.

Computer and data processing expense increased by $10,100,  or 17.5%, to $67,700
for the three  months  ended June 30,  2006  compared  to $57,600  for the three
months ended June 30, 2005 and increased by $22,700,  or 20.8%,  to $131,700 for
the six months  ended June 30, 2006 and  compared to $109,000 for the six months
ended June 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 $8,900, or 35.0%, to $34,300 for the three months
ended June 30, 2006 and decreased $5,600, or 9.5%, to $53,200 for the six months
ended June 30, 2006 compared to $25,400 and $58,800 for the three and six months
ended June 30,  2005.  The  increase  during the  quarter  ending  June 30, 2006
reflects the payment of disputed  advertising  invoices  for the quarter  ending
March 31,  2006 that were paid  after the end of the  quarter  ending  March 31,
2006. The reduction  during the six months ended June 30, 2006 was due primarily
to a reduction in the amount of radio advertising employed by the Company.

Office supplies and postage expenses  increased $3,600, or 13.2%, to $30,800 for
the three months ended June 30, 2006 and increased  $2,900,  or 4.9%, to $62,400
for the six months  ended June 30, 2006  compared to $27,200 and $59,500 for the
three and six months  ended June 30, 2005.  The  increase  was due  primarily to
rising postage expenses and increased mailings due to the larger customer base.

Other operating  expenses  increased $1,700, or 1.9%, to $90,500 for the quarter
and  increased  $4,100,  or 2.3%,  to  $178,600  year-to-date  due in part to an
increase in regulatory assessments of $5,000, or 87.7%, to $10,700 for the three
months  ended June 30,  2006 and of  $9,900,  or 86.3%,  to $21,300  for the six
months ended June 30, 2006.  ATM-related fees increased by $8,600,  or 31.5%, to
$35,900 for the three  months ended June 30, 2006 and  increased by $16,200,  or
31.7%, to $67,300 for the six months ended June 30, 2006. Additionally,  service
charges on the Federal Home Loan Bank  correspondent  checking account increased
by $600,  or 5.1%,  to $12,300 for the three  months  ended June 30, 2006 and by
$3,500, or 16.1%, to $25,300 for the six months ended June 30, 2006.

Income Tax Expense.  The Company  provides for both the current and deferred tax
effects of the transactions reported in its financial statements and 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 realized.  Based
on its current earnings,  its future projected earnings,  and other factors, the
Company  determined  in 2004 that it was  appropriate  to


                                       15
<PAGE>

establish a valuation allowance of $418,500 for its net deferred tax assets. The
balance of the valuation  allowance at June 30, 2006 is $642,400.  The increases
in the  valuation  allowance  for the six months  ended June 30, 2006 of $75,600
relates to the net losses incurred in 2006.

As of June 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 JUNE 30, 2006 AND DECEMBER 31, 2005

The Company's  total assets as of June 30, 2006 were $74.5 million,  an increase
of $2.8 million,  or 3.9%, 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  $3.7
million, or 7.8%. Net loans receivable increased by $3.0 million, or 4.6%, which
reflected our continued  marketing efforts.  Commercial mortgage loans decreased
$475,600, or 6.5%, and decreased to 10.1% of the loan portfolio at June 30, 2006
from 11.3% at December 31, 2005. The Company's  investment  securities decreased
by $501,400,  or 28.3%,  to $1.3 million at June 30, 2006 due to  maturities  of
securities.  Premises and equipment decreased $102,000,  or 4.5%, due to current
year  depreciation.  The Company's cash and cash equivalents as of June 30, 2006
were $2.2  million,  an increase of $200,000  from  December 31, 2005's level of
$2.0 million.

Liabilities  increased by $2.6 million,  or 3.8%, to $71.6 million due primarily
to a $5.8  million,  or 10.7%,  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 $3.2 million, or 24.4%, to $9.8 million at June 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 June 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 $2.9  million  at June 30,  2006  from $2.7
million at  December  31,  2005.  The small  increase  in  stockholders'  equity
principally  reflects  $394,600 in proceeds from the private  placement  sale of
9,327  shares of Common  Stock  during the period  and was  partially  offset by
$222,300 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.

                                                   June 30,        December 31,
                                                     2006             2005
                                                  ---------        ------------

Non-accrual loans                                 $159,533           $263,000
Accruing loans past due 90 days or more            110,052             44,000
                                                  --------           --------
  Total non-performing loans                       269,585            307,000
Foreclosed assets                                   53,525                 --
                                                  --------           --------
  Total non-performing assets                     $323,110           $307,000
                                                  ========           ========

Non-accrual  loans at June 30, 2006 consisted of 6 loans.  There were 7 accruing
loans past due 90 days or more at June 30, 2006.

At June 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:

                                           Six Months Ended
                                               June 30,
                                       ---------------------------
                                          2006             2005
                                       ----------      -----------

Balance, beginning of period           $ 387,822       $ 319,937
Loans charged off                         (3,197)        (16,192)
Loan recoveries                              711           4,605
                                       ---------       ---------
     Net charge-offs                      (2,486)        (11,587)

Provision for loan losses                  1,500          61,500
                                       ---------       ---------

Balance, end of period                 $ 386,836       $ 369,850
                                       =========       =========


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,  although  historically  the Bank has done
this rarely. 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 June 30, 2006, cash and cash equivalents
totaled $2.2 million.

The Bank's primary investing  activities is the origination of loans. During the
six months ended June 30, 2006 and 2005, loan originations totaled $12.5 million
and $14.8  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 June 30,  2006,  the Bank had $1.8  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 $36.0 million at June
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
June 30, 2006,  the Bank had $21.7 million in unused  borrowing  capacity at the
FHLB of Cincinnati.

The Bank is subject to minimum capital requirements under OTS regulations. Under
these  regulations,  the Bank 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."  At June 30, 2006,  the Bank's Tier 1/Core Capital ratio
was  5.32%,  its  Tier 1  risk-based  capital  ratio  was  9.11%  and its  total
risk-based   capital  ratio  was  10.00%.   In  order  to  maintain  the  Bank's
well-capitalized"  status, however, the Company was required to raise capital at
quarter end in a private  placement of common stock to directors.  Subsequent to
the end of the quarter,  the Company raised an additional $276,000 from the sale
of common stock.  Estimated  offering expenses were  approximately  $35,000.  No
assurance can be given that the Company will not be required to raise additional
capital  to  maintain  the  Bank's  well-capitalized  status or that the  Bank's
well-capitalized status will be maintained.

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


                                       18
<PAGE>

additional collateral,  and Community First Bank is required to maintain a total
risk-based  capital  ratio of at least 10%,  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. The Company currently anticipates that it will be
able to renew these borrowings on similar terms but does not have any 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 private placement or
pursue a combination of these  strategies.  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 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
          -----------------------------------------------------------

     (a)  During the quarter ended June 30, 2006, the Registrant sold a total of
          34,506 shares of common stock,  $.01 par value, in a private placement
          under  Rule 506 to  directors  of the  Registrant  and  certain  other
          accredited investors. The total offering price of the common stock was
          $276,048. The Registrant did not use an underwriter or placement agent
          for this offering.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

On June 1, 2006,  the Company held its annual meeting of  stockholders  at which
the following items were voted on.

     (1)  Election of Directors

                Nominee                      For              Withheld
     ------------------------------     --------------     -------------
     Paul W. Arison                        212,138            47,953
     Charlotte E. Baldwin                  212,138            47,953
     C. Barry Vaughn                       207,138            52,953

There were no abstentions or broker non-votes in the election of Directors.


ITEM 6.   EXHIBITS
          --------

          The following  exhibits are either being filed with or incorporated by
          reference in this quarterly report on Form 10-QSB:

     Number   Description
     ------   -----------
     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
    ---------------
    *        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).







                                       20
<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: August 8, 2006                   /s/ William M. Tandy
                                       -----------------------------------------
                                       William M. Tandy, President
                                       (Duly Authorized Representative)


Date: August 8, 2006                    /s/ Michael D. Wortham
                                       -----------------------------------------
                                       Michael D. Wortham, Vice President
                                       (Chief Financial Officer)