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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

FOR THE TRANSITION PERIOD FROM  to

Commission file number: 000-49736



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FIRST COMMUNITY FINANCIAL
CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|PENNSYLVANIA                                                   |  | 23-2321079                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                 |  |           
|------------------------------------------------ |  | ----------
|TWO NORTH MAIN STREET, MIFFLINTOWN, PENNSYLVANIA |  | 17059     
|(Address of principal executive offices)         |  | (Zip Code)

(717) 436-2144

(Issuers telephone number, including area code)



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Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding
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 large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12-b-2
of the Exchange Act.

Large accelerated filer: ̈Accelerated filer: ̈Non-accelerated filer:  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act.    Yes ̈No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practical date: COMMON STOCK, Par Value $5.00 per share
1,400,000 shares outstanding as of July 31, 2006



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PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars
In Thousands, Except Per Share Data)



|                                                                                                 |  |               |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------ |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                 |  | (unaudited)   |         |   |                   |  
|                                                                                                 |  | June 30, 2006 |         |   | December 31, 2005 |  
|ASSETS                                                                                           |  |               |         |   |                   |   |         |  
|Cash & Due from Banks                                                                            |  | $             | 7,193   |   |                   | $ | 7,648   |  
|Interest Bearing Deposits with Banks                                                             |  |               | 462     |   |                   |   | 502     |  
|                                                                                                 |  |               |         |   |                   |   |         |  
|Cash & Cash Equivalents                                                                          |  |               | 7,655   |   |                   |   | 8,150   |  
|Time Certificates of Deposit                                                                     |  |               | 2,574   |   |                   |   | 2,972   |  
|Securities available for sale                                                                    |  |               | 48,220  |   |                   |   | 52,140  |  
|Securities held to maturity, fair value 2006 $ 25,226; 2005 $ 25,776                             |  |               | 25,566  |   |                   |   | 24,824  |  
|Loans - Net of allowance for loan losses 2006 $ 1,263; 2005 $ 1,264                              |  |               | 171,055 |   |                   |   | 161,800 |  
|Premises and Equipment                                                                           |  |               | 7,350   |   |                   |   | 7,625   |  
|Restricted investment in bank stocks                                                             |  |               | 2,144   |   |                   |   | 2,012   |  
|Investment in life insurance                                                                     |  |               | 4,590   |   |                   |   | 4,514   |  
|Other Assets                                                                                     |  |               | 3,391   |   |                   |   | 3,120   |  
|                                                                                                 |  |               |         |   |                   |   |         |  
|TOTAL ASSETS                                                                                     |  | $             | 272,545 |   |                   | $ | 267,157 |  
|                                                                                                 |  |               |         |   |                   |   |         |  
|LIABILITIES                                                                                      |  |               |         |   |                   |   |         |  
|Deposits:                                                                                        |  |               |         |   |                   |   |         |  
|Non-Interest Bearing                                                                             |  | $             | 22,397  |   |                   | $ | 25,508  |  
|Interest Bearing                                                                                 |  |               | 193,973 |   |                   |   | 186,436 |  
|                                                                                                 |  |               |         |   |                   |   |         |  
|Total Deposits                                                                                   |  |               | 216,370 |   |                   |   | 211,944 |  
|Short-Term Borrowings                                                                            |  |               | 8,640   |   |                   |   | 8,937   |  
|Long-Term Borrowings                                                                             |  |               | 22,000  |   |                   |   | 21,000  |  
|Junior Subordinated Debt                                                                         |  |               | 5,155   |   |                   |   | 5,155   |  
|Other Liabilities                                                                                |  |               | 1,676   |   |                   |   | 1,789   |  
|                                                                                                 |  |               |         |   |                   |   |         |  
|TOTAL LIABILITIES                                                                                |  |               | 253,841 |   |                   |   | 248,825 |  
|                                                                                                 |  |               |         |   |                   |   |         |  
|SHAREHOLDERS EQUITY                                                                             |  |               |         |   |                   |   |         |  
|Preferred stock, without par value; 10,000,000 shares authorized and unissued                    |  |               |        |   |                   |   |        |  
|Common stock, $ 5 par value; 10,000,000 shares authorized; 1,400,000 shares issued & outstanding |  |               | 7,000   |   |                   |   | 7,000   |  
|Capital in Excess of Par Value                                                                   |  |               | 245     |   |                   |   | 245     |  
|Retained Earnings                                                                                |  |               | 12,110  |   |                   |   | 11,492  |  
|Accumulated Other Comprehensive Loss                                                             |  |               | (651    | ) |                   |   | (405    | )
|                                                                                                 |  |               |         |   |                   |   |         |  
|TOTAL SHAREHOLDERS EQUITY                                                                       |  |               | 18,704  |   |                   |   | 18,332  |  
|                                                                                                 |  |               |         |   |                   |   |         |  
|TOTAL LIABILITIES & SHAREHOLDERS EQUITY                                                         |  | $             | 272,545 |   |                   | $ | 267,157 |  
|                                                                                                 |  |               |         |   |                   |   |         |  

See accompanying notes.



2



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PART I  FINANCIAL INFORMATION, CONTINUED

Item 1. Financial Statements, continued

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars In Thousands, Except Per Share Data)



|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|--------------------------------------------------- |  | -------------------------- | ----- | ------------------------ | ---- | - | ----- |  | - | ----- | - |  | - | -----
|                                                    |  | Three Months EndedJune 30, |       | Six Months EndedJune 30,
|                                                    |  | 2006                       |       |                          | 2005 |   | 2006  |  |   | 2005 
|INTEREST INCOME                                     |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|Interest & Fees on Loans                            |  | $                          | 2,874 |                          |      | $ | 2,461 |  | $ | 5,620 |   |  | $ | 4,878
|Interest on Taxable Securities                      |  |                            | 530   |                          |      |   | 500   |  |   | 1,069 |   |  |   | 969  
|Interest on Tax-Exempt Securities                   |  |                            | 221   |                          |      |   | 217   |  |   | 429   |   |  |   | 422  
|Other Interest & Dividends                          |  |                            | 74    |                          |      |   | 42    |  |   | 147   |   |  |   | 87   
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|TOTAL INTEREST INCOME                               |  |                            | 3,699 |                          |      |   | 3,220 |  |   | 7,265 |   |  |   | 6,356
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|INTEREST EXPENSE                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|Interest on Deposits                                |  |                            | 1,497 |                          |      |   | 1,201 |  |   | 2,903 |   |  |   | 2,362
|Interest on Short Term Borrowings                   |  |                            | 78    |                          |      |   | 31    |  |   | 134   |   |  |   | 49   
|Interest on Long Term Borrowings                    |  |                            | 348   |                          |      |   | 259   |  |   | 682   |   |  |   | 499  
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|TOTAL INTEREST EXPENSE                              |  |                            | 1,923 |                          |      |   | 1,491 |  |   | 3,719 |   |  |   | 2,910
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|NET INTEREST INCOME                                 |  |                            | 1,776 |                          |      |   | 1,729 |  |   | 3,546 |   |  |   | 3,446
|Provision for Loan Losses                           |  |                            |      |                          |      |   | 5     |  |   |      |   |  |   | 15   
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                            | 1,776 |                          |      |   | 1,724 |  |   | 3,546 |   |  |   | 3,431
|                                                    |  |                            |       |                         
|NON-INTEREST INCOME                                 |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|Service Charges on Deposits                         |  |                            | 175   |                          |      |   | 142   |  |   | 326   |   |  |   | 259  
|Fiduciary Activities                                |  |                            | 75    |                          |      |   | 85    |  |   | 150   |   |  |   | 160  
|Earnings on Investment in Life Insurance            |  |                            | 47    |                          |      |   | 47    |  |   | 95    |   |  |   | 94   
|ATM Card Fees                                       |  |                            | 112   |                          |      |   | 91    |  |   | 214   |   |  |   | 173  
|Realized Gains (Losses) on Sales of Securities      |  |                            | (2    | )                        |      |   |      |  |   | (2    | ) |  |   | 129  
|Other Income                                        |  |                            | 53    |                          |      |   | 40    |  |   | 95    |   |  |   | 74   
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|TOTAL OTHER INCOME                                  |  |                            | 460   |                          |      |   | 405   |  |   | 878   |   |  |   | 889  
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|NON-INTEREST EXPENSES                               |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|Employee Compensation & Benefits                    |  |                            | 838   |                          |      |   | 835   |  |   | 1,710 |   |  |   | 1,691
|Net Occupancy & Equipment                           |  |                            | 274   |                          |      |   | 242   |  |   | 541   |   |  |   | 489  
|ATM Expense                                         |  |                            | 78    |                          |      |   | 66    |  |   | 149   |   |  |   | 130  
|Professional & Regulatory Fees                      |  |                            | 36    |                          |      |   | 63    |  |   | 94    |   |  |   | 124  
|Director & Advisory Boards Compensation             |  |                            | 71    |                          |      |   | 70    |  |   | 143   |   |  |   | 139  
|Supplies & Postage                                  |  |                            | 67    |                          |      |   | 63    |  |   | 144   |   |  |   | 111  
|Other Non-Interest Expenses                         |  |                            | 270   |                          |      |   | 230   |  |   | 527   |   |  |   | 459  
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|TOTAL NON-INTEREST EXPENSES                         |  |                            | 1,634 |                          |      |   | 1,569 |  |   | 3,308 |   |  |   | 3,143
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|Income Before Income Taxes                          |  |                            | 602   |                          |      |   | 560   |  |   | 1,116 |   |  |   | 1,177
|Applicable Income Taxes                             |  |                            | 115   |                          |      |   | 107   |  |   | 204   |   |  |   | 236  
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|NET INCOME                                          |  | $                          | 487   |                          |      | $ | 453   |  | $ | 912   |   |  | $ | 941  
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|Basic Earnings Per Share                            |  | $                          | 0.35  |                          |      | $ | 0.32  |  | $ | 0.65  |   |  | $ | 0.67 
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      
|Dividends Per Share                                 |  | $                          | 0.105 |                          |      | $ | 0.095 |  | $ | 0.21  |   |  | $ | 0.19 
|                                                    |  |                            |       |                          |      |   |       |  |   |       |   |  |   |      

See accompanying notes.



3



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PART I  FINANCIAL INFORMATION, CONTINUED

Item 1. Financial Statements, continued

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

For the Six Months Ended June 30, 2005

(Unaudited)

(Dollars In Thousands, Except Per Share Data)



|                                                                               |  |             |       |                              |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|------------------------------------------------------------------------------ |  | ----------- | ----- | ---------------------------- | - | ---------------- |  | - | ------------------------------------------ | - |  | ----- | ---- | - |  | - | ------ | -
|                                                                               |  | CommonStock |       | CapitalIn Excessof Par Value |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | Total |     
|Balance December 31, 2004                                                      |  | $           | 7,000 |                              | $ | 245              |  | $ | 9,967                                      |   |  | $     | 196  |   |  | $ | 17,408 |  
|Comprehensive income:                                                          |  |             |       |                              |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Net Income                                                                     |  |             |       |                              |   |                  |  |   | 941                                        |   |  |       |      |   |  |   | 941    |  
|Net change in unrealized losses on securities available for sale, net of taxes |  |             |       |                              |   |                  |  |   |                                            |   |  |       | (154 | ) |  |   | (154   | )
|                                                                               |  |             |       |                              |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Total comprehensive income                                                     |  |             |       |                              |   |                  |  |   |                                            |   |  |       |      |   |  |   | 787    |  
|                                                                               |  |             |       |                              |  
|Cash dividends, $.19 per share                                                 |  |             |       |                              |   |                  |  |   | (266                                       | ) |  |       |      |   |  |   | (266   | )
|                                                                               |  |             |       |                              |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Balance June 30, 2005                                                          |  | $           | 7,000 |                              | $ | 245              |  | $ | 10,642                                     |   |  | $     | 42   |   |  | $ | 17,929 |  
|                                                                               |  |             |       |                              |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

For the Six Months Ended June 30, 2006

(Unaudited)

(Dollars In Thousands, Except Per Share Data)



|                                                                               |  |             |       |                              |   |                  |  |   |                                     |   |  |       |      |   |  |   |        |  
|------------------------------------------------------------------------------ |  | ----------- | ----- | ---------------------------- | - | ---------------- |  | - | ----------------------------------- | - |  | ----- | ---- | - |  | - | ------ | -
|                                                                               |  | CommonStock |       | CapitalIn Excessof Par Value |   | RetainedEarnings |  |   | AccumulatedOtherComprehensive(Loss) |   |  | Total |     
|Balance December 31, 2005                                                      |  | $           | 7,000 |                              | $ | 245              |  | $ | 11,492                              |   |  | $     | (405 | ) |  | $ | 18,332 |  
|Comprehensive income:                                                          |  |             |       |                              |   |                  |  |   |                                     |   |  |       |      |   |  |   |        |  
|Net Income                                                                     |  |             |       |                              |   |                  |  |   | 912                                 |   |  |       |      |   |  |   | 912    |  
|Net change in unrealized losses on securities available for sale, net of taxes |  |             |       |                              |   |                  |  |   |                                     |   |  |       | (246 | ) |  |   | (246   | )
|                                                                               |  |             |       |                              |   |                  |  |   |                                     |   |  |       |      |   |  |   |        |  
|Total comprehensive income                                                     |  |             |       |                              |   |                  |  |   |                                     |   |  |       |      |   |  |   | 666    |  
|                                                                               |  |             |       |                              |  
|Cash dividends, $.21 per share                                                 |  |             |       |                              |   |                  |  |   | (294                                | ) |  |       |      |   |  |   | (294   | )
|                                                                               |  |             |       |                              |   |                  |  |   |                                     |   |  |       |      |   |  |   |        |  
|Balance June 30, 2006                                                          |  | $           | 7,000 |                              | $ | 245              |  | $ | 12,110                              |   |  | $     | (651 | ) |  | $ | 18,704 |  
|                                                                               |  |             |       |                              |   |                  |  |   |                                     |   |  |       |      |   |  |   |        |  

See accompanying notes.



4



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PART I  FINANCIAL INFORMATION, CONTINUED

Item 1. Financial Statements, continued

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars In Thousands)



|                                                                                  |  |                          |        |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------- | -
|                                                                                  |  | Six Months EndedJune 30, |       
|                                                                                  |  | 2006                     |        |   | 2005 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |                          |        |   |      |   |         |  
|Net income                                                                        |  | $                        | 912    |   |      | $ | 941     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |        |   |      |   |         |  
|Provision for loan losses                                                         |  |                          |       |   |      |   | 15      |  
|Depreciation and amortization                                                     |  |                          | 294    |   |      |   | 294     |  
|Net amortization of securities premium                                            |  |                          | 124    |   |      |   | 226     |  
|Net realized loss (gain) on sales of securities                                   |  |                          | 2      |   |      |   | (129    | )
|Earnings on life insurance                                                        |  |                          | (95    | ) |      |   | (94     | )
|Increase in other assets                                                          |  |                          | (122   | ) |      |   | (355    | )
|Decrease in other liabilities                                                     |  |                          | (113   | ) |      |   | (138    | )
|                                                                                  |  |                          |        |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                          | 1,002  |   |      |   | 760     |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |                          |        |   |      |   |         |  
|Securities held to maturity:                                                      |  |                          |        |   |      |   |         |  
|Maturities, calls and principal repayments                                        |  |                          | 3,154  |   |      |   | 1,315   |  
|Purchases                                                                         |  |                          | (3,959 | ) |      |   | (3,723  | )
|Securities available for sale:                                                    |  |                          |        |   |      |   |         |  
|Maturities, calls and principal repayments                                        |  |                          | 8,174  |   |      |   | 6,117   |  
|Purchases                                                                         |  |                          | (4,801 | ) |      |   | (11,256 | )
|Proceeds from sales                                                               |  |                          | 108    |   |      |   | 145     |  
|Net increase in loans receivable                                                  |  |                          | (9,255 | ) |      |   | (1,993  | )
|Net (increase) decrease in restricted investment in bank stocks                   |  |                          | (132   | ) |      |   | 8       |  
|Purchases of premises and equipment                                               |  |                          | (19    | ) |      |   | (386    | )
|Net maturities of interest bearing time deposits                                  |  |                          | 398    |   |      |   |        |  
|Proceeds from sale of foreclosed real estate                                      |  |                          |       |   |      |   | 6       |  
|                                                                                  |  |                          |        |   |      |   |         |  
|Net cash used in investing activities                                             |  |                          | (6,332 | ) |      |   | (9,767  | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |                          |        |   |      |   |         |  
|Net decrease in non-interest bearing demand and savings deposits                  |  |                          | (3,111 | ) |      |   | (496    | )
|Net increase in time deposits                                                     |  |                          | 7,537  |   |      |   | 5,379   |  
|Net decrease in short-term borrowings                                             |  |                          | (297   | ) |      |   | (710    | )
|Proceeds from long-term borrowings                                                |  |                          | 5,000  |   |      |   | 5,000   |  
|Repayment of long-term borrowings                                                 |  |                          | (4,000 | ) |      |   |        |  
|Dividends paid                                                                    |  |                          | (294   | ) |      |   | (266    | )
|                                                                                  |  |                          |        |   |      |   |         |  
|Net cash provided by financing activities                                         |  |                          | 4,835  |   |      |   | 8,907   |  
|                                                                                  |  |                          |        |   |      |   |         |  
|Net decrease in cash and cash equivalents                                         |  |                          | (495   | ) |      |   | (100    | )
|Cash and cash equivalents:                                                        |  |                          |        |   |      |   |         |  
|Beginning of year                                                                 |  |                          | 8,150  |   |      |   | 8,106   |  
|                                                                                  |  |                          |        |   |      |   |         |  
|End of period                                                                     |  | $                        | 7,655  |   |      | $ | 8,006   |  
|                                                                                  |  |                          |        |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURES:                                                         |  |                          |        |   |      |   |         |  
|Cash payments for interest                                                        |  | $                        | 3,498  |   |      | $ | 2,890   |  
|                                                                                  |  |                          |        |   |      |   |         |  
|Cash payments for income taxes                                                    |  | $                        | 275    |   |      | $ | 284     |  
|                                                                                  |  |                          |        |   |      |   |         |  
|NON CASH INVESTING:                                                               |  |                          |        |   |      |   |         |  
|Transfer of loans to foreclosed real estate                                       |  | $                        |       |   |      | $ | 24      |  
|                                                                                  |  |                          |        |   |      |   |         |  

See accompanying notes.



5



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PART I  FINANCIAL INFORMATION, CONTINUED

Item 1. Financial Statements, continued

FIRST COMMUNITY FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

June 30, 2006

Note A
 Basis of Presentation

The consolidated financial statements include the accounts of First Community Financial Corporation (the
Corporation) and its wholly-owned subsidiary, The First National Bank of Mifflintown (the Bank). All material inter-company transactions have been eliminated. First Community Financial Corporation was organized on
November 13, 1984 and is subject to regulation by the Board of Governors of the Federal Reserve System.

The accompanying unaudited consolidated
financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and are presented in accordance with the instructions to Form 10-Q and Rule 10-01 of the Securities and Exchange
Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2006, are not necessarily indicative of the results that may be expected for the year ending
December 31, 2006.

The consolidated financial statements presented in this report should be read in conjunction with the audited financial statements
and the accompanying notes for the year ended December 31, 2005, included in the Corporations Form 10-K filed with the Securities and Exchange Commission on March 14, 2006.

Note B  Accounting Policies

The accounting policies of the
Corporation as applied in the interim financial statements presented, are substantially the same as those followed on an annual basis as presented in the Corporations Form 10-K.



6



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Note C - Comprehensive Income

The only comprehensive income item that the Corporation presently has is unrealized gains (losses) on securities available for sale. The components of the change in unrealized gains (losses) are as follows:



|                                                            |  |                            |      |   |                          |   |     |      |  |   |      |   |  |   |      |  
|----------------------------------------------------------- |  | -------------------------- | ---- | - | ------------------------ | - | --- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                            |  | Three Months EndedJune 30, |      |   | Six Months EndedJune 30, |  
|                                                            |  | 2006                       |      |   | 2005                     |   |     | 2006 |  |   | 2005 |  
|                                                            |  | (Dollars in Thousands)     |     
|Unrealized holding gains (losses) arising during the period |  | $                          | (320 | ) |                          | $ | 261 |      |  | $ | (378 | ) |  | $ | (113 | )
|Reclassification of losses (gains) realized in net income   |  |                            | 2    |   |                          |   |    |      |  |   | 2    |   |  |   | (129 | )
|                                                            |  |                            |      |   |                          |   |     |      |  |   |      |   |  |   |      |  
|                                                            |  |                            | (318 | ) |                          |   | 261 |      |  |   | (376 | ) |  |   | (242 | )
|Deferred income tax effect                                  |  |                            | 109  |   |                          |   | (90 | )    |  |   | 130  |   |  |   | 88   |  
|                                                            |  |                            |      |   |                          |   |     |      |  |   |      |   |  |   |      |  
|Change in accumulated other comprehensive income (loss)     |  | $                          | (209 | ) |                          | $ | 171 |      |  | $ | (246 | ) |  | $ | (154 | )
|                                                            |  |                            |      |   |                          |   |     |      |  |   |      |   |  |   |      |  

Note D - Earnings Per Share

The Corporation has a simple capital structure. Basic earnings per share represents net income divided by the weighted average number of common shares outstanding. The weighted average number of common shares
outstanding was 1,400,000 in 2006 and 2005.

Note E - Guarantees

The Corporation does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit written are conditional commitments issued by
the Corporation to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those
that are involved in extending loan facilities to customers. The Corporation, generally, holds collateral and/or personal guarantees supporting these commitments. The Corporation had $353,000 of standby letters of credit as of June 30, 2006.
Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payment required under the corresponding guarantees. The current amount
of the liability as of June 30, 2006 for guarantees under standby letters of credit issued is not material.



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Note F - New Accounting Pronouncements

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

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets  An Amendment of FASB Statement No. 140
(SFAS 156). SFAS 156 requires that all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable. The statement permits, but does not require, the subsequent
measurement of servicing assets and servicing liabilities at fair value. SFAS 156 is effective as of the beginning of an entitys first fiscal year that begins after September 15, 2006, which for the Company will be as of the
beginning of fiscal 2007. The Company does not believe that the adoption of SFAS 156 will have a significant effect on its financial statements.

In
July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (FIN 48), which clarifies the
accounting for uncertainty in tax positions. This Interpretation requires that companies recognize in their financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the
technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained
earnings. We are currently evaluating the impact of adopting FIN 48 on our financial statements. The Company does not believe that the adoption of FIN 48 will have a significant effect on its financial statements.



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Item 2- Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Except for historical
information, this report may be deemed to contain forward-looking statements regarding the Corporation. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings,
expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure and other financial terms, (b) statements of plans and objectives of management or the board of directors, and
(c) statements of assumptions, such as economic conditions in the Corporations market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as believes, expects,
may, intends, will, should, anticipates, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy.

No assurance can be given that the future results covered by forward-looking statements will be achieved. Such statements are subject to risks, uncertainties, and other
factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could impact the Corporations operating results include, but are not limited to,
(i) the effects of changing economic conditions in the Corporations market areas and nationally, (ii) credit risks of commercial, real estate, consumer and other lending activities, (iii) significant changes in interest rates,
(iv) changes in federal and state banking laws and regulations which could impact the Corporations operations, (v) funding costs, and (vi) other external developments which could materially affect the Corporations business
and operations.

Critical Accounting Policies

The
consolidated financial statements include the Corporation and its wholly-owned subsidiary, The First National Bank of Mifflintown (the Bank). All significant intercompany accounts and transactions have been eliminated.

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the
Corporation to make estimates and assumptions (see footnote 1 to the financial statements for the year ended December 31, 2005). The Corporation believes that of its significant accounting policies, the allowance for loan losses involves a
higher degree of judgement and complexity.



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The allowance for loan losses is established through a charge to the provision for loan losses. In determining the
balance in the allowance for loan losses, consideration is given to a variety of factors in establishing this estimate. In estimating the allowance for loan losses, management considers current economic conditions, diversification of the loan
portfolio, delinquency statistics, results of internal loan reviews, borrowers perceived financial and managerial strengths, the adequacy of the underlying collateral, if collateral dependent, or present value of future cash flows and other
relevant factors. The use of different estimates or assumptions could produce different provisions for loan losses. Additional information is provided in the discussion below about the provision for loan losses under Results of
Operations.

Financial Condition

Total assets of
the Corporation increased $5,388,000 or 2.0% during the first six months of 2006. Net loans increased $9,255,000 or 5.7% and securities decreased by $3,178,000 or 4.1% from December 31, 2005 to June 30, 2006.

Total deposits increased by $4,426,000 or 2.1% from December 31, 2005 and long-term borrowings increased by $1,000,000 or 4.8% during the same time period. The
Corporations expansion and business development were primarily responsible for the deposit growth during the first six months of 2006.

Results of
Operations

Net income for the six months ending June 30, 2006 was $912,000 or $0.65 per share compared to $941,000 or $0.67 per share for the same
period in 2005. The major reason for the decrease in net income was the decrease in gains on sales of securities of $131,000 for the first six months of 2006 compared to 2005. Annualized return on average equity was 9.86% for the first six months of
2006 and 10.98% for the same period in 2005. Annualized return on average assets was 0.68% for the first six months of 2006 and 0.76% for the same period in 2005.

Net income for the quarter ending June 30, 2006 was $487,000 or $0.35 per share compared to $453,000 or $0.32 per share for the same period in 2005. Annualized return on average equity was 10.42% for the second quarter of 2006 and
10.54% for the same period in 2005. Annualized return on average assets was 0.72% for both the second quarter of 2006 and 2005.

Net interest income for
the first six months of 2006 increased by $100,000 or 2.9% compared to the same period in 2005. This increase is primarily a result of increased volume of interest earning assets. For the first six months of 2006, the net interest margin on a fully
tax equivalent (FTE) basis was 3.08% compared to 3.23%



10



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for the same period in 2005. The FTE basis is calculated by grossing up the yield on tax-exempt securities and loans by
the federal tax rate of 34%, in order that the yield on tax-exempt assets may be comparable to interest earned on taxable assets. The primary driver of the decrease in the net interest margin was the increase in the cost of funds of 0.45% from 2.57%
during the first six months of 2005 to 3.02% during the same time period in 2006.

Net interest income for the quarter ended June 30, 2006 increased
by $47,000 compared to the same period in 2005. Net interest margin for the quarter ended June 30, 2006 was 3.05% compared to 3.20% during the same period in 2005. The increase in the yield on earning assets from 5.78% in the first six months
of 2005 to 6.13% in 2006 was more than offset by the increase in the cost of funds from 2.58% during 2005 to 3.11% during 2006.

The Corporation recorded
no provision for loan losses for the first six months of 2006 compared to $15,000 for the first six months of 2005. As a percentage of loans, the allowance for loan losses was 0.74% at June 30, 2006, compared to 0.78% at year-end 2005 and 0.84%
at June 30, 2005. Provisions for loan losses are charged to income to bring the allowance for loan losses to a level deemed appropriate by management. Management determines the adequacy of the allowance based on on-going quarterly assessments
of the loan portfolio, including such factors as: changes in the nature and volume of the portfolio, effects of concentrations of credit, current and projected economic and business conditions, regulatory and consultant recommendations, repayment
patterns on loans, borrowers financial condition, current charge-offs, trends in volume and severity of past due loans and classified loans, potential problem loans and supporting collateral. Management believes the allowance is presently
adequate to cover the inherent risks associated with the Corporations loan portfolio.

Non-interest income in the first six months of 2006 decreased
by $11,000 or 1.2% compared to the same period in 2005. Gains on sales of securities decreased by $131,000, income from fiduciary activities decreased by $10,000, increased activity led to ATM card fees increasing by $41,000, and service charges on
deposit accounts increased $67,000 during the first six months of 2006 compared to the same period in 2005. The increase in service charges follows the introduction of our overdraft protection program which was instituted during the second quarter
of 2005.

Non-interest income for the quarter ending June 30, 2006 was $460,000 compared to $405,000 in 2005. This increase is primarily related to
the increase in service charges on deposit accounts of $33,000, and an increase in ATM card fees of $21,000.



11



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Total non-interest expense increased in the first six months of 2006 by $165,000 compared to the first six months of
2005. Employee compensation and benefits increased by $19,000 or 1.1% compared to the same period in 2005. Additional increases in employee compensation and benefits are anticipated as the Corporation continues to grow in size and number of
locations. Also, net occupancy and equipment expense increased $52,000, supplies and postage increased $33,000, and ATM expense increased $19,000. As a result of decreased legal fees, professional fees decreased by $30,000. The increase in other
non-interest expense is primarily the result of an increase in supplies and state shares tax of $61,000. As the Corporation continues to add new offices and services, additional operating costs will be generated. Over time it is anticipated these
costs will be offset by the additional income generated through the expansion of services to our customers and community and new business development.

During the quarter ending June 30, 2006, total non-interest expense increased $65,000 compared to the second quarter of 2005. Net occupancy & equipment expense increased by $32,000, ATM expense increased by $12,000, and other
operating expenses increased by $40,000 primarily due to an increase in state shares tax and supplies of $22,000. These increases were somewhat offset by a decrease in professional fees of $27,000. These were the principal reasons for the increase
in total non-interest expense.

Income tax expense was $204,000 for the six month time period ending June 30, 2006 compared to $236,000 for the same
time period in 2005. Income tax expense as a percentage of income before income taxes was 18.3% for the period compared to 20.1% for 2005. The reason for the decrease in the effective tax rate is tax-exempt income as a percentage of income before
taxes was higher in 2006 than 2005. The decrease in the Corporations effective tax rate below the statutory rate of 34.0% is a result of tax-exempt income on loans, securities and bank-owned life insurance.

Liquidity

Liquidity represents the Corporations ability to
efficiently manage cash flows to support customers loan demand, withdrawals by depositors, the payment of operating expenses, as well as the ability to take advantage of business and investment opportunities as they arise. One of the
Corporations sources of liquidity is $216,370,000 in deposits at June 30, 2006, which increased $4,426,000 over total deposits of $211,944,000 at December 31, 2005. Other sources of liquidity at June 30, 2006 are available from
the following: (1) investments in interest-bearing deposits with banks and federal funds sold, which totaled $462,000, (2) securities and time certificates of deposit maturing in one year or less, which totaled $10,171,000, and
(3) investments in mortgage-backed securities, which supply income and principal cash flow streams on an ongoing basis. In addition, the Corporation has established federal funds lines of credit with Atlantic Central Bankers



12



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Bank and with the Federal Home Loan Bank of Pittsburgh, which can be drawn upon if needed as a source of liquidity.
Management is of the opinion that the Corporations liquidity is sufficient to meet its anticipated needs.

Capital Resources

Total shareholders equity was $18,704,000 as of June 30, 2006, representing a $372,000 increase from December 31, 2005. The growth in capital was a result
of net earnings retention of $618,000 partially offset by an increase in accumulated other comprehensive loss of $246,000. The other comprehensive loss during the period is due to the change in value of the Corporations available for sale
securities. Management does not believe that this decline in value of securities is other than temporary.

At June 30, 2006, the Bank had a leverage
ratio of 8.70%, a Tier I capital to risk-based assets ratio of 15.50% and a total capital to risk-based assets ratio of 16.34%. These ratios indicate the Bank exceeds the federal regulatory minimum requirements for a well capitalized
bank. The Corporations ratios are not materially different than those of the Bank.

Item 3. Quantitative and Qualitative Disclosures
about Market Risk

There are no material changes in the Corporations interest rate risk exposure since December 31, 2005. Please refer to the
Annual Report on Form 10-K of First Community Financial Corporation, filed with the Securities and Exchange Commission on March 14, 2006.

Item 4. Controls and Procedures

We maintain a system of controls and procedures designed to provide reasonable assurance as to the
reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. The Corporations President (Principal Executive Officer) and Chief Financial Officer
(Principal Financial Officer) have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2006. Based upon that evaluation, our President and Chief Financial Officer concluded that our disclosure controls and
procedures are effective in timely alerting them to information required to be included in our periodic Securities and Exchange Commission filings. There was no significant change in our internal control over financial reporting that occurred during
the quarter ended June 30, 2006, that materially affected, or is reasonably likely to materially affect, the Corporations internal control over financial reporting.



13



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PART II  OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable

Item 1A. Risk Factors

There are no material changes in the
Corporations risk factors since December 31, 2005. Please refer to the Annual Report on Form 10-K of First Community Financial Corporation, filed with the Securities and Exchange Commission on March 14, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable

Item 3. Defaults Upon Senior Securities

Not Applicable

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

At the annual shareholders meeting on April 11, 2006 the following directors were elected to Class
C for a term of three years as follows:



|                    |  |           |  |         |  |                                
|------------------- |  | --------- |  | ------- |  | -------------------------------
|                    |  | FOR       |  | AGAINST |  | ABSTENTIONS ANDBROKER NON-VOTES
|Samuel G. Kint      |  | 1,151,199 |  | 3,016   |  | -0-                            
|Clair E. McMillen   |  | 1,152,750 |  | 1,465   |  | -0-                            
|Roger Shallenberger |  | 1,153,715 |  | 500     |  | -0-                            
|Lowell M. Shearer   |  | 1,153,715 |  | 500     |  | -0-                            

The term of office of each of the following other directors continued after the meeting:

Class A Directors  Term expiring 2007

John P. Henry III

James R. McLaughlin

Frank L. Wright

Class B Directors  Term expiring 2008

Joseph E. Barnes, Sr.

Nancy S. Bratton

Jody D. Graybill

Charles C. Saner



14



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Item 5. Other Information

Not Applicable

Item 6. Exhibits

(a) Exhibits



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Title                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.1     |  | Articles of Incorporation of the Corporation. (Incorporated by reference to Exhibit 2(a) to the Corporations December 31, 2001 Registration Statement on Form 10-SB, as filed with the
Securities and Exchange Commission on April 17, 2002.)                                                                                                                                                                                                                                                 
|        | 
|3.2     |  | Bylaws of the Corporation. (Incorporated by reference to Exhibit 2(b) to the Corporations Registration Statement on Form 10-SB, as filed with the Securities and Exchange Commission on
April 17, 2002.)                                                                                                                                                                                                                                                                                      
|        | 
|4.1     |  | Certain instruments defining the rights of the holders of long-term debt of the Corporation and certain of its Subsidiaries, none of which authorize a total amount of indebtedness in excess
of 10% of the total assets of the Corporation and its Subsidiaries on a consolidated basis, have not been filed as Exhibits in accordance with Item 601(b)(4)(iii) of Regulation S-K. The Corporation hereby agrees to furnish a copy of any of these
instruments to the Commission upon request.
|        | 
|31.1    |  | Certification of Principal Executive Officer of First Community Financial Corporation Pursuant to Securities and Exchange Commission Rule 13a-14(a) / 15d-14(a).                                                                                                                                                                                                                                                                                                                               
|        | 
|31.2    |  | Certification of Chief Financial Officer of First Community Financial Corporation Pursuant to Securities and Exchange Commission Rule 13a-14(a) / 15d-14(a).                                                                                                                                                                                                                                                                                                                                   
|        | 
|32.1    |  | Certification of Principal Executive Officer of First Community Financial Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                               
|        | 
|32.2    |  | Certification of Chief Financial Officer of First Community Financial Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                    



15



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                      |  |                                       |  |                              
|--------------------- |  | ------------------------------------- |  | -----------------------------
|                      |  | FIRST COMMUNITY FINANCIAL CORPORATION
|                      |  | (Registrant)                         
|                      |  |                                      
|Date: August 11, 2006 |  | BY:                                   |  | /s/ Jody D. Graybill         
|                      |  |                                       |  | Jody D. Graybill             
|                      |  |                                       |  | President                    
|                      |  |                                       |  | (Principal Executive Officer)
|                      |  |                                      
|Date: August 11, 2006 |  | BY:                                   |  | /s/ Richard R. Leitzel       
|                      |  |                                       |  | Richard R. Leitzel           
|                      |  |                                       |  | Vice President and           
|                      |  |                                       |  | Chief Financial Officer      
|                      |  |                                       |  | (Principal Financial Officer)



16